After getting the go-ahead to build a new insurance company, BHSI’s founding executive team—Peter Eastwood, president and CEO; David Bresnahan, executive vice president; David Fields, executive vice president; and Sanjay Godhwani, executive vice president—had the luxury of starting a company from the ground up, one with an enviable balance sheet and no internal legacy issues to worry about.Executive SummaryIn June 2013, Berkshire Hathaway CEO Warren Buffett said his firm was “moving into commercial insurance in a substantial way and we are here to stay.” Within 14 months after launching Boston-based Berkshire Hathaway Specialty Insurance (BHSI), the business was profitable. Six years after its launch, BHSI has more than 1,000 employees, a physical presence in 14 countries and 29 cities, and multinational capabilities around the globe. How did this happen in so short a time? In a conversation with Carrier Management, three of BHSI’s original founders—Peter Eastwood, Sanjay Godhwani and David Bresnahan—talked about their roll-out strategy and what has been instrumental in this successful launch.
When they knew they could use the Berkshire Hathaway name, it was like adding icing on the cake. The Berkshire Hathaway brand is not only a strong and highly regarded one, it is also one of the most trusted names in the business. But why the use of specialty in the name? Eastwood said it was because there are a number of insurance businesses within Berkshire Hathaway, so the company needed a distinguishing moniker. However, the choice of specialty in the name isn’t as serendipitous as Eastwood makes it seem.
Eastwood said he’d noticed over the years that the growth rates and underwriting profitability in the specialty and excess and surplus lines markets were generally better than in the U.S. admitted market. In the U.S., the E&S market is unique because it offers insurers freedom from regulated rates and state filings. It’s particularly useful to businesses or industries that find it difficult to obtain insurance coverage in the admitted markets. Products and services can be designed and implemented quickly, without waiting for regulatory approvals.