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EC News (15th June 2017)

  • Publish Date: Posted almost 7 years ago
  • Author:by Alan Jarque

Round-up of the weekly news and developments from the global insurance market with stories from LSM, WR Berkley, Argo and more. 

Protector Forsikring is insurer for London tower blaze

Norwegian carrier Protector Forsikring is the insurer for the block of flats in west London that was engulfed by a tragic fire in the early hours of Wednesday morning (14 June), according to reports.

The 24-storey building in North Kensington, named Grenfell Tower, reportedly contains around 120 flats, with between 400 and 600 people said to live there.

As of this morning, the devastating blaze is believed to have resulted in at least twelve fatalities and more than 70 people being placed in hospital, with the tower block now left severely damaged.

The cause of the fire is not yet known.

"As the insurance provider for Royal Borough of Kensington and Chelsea, Protector Forsikring ASA is involved in the tragic fire in Grenfell Tower," the insurer told Reuters in a statement.

"Our thoughts go to the people who lived in the building and their families. Protector will work closely with the local authorities and the rescue teams," the company added.

Protector highlighted that the cost of the fire will chiefly be picked up by reinsurance programme, with its own account share normally limited to 20mn kroner ($2.4mn) per event.

The firm added that the impact on its earnings is expected to be negligible.

In its April 2016 investor presentation, Protector said that all its reinsurance treaties are placed by reinsurance broker Willis Re.

Meanwhile, it has been reported that Munich Re is the lead reinsurer for Protector Forsikring, with Intelligent Insurer stating that the Norwegian insurer has confirmed that all its property claims in UK and in the Nordic market are covered by the German reinsurer.

Although the size of Munich Re's participation on the reinsurance programme is unknown, it is believed to be sizeable.

Grenfell Tower was built in 1974 by Kensington and Chelsea Borough Council and is managed by the Kensington and Chelsea Tenant Management Organisation (KCTMO) on behalf of the council.

ProSight Syndicate 1110 placed into run-off

Lloyd’s has informed the market of ProSight’s decision to place Syndicate 1110 into run-off.

In a market bulletin dated 9 June, Lloyd’s said that it supported ProSight’s decision and will be working closely with the company to ensure that the run-off is handled efficiently and effectively for all constituents.

The Corporation noted that Syndicate 1110 remains fully able to meet all claims, adding that ProSight will continue to service the syndicate’s business.

While Syndicate 1110 will not be accepting any new business, on all existing business brokers should continue to deal with their usual contacts at ProSight, who will be available to assist with any risk written by the syndicate,” the bulletin stated.

Lloyd’s said that ProSight intends to appoint a third party to take over the management of the run-off, adding that a “process is underway to select that provider” and that further details will be announced in “due course”.

The decision to put the business into run-off follows reports by The Insurance Insider earlier this year that US specialty insurer ProSight, which is backed by GS Capital Partners and TPG Capital, had launched a sales process at group level.

However, after failing to secure the desired premium valuation, it was reported that efforts to auction the whole group were abandoned, with ProSight’s board instead appointing a bank to sell off its Lloyd's operation.

Last month, the publication reported that Lloyd’s had asked ProSight to prepare a contingency plan in case the Lloyd’s business was put into run-off.

In 2016, Syndicate 1110 generated gross written premiums of £245mn, with over half emanating from the US. The syndicate’s stamp capacity increased to £280mn for 2017.

Global standalone cyber premiums hit $1.7bn

Global standalone cyber insurance premiums reached $1.7bn in 2015 in a market still in its infancy, according to a study conducted by Aon.

In its Global Cyber Market Overview report published earlier this week, Aon noted that the cyber insurance market has boomed in recent years, citing annual premium growth rates of around 30 percent between 2011 and 2015.

Furthermore, the broker estimated 2016 global standalone cyber premiums to be c.$2.3bn as data pointed to higher growth rates last year.

The report estimated that the US accounted for c.90 percent or $1.5bn of total gross written premiums in 2015, of which more than 60 percent was written by the five largest insurers.

Meanwhile, Lloyd’s carriers accounted for 30 percent of US cyber premium in 2015.

