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EC News (13th July 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 Novae, Chubb, AmTrust and more. 

Novae bloodstock team to establish MGA with Castel

Novae’s bloodstock team have exited the Lloyd’s carrier to establish an MGA with Castel.

The new MGA, which will be run through the Castel Underwriting Agencies platform by David Higgins and Tara Woodward, will be backed by Novae which will provide full capacity for the start-up as it looks to retain its participation in the equine insurance market.

Novae said that the move had been mutually agreed and was subject to approval by Lloyd's.

The carrier explained that it had chosen to transition towards an MGA model due to the relatively small size of its bloodstock book with annual gross written premiums in the region of £5mn.

It added that the team tended to write following lines and that the market is a "less mainstream" line of business for the company.

Whilst at Novae, Higgins and Woodward wrote policies covering equine mortality, equine infertility, stallion loss of income, prospective foal and life-saving surgery costs for thoroughbred risks such as racehorses, stallions at stud, broodmares and young stock, as well as high value showjumpers, dressage and eventing horses.

"This marks a further strengthening of the relationship between Novae and Castel, which has grown in recent years with Novae providing capacity support to Castel on a number of other lines of business,” Novae said.

The move follows the announcement of Axis’ £468mn acquisition of Novae last week.

In May, Novae said it had withdrawn from financial institutions, professional indemnity, general liability reinsurance and motor reinsurance, citing inadequate future profitability prospects.

Later that month, Sompo International agreed to acquire the renewal rights to Novae Syndicate 2007’s financial institutions portfolio.

Protector estimates £50mn Grenfell tower claim

Protector Forsikring, the insurer for the tragic blaze that engulfed Grenfell Tower last month, has said that it expects gross claims of £50mn from the disaster.

In its second quarter investor presentation, the Norwegian carrier warned that the preliminary estimate remains “highly uncertain” and that it will “take years” for a full picture of claims levels to materialise.

It said that the £50mn gross estimate includes both property, liability and other potential related costs.

Protector, which provides insurance for Royal Borough of Kensington and Chelsea and the management company, noted that the bulk of claims will be picked up by its reinsurers, with its net exposure expected to total around £2.5mn.

According to reports, Munich Re is the lead reinsurer on Protector’s property reinsurance programme, with Willis Re the reinsurance broker.

The primary cover for the council was placed by London-listed broker JLT.

Cunningham Lindsey has been hired to handle claims, while Protector has picked law firm Kennedys to act as legal counsel on regulatory issues.

The Grenfell Tower blaze is said to have killed at least 80 people although police have said that the final death toll will not be known until at least the end of the year.

The fire started after a fridge freezer malfunctioned, with the fire spreading up one side of the building externally, before engulfing the entire 24 storey block of flats.

The tragedy has sparked an inquiry into the cladding installed on Grenfell Tower in a recent renovation, with experts saying a more fire-resistant type could have been used. Both the cladding and insulation on the outside of the building failed all preliminary tests by the police.

Stewart to lead Chubb’s global cyber risk practice

Chubb has announced that it is making its global cyber risk practice a standalone business under the leadership of Bill Stewart, who has been named division president of the unit.

Stewart, who moves over from consulting firm Booz Allen Hamilton, will be responsible for leading the development and implementation of Chubb's strategy to deliver the next generation full suite of P&C cyber insurance offerings globally.

He will also work with chief information security officer David Cowart to develop Chubb's cyber security best practice.

Stewart will be based in New York and will report to Chubb Group vice chairman John Lupica.

"The number and complexity of cyber exposures have grown exponentially over the last few years," remarked Lupica.

"The decision to make our cyber risk practice a standalone business under a forward-thinking leader like Bill adds another level of depth and thought leadership to Chubb's offerings in this segment,” he added.

Working with Stewart will be Michael Tanenbaum who will lead the North America cyber practice as executive vice president and Tim Stapleton, a senior vice president and cyber product manager who is also technology practice lead for the overseas general insurance division who will lead the cyber practice outside North America.

