• Africa Re reports growth in gross written premium for Q1 2018
• U.S. cyber insurance market experiencing “significant growth”: A.M. Best
• Castel Specialty launches political risk business
• XL Catlin strengthens U.S war, terrorism and political violence team

The company said that the increase reflected a “successful” January 1 renewals combined with the “slight hardening” in the South African reinsurance market.

However, following adverse claims with several large catastrophe losses, Africa Re reported an almost break-even underwriting result, the release said.

Investment income decreased to $3.34 million in the first quarter of 2018, compared to $13.97 million for the same period in 2017.

Corneille Karekezi, General Managing Director and Chief Executive Officer, said: “The Corporation continues to show resilience even after the major losses recorded in 2017 and impacting 2018.

“The performance is in line with our forecast of a positive underwriting result year-end.”

In 2017, the U.S cyber premiums rose by nearly 32% year over year to $1.8 billion, and policies in force jumped 24% to $2.6 million.

The report said that the low take-up rate for cyber policies in small to medium-sized companies presents insurers with a meaningful growth opportunity.

The ratings agency also found that in 2017 cyber packaged policies in force increased 28% for the U.S. property and casualty industry, partly due to the addition of affirmative cyber coverage in commercial policies.

While systematic events remain a serious threat for cyber insurers, A.M. Best believes that underpricing from new market entrants also should remain a concern.

Bobby Skrabal, A.M. Best Industry Analyst, said: “At this point, underwriting and pricing are driven more by market forces than by loss experience and models.”

“As insurers develop more experience they’ll improve their pricing models, but due to the constantly changing nature of cyber threats, pricing will most likely continue to rely on the judgment of underwriters.”

Castel Political Risk will initially underwrite contract frustration and political risk coverages, with a focus on business in Latin America, the Middle East and Africa.

The business will be led by Tom White, who previously served as Senior Underwriter at ANV, now AMTrust, where he had a role in establishing the political risk book.

Mark Birrell, Chief Executive of Castel, said: “Tom has both broking and underwriting expertise in this niche class.

“This experience, combined with our dedicated infrastructure support, will enable him to access the specialist brokers and markets required to build a strong-performing book of business.”

Ms. Nieves assumes the role of Assistant Vice-President, Underwriting Manager for the South and Central zone in Atlanta.

She first joined XL Catlin in 2014 having previously served as a risk management specialist at American International Group.

Mr. Gardenhire has been appointed as an Underwriter in Dallas, where he will be responsible for leading the terrorism and political violence underwriting activities and manage broker relationships.

Ben Tucker, Head of XL Catlin’s U.S. War, Terrorism & Political Violence, said: “Recent events continue to drive interest in terrorism insurance and even more specialized coverage like our Active Assailant insurance coverage.”

• Buyers’ market for cyber re/insurance: Fitch
• $50 million Tangency Capital reinsurance hedge fund launched
• U.S. sanctions unlikely to affect Iranian reinsurance deals: report
• MGA and marine group form reinsurance venture in Africa

The ratings agency found that the increasing high-profile cyber attacks and regulatory requirements have made the cyber sector a significant growth opportunity for U.S property & casualty insurers and reinsurers.

However, as cyber profitability increases the premium renewal rates are expected to remain flat to down, the report said.

Fitch stated that underwriting results will suffer as exposure grows, and pricing movements will be affected as more capacity is attracted to the market.

James Auden, Managing Director at Fitch Ratings, said: “Profitable results in a new market are attracting competition to the cyber space.

“Roughly 75 distinct insurers wrote over $1 million each of annual cyber premiums last year alone.”

The report said Tangency Capital, which has offices in London and Bermuda, will invest in non-life reinsurance risks.

Reuters reported that hurricanes Harvey, Irma and Maria resulted in record insurance losses, but also further capital raising in expectation of investor demand because of higher rates at renewals in June and July.

The report quoted industry tracker Preqin as saying that despite the capital raising, only one insurance-linked fund has launched in 2018 out of a market of 82 funds.

Tangency Capital was founded by Dominik Hagedorn, Michael Jedraszak and Kai Morgenstern.

“Not many deals were signed with foreign counterparts during the past two-and-a-half years and the number of deals that were signed are not so high that foreign companies would want to cancel them,” Seyyed Mohammad Asoudeh told the Financial Tribune Iranian/English news website.

