Insurance Insight Interview: Anne-Sofia Hedin

The Nordic region - and Sweden in particular - appears to have generated quite an allure of late. Last September, Lloyd's opened its first representative office in Stockholm to act as a hub for the geographic zone, citing strong growth potential, low volatility and profitable diversification opportunities as being among its most attractive qualities.

Then January brought the news that RSA had acquired Sveland P&C - Sweden's ninth largest private insurer - immediately boosting gross written premium by approximately £40m for an outlay of around £12m in cash.

But the region's comely features and widening appeal will not have surprised Markel Corporation. Back in 2008, the US insurer elected to set up operations in Stockholm to provide marine and professional risk products across the Nordic countries, Baltic States and Russia as part of its international division.

To date, Markel Sweden has not ventured down the acquisitions route to secure growth, choosing instead to build a business from scratch - quietly, consistently and strategically. And now it has a new general manager at the helm to lead it though the next phase of development.

Anne-Sofia Hedin was appointed to the role in February, taking over from Ove Staf who retired after an insurance career spanning more than three decades. Despite boasting more than 25 years of varied international insurance and reinsurance experience herself (see box), Ms Hedin was far from a stranger to the operation and its ambitions. She joined Markel Sweden in time for its launch two years ago and previously served as operations manager.

Describing the business as a "genuine start-up", Ms Hedin explains that all three regions were in "the target scope" from the very beginning and clients now emanate from across the piece - albeit that the closest geographic areas herald the bulk of the business at present. "Currently our marine business has a particularly strong link with the large shipping industry of Norway, whereas professional lines is still mainly Swedish business," she explains.

And although the anticipated global economic upswing may play its part in boosting business further afield, Ms Hedin is quick to stress this will not be the primary generator behind any new client wins. "We expect strong growth in the Baltic States and Russia when the world economy recovers. However, our portfolio is mainly growing on the back of the extensive personal network of our underwriters, which is continuously being developed and expanded further. New business relations are carefully developed with focus on quality and profitability."

Markel Corporation posted some fairly impressive results for 2009 - with a near $1bn swing from a loss of $403m in 2008 to a $591m profit. And Markel International was highlighted as a strong contributor to this result with a 91% combined ratio (better than the 95% reported by the group as a whole) in addition to a 10% increase in investment returns and $691m contribution to gross written premium.

In terms of the part played by Markel Sweden, Ms Hedin confirms that, after seven quarters in operation, it contributed more than $6m to last year's figures - but her ambition is to more than triple this in the not too distant future. "The Scandinavian market has been identified as a place where it is possible to find profitable business areas. However, in order to achieve an acceptable balance between operating costs and premium income we would need to grow to an annual GWP of around $20m - something we aim to do within the foreseeable future.

Further growth can be achieved through organic growth or acquisitions, the latter offering the advantage of more substantial leaps in development, of course." She confirms that Markel Sweden has already looked at potential acquisitions but has abandoned these so far at the initial phase, adding confidently: "We are capable of achieving sufficient growth rate through organic growth only."

Asked who she considers to be Markel Sweden's biggest competitors in the lines it currently writes and why she believes her company offers brokers and clients a stronger proposition, Ms Hedin responds: "The largest players in marine are Gard, Norwegian Hull Club and Swedish Club.

In respect of professional risks, the major players are Chartis, Ace and Zurich. All our underwriters are senior underwriters who generally have more experience and longer relations with brokers and clients than the opposition. In addition, a small company like ours will select brokers and clients carefully and try to provide personal service and flexible solutions."

So what was the reasoning behind Markel's move in 2008 and why Scandinavia? "The Scandinavian market was regarded as attractive as there were still many profitable segments in the market," says Ms Hedin. "This was, for instance, highlighted in the Lloyd's report Northern Lights. The Swedish - as well as other Nordic markets - are typically dominated by a few large insurance providers leaving room for specialist niche players. Sweden is also regarded as a good and central platform for entering the Nordic countries as well as the Baltic region and Russia."

Summing up the start-up's experience to date, she states: "I think we have been successful considering we have been in this market for only two years and started with a blank sheet of paper. This year we will continue to focus on existing markets and will target the Baltic States when the economic climate in this region improves."

Markel International's president and chief operating officer, William Stovin, certainly has high hopes for the business, commenting at the time of Ms Hedin's appointment: "We have ambitious plans for this region and I believe that, through the continuing expansion of Markel Sweden, we can add significantly to Markel International's role in Europe."

