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EC News (7th June 2018)

  • Publish Date: Posted almost 6 years ago
  • Author:by Alan Jarque

Round-up of the weekly news and developments from the global (re)insurance market with stories from XL Group, Howden, Aon and more.

XL shareholders approve AXA takeover

AXA’s planned $15.3bn acquisition of XL Group has moved one step closer to completion after XL shareholders approved the deal.

 “We are pleased with our shareholders’ vote of confidence in supporting all matters, including the AXA transaction,”remarked XL Group CEO Mike McGavick.

“In AXA we have found a like-minded partner committed to innovation and moving our industry forward. Becoming a part of AXA provides unrivalled opportunity to accelerate our strategy with new strength and dimension. Based on today’s vote, it is clear that our shareholders share this same vision and opportunity for XL Group.”

Under the terms of the agreement, XL Group shareholders will receive $57.60 per share, resulting in an aggregate cash consideration of $15.3bn.

AXA said the deal would make it a leading global P&C commercial lines player across all lines, with combined gross written premiums of EUR30.2bn based on 2016 figures.

Following deal completion, the combined operations of XL Group, AXA Corporate Solutions, and AXA Art will be led by incumbent president and COO of XL Group Greg Hendrick who will assume the role of CEO of the combined entity and will join AXA Group’s management committee. Hendrick will report to AXA CEO Thomas Buberl.

In addition, XL Group CEO Mike McGavick will become vice chairman of the combined P&C commercial lines operations and also act as a special advisor to Buberl to advise on integration-related and other strategic matters.

Last month, XL Catlin outlined a number of senior departures and leadership changes as it gears up for its takeover. Among the departures is chief experience officer Paul Jardine, who is expected to leave the company at or shortly after the close of the transaction, along with Susan Cross, XL’s chief actuary, Kirstin Gould, general counsel, and chief human resources officer Eileen Whelley.

The deal is expected to close in the second half of 2018, subject to necessary regulatory approvals.

González to become Howden CEO

José Manuel González has been appointed CEO of Howden Broking Group.

Effective immediately, González will become deputy CEO of the business as part of the transition, taking on the full CEO title from 1 October 2018. 

He will take the reins from David Howden who has been the driving force behind the broker since it was founded in 1994. The reshuffle will see Howden remain as CEO of Hyperion, the group’s parent company.

González is currently CEO of Howden Iberoamerica, overseeing 700 employees across eight countries, a position he will retain alongside his new leadership role. He is also a member of the Hyperion Group executive committee.

He joined the firm 11 years ago, and since then has established the Howden Iberia business, which under his leadership, is now the fourth largest broker in Spain.

González will continue to report to Howden in his new role.

Commenting on the appointment, Howden said: “Following the investment by Caisse de dépôt et placement du Québec in our business, we have entered a new chapter of growth. As the group continues to evolve, it is time for me to focus more on our group strategy and ambitious growth plans.”

 “José Manuel has a real passion for our business and understands that it is the talent and the culture in the group that sets us apart and that our employee-ownership model ensures our focus is on delivering the best solutions for our clients as it is personal for us,”he added.

González said: “I feel both excited and privileged that David has asked me to take on this challenge. I know from personal experience that Howden has even greater potential than we have already achieved. I look forward to working closely with the management teams in each of our five regions to drive forward together our ambitious growth plans.”

Aon appoints Marcell as reinsurance solutions CEO

Aon has named Andy Marcell as CEO of its Reinsurance Solutions business.

Marcell joined Aon as head of strategy for Aon Benfield in 2015, before being promoted to president of the reinsurance broker in 2017. Prior to joining Aon, Marcell was CEO of Guy Carpenter’s US operations and head of its global facultative business. 

In his new position, which is effective immediately and based in New York, he will be responsible for managing the existing operations and growth strategy of Aon’s Reinsurance Solutions business as it begins its brand transition from Aon Benfield. 

He will continue to report to Eric Andersen, co-President of Aon.

The appointment comes just weeks after Aon announced that it was retiring the firm’s remaining business unit brands, Aon Risk Solutions and Aon Benfield, and will go-to-market under the unified brand of Aon, appointing Eric Andersen (most recently CEO of Aon Benfield) and Michael O'Connor (most recently CEO of Aon Risk Solutions) as co-presidents.

Aon has five specific global solution lines: Commercial Risk Solutions, Reinsurance Solutions, Retirement Solutions, Health Solutions and Data & Analytic Services.

Andersen commented: “After joining our firm three years ago, Andy has performed varied roles that have given him an in-depth understanding of Aon’s Reinsurance Solutions business. 

“He has successfully identified key growth initiatives and implemented strategies that will allow us to achieve profitable growth in a sector with challenging market dynamics. We are pleased that Andy agreed to take on this new position, and we are excited to have him leading the business. He will provide strong leadership and brings an international perspective to the role as we continue to grow.”

Axis Re unveils organisational changes and market expansion plans

Axis Re has announced a number of strategic and organisational changes as it looks to increase client satisfaction and drive profitable growth, whilst cementing future market leadership.

