Round-up of the weekly news and developments from the global insurance market with stories regarding the property direct and facultative market, Navigators, Vitruvian and more
Property direct and facultative rates reach reduction limit at the 1 April renewals
The 1 April renewals are seeing property direct and facultative (D&F) rates reach a reductions limit as carriers say they cannot give any more concessions. Industry insiders have reportedly said they cannot withstand any more reductions and that the D&F market has reached a point that they have to say no to any more concessions. Some of the industry is witnessing some resistance to the lack of movement having got used to double digit reductions over the past few years. Many are quoting the same rates as last year and after a period of protest many are agreeing to last year’s rates. The reason the D&F market has hit this point is that it has been subject to three years of falling rates with some carriers struggling to make it a profitable line of business. Novae is just one carrier who has pulled out of the market in recent years with some others reigning back on operations.
Guillaume Déal joins Navigators
Guillaume Déal has been appointed by Navigators as managing director of mainland Europe to compliment the carriers growth in the region. Déal joins from Caisse d'Assurances Mutuelles du Crédit Agricole (CAMCA) where he was chief underwriting officer. Prior to this Déal was vice president and European strategic alliances and alternative distribution manager at Chubb. Déal will have responsibility for growing the Navigators business across the continent of Europe from his base in Paris. Déal’s appointment is the latest in a series of appointments designed to maximise the growth efforts of Navigators outside the US. Earlier this year the company set up a Hong Kong operation bringing on board three new hires from Chubb to grow in Asia. This new strategy marks a new phase in the business’s history as it looks to markets outside the US and London where it has a well-established presence.
Vitruvian acquires 40% state in CFC for £230mn
Vitruvian has aquired a 40% stake in CFC Underwriting for the valuation price of £230mn. The deal is 15x forward Ebitda and almost 20x trailing Ebitda. It was reported as early as last year that CFC was looking for a potential buyer appointing Evercore to look at potential suiters. It is understood that CFC will acquire its stake by buying out Richard Corfield, the current CFC chairman, Mike Rees, co-founder of Benfield and Hugh Willis, co-founder of BlueBay Asset Management. The remainder is owned by the management and staff of CFC who have added to their 18% stake though a contractual agreement that allows them to buy shares should investors leave. Those who were involved in the bidding process were Lightyear Capital, Inflexion and HG Capital who were eliminated in the second round. Aquiline and Warburg Pincus failed to make it through the first round of bids.
Matt Keeping parts Willis Towers Watson
Matt Keeping, North America’s chief broking officer has left the company and will be replaced in the interim by Joe Peiser. Keeping moved from London to New York in 2009 as CEO of Willis Facultative. Pieser is presently head of North America casualty broking, holding the position since January 2015. Prior to moving to Willis he served nearly two decades at Johnson & Higgins as well as Marsh. Keeping’s departure comes soon after Dave Finnis left the company late last year.
XL Catlin expands its cyber team
Duane Folkard has been hired by XL Catlin to bolster the cyber team headed by James Tuplin. Folkard joins from Willis Towers Watson and held the position of divisional director for cyber and technology, media and telecoms. Before his two year stint at Willis, Folkard was vice president for professional indemnity lines at Marsh in London. In his new role he will report to Tuplin who joined earlier in the month having left QBE Europe in January. The appointment of Folkard will see the XL Catlin team return to the numbers it had 12 months ago before a number of underwriters left the company. Cyber teams in the London market have been fairly fluid recently as more and more carriers look to enter the market. Companies who have seen their cyber team’s change in recent months include Allianz and Barbican. Competition for experienced cyber specialists will likely intensify as teams grow and more carriers enter the market.
Hannover Re signs deal to buy Argenta
Hannover Re has signed an agreement to acquire Argenta, which owns Lloyd’s managing agent Argenta Syndicate Management and Argenta Private Capital. Hannover Re will also obtain a pro rata share of the Lloyd's Syndicate 2121. The deal is expected to close in the third quarter of 2017 subject to all necessary approvals. Ulrich Wallin, chief executive officer of Hannover Re said, "For some time now we have been interested in a Lloyd's syndicate with a view to gaining additional access to international and London market business. We are delighted to have found an ideal partner in Argenta". The syndicate 2121 focuses on short-tail property business and specialty lines. In 2016 it booked gross premiums of £280 million. Alasdair Locke, chairman of Argenta said, "We are delighted to have reached an agreement to become part of such a strong and well-respected reinsurance group. Hannover Re has been a valued business partner of Syndicate 2121 for many years, both as a reinsurer and capital provider and we believe that this transaction is in the best interests of Argenta, its customers and its staff."
Talanx makes record profit in 2016
Talanx achieved a record net income for 2016 growing 23.6% to EUR907mn. Herbert Haas, CEO of Telanx, hailed the result as the best in the company’s history. Operating profit for 2016 grew by 5.4% to EUR2.3bn. This full year result was recorded despite a slowdown towards the end of the year. Q4 operating profit at Talanx dropped 3.9% due to a fall in its life insurance segment. Within the company’s reinsurance segment, which includes Hannover Re, the P&C operating profit grew 8.6%. The industrial line business saw a 65.5% increase in operating income to EUR91mn for the fourth quarter. At a group level, the combined ratio improved by 20 basis points to 93.1% for Q4.
Cyber incident response app unveiled by CFC Underwriting
CFC Underwriting has unveiled a cyber incident response app that will enable policyholders to notify them of a claim with a click of a button and receive specialist support from CFC’s global cyber incident response team. Users can also access global cyber news and are able to configure the app so that excess insurers and other members of the policyholder’s incident response team are notified at the same time. Anthony Hess, head of incident response at CFC said, “The longer it takes a policyholder to notify us that they’ve suffered a cyber incident regardless of whether it is an extortion demand or a system outage, the more damaging the impact can be on their business. Using the app, it will take just seconds to notify us that something has gone wrong and less than half an hour for our network of experts to respond.” Hess added that CFC’s cyber insurance proposition has evolved to become an incident response service as the number of cyber claims managed by CFC grew by 78% from 2015 to 2016 and the main types of attack being claimed for were privacy breaches and financial losses. 90% of claims by volume were from businesses with less than $50 million in revenue. CFC covers more than 25,000 companies against cyber risk in a variety of industries located in over 20 countries around the world. CFC’s cyber incident response app runs on iOS, Android and Windows mobile phones and further functionality will be added over the coming months.