The report said that when U.S. President Donald Trump announced he was withdrawing from an international nuclear deal with Iran he cast doubt over the country’s new reinsurance deals with foreign counterparts as well as its ties to other countries.

It said 24Vision.Solutions specializes in solutions for marine operations and that FourteenZeroFive focuses on energy and engineering reinsurance while investing in Africa.

Under the agreement, 24Vision will make its corporate platform available to FourteenZeroFive, with the aim of ensuring there is transparency to the reinsurance market accepting energy and engineering placements.

“By forming this partnership, we can guarantee to our clients a digital platform that will facilitate the way construction and operational risks are underwritten and managed in Africa while reducing claims frequency and severity together with associated costs,” said Attilio Tornetta, Managing Director of FourteenZeroFive.

“As well, our reinsurers will experience a transparent and linear way of managing risks accepted on their behalf, having a live control on underwriting discipline and performances.”

• Willis Towers Watson first global insurance broker to get full licence in China
• Zurich finalizes $2.7 billion intermediated longevity swap deal with National Grid
• XL Catlin launches solution for autonomous technology
• Hamilton Re appoints Carol Redahan as Controller

It said this follows President Xi Jinping’s announcement early last month of a series of major financial liberalization initiatives aimed at opening up the Chinese market to foreign operators.

Scott Burnett, Head of Asia at Willis Towers Watson, said: “Willis Towers Watson was one of the first foreign insurance brokers to enter the Chinese market, with a presence dating back to 1994.

“This latest announcement speaks to the long-term commitment of our company to China and the recognition of our reputation and relationships not only in China but across the globe. The expanded license represents a significant vote of confidence by the CBIRC in Willis Towers Watson, our capabilities and our expertise.”

Wise Xu, Head of Willis Insurance Brokers China, said: “We have a strong branch network in China, extensive relationships with carriers and a global placement capability.

“Combined with our global knowledge and experience, the extended license to operate in China enables us to further grow our business with existing and new clients and opens up many new potential opportunities over time.”

Smilla Yuan, Chief Executive Officer of Willis Towers Watson Greater China, added: “Willis Towers Watson is actively exploring and assisting Chinese insurance companies in product innovation and development.

“With forward looking perspectives and innovative experiences, the extension of our license enables us to provide our Chinese clients with enhanced analytical and risk management capabilities.”

The transaction will protect National Grid against the risk of rising costs for around 6,000 pensioners and future dependent members living longer than expected.

Zurich said it has reinsured a significant proportion of the longevity risk with Canada Life Reinsurance.

Greg Wenzerul, Zurich’s Head of Longevity Risk Transfer, said: “This is our first bespoke intermediated longevity swap and by far our largest deal to date.

“I’m delighted that our solution fitted the National Grid Electricity Group Trustee’s requirements.”

Andrew Bonfield, Finance Director, National Grid, said: “We are very pleased to announce the completion of this longevity insurance which covers around two-thirds of the liabilities of the National Grid Electricity Group pension liabilities.”

It said the solution will cover all sectors of the industry, and is made bespoke to the client’s need.

To support the new offering, XL Catlin has launched a multi-disciplinary Global Autonomy Center of Excellence.

The center will have a team of experts who will be able to provide guidance and support to XL Catlin’s underwriters, brokers and clients globally.

Mike McGavick, Chief Executive Officer of XL Catlin, said: “Autonomous technologies are changing the world around us, the way companies operate and the risks they face.

“We recognize the new and complex risks that are emerging and, as underwriters, we know we have the expertise to develop and deliver the right insurance solutions.”

She has more than 20 years of industry experience and joins the company from Equator Reinsurances, where she was Controller.

She holds a Chartered Accounting designation from the Institute of Chartered Accountants, and she will report to Hamilton Re Chief Financial Officer Vanessa Hardy Pickering.

Hamilton Re Chief Executive Officer Kathleen Reardon said Ms Redahan “adds an important skill set to our Finance team whose scope of responsibilities have expanded significantly as our company has grown.

“In addition, she will be a valuable asset to Vanessa who will now be able to concentrate on the more strategic aspects of her position as CFO.”