They will both be responsible for coordinating cyber risk underwriting, services and operations in their respective regions.

Tanenbaum will report to both Stewart and North America financial lines division president Scott Meyer. Meanwhile, Stapleton will report to Stewart and P&C COO Tim O'Donnell, who is also financial lines executive vice president of overseas general insurance.

Stewart most recently served as executive vice president at Booz Allen Hamilton, where he was responsible for the firm's commercial cyber business. He joined the company in 1989 as an information assurance business leader, before heading the commercial financial services business from 2013 to 2015 and then rising to leading the overall commercial cyber practice.

AmTrust inks adverse loss development deal with Premia

AmTrust has entered into an adverse loss development cover with Arch-owned reinsurer Premia Re.

The agreement will see the reinsurer provide up to $1.025bn of coverage for adverse net loss reserve development, attaching when losses exceed approximately $5.96bn of AmTrust’s net loss reserves and extending $400mn in coverage above AmTrust's $6.59bn of carried loss reserves as of 31 March.

AmTrust said the deal became effective on 30 June and covers exposures through 1 April 2017.

The carrier said that it will pay $675mn to Premia in consideration of the agreement, of which $50mn is for a premium payment for the protection above the carried loss reserves of $6.59bn.

AmTrust will also experience an expense liability of around $11mn.

The firm noted that the transaction will result in a one-time $61mn pre-tax charge to second quarter net income.

The move follows a turbulent few months for the carrier, which has included a delay in its 2016 results and an announcement that it would have to restate its financials between 2014 and the first nine months of 2016 and a note from KBW analysts speculating that AmTrust may need to take a nine-digit reserve charge in order to restore investor confidence.

Commenting on the transaction, AmTrust chairman and CEO Barry Zyskind said: "By entering into a reinsurance agreement, we are providing confidence to all of our stakeholders that we are well insulated from any potential reserve volatility in the future.”

Meanwhile, the carrier’s CFO Adam Karkowsky added: "This agreement supports our goal of reducing exposure to volatility and creating more certainty and confidence in our future financial performance."

We are taking a thoughtful, conservative approach to the ongoing management of our balance sheet, consistent with that of property and casualty insurance providers of our size, scale and capacity."

Run-off reinsurance vehicle Premia Re was launched at the beginning of 2017 following a $510mn initial capital raise and is majority owned by Arch Capital and private equity firm Kelso & Company. It is led by former Chubb exec Bill O'Farrell.

Ensurance strikes partnerships with Swiss Re, XL Catlin

Australian insurance company Ensurance has announced that its managing general agency (MGA), Ensurance UK, has received Lloyd’s coverholder status and has formed partnerships with Swiss Re Corporate Solutions and XL Catlin as part of its global growth strategy.

Ensurance UK will initially specialise in construction and engineering insurance.

Through its new partnership with Swiss Re Corporate Solutions, the commercial and specialty arm of Swiss Re, Ensurance will offer a variety of construction and engineering insurance products in the UK and certain parts of the EU, with Ensurance targeting to insure construction and engineering contracts up to £100mn.

"'Not only has the company successfully expanded from the Australian market into the UK market in a short period, but by partnering with Swiss Re Corporate Solutions we will now receive significant exposure globally,” remarked Ensurance managing director Stefan Hicks.

"Swiss Re Corporate Solutions have very few partnerships of this nature globally, and this exclusive agreement has been achieved due to the experienced Ensurance UK team, headed by CEO Tim James, a former director at one of the world's largest insurers specialising in construction and engineering,” he added.

The company has also partnered with XL Catlin. As part of the agreement, Ensurance UK will initially provide a bespoke construction insurance product to high net worth UK domestic clients.

This product, whilst niche, provides Ensurance UK with the ability to expand its clientele from the broker market to the insurer market, essentially attracting insurers as clients,” remarked Hicks.