As part of its actions, Axis Re said that it will expand its products and markets, including broadening capabilities for structured reinsurance, growing its presence in Asia to strengthen global footprint, and dedicating a team to service specialty reinsurance businesses.

It is also announced the launch of Axis Re Strategic Partners, a dedicated team to serve clients and brokers, which it said will enable the firm to provide tailored solutions that are a direct response to client needs.

As part of the restructure, Axis Re will now organise around four major divisions – North America, EMEA, Asia, and Global Markets, supported by two enabling teams, Reinsurance Products and Reinsurance Services.

As such, the carrier announced a number of changes to its leadership team.

Jon Colello has been named president of North America, having previously served as president and CUO of Axis Re’s US operations.

Based out of New York, the division will include the carrier’s Bermuda platform. Peter Kiernan will continue in his position as president of Bermuda.

Les Loh has been promoted to president of Asia and will be based in Singapore. Loh previously served as deputy head of underwriting for the region.

The changes also include the creation of a Global Markets division, which will be home to Axis Re’s specialty and international business that operates through its Lloyd’s platform. Former head of accident and health reinsurance Rob Smart will lead the new unit as interim president whilst the carrier searches for a permanent leader.

Meanwhile, Megan Thomas, who joined Axis Re as CUO in April from AIG, will assume additional leadership of the newly created Reinsurance Products team alongside her current role.

In addition, Axis Re CFO and COO Rob Looney will take on additional responsibility for Reinsurance Services, based in New York.

Jan Ekberg will continue as EMEA president, with Axis Re’s Latin America business continuing to be a part of the EMEA division. Victoria Westerberg will remain as head of human resources. Both will continue to be based in Zurich.

Axis Re CEO Steve Arora remarked: “Today, the industry is rapidly changing – new forces are reshaping the market, new risks are emerging, protection gaps are growing and there is a need for fresh solutions that solve client needs,” 

“As the market transforms, we believe in the long-term potential of our business, and it is our ambition to achieve a leadership position which will allow us to deliver significant value to our clients, our brokers, and our communities. This is the next step in the evolution of Axis Re.”

As we grow, we will always maintain the character of Axis Re as an expert-driven and agile reinsurer. We will continue to invest in the audiences that matter most – our clients and our people – while growing a culture centred around performance and purpose and creating a positive impact in all that we do,”he concluded.

BHSI names Colahan as UK and Europe president

Berkshire Hathaway Specialty Insurance (BHSI) has appointed Chris Colahan as president of its UK and European operations.

Colahan moves into the new position having served as president of the Australasia region since joining BHSI in February 2015. Prior to that, he was at RSA for nearly a decade, most recently serving as its Asia CEO. His new role will be based in London.

In addition, BHSI has drafted in Mark Lingafelter to assume responsibility for the BHSI Australasia region from Colahan. Lingafelter joins from QBE, where he was most recently CUO for Asia Pacific. Before that, he spent more than 11 years as managing director at Chubb Insurance Company of Australia.

The move comes after former president and CEO of UK and Southern Europe, Tom Bolt, left BHSI to join AIG as its new general insurance CUO at the beginning of the year.

Commenting on the announcement, BHSI president and CEO Peter Eastwood said:“With more than 30 years of experience in the global insurance market, Mark is well qualified to lead our ongoing profitable growth in Australia and New Zealand. Chris has been a superb leader of BHSI in Australasia, and we look forward to adding his energy and expertise to our expanding European team and operations.”

O’Hara joins board of cyber start-up Envelop Risk

Industry veteran and former XL CEO Brian O’Hara has joined the board of start-up cyber analytics and underwriting firm, Envelop Risk.

Headquartered in London, Envelop Risk launched in April 2018 under the leadership of Jonathan Spry and provides delegated (re)insurance underwriting, and partners with cyber security firms for custom insurance products. Its underwriting and product development capabilities are enabled by a core artificial intelligence model, and augmented intelligence frameworks.

The start-up also has offices in Boston, Washington DC, and Bermuda.

O’Hara served as president and CEO of XL from 1994 until 2008 and as chairman of XL’s board of directors from 2008 to 2009.

In 1986, O’Hara joined XL Insurance (Bermuda) Ltd as its founding president and COO, having started his insurance career in San Francisco with The Royal Insurance Company and Employers’ Reinsurance Company. Under his leadership, by 2006, XL had revenues of $9.8bn and total assets of $59.3bn.

Welcoming O’Hara’s appointment, which is effective 31 May, Envelop Risk CEO Jonathan Spry said: "Brian’s extraordinary leadership as an executive and director transformed the insurance industry. He is an outstanding addition to our board, and we will benefit greatly from his domain expertise and counsel.

“Brian has helped form the excess casualty market back in the ‘80s while the market was hopelessly unprofitable. Cyber risk has parallels to the casualty markets of the ‘80s in its esoteric nature and growing demand. We will immensely benefit from Brian’s experience in building XL Capital from scratch.”

