Roundup of the weekly news and developments from the global insurance market with stories from the London insurance market, Hyperion, MS Amlin and more
London Market passes $200bn stress test
Hiscox has published a white paper analysing the London market's response to a theoretical stress test involving the costliest losses in history. The dry run scenario involved an unprecedented cyber event, a highly destructive hurricane, one of the largest ever stock market declines and a major reinsurer default with consequent delays in reinsurance payments. These simulated events resulted in extraordinary global insurance losses of approximately $200bn [£160.4bn], the biggest in history. The two-week exercise looked at the sector's ability to absorb a large market dislocation, maintain liquidity and raise capital during the period of dislocation following a market-turning event and provide the trading capabilities required to respond operationally to such losses. The scenarios were also intended to challenge companies' internal processes, decision-making and management reactions. Three recent major catastrophes were used to provide insights, these were 9/11, Hurricane Katrina and the 2011 Tohuku earthquake. According to the white paper the exercise suggested that the industry has access to sufficient resources to cope with the extraordinary losses witnessed.
Hyperion teams up with Manchester City FC
Hyperion has teamed up with Manchester City FC and is now the official regional partner of the football club in United Kingdom. In addition Hyperion has the same status with the United Arab Emirates and is an official regional partner of Major League football team New York City FC. Hyperion CEO, David Howden said of the partnership, "We are delighted to be an official partner of Manchester City and New York City FC. The sports and entertainment market is an important and growing focus for us across the group. To be appointed as a partner by a globally recognised sports brand is a fantastic endorsement of our expertise; I am excited to work with the two clubs to explore the great opportunities this partnership will deliver." Damian Willoughby, senior vice-president for partnerships at City Football Group, said that having been a client of Hyperion for a number of years they had been very impressed by the firm's approach to delivering first-class service, saying, "City Football Group and Hyperion both have unique growth and success stories that have been built on a spirit of striving for excellence, an unwavering focus on the needs of our supporters and clients, and a commitment to creating a globally connected, but locally relevant, group structure."
MS Amlin and Ascot main insurers on $400mn marine claim
MS Amlin is the main insurer for a $400mn marine cargo claim being submitted by Canadian commodity hedge fund vermillion stemming from a lost shipment of oil. Ascot has been reported as the main insurer on the first excess layer on the placement which is exposed to a $250mn loss. The lost shipment has been attributed to the closure of Moroccan based oil refinery Société Anonyme Marocaine de l'Industrie du Raffinage (Samir). Production ended at the Samir refinery following the drop in oil prices in 2014 and 2015. Sources have said that the amount liable and the policy that would have to pay out haven’t been fully established due to confusion caused by allegations of misappropriation. Ordinarily any loses from misappropriation would be picked up by political risk teams but many expect this particular incident to be covered by the companies marine cover. Allegations of misappropriation were made last year without any clear identification as to who or where the misappropriated oil had been taken.
$800mn potential loss for energy market after Abu Dhabi fire
A recent fire at the Takreer Ruwais refinery in Abu Dhabi has led many in the downstream energy market to brace for a major loss. Abu Dhabi National Oil Company (Adnoc) owns the refinery and has spread the risks over multiple policies. Those who have the biggest exposure to the potential loss have been reported as being, Chubb, Liberty Specialty Markets and QBE. JLT is believed to be Adnocs broker. Initial loss estimates put the exposure at £50mn but after further analysis the fire damage is worse than first anticipated and now is expected to fall between $450mn and $500mn. Adnoc did not take out business interruption cover which will reduce any exposures; however, the refineries closure will impact other companies who have taken out business interruption cover. Early indications pointed to a potential loss of $300mn from this portion of the claim.
Jacob Ingerslev appointed by Navigators
Jacob Ingerslev has been appointed by Navigators to the position of global practice leader for cyber liability. Ingerslev was previously head of technology error and omissions (E&O), cyber and media lines at CNA Insurance in Chicago for four years before leaving last year. Since leaving Chicago he has been linked to multiple roles in the cyber market before committing to Navigators. The appointment is expected to be followed by a considered effort to grow in the expanding market. Ingerslev will report directly to president of US insurance Vincent Tizzio and president of international insurance Michael Casella. Before moving to Chicago Ingerslev was European underwriting director for technology and cyber risks after serving at Chubb in Europe.
Hiscox to end writing political risk
Hiscox has informed the market that it will no longer be operating in political risk. A representative from the company told reporters that the decision was taken in response to the continued challenges in the market. The company also said that although they were profitable in this area they were small and they only had a limited appetite for growth. The current risk team at Hiscox includes political risk and credit risk line underwriter Claire Simpson and underwriters Victoria Padfield and Russell Fisher. This area of business had reportedly reached a point where it was no longer sustainable to continue operations. Hiscox divides political violence and political risk into separate underwriting teams. The (re)insurer is sticking with its political violence and terrorism line.
Lloyd’s Brexit options have been detailed by Inga Beale
Lloyd’s CEO Inga Beale has outlined possible options for the company in a bid to retain market access after Brexit. Five options have been shortlisted by Lloyd’s in response to Britain leaving the EU, including establishing European operations in Dublin, Germany and the Benelux region. At a meeting earlier in the week Beale said that language would have little effect on choosing one of the five options. Beale did explain that if access could be maintained then they may reconsider their options. She highlighted this was a decision that impacted the future of Lloyd’s saying that it would ensure the organisation was around in a hundred years’ time. Beale also took the opportunity to tell the insurance industry to embrace the opportunities of the age by adopting technological change and opportunities provided by China, the wider Asian market and the increasingly, Latin America.
Claims manager Davies Group sold for £90m to US-PE firm
Epiris has sold its majority stake in loss adjusters Davies Group for £90m to a US-based private equity (PE) firm. PE-fund manager Epiris led the £61m purchase of the company in 2011 and has sold its interest to HGGC for £90m. The deal provides an exit for Epiris. Davies is a third party administrator that provides claims and insurance services to over 100 clients across the UK & Ireland. According to Davies, HGGC's investment will allow the company to continue its strategy of investing in niche lines, technology and technical expertise. Additionally, the claims provider is set to target new segments of the insurance services, specialty business process outsourcing and an overseas expansion for its claims business. Davies chief executive officer Dan Saulter and chief commercial officer Darren Coombes will continue in their roles. Saulter said, "We have a fantastic team here at Davies, and this investment from HGGC is a testament to their performance and delivery. We operate in a vibrant and ever-changing insurance market. We will continue to invest in service, technology and new capabilities to help our clients grow their businesses and provide great service to their customers."