Round-up of the weekly news and developments from the global insurance market with stories from Lloyd’s, Aon, the Siri oil platform and more
The search for a new Lloyd’s chairman faces delays
The search for John Nelson’s successor as chairman of Lloyd’s could be delayed up until March. It has been reported that a decision is some way off with the initial plan for an announcement in December. Lloyd’s have revealed little of the recruitment process with fear of information being leaked but it has been speculated that XL Catlin's deputy executive chairman Stephen Catlin remains in the running for the post. Talks with a number of other leading players in the industry are still ongoing. The earliest the industry could expect to hear of the replacement is mid-February however March is seen as a more realistic time frame. John Nelson is thought to be stepping down in May leaving a narrow window for the handover process to take place.
Global natural disasters result in $54bn of insured losses
Global natural disaster events were responsible for a total economic loss of over $200bn in 2016 and $54bn of insured losses according to Aon Benfield. Their 2016 Annual Global Climate and Catastrophe Report reveals that 2016 was the seventh highest on record for economic losses, with flooding causing nearly one-third of the all economic losses. Record temperatures are believed to have caused the increase in severe weather, which when added to damage from earthquakes and flooding, makes up 70% of all economic losses in 2016. Steve Bowen, Aon impact forecasting director and meteorologist said, “After a decline in catastrophe losses during the previous four years, 2016 marked a bit of an uptick in natural peril costs to the global economy. When recognising that we have seen a nominal increase in both annual and individual weather disaster costs in recent decades, we recognise that factors such as climate change, more intense weather events, greater coastal exposures and population migration shifts are all contributors to the growing trend.” 34 natural disasters were counted in 2016, each costing over $1bn to the world’s economy. The report also highlighted that only 26% of losses were covered by insurers due to a higher percentage of damage occurring in areas with low insurance penetration. Despite this, public and private insurance industry losses were 7% above the 16-year average and the highest combined total recorded since 2012.
Energy market fight against $470mn claims judgement
A judgement that would mean the upstream energy market would pay a claim worth $470mn is being fought against by the market. The appeal involves the Danish Maritime and Commercial High Court's decision in December that 24 insurers involved in the Norwegian oil company Noreco's all-risk policy should pay $470mn for damage caused to the Siri oil platform in 2009. The largest owner of the policy is Farrell Syndicate with a 10% stake. Other insurers on the policy include, XL Catlin, Gard, AIG, JLT, Talbot, Axis, Lancashire, Liberty, Markel and Zurich. Noreco is weighing up whether to sell a portion of the pay-out to claims farmers which will see $200mn being transferred to Norwegian investment company Awilhelmsen and US hedge fund sponsor QVT Financial. This move has caused controversy in the market and is one of the reasons the insurance market is fighting the claim. Noreco claimed against the Siri platform event for loss of production but this was rejected due to the belief that damage was caused by a design-related fault not covered in the policy.
Zurich appoint Rob Kuchinski to top property job
Zurich have appointed Rob Kuchinski to the role of global head of property in a position that was newly created to complement the tripartite structure within Zurich. Further to its work in property lines the unit will include construction, engineering and all energy lines including liability. Kuchinski will report to Jim Shae who is a former colleague and was hired by Zurich last year. Also joining Shae’s team is Adrian Sweeney who will become chief underwriting officer for Zurich's commercial business. He previously held the position of chief underwriting officer in the Asia Pacific and will join the team next month.
Patel appointed Novae CFO
Novae Group have appointed Reeken Patel as executive director and group chief financial officer, subject to regulatory approval. Matthew Fosh, group chief executive commented “Reeken has an outstanding track record as a member of the executive team and we are delighted to be appointing him to the position of chief financial officer and as an executive director of Novae Group plc.” John Hastings-Bass, Chairman commented, “Reeken’s recent experience as interim chief financial officer, and his previous role as the Company’s chief risk officer, together with his prior experience as a partner at PricewaterhouseCoopers, provides an ideal skill set to support the delivery of our strategy.” Patel joined the Company in July 2014 as chief risk officer, where he led the risk and actuarial functions and has been acting as interim chief financial officer since 1 November 2016. Patel is a qualified actuary with over 16 years’ experience. Prior to joining Novae he was a partner in the General Insurance Division of PwC and their London Market Actuarial leader.
Argenta receives final bids
The sales price for Argenta could be double the book value when the sales process is completed in the coming weeks. Bidding in the final round is due to close this week with China Taiping and Exin among those in the final round. Parties that have recently ended their interest include Hannover Re who has decided to look elsewhere to fulfil its desire for a Lloyd’s acquisition. Reports have speculated that the final price paid for the organisation could tip over the £100mn mark. Argenta CEO Andrew Annandale is likely to remain in place following the auction, which was closed to Lloyd's consolidators. If China Taiping goes through to complete the full bidding process it will be the first Lloyd’s business to be aquired by a Chinese based organisation.
US and EU talks ends with barriers to transatlantic business reduced
European and American representatives have reached an agreement to harmonise regulation of insurers and reinsurers and remove barriers to doing business. The deal is thought to reduce the amount of collateral a European insurer must hold against business taken in the US. The streamlining will affect supervision, reinsurance and information that is shared by regulators. A joint statement from both sides of the Atlantic read, "will ensure ongoing robust insurance consumer protection and provide enhanced regulatory certainty for insurers and reinsurers operating in both the US and the EU. With regard to reinsurance, the agreement will enhance consumer protection and will lead to the elimination of collateral and local presence requirements for EU and US reinsurers operating in these markets." The agreement stipulates that insurers are primarily subject to the regulatory authority of their home countries, not those of nations where they're doing business. The US side of negotiations wanted a swift agreement so they could continue to operate in Europe after solvency II rules took effect a year ago.
Pen Underwriting appoint Jonathan Turner as new CEO
Jonathan Turner will become chief executive of Pen Underwriting, replacing current managing director Mark Armitage. Turner, who joined Pen as executive chairman in September 2015, will adopt full day-to-day management for Pen. Armitage will take on the role of managing director, broking and placement at parent company Arthur J. Gallagher. Grahame Chilton, international CEO of Gallagher said, "Under Mark's steerage the team has brought together and integrated a collection of some of the best known and respected UK underwriters and built one strong, specialist underwriting business that is now the second largest MGA in the UK. That is an incredible achievement in just 18 months and gives Pen, and Jon, solid foundations on which to now build out the strategic growth plans he has been spearheading as executive chairman of Pen. Core objectives include further international expansion and development of Pen's specialist underwriting portfolio, and looking at alternative ways to provide capacity for our customers."
