Daily Willis Review | 29 May 2018

Daily Willis Review | 29 May 2018
  • Swiss Re ends talk with SoftBank
  • NOAA predicts near or above normal 2018 Atlantic hurricane season
  • Mid-year renewals point to damaged business model: KBW
  • AIG appoints CEO of AIG China
Swiss Re ends talk with SoftBank
Global reinsurers Swiss Re and SoftBank Group have announced they have agreed to end discussions about a potential minority investment of SoftBank in Swiss Re.

Swiss Re has said it will continue with the implementation of its technology strategy which will combine in-house developments and third-party collaborations.

However, the company has said in this context it will explore business ideas between Swiss Re’s operative entities and the portfolio companies of Softbank.

Swiss Re first announced it was in talks with the Japanese conglomerate regarding a minority investment in February 2018, Intelligent Insurer has reported.

According to the report on the company’s Q1 results call, John Dacey, Chief Financial Officer, suggested that Swiss Re may be in talks with companies other than SoftBank in relation to selling a stake in the company.

NOAA predicts near or above normal 2018 Atlantic hurricane season
The National Oceanic and Atmospheric Administration (NOAA) Climate Prediction Center has forecast that there is a 75% chance that the 2018 Atlantic hurricane season will be near-normal to above-normal.

NOAA forecasters have predicted a 35% chance of an above-normal season, a 40% chance of a near-normal season, and a 25% chance of a below-normal season. The Atlantic hurricane season begins on June 1 and ends November 30.

Forecasters have said there is a 70% likelihood of 10 to16 named storms, five to nine of these storms could become hurricanes and one to four major hurricanes.

According to the Climate Prediction Center, two of the factors driving this outlook is the possibility of a weak El Niño developing in conjunction with near-average sea surface temperatures across the tropical Atlantic Ocean and Caribbean Sea.

Wilbur Ross, Secretary of Commerce, said: “With the advances made in hardware and computing over the course of the last year, the ability of NOAA scientists to both predict the path of storms and warn Americans who may find themselves in harm’s way, is unprecedented.”

Mid-year renewals point to damaged business model: KBW
According to Keefe, Bruyette & Woods (KBW), mid-year catastrophe reinsurance rate increases are falling behind those at the January renewals, pointing to the old business model being “permanently” damaged.

The majority of reinsurers who spoke with KBW confirmed that mid-year reinsurance rate increases were smaller than those seen at 1/1, Reinsurance News has reported.

At mid-year renewals loss-impacted accounts renewing flat to up 5%, and loss-free layers renewing at flat to down 5%.

While rates improved at the January renewals, it is clear that the abundant availability of capacity has hindered rate increases and limited the ability of the market to improve rates in a sustainable manner, the report said.

KBW analysts said: “We think the industry’s inability to materially raise rates after 2017’s huge catastrophe losses show that the old catastrophe reinsurance business model is “permanently” impaired, which (along with other factors) should drive sustained consolidation.”

AIG appoints CEO of AIG China
American International Group (AIG) has announced the appointment of Lisa Sun as Chief Executive Officer of AIG Insurance Company China, subject to regulatory approval.

Ms. Sun will report directly to Chris Townsend, Chief Executive Officer, International General Insurance and succeeds Eric Zheng who is leaving AIG to pursue other opportunities.

She brings with her more than 20 years’ experience in the industry and most recently she served as CEO of Mercer’s Hong Kong and South and East Asia Zone.

Mr. Townsend said: “China is a core growth market for AIG. I am pleased to welcome Lisa back to AIG to take on the important role of leading our China business.

“I look forward to working closely with Lisa and the team in this dynamic region.”