• Munich Re establishes Bermuda life reinsurance entity
• Arch appoints Executive VP and CFO
• DARAG completes first transaction with New Nordic
• Munich Re America appoints team leader for credit surety and political risk

The new entity, named Munich Re of Bermuda, will take on life risks from across the group and will act as an internal consolidator of life risks and retrocessionaire to other entities within the group.

Previously the company was named Princeton Eagle West Insurance Company Limited and was authorized to underwrite run-off property and casualty re/insurance risks.

Munich Re will provide the new entity with an excess of retention and excess of loss reinsurance treaty to protect its portfolio, as well as explicit support thanks to a capital contribution of $330 million, the report said.

Munich Re of Bermuda has also received a Class C approval from the Bermuda Monetary Authority, meaning it can act as an authorized reinsurer of the Munich Re group for certain life risks.

Mr. Morin succeeds current CFO Mark Lyons, who is leaving Arch to become Senior VP and Chief Actuary, General Insurance at American International Group.

Mr. Morin first joined Arch in 2011 and currently serves as SVP, Chief Risk Officer and Chief Actuary.

He brings with him almost 30 years’ experience in the insurance industry and will report to Marc Grandisson, President and Chief Executive Officer of Arch.

Mr. Grandisson said: “Anyone who has followed our company knows one of Arch’s strengths is its deep pool of talent.

“François’ extensive experience leading Arch’s actuarial and enterprise risk management practices gives him valuable perspective into all financial and capital aspects of our Company.”

As part of the transaction, DARAG and New Nordic will acquire two portfolios of Qudos Insurance, which was first acquired by New Nordic in 2017 through a join cell structure.

According to the release, this is the first in a series of joint cell transactions which will see DARAG and New Nordic combine forces to deliver a holistic solution to clients.

Nicolai Borcher Hansen, New Nordic Chief Executive Officer, said: “The team at New Nordic Advisors is delighted to have negotiated, on behalf of Qudos Insurance, the first in a series of portfolio transfer agreements with DARAG, signifying the deepening of the strategic relationship between our firms.”

Stuart Davies, Executive Chairman of DARAG, said: “As DARAG has continued to grow, we have remained true to our client focused approach of delivering bespoke solutions that enable them to concentrate on their core business.”

In her new role, Ms. Puccio will be responsible for managing and growing the surety, trade credit and political risk business portfolio.

She succeeds Frank Bonner who will retire after 40 years with Munich Re America.

Ms. Puccio first joined the company in 2017 as Vice-President and Production Underwriter for the credit, surety and political risk business.

Steve Levy, Chief Executive Officer and President for the Reinsurance Division, said: “Having spent her entire career in the field of surety and credit insurance, Sarina brings deep industry expertise to her new role.”

• MENA presents great opportunities for takaful operators
• Bermuda reinsures prove resistant, despite 2017 challenges
• ICA declares catastrophe after storm in Hobart
• Compre appoints new COO

However, the report has found that these opportunities remain unrealized, with many takaful companies struggling to establish strong profiles.

The main issue faced by takaful providers is a lack of differentiation, meaning they are subject to price competition with larger insurers that already have brand awareness and established distribution networks, the report said.

A.M. Best believes that support from sharia scholars in promoting Islamic financial products is essential for the growth of the takaful sector.

Salman Siddiqui, Associate Director, said: “Given the proportion of Muslims in the MENA region, A.M. Best considers the take-up of shari’a-compliant insurance to be disappointing, especially in contrast with the Malaysian experience, which exhibits higher takaful penetration – despite the country having a lower proportion of Muslims.”

However, the sector continues to deal will low investment yields, as well as pressure on profitability, Reinsurance News has reported.

The ratings agency also found that Bermuda reinsurers have successfully reduced their overall net catastrophe exposures in the last few years by transferring much of their business to the capital markets.

The Bermudian insurers and reinsurers discussed by Fitch include Arch, Axis, PartnerRe, RenaissanceRe, XL Catlin, and Validus.

Brian Schneider, Senior Director at Fitch, said: “Bermuda reinsurers typically maintain very strong capitalization while keeping leverage modest, which will serve them well as they continue to work through sizable catastrophe losses and shrinking profits.”

“The willingness of the capital markets to accept a lower price for catastrophe risk has helped to reduce the financial impact to Bermuda reinsurers.” Mr. Schneider said.

