“Profitable growth” has become one of the most frequently used phrases in the property/casualty insurance industry. It appears in strategic plans, board discussions, and corporate objectives across the market. It is an understandable aspiration. But is it really a strategy?
At Holborn, we would argue that it is not.
Growth is not, and should not be, a strategy in itself. Rather, it is the outcome of a series of decisions. While growth is an important measure of success, it is not a directly controllable input. Sustainable performance is driven by something far more fundamental: disciplined execution of the core principles of underwriting.
When organizations focus primarily on growth, attention can inadvertently shift away from the decisions that truly determine long-term performance. Growth is influenced by underwriting, distribution, market conditions, and capital allocation. It is, therefore, better understood as a consequence of effective execution. This distinction matters.
The phrase “profitable growth” can imply a balance between two competing priorities. However, in reality, profitability and growth should not be viewed as opposing goals. Growth that is not profitable ultimately erodes value while profitability without growth may simply reflect a more conservative business approach or even a missed opportunity. Framing the two together can sometimes obscure the actions that genuinely drive sustainable results. Those actions remain remarkably consistent.
In Holborn’s view, long-term underwriting performance is built on three disciplines: pricing, risk selection, and portfolio management.
Pricing is the most direct lever of profitability.
Pricing involves considerably more than simply setting rates. Pricing requires careful consideration of exposure, insured values, terms and conditions, expected loss costs, and target returns. Inflation, changing exposures, and evolving market conditions all influence pricing adequacy. Effective pricing requires continual evaluation.
Risk selection is equally important.
One principle has always remained true: You cannot reinsure a bad risk into a good risk. Even the most sophisticated pricing models cannot compensate for business that falls outside an insurer’s defined risk appetite. Strong underwriting discipline begins with clarity about the types of risks an organization seeks to write, the limits within which it is prepared to operate, and the underwriting standards that ensure consistency across the portfolio. Superior performance comes not from writing more business, but from writing the right business.
Maintaining pricing adequacy, adhering to risk appetite, and managing portfolio composition remain fundamental to long‑term success.
Portfolio management completes the picture.
Every individual underwriting decision contributes to the overall characteristics of a portfolio. Line of business, geography, hazard profile, accumulation, correlation, and capital efficiency all influence long-term results. Managing these factors requires continual attention to portfolio composition, ensuring that underwriting decisions collectively support the organization’s broader objectives.
These three disciplines work together. When pricing remains adequate, risks are selected carefully, and portfolios are actively managed, insurers place themselves in the strongest possible position to achieve sustainable performance. Growth often follows. Not because it has been pursued directly, but because disciplined underwriting creates the conditions in which high-quality growth can occur.
The opposite can also be true. When growth becomes the primary focus, organizations may experience pressure that influences underwriting discipline, particularly in competitive market environments or when entering unfamiliar segments. Pressure on pricing, gradual loosening of underwriting standards, and portfolio drift toward higher-volatility risks can emerge over time. Individually, these decisions may appear manageable. Collectively, they can place pressure on margins, surplus, and earnings stability.
Maintaining underwriting discipline is rarely straightforward.
Every declination or non-renewal has the potential to affect valuable distribution relationships. Balancing underwriting discipline with the needs of distribution partners is one of the enduring challenges facing insurers. Nevertheless, maintaining pricing adequacy, adhering to risk appetite, and actively managing portfolio composition remain fundamental to long-term success, regardless of market conditions.
Viewed through this lens, growth becomes a useful indicator rather than a primary objective. Strong growth may reflect effective execution. More modest growth may equally reflect a deliberate commitment to underwriting discipline or changing competitive dynamics. In either case, growth should be interpreted as evidence of underlying decisions rather than the strategy itself.
Ultimately, profitable growth remains a useful shorthand for a desirable outcome. But sustainable performance is built through disciplined pricing, rigorous risk selection, and active portfolio management, applied consistently throughout the underwriting cycle.
The organizations that remain focused on these principles place themselves in the strongest position to achieve profitable growth – not by chasing it, but by earning it.
The strongest organizations achieve profitable growth not by chasing it, but by earning it.