Letter from the President

As we close in on the end of 2010 our industry continues its march towards questionable profitability due to competitive pricing and underwriting decisions. In a capitalist economy we all must be responsive regardless of our own personal opinions about the long term wisdom of pricing our products.

We, in the excess and surplus lines segment, are constantly reinventing not only our products but ourselves as specialty brokers. While we all have different educations that bring us to our roles, we continue to seek more and diverse education to help manuscript products with our underwriting companions to offer you, our customers, the ability to sell new and essential products to your clients. We have been extremely successful, as a firm, serving as the tip of the spear for new coverages such as cyber and privacy liability. The application of this coverage is universal because so many businesses have, at the very least, a website and a human resource department. While developing expertise in this product five years ago, it became apparent to me that we—as an insurance brokerage firm—have significant need for this product and indeed purchase this coverage, which we have in force to this day. This coverage, like our own significant amount of errors and omissions coverage purchased, is a testament to our reliability and stability in an industry which demands these qualities along with integrity and honesty far beyond our role as a fiduciary. You—the agent—depend upon us to offer you not only access to the insurance marketplace but, the correct terms and conditions and coverage for your client and the integrity to stand behind what we offer.

As S.H. Smith & Company, Inc. looks toward 30 years in business; we are amazed at the additional entrance into an industry that is potentially oversaturated. While we believe that there's always room for an innovative solution, we're also disheartened by the lack of integrity some of the new entrants offer in this industry. Ultimately, it is integrity, honesty, initiative and innovation which drive successful results. I know our carrier partners have not always stood up the way we would like them to by vetting out new distribution sources but, I hope that you the agent will. Market access is only one of the many components that we believe should be present in a relationship between retail insurance agents and wholesale partners. We believe that we have proven ourselves over the years in business and we continue to add strong intelligent and honorable people to our brokering ranks.

2011 will bring great opportunity and great challenge. As we continue to expand our product lines and our brokering staff as well as our market relationships we thank you for your business. From all of us at S.H. Smith & Company: A very joyous holiday season to you, your family and your staff.

Yours very truly,

Scott H. Smith
President

OFFICES: CONNECTICUT, MARYLAND, MASSACHUSETTS, MINNESOTA, NEW YORK, NEW JERSEY, OHIO, RHODE ISLAND