| P&C industry reserves $4.3 billion deficient in 2017: Morgan Stanley |
| Property and Casualty (P&C) industry reserves deteriorated year-on-year to a deficit of $4.3 billion, according to an actuarial analysis by Morgan Stanley. This marks a further decline from the $2.5 billion deficiency Morgan Stanley estimated for 2016, representing an overall YoY deterioration of $1.6 billion, Reinsurance News has reported. Analysts have estimated an actuarially reasonable range of reserves between $605.8 billion and $633.7 billion, and the report found that at the 34th percentile of this range, industry carried reserves of $615.4 billion, which were $4.3 billion below the midpoint. The report found that deficiencies are now present in five of the top six reserve lines, including workers’ compensation, personal auto liability, other liability occurrence, other liability claims-made, and commercial auto liability. Morgan Stanley said that the bulk of the decline was in the other liability lines, which deteriorated $3.7 billion year-on-year. The firm said that it does not consider large industry reserve releases to be sustainable, and forecasts slower reserve releases in 2018 and 2019. |
| Rapidly changing industry calls for paradigm shift in ERM: A.M. Best |
| According to A.M. Best, if companies are to keep up with the pace of technological change and advancements, the globalization of capital markets and other changes, they must continually refine and enhance their enterprise risk management (ERM) programs. The ratings agency has updated Best’s Credit Rating Methodology, in which ERM is now formally recognized as one of the core building blocks in developing a credit rating opinion on an insurance company. Technological advancements open up new horizons in risk management and the assessment and mitigation of cyber risk poses “a myriad of challenges for insurers”. The ratings agency said “cyber risk brings insurers’ operational risk to the fore, and for those insurers underwriting cyber risks, a focus on coverage limits and aggregation risks from industries is critical. “Insurtech and fintech innovations and the growing use of third-party vendors for data analytics add layers of cyber and infrastructure risk, requiring that companies expand and enhance their ERM,” the report said. |
| Everest Re estimates $100 million in catastrophe losses in Q1 |
| Everest Re has estimated it will incur $100 million in catastrophe losses, net of reinsurance recoverables and reinstatement premiums, in Q1 of 2018. The majority of losses come from the California wildfires in October and December 2017, and other related events. Currently, the industry loss estimate from the Northern and Southern California wildfires is projected at over $13 billion, a rise from initial loss estimates of between $8 billion and $10 billion. The company has also made a change to its reporting of operating income, a non-GAAP financial measure. Beginning Q1 2018, Everest Re will adjust its operating income to exclude foreign exchange gains and losses. According to the report, this is because the company believes the impact of foreign currency movements on income is not indicative of the performance of the underlying business in a particular period. |
| Volante appoints Underwriting and Franchise Director |
| Volante Global has announced the appointment of Jerry Probert as Underwriting and Franchise Director, Intelligent Insurer has reported. In his new role, Mr. Probert will be responsible for managing the firm’s global underwriting strategy, and to monitor technical and business performance across all portfolios. He brings with him more than 35 years of underwriting experience and joins the managing general agent from QBE’s European operations, where he served as Director of Europe. Talbir Bains, Founder and Chief Executive Officer of Volante, said: “Jerry is a fantastic addition to the Volante team and brings an outstanding level of underwriting expertise and leadership experience to the role. “His appointment underlines our continued commitment to achieving and maintaining the highest standards of underwriting excellence across the Group.” |
Daily Willis Review
Daily Update from Willis
Daily Willis Review | 13th April 2018
CCRIF looks to scale up parametric protection, add new products
The CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility) is ten years old this year and is it looks to the future the parametric insurance facility wants to better serve its members by scaling up the protection it offers, adding new products, and ultimately expanding the CCRIF risk pool.
CCRIF provides Caribbean and Central American nations with parametric disaster insurance protection, against perils including hurricanes, earthquakes and extreme rainfall.
The risks are structured and underwritten using parametric triggers and the diversified risk pool that is created is then backed by reinsurance from the traditional and sometimes alternative market.
The larger and more diversified the CCRIF risk pool becomes the greater the economies of scale that it can pass on to its policyholder members. So there are benefits to the scaling up beyond just making more coverage, or different parametric risk transfer products available.
Size really does matter when it comes to approaching the global reinsurance and capital markets, meaning the larger the CCRIF risk pool becomes, the greater the efficiencies of global risk capital can be, to the benefit of the members.
