Zurich Head of U.S. Middle Market looks to next phase of growth

Five years ago, Alex Wells joined Zurich to lead a newly formed U.S. Middle Market team as part of Zurich's global investment in this segment. His mandate was clear: Leverage Zurich's capabilities and core brand to build a world-class Middle Market operation, serving the risk management needs of Middle Market businesses in key industries across the U.S.

Today, Zurich’s Middle Market business has delivered double-digit growth over four consecutive years and is tasked with exceeding that growth rate in Zurich Insurance Group’s new three-year plan for 2025-2027, announced a year ahead of schedule, at the recent Zurich Investor Day in London. Why ahead of schedule? The Group is on track to exceed all of its 2023-2025 targets — with robust contributions from the Middle Market segment — and saw new opportunities as the economic and geopolitical outlook has shifted since 2023.

At Investor Day, Wells joined Kristof Terryn, Zurich North America CEO, and Dalynn Hoch, Head of RCIS (Zurich’s crop insurance business in the U.S.), in representing the U.S. business. The three spoke at breakout sessions, sharing how the work in the U.S. over the past few years has helped influence the Group’s global plan for the next three.

We followed up with Terryn, Wells and Hoch when they returned home for a series of Q&As about the path ahead. We started with a Q&A with Terryn. The second in this three-part series is here, with Wells.

Q: Zurich’s Middle Market business is front and center in the Group’s new three-year plan. Why?

Wells: I’ll start with the customer we serve. While definitions of “middle market” businesses vary, one recent report from JPMorgan Chase and Next Street defines midsize businesses as those with revenue ranging from $11 million to $500 million. By that definition, U.S. middle market companies represent an estimated 300,000 businesses generating about $13 trillion in annual revenue and employing over 40 million people.¹

Looking at those numbers a different way, middle market businesses generate 33% of the revenue in the country and 30% of all private sector employment in the country, even while representing just 5% of the total of national employer businesses.² So the middle market segment is important not just to our plans at Zurich, but to America’s plans.

Q: What’s critical to serving the Middle Market customer? What did you do to build the foundation when you joined Zurich five years ago?

Wells: As you can imagine, our Group CEO Mario Greco is pretty clear when he gives somebody a job. Zurich has great global capabilities and a strong brand. So, when I came to Zurich, I focused on building out a foundation of exceptional talent to serve the U.S. Middle Market. We’ve worked to assemble a team of dedicated Middle Market leaders and underwriters who understand this space very deeply and who grasp the unique challenges of the various industry segments and the individual customers we serve.

To attract the best Middle Market businesses and to fulfill their evolving needs — both of which are critical to be best in class — we understood very quickly that our underwriting, products and services needed to be both specialized by industry and localized by geography.  

So, we have strategically invested, more than doubling our geographic footprint of underwriting staff across the U.S. with a specific focus on geographies that are growing economically at an accelerated rate and have a concentration of key industries that will drive the economies of the future.  We further focused our investments on seven of those key industries where our capabilities mesh well with the needs and risk management practices of businesses in those spaces — namely, Construction, Technology, Life Sciences, Private Equity, Financial Institutions, Manufacturing and Professional Services. Those aren’t the only geographies and industries we serve, but they are areas of focus for us.

Q: Industry specialization and regional localization — are those the two key ingredients in the secret sauce?

Wells: Knowing where you want to grow and building a field organization that's oriented to that is the start and critically important to delivering on our promise of world-class individual account underwriting. But you also have to have an organization behind those field teams that provides resources and knowledge that creates a sustainable competitive advantage on the most preferred accounts. Recognizing this, we built an exceptional infrastructure of regionalized underwriters, specialists and tools to support the field underwriters so that they could operate smarter, faster and with fewer questions of our broker partners and customers.

We've also built a dedicated distribution team of more than 30 regional and territory leaders who understand our brokers very well and very locally, and who can manage our relationships so that our customers feel the strength of Zurich behind them.

Q: How important is technology to the Middle Market offering?

Wells: Technology is critically important. We have invested in technology that streamlines our process and gives our underwriters the best starting point for their underwriting decisions. That has allowed us to reduce the number of systems that our underwriters have to touch, which in turn can help reduce the amount of time that it takes for them to produce a quote on a submission from a broker.

Being part of a company with a 152-year track record, with the financial strength, global reach and capabilities of Zurich, enables key strategic investments in technologies including AI and predictive analytics to support our brokers and customers.

Altogether, this work and this focus have produced some exceptional results, including double-digit growth and a combined ratio in the 80s in our core P&C business, and competitive advantages that are difficult to match. This foundation of underwriting excellence and differentiated capabilities equips us to accelerate growth going into the next strategic cycle. With no carrier in the U.S. Middle Market space estimated to have more than about a 10% market share, we expect to have a lot of opportunity. The U.S. Middle Market team is central to Zurich’s growth plan.

Q: A reporter at Investor Day pointed out that Middle Market seems to be an area many insurance carriers are targeting. What differentiates Zurich’s Middle Market offering?

Wells: There are some big players and then some smaller players entering this space, and what we've done is bring the advantages of a big global organization into a local relationship that we can leverage right now. That’s for the clients’ benefit; we have the ability to do things that few others can.

An example: A very large percentage of Middle Market clients in the United States have an international exposure. These are relatively big clients, and they buy and/or sell abroad. A big advantage we have, which frankly even most of our bigger domestic U.S. competitors don't have in the same way, is our international proposition and being able to solve for those needs. The relationships we have with the top 10 to 15 brokers that do business in the United States is an entirely different relationship because of our global footprint and everything else we can offer right now. When we go into a local marketplace, we’re selling big and we're operating small.

• Click here for a Q&A with CEO Kristof Terryn on the North American role in Zurich Insurance Group’s new three-year plan.
• Click here for a Q&A with Head of RCIS Dalynn Hoch on the role Zurich’s crop insurance business plays in the broader Zurich Group.
• Click here for more information about Zurich Investor Day.  

References

1. JPMorgan Chase & Co. (2023, November 9). The middle matters: Exploring the diverse middle market business landscape.  jpmorgan.com/content/dam/jpmorgan/documents/cb/insights/banking/commercial-banking/next-street-the-middle-matters-report.pdf

2. Ibid.