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EC News Asia Edition (19th September 2018)

  • Publish Date: Posted over 5 years ago
  • Author:by Alan Jarque

Round-up of the latest news and developments from the Asian insurance market with stories from China Re, Lloyd’s, QBE and more.

China Re acquires Chaucer from The Hanover in $950mn deal

China Re has acquired The Hanover’s London-based specialty business Chaucer in a deal totalling $950mn.

The transaction includes a cash consideration from China Re of $865mn and a pre-signing dividend from Chaucer of $85mn, received in the second quarter of this year.

The announcement follows reports from The Hanover earlier this year that the company was exploring “strategic alternatives” for Chaucer, which it said could include a possible sale.

Chaucer underwrites across international marine and non-marine markets through its Lloyd’s Syndicate 1084, and has a leading underwriting vehicle for nuclear risks in Syndicate 1176.

Chairman of China Re, Yuan Linjiang stated: “The acquisition of Chaucer Group by China Re represents a significant milestone in our international development, as well as the next step following the establishment of China Re Syndicate 2088 at Lloyd’s and the Singapore branch.”

The cash consideration of $865mn, excluding the pre-signing dividend of $85mn, consists of an initial $820mn payable at closing and contingent consideration of $45mn to be held in escrow, which may be adjusted downwards if catastrophe losses incurred in 2018 are above a certain threshold.

The total consideration, adjusted for the pre-signing dividend, represents a multiple of 1.66 times Chaucer’s tangible equity as of 30 June 2018.

He Chunlei, president of China Re commented: “We are delighted to be acquiring a top quartile performer in the Lloyd’s market and respect senior management’s achievements to date in growing the business to this point. We look forward to working closely with John Fowle, Chaucer CEO, and the management team.”

The Hanover says the transaction will position it to continue the successful expansion of its domestic business, building out its strategic capabilities for its partners and customers.

President and CEO at The Hanover, John Roche said: “Our decision to sell Chaucer followed an extensive strategic review and careful consideration,”

Roche added: “This transaction will enable us to build on the growing momentum in our domestic property and casualty businesses, as we continue to advance our long-term strategy and deliver even stronger shareholder returns.”

The deal is structured so that, subject to certain exceptions, the risks and rewards of Chaucer’s business from 1 April 2018 until closing, are transferred to China Re.

Furthermore, The Hanover estimates the sale will result in a net GAAP after-tax gain which will be recorded in discontinued operations at sale execution.

Beginning in the third quarter of 2018, the earnings results for Chaucer operations will be reported as part of The Hanover’s discontinued operations for all periods presented in The Hanover’s financial statements.

Jeffrey Farber, executive vice president and chief financial officer (CFO) at The Hanover remarked: “This transaction represents an attractive return for shareholders, providing us with greater financial flexibility to invest in the growth of our U.S. agency business and return capital to our shareholders through a variety of options including continued dividends, stock buybacks, debt management, and special dividends,”

“The sale will reduce catastrophe exposure to extreme global events, while enhancing our return on equity potential. We look forward to our continuing successful partnership with Chaucer through the close of the sale and the transition.”

Lloyd’s names Neal as CEO

Lloyd’s has named John Neal as its new CEO, succeeding Inga Beale.

The appointment was unanimously approved by the council of Lloyd’s and Neal will assume his new role on 15 October 2018.

Neal’s entire career has been associated with the Lloyd’s market, most recently serving as group CEO of QBE. He was also an underwriter and later CEO of the Ensign Managing Agency.

Neal brings extensive experience as a global CEO with a track record as a highly effective leader who can deliver business transformation.

Commenting on the appointment, chairman of Lloyd’s Bruce Carnegie-Brown commented: “On behalf of the market, I am delighted to welcome John to Lloyd’s. His wealth of experience both at Lloyd’s and internationally, including the US, will bring new insights and fresh thinking at a challenging time for the global insurance industry.

"John will continue Lloyd’s focus on delivering sustainable profitability, through a combination of underwriting discipline and market modernisation. An immediate priority will be the successful launch of Lloyd’s Brussels subsidiary which will enable Lloyd’s to continue serving its customers in the European Economic Area after Brexit.

“I am grateful to Inga for the leadership she has provided to Lloyd’s over the past five years, during a challenging time for the market. She has driven the market’s modernisation programme, the success of which is evident not least in the recent rapid increase in electronic placement volumes and the launch of the Lloyd’s Lab.”

Commenting on his appointment, Neal added: “I am thrilled to be offered the opportunity to lead Lloyd’s, and will do so with the same excitement I felt when I first stepped into the underwriting room back in 1985.

"The insurance sector is facing many challenges. For 330 years the Lloyd’s market has demonstrated its ability to innovate and adapt, and I look forward to playing my part to ensure this unique marketplace remains at the forefront of global commercial corporate and specialty insurance and reinsurance.”

The appointment is subject to approval and consent from the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).