At a meeting to celebrate the tenth anniversary and look ahead to the future, key CCRIF members and stakeholders explored the opportunities to scale up the parametric insurance facility.
They discussed various ways to increase scale, including providing more coverage to existing members, adding new members to the risk pool, and offering new products or covering new perils.
In terms of the amount of coverage that is available, currently it’s insufficient to meet larger Caribbean or Central American countries disaster risk transfer and financing needs. Countries such as Jamaica really need tens if not hundreds of millions of dollars in payouts if a truly major hurricane or earthquake struck and the CCRIF policies are currently not supporting that level of coverage.
Adding new members will benefit all the existing ones as well, through the broadening and diversification of the risk pool, as well as through the reinsurance synergies the CCRIF could then achieve.
New products also broaden the risk pool, but more importantly they can meet the needs of a wider range of potential cedents, beyond just the countries themselves.
Product ideas discussed at the CCRIF meeting included drought insurance, cover for industries such as agriculture and fisheries, as well as coverage for public utilities such as power and telecoms, and covers for other industries such as tourism.
The CCRIF could benefit from the use of real-time monitoring stations around the region it covers, for disaster related metrics such as wind-speed, enabling more localised parametric insurance to be offered.
Participants at the CCRIF meeting also discussed how the parametric insurance facility could broaden its research and development capacity, provide in-country support for strengthening national disaster risk management strategies, and using its risk models and expertise to assist country decision-making processes around disaster risk reduction.
CCRIF has also launched an Online Policy Forum as it looks to engage members and stakeholders identifying its path towards the future and how it can better support disaster risk management in the region.
CCRIF CEO, Isaac Anthony commented, “We hope to use the online forum to discuss key topics related to risk financing, provide updates on CCRIF among others and indicated that the Forum will provide a unique space for officials to engage in open and frank discussion and will provide an opportunity to develop solutions to address common challenges in keeping with the spirit of innovation and building a resilient Caribbean.”
Scaling up the CCRIF offering and expanding the parametric risk pool will enable the facility to make greater use of the efficiencies of risk capital, both reinsurance and from the capital markets, also making instruments such as catastrophe bonds more cost-effective and enabling the ILS community to better support CCRIF’s strategic objectives.
Daily Willis Review | 12th April 2018
| Accredited partners with American Team Managers |
| A Randall & Quilter subsidiary, Accredited Surety & Casualty Company, has begun a new underwriting partnership with American Team Managers (ATM). Beginning April 1, Accredited has become the issuing carrier on behalf of ATM, which is an independently-owned insurance managing general agent and wholesaler that specialises in providing cargo insurance. As part of the partnership, Accredited will act as the insurer on behalf of ATM, on a fully reinsured basis, as well as a conduit between the company and its insurance capital providers. The cargo insurance program provides coverage in 12 U.S. western states with limits of up to $250,000. Todd Campbell, the President and Chief Executive Officer of Accredited, said: “We are delighted to be working with ATM, a leading MGA in the inland transportation sector and with a well-deserved reputation for excellence and superior service.” |
| PERILS updates Industry Exposure Database |
| PERILS, the Zurich-based provider of industry-wide catastrophe insurance data, has released its 2018 update of the PERILS Industry Exposure Database (IED). The update for each individual county has been produced from scratch and is based on exposure information from more than 100 national and international insurance companies. According to the database, the biggest exposure is the European windstorm, with 190 million individual risks representing €55 trillion ($68 trillion) of insured property values. This is compared to January 1, 2017, where the overall European windstorm sums insured increased in Euros by 2.1%, while in U.S. dollars the increase was 16.5%. Australia, Italy and Turkey have experienced year-on-year variations, the release said, ranging from +7.4% to +17%. Luzi Hitz, Chief Executive Officer of PERILS, said: “Our bottom-up approach ensures that the most current portfolio information is incorporated into the IED, and that changes and corrections in company sums insured are taken into account on an annual basis.” |
| Sompo launches new global retail insurance platform |
| Sompo International has launched a new retail platform to facilitate the integration of all the operations of Sompo Holdings outside Japan. Currently, Sompo has 45 licensed entities across 32 countries throughout Europe, North and South America, Asia and Oceania, the Middle East and Africa. The launch of the new platform is part of the company’s plans to bring all international businesses outside Japan under the ownership of Sompo by 2020, the release said. As part of the new platform, Sompo will establish a new ecosystem function in which it will share expertise across countries and collaborate on the development of future products and underwriting models. The company has also formed a new retail executive team which will be led by John Charman, who has been appointed Chairman and Chief Executive Officer. Kengo Sakurada, President & CEO of Sompo Holdings, said: “Our vision is to build the first truly global integrated insurance and reinsurance business.” |
