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General Insurance Newsletter - Friday 12th January 2018

12 Jan 2018

Market News

The insurance industry is working hard to close the "innovation gap" but the pace of change needs to accelerate, according to Bruce Carnegie-Brown, Chairman of Lloyd's. In an interview , he added that making commercial insurance relevant to the changing risk environment has become one of his top priorities as Chairman since taking the position in February last year. In one of his first speeches as Chairman in September last year, Carnegie-Brown said he was "concerned" about Airmic surveys showing that a large proportion of members saw little role for insurance when managing intangible assets such as reputation. The Lloyd's Chairman believes that the industry as a whole needs to do a better job of reducing the time and costs of distributing and underwriting its products. He further added that artificial intelligence has an important role to play across the London insurance market and that there are a number of modernatision initiatives underway, such as Placing Platform Limited (PPL), which is an example of one touch data capture which enables Brokers, Insurers and their processing teams to capture information electronically, making the placing process faster, easier and more accurate.

In light of recent high-profile collapses of companies such as Monarch and grocery wholesaler, Palmer & Harvey; BIBA has launched a new scheme for trade credit insurance through recognised experts in the field: CMR Insurance Services Limited. This new scheme provides BIBA members with access through CMR Insurance Services Limited to trade credit insurance, which protects businesses from the risk of their commercial clients not paying invoices. CMR’s managed credit insurance policy reduces the risk of a bad debt destabilising a business. Trade credit insurance supported £314bn of UK trade last year, enabling businesses of all sizes ranging from SMEs to multinational corporates, across a wide range of trade sectors, to grow their businesses, capitalise on trade opportunities and protect their bottom line.

Following the successful launch of NMU's enhanced Terrorism product last month, which includes “non-damage” business interruption extensions, they have now announced its availability on the Acturis platform, as a fully auto-rated e-trade product. The launch will see NMU as the first insurer to go live with a terrorism insurance e-trade solution on Acturis.

MS Amlin, the specialist global (re)insurer has announced that a new Bermuda-domiciled special purpose reinsurer, Viribus Re Ltd, has been created to provide collateralised capacity support for MS Amlin Syndicate 2001’s global reinsurance portfolio in 2018. Viribus Re Ltd has entered into a quota share agreement with MS Amlin, incepting January 1, 2018, under which it will reinsure a share of MS Amlin’s worldwide property catastrophe excess of loss portfolio.

A joint study by London Market Group and Boston Consulting Group looked at the Market’s competitive standing and cited the myriad reasons for its historic competitive advantage has revealed that the Market has recognised that digital transformation was the key to its continued strength and influence and would grant it new capabilities that would allow it to retain its competitive revenue generation position. The London Insurance Market had lagged behind with digital adoption for several reasons. Technology changes were difficult due to the complex and diverse risks involved in commercial and specialty reinsurance. In addition, restrictive legacy platforms held Market Insurers back, preventing them from becoming digital organisations. But the Market knew it  needed to address digital transformation – and soon – if it wanted to remain competitive. Digital transformation is key to the continued strength and success of the London Market and to help it retain and grow the skills of a precious asset – its people. The Market is uniquely able to attract talent in part because of its specialty insurance products and its ability to insure complex risks. If the Market doesn’t meet the accelerated imperative to leverage technology capabilities, the talent will go elsewhere.

The Ardonagh Group has announced that, further to the announcement on 11th October 2017 confirming that they have exchanged contracts in relation to the purchase of Carole Nash Insurance Consultants Limitedand also Mastercover Insurance Services Limited, it has now completed these acquisitions following necessary approvals from the FCA and SRA, with all conditions having been met.

Miles Smith has announced the proposed acquisition of a majority shareholding in the business by funds managed by Pollen Street Capital (PSC), a private equity firm specialising in the financial services sector. The transaction is subject to approval by the Financial Conduct Authority. Miles Smith is one of the UK’s leading schemes and affinities Brokers and can trace its origins back to 1925. It is currently ranked in the country’s top 40 Brokers and employs over 220 insurance, claims and risk management specialists, together with customer service and support staff. Its head office is situated in London and it also has offices in Suffolk and Bedfordshire. The Group writes in excess of £170m GWP annually.To achieve its next stage of growth, Miles Smith worked with Deloitte’s Financial Services M&A Advisory team to present the opportunity to potential investors wishing to participate in a business with strong fundamentals and growth potential alongside an experienced and skilled management team and workforce. Miles Smith carefully selected a partner who they felt would support the business through this next exciting phase and who could facilitate retiring and exiting shareholders. They are now entering the final stages of the deal with investors PSC and, subject to regulatory approval, hope to complete in the first quarter of 2018.

With recent catastrophe loss estimates in the region of US$136bn, 2017 is proving to be one of the worst loss years on record for the global (re)insurance market, according to the latest 1st View renewals report from Willis Re, the reinsurance division of Willis Towers Watson.According to the report, the ILS market showed resilience during the catastrophe losses in the second half of the year, comfortably weathering the first major test for a number of funds with investors prepared to recapitalize funds and provide liquidity for trapped capital. Similarly, traditional reinsurers’ Q3 2017 results showed that while the losses are clearly an earnings event, the impact on capital has been relatively muted with average capital impairments in the range of 5% to 7.5%. Key findings from the report: catastrophe losses have stopped a further downward movement in risk adjusted rates in most markets and classes; the continued supply of capital has helped curtail widespread increases in risk adjusted rates on loss free portfolios; pricing across global property catastrophe and risk programs is seeing average adjusted increases of 0% to 7.5% with a few outliers either side of this range; evolving cyber threats are a major concern for the industry in 2018; recognition of silent cyber risk continues to grow in the market with reinsurers trying to assess potential aggregation levels; merger and acquisition (M&A) transaction volume in the global insurance sector finished 2017 on a par with 2016’s $49bn; ILS investors have replenished their capital and continue to trade forward with modest spread increases for loss affected perils.