QBE names Costigan as executive GM of consumer & retail partnerships

QBE has appointed Frank Costigan as its new executive GM of consumer and retail partnerships.

Costigan will join the company in November.

Prior to joining QBE, Costigan held executive roles at the likes of; Berkshire Hathaway Specialty Insurance and IAG, before joining Youi in 2016.

As well as Costigan, QBE made several other appointments to the company recently.

Previously interim executive GM of consumer and retail partnerships, Eleanor Debelle has been appointed chief human resources officer. Her predecessor in this role, Sally Kincaid, has moved to a group HR position.

Having held the role as the division CFO on an interim basis since Inder Singh’s move to group CFO in April, Chris Killourhy has been formally appointed to the position.

Renee Roberts was named as COO in June with interim COO Steve Raynor departing from the business.

Fiona Hayes-St Clair was appointed to the new position of chief strategy officer in July.

Nexus acquires Huntington Underwriting

Specialty managing general agent (MGA) Nexus Group has completed its acquisition of Huntington Underwriting Limited (HUL), a structured solutions underwriting manager and associate of the Singapore headquartered services group Huntington Group.

Since 2014, HUL has operated out of Labuan International Business and Financial Centre, Malaysia, and is licensed by the Labuan Financial Services Authority.

It currently oversees a portfolio of structured solutions business spanning Asia that comprises a mix of both proportional and non-proportional reinsurance.

Following the acquisition, the business will be rebranded and trade as Nexus Structured Solutions, although it will continue to be run by HUL’s founders, Gerard Pennefather and Anthony Egerton, who will become chairman and managing director of Nexus Structured Solutions, respectively.

Egerton has over 35 years of experience in re/insurance and structured finance, 20 of which have been spent in Asia, and has previously served as president, Asia-Pacific for Lloyd’s of London, based in Singapore.

Pennefathe also boasts 35 years of experience in fields such as insurance, corporate finance, banking and consultancy.

Nexus added that its founder and group CEO, Colin Thompson, head of insurance and reinsurance, Mike Sibthorpe, and group CFO and COO, Stuart Rouse, will also be appointed to the Board of HUL, subject to requisite approvals.

Thompson commented: “Following the acquisition of HUL, the Nexus Group now has an Asian presence in Hong Kong and Malaysia. This strengthens our offering to local brokers and markets as we continue to focus on Asian strategic initiatives, while moving us closer to our ambition of becoming the largest MGA in Asia over the next three years.

“Gerard and Anthony are highly credible, well known and respected individuals within the Asian market. With many years of experience between them, they will act as excellent ambassadors for expanding our footprint in Asia.”

He continued: “The acquisition of HUL also brings in a new, growing and highly specialised class of business into the Nexus Group. Demand for highly tailored reinsurance solutions is growing internationally, with structured solutions increasingly recognised as effective tools for managing volatility.

“We are delighted to be adding to our expertise and scope in this dynamic field. This acquisition marks the Nexus Group’s second acquisition of 2018 and eleventh in total, with further deals in the pipeline.”

Egerton also stated: “We are delighted and proud to be joining the Nexus Group. It has been an exciting four years developing HUL with the excellent support and encouragement of our clients, brokers and reinsurers.

“We are now looking forward to contributing to Nexus’ development plans here in Asia. This will involve delivering a broader range of products and services to the marketplace, whilst continuing to harness the latest technologies in data analytics and risk modelling.”

Duverne appointed chair of the IDF

The Insurance Development Forum (IDF) has named Denis Duverne as chair of its steering committee, effective 11 September 2018.

Duverne is chairman of AXA Group, having held senior roles including CFO and deputy CEO, at the global insurer since 1995. He has been a member of the IDF steering committee since 2016.

Duverne succeeds Stephen Catlin, founder and former CEO of Catlin Group, who has led the IDF as chair since its creation in 2016.

During his tenure, the IDF has supported several innovative insurance developments, including the Centre for Global Disaster Protection and the G20 InsuResilience Global Partnership by the UK and German governments. It has also driven critical initiatives on enhancing open source and transparent risk modelling, market-enabling regulation and partnerships with international institutions.

MSIG partners with InsurTech startup Anapi

MSIG Insurance (MSIG) in Singapore has partnered with insurtech startup Anapi to offer innovative insurance protection through digital partners via an easy-to-integrate API service.

Anapi’s smart API hub sits between MSIG and the digital partners to enable the seamless connection between the two.

API-first design means that digital partners can test and embed relevant insurance propositions within their services in a matter of days compared to the usual months.

The API hub provides additional integrated services such as machine learning, data analytics and process automation to facilitate a frictionless customer experience.

To kick-start the collaboration, MSIG will be launching a flight delay insurance product through a digital partner’s travel assistant mobile app allowing customers to purchase flight delay insurance cover to Bangkok via the app from just S$2. As long as there is a departure delay of at least one hour, the flight delay claim will be auto-triggered. The policyholder will receive their claims payout via PayNow without the need to notify MSIG or submit any documentation.