| QBE announces senior management changes |
| QBE Insurance Group has announced a reshaping of its senior management team with a series of appointments. Inder Singh, Chief Financial Officer for QBE Australia and New Zealand, is appointed Group Chief Financial Officer, replacing Michael Ford. Peter Grewal has been appointed Group Chief Risk Officer. He joins the company from Swiss Re, where he held the role of CRO of its reinsurance operations. Liam Buckley, who currently serves as Interim Group Chief Risk Officer, will take on the new position of Group Head of Culture and Talent. Matt Mansour, who joins from Barclays, where he served as Chief Technology Information Security Officer, is appointed Group Chief Information Officer. Anders Land has been formally appointed Group Head of Internal Audit, after eight months acting in this role. Pat Regan, Group Chief Executive Officer, said: “We have commenced an accelerated reshaping of the company’s strategic focus to create a stronger and simpler QBE.” |
Daily Willis Review | 10th April 2018
| AIR Worldwide partners with RenaissanceRe for probabilistic model |
| AIR Worldwide has partnered with RenaissanceRe to further refine the industry’s first fully probabilistic model for extreme liability events. As part of the venture, AIR Worldwide is producing portfolio-specific casualty losses based on its exposure management application, Arium. Arium has a scenario-based loss assessment framework that enables companies to systematically measure portfolio loss potential and exposures to simulated scenarios representing both emerging risks and forward-projected historical events. Ian Branagan, Senior Vice-President and Group Chief Risk Officer at RenaissanceRe, said: “We’re pleased to work with AIR to advance our industry’s ability to better understand how to model and manage casualty and specialty risk.” Dr. Jay Guin, Chief Research Officer, AIR Worldwide, said: “Collaborating with a global leader in risk management like RenaissanceRe is a great step forward in the development of our stochastic model.” |
| Munich Re Canada appoints CFO |
| Munich Re has announced the appointment of Rebecca Rycroft as Senior Vice-President and Chief Financial Officer to Munich Re Canada (Life and Health). Ms. Rycroft has 18 years’ experience in international actuarial consulting and is a seasoned expert in the North American financial market. She joins the company from Oliver Wyman, where she most recently held the position of Senior Principal. Bernard Naumann, President and Chief Executive Officer of Munich Re, Canada (Life and Health), said: “Rebecca is well-known within the insurance sector for her energetic leadership, her actuarial expertise, and her commitment to deliver. “Under her guidance, the role of Chief Financial Officer will play a greater part in helping our clients navigate the changing regulatory space and grow their business.” |
| 2018 outlook for UK life re/insurers stable: A.M. Best |
| In a recent report, A.M. Best has placed a stable outlook on the UK life insurance and reinsurance sector due to growth opportunities from defined contribution (DC) pensions and bulk annuity transactions. According to Reinsurance News, the ratings agency anticipates the DC pension savings market to grow rapidly and become a significant source of capital for UK life insurers and reinsurers due to the predominance of younger age groups. However, the report said that the life insurance and reinsurance sector faces many challenges in its current environment. Life insurers and reinsurers will have to carefully manage its exposure to illiquid assets, regulatory uncertainty, product innovation and the long-term prospects of digital and retail distribution. What is more, the sector’s active product profile is considerably narrower due to the domination of pension-related products in the market, the demise of UK with-profit products and the diminished role of investment bonds. Currently, A.M. Best estimates that around 85% of UK with-profits assets now reside either in Prudential or with the two largest closed fund consolidators, Phoenix Group and ReAssure. |
| Sompo strengthens U.S. insurance business development team |
| Sompo International has appointed Jonathan Monks and Ben Tasse as Senior Vice-Presidents, Business Development, for its U.S. insurance platform. In their new positions, Mr. Monks and Mr. Tasse will be responsible for broker and agent relations and business development strategies. Mr. Monks will focus on retail distribution partners and Mr. Tasse will focus on wholesale distribution partners. Mr. Monks brings with him more than 20 years of experience in strategic relationship management and large account distribution, and joins the company from American International Group. Mr. Tasse joins Sompo from AXIS Capital, where he most recently served as Vice-President, Professional Liability Underwriter and Manager within the Private Equity and Venture Capital Team. Chris Sparro, Chief Executive Officer of U.S. Insurance, said: “With Jon and Ben assuming these new roles in our U.S. Insurance operation, we will be able to build on their experience and producer networks to further expand our presence in the markets we service.” |
Risk Management
A ruling by Massachusetts’ highest court that says brand-name prescription drug manufacturers can be held liable for reckless failure to warn a user of the drug’s generic equivalent is expected to lead to more litigation against brand-name manufacturers.
