Operating Strategy
Growth

Underwriting Strategy

Underwriting Approach & Opportunities

Underwriter Profile

Seneca's Claim Strategy

Welcome to the Seneca Insurance Company website. I have been the Chairman and Chief Executive Officer of Seneca for the past 16 years. During that time, there have been tremendous changes at Seneca:

	Surplus has increased more than tenfold.
	Our rating from A.M. Best has gone from NA-5 to A-.
	We have 18 profit centers - up from 3 profit centers 16 years ago.

We have consciously sought to do business differently from our competitors.  By paying strong attention to the “details” of underwriting, claims adjusting and operations, we believe that we outperform our competitors thereby benefiting our stockholders, producers, and insurers.

We have built our business by hiring talented underwriters who are problem solvers and can build profitable businesses. Our target employee is generally a seasoned underwriter with some frustration about the current underwriting approach of a large company. Our ability to recruit people such as these has allowed us to grow from 3 small branches with $11 million in business in 1989 to 18 profit centers that write over $135 million today.

We are always eager to attract talented underwriters with a strong conviction and a firm belief in the value of the underwriting process. If you are interested in building and managing a business for Seneca, please contact us or e-mail us with your business proposal.

Sincerely,

Douglas M. Libby
President and Chief Executive Officer

Operating Strategy:

Seneca's unique way of doing business extends beyond our underwriting approach.

	We have a very flat management structure. Profit center managers have accountability and authority.
	New profit centers are typically established as start-ups by seasoned underwriters.
	Profit center managers receive substantial additional compensation based on their bottom line underwriting results.

Growth:

We identify and acquire talented underwriters and are willing to consider business plans in many different lines of business.  Our interviewing process consists of discussing a business plan including of underwriting strategy, distribution strategy and approach to other matters such as facultative and treaty reinsurance.  We expect each new profit center to produce reasonable premium growth for the first year and disregard proposals that involve unrealistic growth.  Most profit center managers we hire have the following characteristics:

	They are frustrated in a larger company environment where they want to deliver an underwriting profit but may be unable to do so;
	They have conviction about how to make money and are committed to the underwriting process;
	They are principally problem solvers rather than “marketers”; and
	They have developed strong producer relationships over many years.

Underwriting Strategy:

	The Company focuses on business that requires and rewards underwriting judgment and strong claims skills.  We prefer to be a market of “last resort” rather than a writer of “preferred” risks.
	We look for inefficient markets and don’t rely on rating manuals.

We also seek a competitive advantage in every aspect of the underwriting and claims processes.  We use tools that permit our underwriters to challenge the information set forth in insurance applications and expect them to do so.  We train our underwriters in financial underwriting as well.  As a consequence, for example, we believe that the inventory values that we use are much more likely to be accurate (based upon a review of an insured’s financial statements) than those used by the underwriters of our competitors.

Our basic approach is to measure risk vs. reward for lines of business and individual risks:

	This usually means “best” risk in a perceived “hazardous” class or territory,
	Avoidance of catastrophic exposure of any kind,
	Restrict coverage where possible, and
	Make sure that underwriters are following the process, and control their tendency to “follow the market” in soft market periods.

The Company is opportunistic, contrarian (we want to write what other companies perceive to be “too risky”) but limit ourselves to those lines of business and types of risks which are within our institutional capabilities, (i.e., the skill level and experience of our underwriters and claims technicians).

Seneca constantly analyzes the risk-reward of each line of business.  However, this analysis is not based upon models.  It is principally based upon understanding changes in terms, conditions and pricing in the marketplace as well as changes in the number and appetite of participants in the market at any given time.

	Seneca's underwriters must have technical skills to evaluate the business.
	There must be a limited and well controlled risk of catastrophic loss.
	Seneca must be able to create operational controls that will maintain profitability.

Substantial growth has occurred in specialty lines driven by underwriters who have profitably built new businesses for Seneca.

Underwriter Profile:

	Experienced.
	Frustrated in unresponsive larger company environment.
	Conviction about how to make money and committed to the underwriting process.
	Strong producer relationships built over many years.

Seneca's Claim Strategy:

	We spend more loss adjustment dollars to do a thorough job resulting in a superior loss ratio.
	We do a better job of reimbursing a claimant's real out-of-pocket losses.