Both companies will work together to roll out a wider range of insurance products that can be customised and easily integrated with a host of other digital services. This will ultimately benefit customers through the delivery of right-sized insurance solutions to them at the right time.

Michael Gourlay, CEO of MSIG Insurance (Singapore) commented: “We are living in a fast-changing world where technology is reshaping the nature of insurance. Customers’ needs are not all the same and our products can now be personalised. And for many, the first port of call is the digital marketplace,”

“Our collaboration with Anapi, who are at the forefront of InsurTech, will reshape how personalised insurance as smart contracts can be offered and easily integrated with digital services. Adopting new plug-in technologies such as APIs will enable us to provide an Always-On service and embed insurance into the digitally enabled ecosystems.”

George Kesselman, co-founder and CEO of Anapi said:  “We believe insurance is a powerful growth tool for any digital business as it significantly increases both customer conversion and retention. The purpose of insurance is to reduce consumer anxieties and worries by managing the underlying risks. Digital services have a unique set of risks, and our tech stack frictionlessly delivers relevant insurance as a service to transfer those risks, in partnership with leading insurers,”

We are on a lookout for insurers that are aligned both to our vision as well as our core values. MSIG stood out with their commitment to digital transformation as well as an amazing team. We are excited to partner with MSIG to continue pushing the boundaries of insurance.”

Willis Towers Watson expands Burnett’s role as head of Asia to include CRB in Asia

Willis Towers Watson has appointed Scott Burnett as head of corporate risk & broking (CRB) for Asia, effectively immediately.

Burnett, who is also currently head of Willis Towers Watson’s Asia region, will now also head up the overall operations of CRB Asia. 

He will continue to be based in Singapore.

The appointment is part of a key business drive to grow Willis Towers Watson’s bench strength and drive its CRB growth ambitions in Asia.

Commenting on the appointment, head of international and CRB international, Adam Garrard said: “We see tremendous opportunities to increase market penetration and continue our business growth in this region. Scott is an astute strategist who sees the future very clearly and aligns strategies accordingly. I am confident that he will apply these attributes in leading and strengthening the CRB teams in Asia, bringing superior solutions to our clients.”

Burnett said: “There are key opportunities for us to accelerate our focus on directly serving clients in Asia with an end-to-end value proposition. Today’s global business environment continues to evolve with ever increasing speed. New technologies, diverse demographic and societal changes, and their impact on the future of work are all transforming the way our clients do business.  As trusted risk advisors, it is our role to anticipate and help mitigate risk for our clients. Willis Towers Watson is well positioned to provide a truly holistic perspective on our clients’ risk management needs and deliver the necessary solutions to mitigate the risks they face in Asia,”

He added: "Whether it is cyber security risks, futureproofing the talent workforce or strengthening their enterprise risk resilience to drive growth, Willis Towers Watson has global and local consultants with rich expertise in Asia, including P&C, transportation and financial lines. For the next phase, we will continue to deepen our risk analytical and advisory capabilities, and deliver innovative and integrated solutions that will address the risk and people challenges our clients face.”

In Asia Pacific, Willis Towers Watson is present in 15 markets and has over 7,000 employees servicing key industry sectors of its clients.

Lloyd’s seeks Asia IP insurance expansion through Singapore deal

Lloyd’s Asia has signed a memorandum of understanding (MoU) with the Intellectual Property Office of Singapore (IPOS) to expand the portfolio for intellectual property (IP) insurance products, enabling innovating companies more protection for their intangible assets.

According to the press release for the signing, IP insurance will allow companies to take on a larger capacity in managing and mitigating their risks as they commercialise their intangible assets and IP, and venture into global markets.

Touching on the MoU signing in her opening address, Indranee Rajah, minister in the prime minister’s office, second minister for finance and second minister for education highlighted how the rise of litigation is impacting businesses. She said: “Prohibitive litigation costs have always been a concern amongst enterprises looking to enforce their IP rights, and this is particularly so for enterprises seeking to expand into the global market.”

Explaining the benefits to come from the MoU, Rajah said that IPOS and Lloyd’s Asia will be able to jointly promote IP insurance “as a strategic tool to help innovative enterprises manage and mitigate IP litigation expenses.”

Angela Kelley, country manager, Singapore for Lloyd’s Asia commented: “Intangible assets such as IP now account for a significant share of corporate value for many companies. Businesses can safeguard this highly valuable asset through IP insurance to help manage the risks of IP infringement, including defraying legal costs of possible subsequent IP rights enforcement”

Daren Tang, chief executive of IPOS said: “Our aim is to build Singapore’s innovation ecosystem so that ‘from Singapore and through Singapore’ IP from anywhere in the world can use this country as a base to commercialise their IP and access growth markets in Asia and beyond.”

Under the MoU, both parties will organise a series of seminars to promote Singapore as a centre for excellence for IP commercialisation, IP rights protection and the availability of underwriting expertise for IP insurance, with the aim of reaching out to 100 companies over the next two years.