Furthermore, that ruling — in combination with a related California Supreme Court ruling late last year and similar rulings in Illinois and Vermont — may increase momentum for litigation against brand-name manufacturers nationally, some experts say.
Experts say the ultimate resolution of the question of who is responsible for harm caused to users by generic drugs, which account for about 90% of all prescriptions, may have to be resolved at the federal level.
Meanwhile, most observers do not expect this issue, at least initially, to significantly effect pharmaceutical manufacturers’ rates or capacity.
The March 16 ruling by the Massachusetts Supreme Judicial Court in Boston in Brian Rafferty v. Merck & Co. Inc. concerned Mr. Rafferty’s charge that he suffered long-term problems from taking a generic version of finasteride, a drug developed by Kenilworth, New Jersey-based Merck & Co., to treat his enlarged prostate.
As the ruling points out, federal law requires generic drug manufacturers to use the same labels as the brand-name counterparts who developed them, as the brand-name manufacturers are the only ones with the power to change the labels.
Mr. Rafferty charged in his litigation that Merck had failed to change its label to include a warning about finasteride’s negative side effects in the United States, even though it had done so in other countries in response to reports and studies.
The Massachusetts court said “public policy is not served if generic drug consumers have no remedy for the failure of a brand-name manufacturer to warn in cases where such failure exceeds ordinary negligence, and rises to the level of recklessness.”
“In cases where, for instance, a brand-name manufacturer learns that its drug is repeatedly causing death or serious injury, or causes birth defects when use by pregnant mothers, and still fails to warn consumers of this danger, public policy does not dictate that these consumers be left with no remedy when those risks are realized, or that the manufacturer have little financial incentive to reveal these risks.”
Joseph G. Blute, a member of law firm Mintz Levin Cohn Ferris Glovsky & Popeo P.C. in Boston, said the ruling applies a recklessness standard to the “innovator liability” doctrine, which says an initial developer can be held liable for a drug sold by a nonrelated generic company. The ruling is “an important expansion of liability principles,” he said.
“The decision is significant, and the impact is real,” said Tarifa Laddon, a partner with Faegre Baker Daniels L.L.P. in Los Angeles. “This will likely increase the number of cases that brand-name manufacturers will have to defend.”
The Massachusetts ruling follows a broader ruling issued by the California Supreme Court in December, which held in T.H., a Minor, etc., et al. v. Novartis Pharmaceuticals Corp. that brand-name drug manufacturers have a duty to warn about their drugs’ safety risks regardless of whether they are sold in brand-name or generic versions.
“These sorts of cases are almost inevitable, because of the lack of ability for people to sue generic companies for failure to warn,” said James Walters, Philadelphia-based managing director of Aon Risk Solutions’ life sciences and chemical group. “It doesn’t seem reasonable that somebody could be sued for a product they didn’t even make.”
The situation has developed, Mr. Blute said, because of the interplay of statutes and U.S. Supreme Court rulings, but it is “the kind of thing some courts are just not comfortable with,” he said.
The Supreme Court’s 2011 ruling in Pliva Inc. v. Messing and its 2013 ruling in Mutual Pharmaceutical Co. v. Bartlett essentially protected generic manufacturers from state law liability for injuries caused by their products.
Meanwhile, the Massachusetts ruling, along with the California Supreme Court ruling, could create momentum toward litigation against brand-name manufacturers, say observers.
The Massachusetts ruling “certainly adds to the relatively recent authority of the California Supreme Court,” which did not limit claims to those of recklessness, said David G. Geiger, a partner with Foley Hoag L.L.P. in Boston.
“It’s possible there is some momentum and other state courts may join in. I would hope they would look at the rationale” and the long history of the law and realize “this is a very radical departure,” Mr. Geiger said.
Mr. Geiger submitted a brief in the Merck case supporting the company on behalf of the Reston, Virginia-based Product Liability Advisory Council.
“The entire legal system watches very closely cases like this that can create opportunities for the plaintiffs bar to find a different pathway to sue,” said Mr. Walters. “I think they’re watching this very carefully and will be looking at ways to take advantage” of the Massachusetts ruling.