The broker said that growth in the US had been fuelled by several factors including the introduction and enactment of data breach legislation in 47 states, a growing awareness of cyber threats and the increasing number and rising cost of data breaches.

The report highlighted that demand in recent years has been driven by large corporations storing personally identifiable information and processing vast quantities of financial transactions such as large retailers, with these clients representing nearly half of US standalone cyber premium.

Healthcare was also noted as a growth segment, accounting for around 15 percent of the US market, as companies increase their purchasing appetite in response to legislation.

In contrast, the European standalone cyber market was sized at $135mn in 2015.

However, it is anticipated that the upcoming Global Data Protection Regulation (GDPR) - which comes into force next May - will catalyse a growth in demand for cyber cover in the region as companies will be obligated to notify the regulator and individuals in the event a breach of personally identifiable data, Aon said.

Meanwhile, it was estimated that global cyber reinsurance premiums hit c.$525mn in 2015, with approximately 95 percent written on a quota share basis.

The report noted that more than 15 reinsurers actively write standalone cyber treaties.

Longstanding supporters of the cyber reinsurance market have built their book over time and are able to offer 20 percent to 30 percent participation on quota share treaties, the broker said.

However, Aon highlighted that loss occurrence caps for business interruption exposure are often required on quota share treaties, as carriers remain conservative on their exposure to cyber risk.

While more recent entrants have shown a clear appetite to quote business, they remain cautious and are unwilling to take large lines and generally restrict their participation below 20 percent, the report noted.

The broker added that the development of the global cyber reinsurance market is being hindered by the current lack of suitable data and modelling capabilities to evaluate aggregate exposures, as well as a dearth of underwriting talent and expertise.

Qatar Re and Centerbridge team up for £500mn Sabre bid: reports

Qatar Re and US-based investment firm Centerbridge have joined forces to lodge a £500mn bid for UK motor insurer Sabre, Sky News reported earlier this week.

According to Sky News, the Centerbridge/Qatar Re consortium is competing with buyout firm Warburg Pincus to acquire Sabre from its current private equity owners BC Partners.

It was also reported that BC Partners is also pursuing parallel plans for an IPO of the business, which the private equity firm believes could value Sabre at as much as £600mn, with investment banks expected to be appointed this month.

The motor insurer was first reported to have been put up for sale last month by the Evening Standard, which said that Evercore was advising on the sale.

BC Partners owns 72 percent of Sabre, while founder and CEO Angus Ball retains a 19 percent stake in the business.

BC Partners acquired the motor insurer in 2013 for £240mn from Binomial Group.

Sabre sells insurance through retail brokers and directly to consumers through its Insure 2 Drive, Go Girl and Drive Smart brands.

LSM appoints Towler as head of aviation reinsurance

Liberty Specialty Markets (LSM) has appointed Hans Towler as the successor to its current head of aviation reinsurance, Chris Rudd.

In his new role, Towler will initially work alongside Rudd, before taking control of the division after Rudd retires next March having run the aviation reinsurance unit since 2001.

He will report to LSM’s chief underwriting officer for reinsurance, Dieter Winkel.

Towler joins LSM with more than 30 years’ experience in the London aviation reinsurance market.

He moves over Willis, where he was a member of the senior management team of the aviation treaty division for seven years in what was his second time working for the broker.

Prior to that, he served an 11-year stretch at rival Aon Benfield, having already spent 13 years in the aviation excess of loss team at Willis Re.

Commenting on the hire, Winkel said: “Hans is a highly experienced and talented leader with considerable experience of aviation reinsurance.”

“His knowledge and strategic insight will ensure the division continues to perform successfully,” he concluded.

Heerasing named ACR deputy CEO

Asia Capital Re (ACR) has named former XL Catlin executive Bobby Heerasing as deputy CEO, the company has announced.

The news comes as the reinsurer’s previously announced $1bn all-cash sale to Chinese provincial government-owned entity Shenzhen Qianhai Financial Holdings and co-investor Shenzhen Investment Holdings nears completion.