Meanwhile, O’Hara said: "I am honoured to serve on the Envelop Risk board of directors," 

"Envelop Risk is transforming the cyber insurance and reinsurance market through its innovative AI-based technology that addresses the complexity of cyber risk to more effectively quantify risk and tailor products."

ACHP exploring Asta stake sale

ACHP, the former owner of legacy outsourcing firm Pro Global, is “assessing options” to dispose of its 30 percent stake in Lloyd’s third party managing agent Asta.

ACHP holds one-third of the voting shares and 30 percent of the economic rights in Asta Capital, the parent of Asta Managing Agency.

In a 1 June Stock Exchange announcement, ACHP said it is “exploring and assessing options to dispose of this investment at the right time and at an appropriate price”.  

It added that it is cooperating with other Asta shareholders and management “to minimise any disruption to the Asta business”.

According to its website, Asta currently manages ten Lloyd’s syndicates, two Lloyd’s SPAs and two MGA clients, with over £1.4bn of underwriting capacity under its management. ACHP is the only Asta shareholder considering an exit.

In April 2016, ACHP sold all its operating subsidiaries, comprising various companies engaged in providing outsourcing and consulting services to the insurance industry, the principal company being Pro Insurance Solutions Limited.  Following the sale, its stake in Asta remains its sole asset.

ACHP directors believe that that the benefits to the company of being listed are now minimal or non-existent and that the listing no longer promotes the success of the company for the benefit of its members as a whole.

As such they are proposing to delist the company, citing excessive costs, an insufficient market capitalisation of £12.4mn, and the likelihood that after a sale of Asta, ACHP would be placed in a member's voluntary liquidation.

ACHP directors said they are “exploring steps to realise for shareholders the Company's investment in Asta”.

“Those steps may include a sale of the Company's investment in Asta, a share sale of ACHP as a whole, or a variety of other options. The directors' goal is to enter into a transaction before the end of January 2019 subject to any regulatory approvals that may be required,”they said.

ACHP has recommended that shareholders vote in favour of the proposal to delist at the annual general meeting on 26 June, which requires no less than 75 percent approval to go through. If the proposal goes through, ACHP expects to delist on 4 July.

The Hartford completes $2.75bn Talcott sale

The Hartford has completed its $2.75bn sale of its run-off life and annuity business, Talcott Resolution.

The Hartford chairman and CEO Christopher Swift said that the company’s exit from these businesses “significantly reduces our capital markets exposure”.

“We now have greater financial flexibility and a business mix that will improve our ROE and earnings growth profile over time,”he said.

Talcott has been acquired by a group of investors led by Cornell Capital, Atlas Merchant Capital, TRB Advisors, Global Atlantic Financial Group, Pine Brook and J. Safra Group.

“This completes our exit from the run-off life and annuity businesses and significantly reduces our capital markets exposure,”said Swift.

“We now have greater financial flexibility and a business mix that will improve our ROE and earnings growth profile over time,” he continued.

Total value of the sale to The Hartford is $2.75bn. This comprises total consideration of around $2.05bn, including cash paid by the buyers, a pre-closing cash dividend, debt included as part of the sale and a 9.7 percent ownership stake in the new company. In addition, The Hartford will retain Talcott Resolution tax benefits with an estimated GAAP book value of approximately $700mn, which will be available for realization subject to the level and timing of The Hartford’s taxable income.

Hartford Investment Management Company (HIMCO), The Hartford’s investment management group, has a five-year contract to manage a significant portion of Talcott Resolution’s investment portfolio. In addition, The Hartford will provide to and be reimbursed by Talcott Resolution for certain transition services for up to two years.

The new company will operate under the name Talcott Resolution. Around 375 of The Hartford’s employees have joined the new company and will be located in offices in Windsor, Connecticut, and Woodbury, Minnesota.

Ascent hires Harden as CFO

Former Canopius finance director Rob Harden has joined specialist MGA Ascent Underwriting as its new CFO.

During a career that spans more than two decades, Harden has held a number of senior finance and corporate development roles at the likes of Liberty Specialty Markets, Beazley, QBE, and Close Brothers. He most recently served as finance director of Canopius Managing Agents Limited for two years.

Harden’s hire follows the appointment of former Arch Insurance Europe CEO James Weatherstone as non-executive chairman in March. Both appointments come after the MGA received significant investment from private equity firm Preservation Capital last November to support its growth ambitions.

Ascent CEO David Umbers said: “Rob is an exceptionally talented individual with a mix of experience and financial expertise that will help propel Ascent toward its goals. 

“Huge opportunity exists within cyber and other emerging specialty lines. With Rob’s appointment, along with James’ and with Preservation Capital’s backing, the team is ready to take full advantage of that opportunity.”

Harden added: “I am delighted to be joining Ascent at such an exciting time in the development of the business. I look forward to working with David and the team to build further on the success of the business as we embark upon the next phase of our growth journey”.