It is important to recognize that the “overwhelming majority of states continue to reject innovator liability.”
“Nonetheless, there is a trend towards increased acceptance” of innovative liability that can no longer be denied,” said Ms. Laddon, noting the Massachusetts ruling followed the California decision by only three months.
Observers generally say they do not expect the ruling to have at least an immediate direct impact on brand-name manufacturers’ insurance
Darlene Villoresi, Morristown, New Jersey-based national life science casualty advisory leader for Marsh L.L.C., said, “There are so many factors that go into underwriting and pricing and rates … I don’t think it’s going to have an impact on insurance.”
“I don’t think there’ll be much of an immediate effect, frankly, unless insurers see a lot more cases,” Mr. Walters said. “The immediate effect on coverage and availability will be minimal, but certainly they’ll be watching these cases very closely and over time, you can see it having an effect long term unless the FDA and the federal government makes some hard decisions to drive uncertainty out of this equation.”
“What this situation is crying out for now is for the (Food and Drug Administration) to actually opine and rule on who is responsible” for labeling, said John Connolly, Radnor, Pennsylvania-based life sciences practice leader for Willis Towers Watson P.L.C.
The agency’s latest 2013 proposal on generic labeling “withered and died on the vine. It’s sitting out there as a discussion point with absolutely no action on it at all.”
Furthermore, the Supreme Court’s Messing rule also left unanswered questions on the issue of who can be sued if not the generic manufacturer, Mr. Connolly said.
“I think it’s logical that at some point the Supreme Court will be asked to fill in the gaps in the original ruling,” he said.
Judy Greenwald
4/10/2018 7:13:00 AM
Daily Willis Review | 11th April 2018
| 2017 global insured losses highest ever: Swiss Re |
| According to the latest Swiss Re sigma study, global economic losses from natural and man-made disasters were $337 billion in 2017, almost double 2016 losses and the second highest on record. Global insured losses from disaster events reached $144 billion, the highest-ever recorded in a single year, with the majority of losses occurring from hurricanes Harvey, Irma and Maria (HIM). With global economic losses at $337 billion and insured losses at $144 billion, the worldwide catastrophe protection gap was $193 billion for 2017. The HIM hurricanes resulted in combined insured losses of $92 billion, making 2017 the second costliest North Atlantic hurricane season since 2005. 2017 was also a record year for wildfires, the study found, with wildfires across the globe resulting in combined insurance losses of $14 billion, the highest ever. In terms of sigma criteria, 2017 saw 301 catastrophes worldwide, compared to 329 catastrophes in 2016. More than 11,000 people lost their lives or went missing as a result of a disaster event, with millions left homeless in 2017, the report said. |
| AXA to restructure its Swiss group life business |
| AXA Switzerland has announced plans to convert its main occupational benefits foundations (Foundations) business model from a full-value insurance model to a semi-autonomous model, by the end of 2018. From 2019, death and disability pensions and administration services will be covered by AXA, while responsibility for asset allocation and investment returns to policyholders will be with the Foundations. The company said that ongoing low-interest rates and strong regulatory requirements in Switzerland have resulted in full-value insurance becoming increasingly lower value for money. As part of the model transformation, AXA will transfer most of its €26 billion ($32 billion) in-force general account reserves backing the pre-retirement savings benefits in its group life portfolio to the foundations. Thomas Buberl, Chief Executive Officer of AXA, said: “This model transformation, initiated and managed by our local teams, is a further important step in our ongoing in-force management program, systematically reassessing customer needs and taking proactive actions, to create value for our customers and shareholders at the same time.” |
| White Mountains to begin self-tender offer |
| White Mountains Insurance Group has announced plans to begin a “modified Dutch auction” self-tender offer to purchase 500,000 of its common shares. The company will offer between $825 and $875 per share, net to the seller in cash, and the tender offer is expected to close May 7, 2018. The “modified Dutch auction” self-tender offer will allow shareholders to indicate how many shares and at what price within the company’s specified range they wish to tender their shares. Once the shares have been tendered and the prices specified by the tendering shareholders, White Mountains will determine the lowest price per share within the range that will enable it to purchase 500,000 shares. The tender offer will not be conditioned upon any minimum number of shares being tendered but will be subject to certain conditions, as will be specified in the offer to purchase. |
| Neon appoints Contingency Underwriter |
| Neon Underwriting has announced the appointment of Jeremy Cooke as Contingency Underwriter. In his new role, Mr. Cooke will be responsible for establishing Neon’s name within the event cancellation market, an area previously written on an opportunistic basis, the company said. He joins the company from Barents Re, where he most recently served as Head of Contingency, and he has held underwriting roles at ProSight Specialty Insurance and Chubb. According to the release, Mr. Cooke’s appointment is in line with the company’s plans to refresh its proposition and portfolio offering. Darren Lednor, Chief Underwriting Officer at Neon, said: “We have made strong progress in consolidating our existing portfolio and this has given us an excellent platform from which to expand into new lines. “Neon is a dynamic business and we are committed to attracting fresh, experienced talent as we continue to grow.” |
Insured disaster losses hit new high in 2017: Swiss Re
Rob Lenihan
4/10/2018 11:46:00 AM
- REUTERS
Global insured losses from disaster events last year totaled $144 billion, Swiss Re Ltd. said Tuesday, the highest ever recorded in a single year.