Heerasing has spent the bulk of his career at Catlin and subsequently XL Catlin across a range of roles and has largely been based in Singapore since 2002.

He most recently served as regional underwriting and distribution director for the Asia Pacific region for XL Catlin. Prior to the merger, he spent nine years as Catlin's chief underwriting officer for Asia Pacific.

Meanwhile, the company noted that group chief executive Hans-Peter Gerhardt has indicated his intent to return to Europe in the “near future”, adding that Heerasing will assume the group’s top leadership roles in acting capacity upon Gerhardt’s departure.

Commenting on the appointment, chairman of the board Hsieh Fu Hua said: “Mr Heerasing’s extensive underwriting and management experience as well as successful track record, particularly in Asia, make him an excellent fit for ACR.”

“Both the Board and ACR’s new owners have full confidence that he will be a strong leader for ACR through its ownership transition as well as in the group’s continued evolution into a leading Asian risk solutions provider,” he added.

Last month, Chinese regulator National Development and Reform Commission approved ACR’s $1bn sale, providing a key step forward towards completing the deal.

WR Berkley forms two Mexican companies

WR Berkley has established a pair of operating companies as the US specialty carrier looks to boost its presence in the region.

Berkley International Fianzas México will specialise in surety business and will be led by Guillermo Espinosa Barragan, who was most recently regional director for a Mexican surety subsidiary of a leading insurer and has almost 25 years of experience in the P&C industry, chiefly in the surety space.

Meanwhile, Javier Garcia Ortiz de Zarate has been appointed general director of Berkley International Seguros México, which will focus on specialty commercial insurance products and services.

Garcia has over 15 years of experience in the P&C industry, largely focused on underwriting in Mexico and Argentina. Prior to WR Berkley, Garcia was regional director for P&C coverage in Mexico for a major insurer.

WB Berkley said that both companies will begin offering products to the Mexican market in the “next few weeks”.

Commenting on the announcement, WR Berkley president and CEO Robert Berkley Jr described Mexico as a “vibrant” market, adding that relatively low insurance penetration in the country provides “significant opportunities”.

“Guillermo and Javier both have extensive knowledge of the surety and insurance markets, respectively, in Mexico, and their experience will enable us to develop a superior offering of products and services tailored to the specific needs of clients in the region,” he said.

Argo appoints LatAm head

Argo has appointed Jorge Luis Cazar León as head of Latin America, the company announced earlier this week.

Cazar joins from Chubb, where he was most recently president of the carrier’s international accident and health division.

In his new role, Cazar will lead the Argo’s Latin America business, which includes insurance and reinsurance operations in Central and South America.

He will report to Jose Hernandez, Argo's head of international.

Prior to Ace’s acquisition of Chubb last year, Cazar had been regional president of Ace's Latin America operations since 2006, a position he retained for several months post deal completion.

Before joining Ace in 2001, he held leadership roles at Cigna International.

“Argo Group has built an impressive international platform, and I’m pleased to have Jorge join the team,” remarked Hernandez.

“His strong leadership skills and experience fully align with the international growth aspirations we have strategically established for the company,” he concluded.

Markel combines wholesale, global insurance divisions

Markel is merging its wholesale segment with its global insurance division into a new entity to be known as Markel Assurance.

The combined unit will be led by Bryan Sanders, current president of the wholesale excess and lines segment, and is expected to be operational by 1 January 2018.

The transition will be assisted by Britt Glisson, who will retire at the end of 2018 following a 40-year career in the industry, most recently as president of Markel's global insurance division which includes complex, risk-managed accounts.

The company said that the combined division’s annual gross written premium is around $1.8bn and will originate from casualty, professional liability and property/marine lines of business, adding that leads for each line will report to Markel’s chief underwriting officer Robin Russo.

Markel Assurance will be made up of underwriting teams based in 10 US offices as well as Bermuda, Dublin and London.

Markel co-CEO Richard Whitt said that the move “aligns our structure more closely with both production partners and customers”.

"We are committed to innovation and to making it easier to do business with Markel—establishing this new division accomplishes both of those objectives,” he added.