• U.S. cyber market reaches $2.0 billion: Fitch Ratings
• Hannover Re launches joint growth initiative with HDI Global
• Third Point Re reports $26 million loss for Q1 2018
• Boost Insurance secures dedicated reinsurance capacity

During 2017, stand-alone cyber direct written premiums grew by 7% to $986 million, according to aggregate statutory data for the property and casualty (P&C) industry.

The industry statutory direct loss ratio for stand-alone cyber insurance fell from 43% in 2016 to35% in 2017, which is indicative of strong underlying profitability in the cyber market, Fitch said.

Analysts said that the growth in package-related cyber premiums reflects expanding insurer efforts to specifically include cyber coverage and endorsements in policies that lack explicit terms or premiums related to cyber risk.

However, the ratings agency notes that the growth does also demonstrate the changes in how companies report cyber premiums in the statutory supplement.

James Auden, Managing Director, said: “Profitable results in a new market are attracting competition to the cyber space.

“Roughly 75 distinct insurers wrote over $1 million each of annual cyber premiums last year alone.”

The new company, HDI Global Specialty, will write agency and specialty business in a broad range of business lines.

As part of the initiative, HDI Global SE will acquire the majority of the shares in International Insurance Company of Hannover SE (Inter Hannover), a subsidiary company of Hannover Re, for €100 million ($119 million).

Following completion of the transaction, HDI Global will retain 50.2% of the new company and Hannover Re 49.8%.

HDI Global Specialty will be launched with a premium volume of more than €1 billion ($1.19 billion).

Torsten Leue, Chairman of the Board of Management of Talanx, said: “This step strengthens our roots as an industrial insurer.

“The joint venture enables us to bring together the cross-business segment expertise we have in the area of specialty in one place within the Group and concentrate our know-how.”

Gross written premiums increased to $378.4 million in Q1 2018, compared to $146.4 million in Q1 2017.

The company’s combined ratio decreased in the first quarter of 2018 to 104.5% from 106.3% in Q1 2017.

Third Point Re posted a net investment income loss of $2.2 million for Q1 2018, compared to a $128.5 million profit for the same period in 2017.

Rob Bredahl, President and Chief Executive Officer, said: “During the first quarter, we generated premiums written of $378 million, an increase of 159% compared to the prior year’s quarter.”

The facility will be led by Nephila alongside Markel Digital, the insurtech group within Markel Corporation, and RenaissanceRe Holdings.

According to the release, Boost will manage a program supporting multiple insurtech startups entering the property and casualty industry and will support all personal and commercial lines of business.

Alex Maffeo, Chief Executive Officer and Founder of Boost Insurance, said: “This is a landmark day for Boost because it makes us a truly one-stop shop for insurtech startups looking to bring their ideas from concept to reality.”

Barney Schauble, Nephila Managing Partner, said: “Boost offers Nephila and the rest of the reinsurance facility members exposure to the best insurtech startups and new insurance products with the confidence that underwriting and compliance is being closely monitored by an experienced team.”

• Citizens approved for $1.42 billion reinsurance program
• Prudential and PIC enter sixth longevity reinsurance agreement
• MIGA to share risk with NEXI through reinsurance
• XL Catlin establishes insurance hub in San Francisco

The new program is a 7% increase on the total limit of risk transfer secured last year and includes more coverage from the capital markets via Everglades Re cat bonds.

As part of its renewal this year, Citizens will combine traditional reinsurance with fully-collateralized coverage, including its Everglades Re cat bonds.

Citizens said its strategy was to: “Transfer risk alongside the FHCF, transfer commercial non-residential (CNR) risk, and transfer aggregate annual risk in order to protect a portion of surplus for most catastrophic events and thereby further reducing the amount and likelihood of assessments beyond the 1-100 year event to the citizens of Florida.”

As part of the agreement, PIC will assume the longevity risk for £900 million ($1.2 billion) in pension liabilities, representing approximately 7,500 pensioners across two pension schemes.

According to the release, the agreement is a result of a growing desire among companies to de-risk their pensions.

Tom Cahill, Director of Prudential’s longevity reinsurance team, said: “We at Prudential are proud to strengthen our growing partnership with Pension Insurance Corporation.