The Swiss Re Institute’s recent sigma report, which is marking its 50th anniversary this year, also found that total global economic losses from natural disasters and man-made catastrophes reached $337 billion last year, almost double the losses in 2016 and the second-highest on record.
Wind damage and flooding from the active hurricane season in the U.S. caused over $217 billion — or 60% — of the damage, with 42% was covered by insurance, the report said, leaving taxpayers and governments to mostly pick up the cost.
The highest losses came from hurricanes Harvey, Irma and Maria that struck the U.S. and the Caribbean in quick succession and resulted in combined insured losses of $92 billion, equal to 0.5% of U.S. gross domestic product. The hurricanes made 2017 the second-costliest North Atlantic hurricane season since 2005.
The hurricanes highlighted the much wider problem of flood risk in the U.S., Swiss Re said, with floods causing, on average, economic losses of $15 billion annually, of which only $5 billion is insured. Many of the nation’s insurers don’t currently offer flood policies due to the unpredictable nature of floods, Swiss Re said, but this is changing.
Swiss Re said flood models have evolved to where flood-risk assessments of each individual home are being replaced by tools such as satellite imaging, digital elevation models and disaster simulations.
“These new technologies have the potential to be a true game changer in how we manage flood risk, saving Americans billions of dollars annually and making us more effective against a peril once thought ‘uninsurable,’” Swiss Re said in a statement.
More than 11,000 people died or went missing in natural and man-made disasters in 2017, the report said, more than in 2016 but still one of the lowest in a single year, according to sigma records. Globally, there were more than 8,000 victims of natural catastrophes in 2017.
Man-made disasters, including major fires, explosions, and terrorism, resulted in roughly 3,000 deaths, compared with around 4,000 in 2016. The total number of victims from terrorism was 731, up from 601 in 2016.
Last year was also record year for wildfires, Swiss Re said. Insured losses from all wildfires in the world totaled $14 billion in 2017, the highest ever in a single year.
“One significant trend is longer wildfire seasons, defined as the time between the first discovery and last control of a wildfire,” the report said. “On average, wildfire seasons in 2003-2012 were around 84 days longer than in 1973-1982.”
Daily Willis Review | 9th April 2018
| 2018 Atlantic hurricane season to be above-average: Colorado State University |
| Analysts at Colorado State University (CSU) have predicted that the Atlantic hurricane season is to be “slightly above-average” in 2018. The researchers have cited a low likelihood of a significant El Niño as a primary factor, following a weak La Niña this past winter. Currently, CSU has predicted 14 named storms, of which seven are expected to become hurricanes, and three to reach major hurricane strength. The CSU Tropical Meteorology Project team anticipate that 2018 hurricane activity will be about 135% of the average season, compared to 2017’s hurricane activity which was about 245% of the average season. The report also includes the probability of major hurricanes making landfall; 63% for the entire U.S. coastline, 39% for the U.S. East Coast, including Florida, 38% for the Gulf Coast and 52% for the Caribbean. CSU has also predicted there will be 70 named storm days, 30 hurricane days and seven major hurricanes days. |
| Negative outlook for London market: Fitch |
| Fitch Ratings has placed a negative outlook on the London Market insurance and reinsurance sector for 2018, due to underwriting pressure, Reinsurance News, has reported. According to the report, the high cost of acquisition and administration have affected underwriting performance, and while expense ratios remain at 40%, the trend is now broadly flat year-on-year. Most London market insurers and reinsurers posted underwriting losses in 2017, with Lloyd’s reporting net catastrophe claims of £4.5 billion ($6.3 billion) in 2017. The exceptions to the pattern were Beazley and Hiscox who reported combined ratios of under 100, due to the companies’ greater focus on non-catastrophe-exposed specialty lines of business. Fitch believes that modernisation and cost-effectiveness should now become key priorities for London market insurers and reinsurers, the report said. |
| XL Catlin partners with Praedicat for changing liability insurance needs |