It’s a significant opportunity to sell Ensurance products through existing and established large books of business operated by some of the largest insurers in the UK,” he continued.

In addition, Ensurance UK has gained the Lloyd's coverholder status allowing it to issue insurance documents on behalf of Lloyd’s syndicates, a status it now has in both Australia and the UK.

Hicks said: “This allows the company flexibility to use different Ensurance centres to expand our footprint wider, using our Lloyds bespoke products, into global regions.

Pleasingly we achieved the coverholder status for Ensurance UK after only nine months, which again speaks volumes for the calibre of the team driving the Ensurance UK business.”

Zurich proposes former Swiss Re CEO Liès as chairman

Zurich has nominated former Swiss Re CEO Michel Liès as its next chairman.

The company said that it will put Liès forward to succeed current chairman Tom de Swaan at its upcoming AGM in April.

Liès stepped down as CEO of Swiss Re in July 2016 after four years at the helm of the company and having served a total of 38 years with the reinsurer.

Commenting on the news, De Swaan said: “[Liès] brings a wealth of skill and insight gained from a very successful career in our sector, which, combined with his experience at the helm of an important Swiss company, make him the ideal next chairman”.

Liès joined Swiss Re in 1978, initially working in the life market before transitioning into the non-life sector in 1994. In 2000, he was appointed head of European property and casualty at Swiss Re before being promoted to head of client markets and a member of the Swiss Re executive committee in 2005. Following a short stint as the reinsurer’s chairman of global partnerships, he was named group CEO in 2012.

Externally, Liès has served as chairman of the Global Reinsurance Forum and a board member of the Geneva Association.

Meanwhile, De Swaan has been Zurich chairman since 2013, having joined the Zurich board in 2006.

I am delighted to be joining Zurich, a business I have held in high regard for many years. I have worked extensively with insurance companies and understand the challenging and exciting landscape we are now in. I am also equally aware of Zurich’s strengths and the opportunities that lie ahead for it and look forward to contributing to it achieving its goals and realizing its full potential as a leader in the sector,” remarked Liès.

Beach hires Shaw from Aon Benfield

Beach & Associates has appointed Aon Benfield’s Daniel Shaw as senior vice president to lead the (re)insurance broker’s wholesale property and casualty treaty unit in London.

He will report to Jason Howard, CEO for London and International.

Shaw moves over from reinsurance broker Aon Benfield, where he has served as a North America casualty treaty reinsurance broker for past 17 years.

Prior to Aon, Shaw served was an account manager for the US property treaty team at EW Blanch. He began his broking career at CE Heath, placing Caribbean and Latin American property treaty business.

Commenting on the appointment, Howard said: "The broking market is changing. It faces severe challenges. To overcome them, brokers will need to innovate their traditional business models and focus on delivering independent, unconflicted advice and transactional expertise."

He added that Shaw’s experience and deep knowledge of the casualty treaty sector would “significantly enhance” Beach’s proposition and would help “cement” its position in the market .

Beach has offices in Bermuda, London, Zurich, Toronto, Burlington NC, Chicago and New York.

Willis Towers Watson appoints Jackson to lead GB financial lines

James Jackson has been appointed as head of financial institutions for Great Britain (GB) within Willis Towers Watson’s FINEX division.

FINEX is the financial, executive and professional risk speciality division of Willis Towers Watson’s corporate risk and broking segment.

In his new role, Jackson will lead the GB-based teams that deliver FINEX expertise and products to financial institutions clients across a range of geographies.

Jackson was previously a regional leader within the US FINEX financial institutions team.

He succeeds Paul Search, who has been appointed the division's head of client engagement and risk insight for the rest of the world.

The broker uses the term GB to describe the territorial responsibilities of its UK-based executives, but excludes the UK province of Northern Ireland. Willis coordinates its Northern Irish operations through Dublin, Ireland.