Jay Shah, Chief Origination Officer at Pension Insurance Corporation, said: “This agreement represents the sixth major reinsurance transaction between the PIC and PICA teams during the past three years.”

The MoU is an agreement to share risk, through reinsurance, on investments made by Japanese firms in developing countries.

As part of the arrangement, MIGA and NEXI will share risk by purchasing reinsurance policies from each other, reducing the exposure either would face individually.

Currently, MIGA provides over $2 billion in guarantees for investments made by Japanese firms across the globe, representing the fourth highest among investor countries.

Keiko Honda, MIGA Executive Vice President and Chief Executive Officer, said: “MIGA’s strategy for the next few years focuses on mobilizing private capital to three priority areas: clean energy, fragile and conflict-affected situations, and low-income countries.”

Kazuhiko Bando, NEXI Chairman and CEO, said: “Through the MoU, MIGA and NEXI are expected to use their own strengths to help Japanese companies develop effective investment projects.”

Charles Marmolejo has been appointed Executive Underwriter and Senior Underwriter Dan McCarthy will join the hub from XL Catlin’s Chicago office.

In his new role, Mr. Marmolejo will help construction clients address their general liability, workers’ compensation and commercial auto risks.

He brings with him almost 29 years’ property and casualty insurance experience across a range of industry segments.

Mr. McCarthy first joined XL Catlin’s North America Construction team in 2014 in Chicago and in his new role he will assist brokers in helping address customers’ excess liability risks throughout the Western region.

Gary Kaplan, President of XL Catlin’s North America Construction, said: “Construction activity throughout the Western region, especially California, is bustling with a wide range of public and private projects in progress and more plans in the works.”

• Fitch maintains negative outlook for global reinsurance sector
• ANZ finalizes $0.74 billion reinsurance deal with Zurich
• Tokio Marine gains approval for post-Brexit subsidiary
• Sompo completes Nipponkoa integration

According to Reinsurance News, the ratings agency does anticipate that profitability is likely to improve for the sector in 2018.

This increase in profitability will be driven by normalized catastrophe losses and improved pricing as a result of the high level of catastrophe losses experienced in 2017, the report said.

The firm believes the underlying accident-year reinsurance combined ratio, excluding catastrophes, will improve to 92.1% this year, from 92.6% in 2017.

However, these improvements may not be sustainable, following the softness of April renewals, which struggled against the persistent flow of alternative reinsurance capital, the report said.

Fitch said: “The influx of alternative capital (the additional capacity being provided by capital market investors willing to accept lower prices for catastrophic risk) limits cyclical price rebounds historically seen after periods of severe catastrophe losses.”

The agreement is the first step in Zurich’s acquisition of ANZ’s Australian life insurance business, One Path Life.

The sale is comprised of two transactions totaling AUS $2.85 billion ($2.11 billion), including the AUS $1 billion ($0.74 billion) of upfront reinsurance commission.

The acquisition of 100% of ANZ’s One Path Life was first announced on December 12, 2017.

According to Intelligent Insurer, the new European subsidiary is in response to the UK decision to leave the European Union and is expected to begin operations in the second half of 2018.

Thibaud Hervy, Chief Underwriting Officer for Specialty Lines at Tokio Marine HCC, has been appointed Chief Executive Officer of the new entity.

Tokio Marine Europe will operate as a Tokio Marine HCC subsidiary in partnership with Tokio Marine Kiln, the report said.

Barry Cook, CEO of Tokio Marine HCC International, said: “It is important that Tokio Marine Group ensures that the relevant steps are being taken to allow the business to continue to grow throughout Europe.”

Charles Franks, CEO of Tokio Marine Kiln, added: “Tokio Marine Europe S.A. will provide a long-term solution to the uncertain developments around Brexit, and the company will provide all brokers and coverholders with continued security and high service levels going forward.”

It said the integration is a “significant milestone” for the company.

The announcement is one of many from the company highlighting its continued European expansion.

Sompo has already received regulatory approval from the Ministry of Finance of Luxembourg to launch its new subsidiary, SI Insurance (Europe) (SIIE).

The company said once SIIE becomes fully operational later in 2018, SJNKE’s continental European business will transfer to SIIE.

Sompo will retain its presence in the Lloyd’s market with Endurance at Lloyd’s and the London company market with Endurance Worldwide Insurance.