| XL Catlin has enlisted the help of InsureTech analytics company, Praedicat, to help address clients changing liability insurance needs. The multi-year agreement will allow XL Catlin access to Praedicat’s latency risk model and mass litigation scenarios, as well as its software on emerging risks called CoMeta, and Oortfolio, its portfolio modeling software. Nancy Bewlay, Global Casualty Chief Underwriting Officer, said: “XL Catlin is committed to Insuretech innovation, to market leadership in data and analytics for underwriting, and to state-of-the-art enterprise risk management.” “Working with Praedicat allows us to advance all three goals.” David Brooks, XL Catlin’s Global Head of ERM, Man-Made Perils, said: “XL Catlin has developed a broad range of risk scenarios for property and casualty. “The hardest area to build them and keep them realistic is in liability where new technologies are emerging, and the world is always changing. We were impressed with Praedicat’s science-based approach to the problem.” |
| Markel strengthens trade credit, political risk and surety business |
| Market International has made a series of promotions in its trade credit, political risk and surety business. Adrian Jones assumes the role of Head of Strategic Development for Asia and the Middle East, alongside his existing position as Senior Underwriter. Leroy Almeida has been appointed Head of the Middle East Operation, a role which now incorporates marine and directors’ and officers’ product lines. Simon Moon assumes the role of Head of Risk Underwriting and Carl Titterton, Head of Commercial Underwriting for the trade credit operation. Nicola Marriage becomes Head of Political Risk, Damian Manning remains Head of Surety and Abhishek Chhajer continues to lead the trade credit operation in the Asia Pacific region. Philip Amlot is appointed Head of Trade Credit and Political Risk, Americas and Arjan Van de Wall becomes Global Development Director. Ewa Rose, Managing Director of the Division, said: “Since the launch of the business in 2010, we have expanded our geographic reach across the U.S., Canada, Singapore and Dubai in addition to the London presence and have added political risk and surety product lines to the trade credit operation.” |
Daily Willis Review | 6th April 2018
| Lloyd’s opens office in Casablanca |
| Lloyd’s has announced the opening of a new office in Casablanca Finance City (CFC) with Salah El-Kadiri as its General Representative. As part of the license, Lloyd’s managing agents can appoint coverholders and service companies, established in the CFC, to underwrite Moroccan and regional insurance and reinsurance business on their behalf. The new office will be able to provide specialist risk solutions for a range of perils including marine, aviation and other Moroccan risks, and reinsurance of Moroccan risks and non-Moroccan risks. Inga Beale, Lloyd’s Chief Executive Officer, said: “We are delighted to open our office in Morocco today as we believe that Africa is the next frontier for insurance. “At Lloyd’s, we are determined to play a vital role in supporting economic growth and developing insurance markets in Africa.” |
| Liberty closes first deal under partnership with IFC |
| Liberty Specialty Markets (LSM) has announced it has closed its first deal as part of its partnership with International Finance Corporation (IFC), a member of the World Bank Group focused on the private sector. As part of the deal, LSM will insure a loan of $185 million from the IFC to Vietnam Commercial Joint Stock Bank (VIB) to support small-to-medium enterprises (SMEs), micro-SMEs, and affordable housing projects in Vietnam. The IFC first announced its partnership with LSM in September 2017 as one of two insurers which will provide unfunded credit insurance for its Managed Co-Lending Portfolio Program (MCPP). Under the terms of the agreement, LSM and IFC will approve the eligibility criteria for loans to be insured under the facility and IFC will originate, structure and administer the loans. Peter Sprent, LSM’s Head of Global Financial Risks, said: “Economic development is a priority for Liberty Specialty Markets. “Creating prosperity in the communities in which we do business around the world is one of our core values. Managed effectively, it can also generate positive returns for us.” |
| Zurich appoints new EMEA CEO |
| Zurich has appointed Amanda Blanc as Chief Executive Officer Europe, Middle East & Africa (EMEA). Ms. Blanc succeeds Gary Shaughnessy, who will step down as CEO EMEA and as a member of Zurich’s Executive Committee in the fourth quarter of 2018. According to the release, Mr. Shaughnessy will continue to serve as a member of various European subsidiary boards. Ms. Blanc joins the company from AXA UK & Ireland where she most recently served as Group Chief Executive. Mario Greco, Group Chief Executive Officer, said: “Gary is a passionate, values-based leader who embodies Zurich’s focus on people and customers.” “In Amanda, we have identified a high-impact proven people leader with deep experience and knowledge,” he added. |