Elsewhere in the continent, Markel International has opened up operations in Madrid and Ms Hedin explains that other suitable locations will continue to be explored with a view to expanding the overseas network of offices and geographic footprint. "I'm convinced that Markel Sweden will be given the opportunity to contribute to this process," says Ms Hedin. "Although our product lines are limited to marine and professional risks for the moment, we are looking for opportunities to expand our product base in future."

Indeed, when her appointment as general manager was announced, Ms Hedin made it clear that diversification from this core offering is on the cards: "Our aim is to build on this foundation and provide more of the 80 plus products that Markel as whole offers worldwide. We can write business on Markel International corporate paper or through Syndicate 3000, our wholly-owned Lloyd's syndicate."

When pressed further about the specifics of this product expansion in terms of top priorities and timeframes, Ms Hedin is reluctant to give too much away, stating only: "For the time being, we are concentrating on expanding our current product lines. We are recruiting three more people for this purpose during 2010, which is in itself quite a challenge for our limited resources. We have looked at various new products and have a good idea of what we want to do next, but we shall not make any decision until we are nearer the time."

Of course, Markel Sweden's existing core class of marine is not without its challenges at the moment, with plenty to occupy the minds of underwriters. A preview piece on last year's International Union of Marine Insurance conference in Bruges quoted IUMI president Deidre Littlefield as saying the market was facing "a number of serious problems". Among these were listed the Rotterdam Rules, where a new convention was scheduled for signing that could radically affect the cargo liability regime; proposed changes in salvage arbitration procedures; and how to deal with the escalating piracy menace.

Asked whether she agrees with the severity of these challenges or views them in the same negative way, Ms Hedin responds: "General economic downturns do not normally spill over to underwriters other than in the form of reduced premium as a result of lower values of ships and transported goods. It is hard to predict when the Rotterdam Rules will come into effect, and salvage is always costly but, in reality, is only a very marginal part of the total claims amount. And there are signs of recovery in the shipping industry - more competition is slowly entering the markets and we must apply a degree of caution in our underwriting."

But as for the ‘menace' of piracy, Ms Hedin concludes on an upbeat, pragmatic note: "Piracy is actually providing a new major source of income for war underwriters and Markel Sweden writes a considerable volume of piracy business."

Anne-Sofia Hedin - her career to date

Like many of her contemporaries, Anne-Sofia Hedin, markel Sweden's new general manager, readily admits that her career path came more from coincidence than design. "I wanted to practice my French after I left school and got the opportunity to work for one of the biggest Swedish insurance companies, Skandia, with French treaty business at its incoming reinsurance department.

After two years, I was transferred over to an IT project and, in connection with this, got the chance to work at Skandia America in New York for a short period."

It was soon after this that she started her university degree in economics but choose to continue working in the industry, studying in the evenings. During this period, Ms Hedin worked as a life and non-life financial control manager at Skandia international, which offered all types of reinsurance - from facultative international aviation direct insurance to treaty life reinsurance.

Arguably, this is when her experience really diversified, becoming much deeper and broader than before. "As manager for the financial control department I was given the opportunity to learn about the specifics within each line of business. Skandia International also had a broad office and subsidiary network all over the world which meant that I got the opportunity to travel a lot."

Around 1995 Skandia decided to sell its international arm. And at this point in Ms Hedin's career, things got decidedly interesting - not to mention a little covert: "I was appointed business controller, which in reality meant that I was transferred over to a secret team that solely had the mission to sell the company and worked closely with an investment bank for more than a year," she explains."The buyers became the Hannover Re group, which didn't purchase the whole company but certain portfolios.

In 1997, she was appointed vice president for the finance and accounting department at Hannover Re's new Swedish operation, before moving into new premises in Stockholm in 1998 under the Interhannover and Hannover re brands. She comments: "It was a tough and interesting task to be part of setting up a structure involving several companies, implementing new routines and learning about culture difference."

Then in 2000, she became general manager for finance and accounting, as well as HR, while simultaneously undertaking an executive MBA at Stockholm's School of Economics. And Markel Sweden was not Ms Hedin's first experience of a helping establish a start-up operation for a foreign insurer. In 2006, she was offered the chance to be part of the team tasked with setting up a new operation for QBE in Stockholm - where she worked for a year before leaving to work for Markel International.