| TMK appoints new Regional Managing Director of Asia |
| Tokio Marine Kiln (TMK) has promoted Alex Dugand to Regional Managing Director, Asia, effective immediately. In his new role, Mr. Dugand will be responsible for overseeing TMK’s Asian business, including the Hong Kong, Singapore and China markets. He first joined the company over 10 years ago as a Reinsurance Underwriter and most recently served as Regional Underwriting Director for TMK’s Asia division. Charles Franks, Chief Executive Officer of TMK, said: “I am delighted to announce Alex’s promotion to the role of Regional Managing Director, Asia. “Alex is an accomplished underwriter whose regional market expertise, skill in building profitable books of business and ability to foster collaboration between our Asia teams and international offices have been core drivers of growth for TMK.” |
Daily Willis Review | 4th April 2018
| EXIM Bank launches risk-share program with reinsurers |
| The U.S. Export-Import Bank (EXIM) has launched a reinsurance program with the private sector to share risk and provide an additional $1 billion in loss coverage for a “significant portion” of EXIM’s existing portfolio of large commercial aircraft financing transactions. The program was carried out in conjunction with a group of 10 reinsurers, led by XL Catlin, Liberty Specialty Markets and Everest. The EXIM reinsurance program is the largest public-private risk-sharing arrangement for a U.S. government credit agency. According to the release the program was funded by the fees generated by the original commercial aircraft transactions and will not cost U.S. taxpayers additional funds. Jeffrey Goettman, Executive Vice-President and Chief Operating Officer, said: “We are excited to announce this historic arrangement with the private sector that protects EXIM Bank and safeguards U.S. taxpayers’ interests without requiring additional funding. “EXIM is committed to a path of financial innovation and risk-sharing with the private sector.” |
| PERILS reports second loss estimate for extratropical cyclone Burglind of $834.8 million |
| PERILS has issued a second property insured loss estimate for windstorm Burglind, also known as Eleanor, of €680 million ($834.8 million). Windstorm Burglind affected the British Isles and European continent on January 2 and 3, 2018, with the majority of losses occurring in France, Germany and Switzerland. PERILS, which provides industry-wide insured loss estimates, said this compares to its initial estimate of €643 million ($789 million), which was issued on February 13. A third loss estimate will be released on July 2, six months after the event and in line with the PERILS’ loss reporting schedule. |
| Argenta launches SPA with Hannover Re backing |
| Following approval from the Lloyd’s franchise board, Argenta Holdings will establish a special purpose arrangement (SPA) in conjunction with its parent company Hannover Re, Intelligent Insurer has reported. The SPA 6134 will be established by Argenta Syndicate Management (ASML), the managing agency subsidiary of Argenta, and will be managed alongside Syndicate 2121. SPA 6134 will be sponsored and capitalized by Hannover Re and will be a quota share facility reinsuring business written by Syndicate 2121. According to the report, the target gross written premium income for the SPA for 2018 is £36 million ($50 million) across various classes of business within the underwriting capability of the host syndicate. Andrew Annandale, Chief Executive of Argenta, said: “SPA 6134 will provide ASML with greater flexibility to react to changing market conditions and allow Syndicate 2121 to take advantage of new opportunities following Argenta’s acquisition by Hannover Re and the very significant losses experienced by the market during 2017.” |
| Castel Specialty establishes global property facultative reinsurance solution |
| Castel Specialty has launched a global property facultative reinsurance offering to its portfolio, with capacity provided by syndicates at Lloyd’s. The company has appointed Paul Witzenfeld to underwrite a book of global property facultative reinsurance business with a focus on targeting large scale risks. Mr. Witzenfeld joins Castel Specialty from Pen Underwriting, where he most recently served as Head of North American Property. He brings with him more than 20 years’ experience in underwriting in the Lloyd’s and London markets. Mark Birrell, Chief Executive of Castel, said: “Paul has the underwriting experience and proven track record that our Specialty division was established to support. “The continuing expansion of Castel Specialty is further evidence of the opportunities that are available for niche underwriters with the appetite and ability to build their own books of business.” |
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