The Purple Partnership, the network for independent Brokers launched by Jelf in January 2008, celebrates its 10th birthday with a record-breaking year in which it announced it 125th member and received the award ‘Network of the Year’ at the Insurance Age UK Broker Awards last September.

Higos Insurance Services Ltd, part of the Global Risk Partners Group [GRP] has acquired GMM Commercial Insurance Services Ltd [GMM]. The acquisition was completed on 2nd January 2018. GMM was founded by MD Simon Rice 35 years ago. It is based in Newton Abbot and is primarily a commercial insurance broker with specialist expertise in food and drink manufacturing, which is a current strategic focus for Higos. The business wrote £2m of GWP last year, and all the team will stay with GMM as it moves across to new ownership. The acquisition has received regulatory approval, and the consideration is undisclosed.

J Bennett and Son has confirmed the acquisition of the Mathews Comfort’s general insurance arm which was with effect from 18th December 2017. Established in 1851 Mathews Comfort has been arranging insurance, managing risk and providing financial advice for more than 165 years. As independent Brokers specialising in a personal service for their business and private clients, they have the same approach and core values as J Bennett & Son. Their existing team including Directors Russell Thynne and Philippa Jones, will continue to run the business from their iconic Oxford premises. The ownership of Mathews Comfort Financial Services which is a separate entity, remains unchanged and moves to new premises in North Leigh from January 2018 where it will continue to provide the same Financial Planning services.

The team at Norwich-based Alan Boswell Risk Management (ABRM) has expanded less than a year after the company launched, due to unprecedented demand for its services. The expansion allows the company, which already provides risk management and engineering inspection services, to provide a greater range of risk advice to an even larger client base. Its two new members of staff, Rebecca Dingle and Jason Patchett, allow ABRM to provide environmental and marine services alongside existing services that include health and safety advice, fire, security and motor risk management. The company, which is part of East Anglian insurance broking and financial planning firm Alan Boswell Group, launched in March 2017 with two Risk Advisers, two Engineering Surveyors and an Administrator. They were joined by Risk Adviser Rebecca and Engineering Surveyor Jason in June and November respectively.

Markerstudy has exchanged contracts to sell its Gibraltar-based insurance companies, namely Markerstudy Insurance Company Limited,Zenith Insurance PLC, St Julians Insurance Company Limited and Ultimate Insurance Company Limited to Qatar Reinsurance Company Limited (Qatar Re). Markerstudy Underwrites more than 5% of the UK motor market, and this deal will secure long term capacity, creating one of the largest retail insurance MGAs and underwriting its position in the UK market, whilst adding more than £750m to Qatar Re.

Dinghy is a new mobile-first, on-demand insurance provider for freelance professionals. Using their bespoke technology platform, Dinghy’s hassle-free and flexible insurance adapts to the freelancer’s lifestyle; for the first time, freelancers save money when they are not working yet keep the full protection of their insurance. Dinghy, which went live this week, has secured a $1.2M round of funding led by Balderton Capital and joined by industry angel investors and ReSolution. Dinghy expects its core market to be made up of tech developers, designers and consultants. The product is designed to insure any freelancers from creative consultants to freelance journalists for their business risks and against equipment damage and theft. 

Insurance Brokers across the UK can now offer holidaymakers increased peace of mind in relation to travel disruption caused by an act of terrorism thanks to a new partnership between Just Travel Cover and specialist Insurer Beazley. While age and pre-existing medical conditions have been regular barriers for travellers, a turbulent few years of terrorist attacks in popular holiday hotspots including Barcelona, Paris and New York have left many tourists feeling uneasy about visiting certain locations and many travel insurance policies do not provide cover for visitors caught up in these tragic events. The terrorism extension comes as standard with Beazley Gold policies, meaning Brokers do not need to offer policy extensions or add on’s for this increasingly expected area of cover. The specialist scheme offers cover should a terrorist attack take place while in destination, allowing clients to claim for injury, loss or damage to possessions and curtailment, but where the Gold policy stands out is the cover options that are available if the UK government issues advice not to travel, thereby providing clients with the flexibility to rearrange or cancel without the fear of losing out financially.

Amazon is in final stages of closing an investment in online-only insurance startup Acko, people familiar with the matter said. The deal will see Amazon co-create financial products with Acko - besides being its distributor - in the first such move by the web retailer. Sources said Flipkart too had held talks with the startup for a potential investment but those discussions fell through. Acko Technologies is the parent of Acko General Insurance, which received an in-principle regulatory clearance to launch earlier this year. People in the know of the transaction said the Seattle-based e-tailing major is likely to come on board Acko as part of a new financing round of about Rs 100 crore. This, after the company racked up Rs 200 crore in May this year as we reported earlier.

Profits dropped for SPP between March 2016 and March 2017 according to results posted at Companies House. Revenue for the company went up to £73.8m (2016: £69.6m) but operating profit dipped from £13.0m to £8.5m. Cost of sales also went up to £41.8m (2016: £35.6m). Profits dropped for SPP between March 2016 and March 2017 according to results posted at Companies House. Revenue for the company went up to £73.8m (2016: £69.6m) but operating profit dipped from £13.0m to £8.5m. Cost of sales also went up to £41.8m (2016: £35.6m). According to the document the cost of the power outage in the 12 month period was £289,000. The business also spent £1.6m on reorganisation which involved redundancies and consultancy costs in relation to a move to a divisional structure. During the period the highest paid director was remunerated £610,000.

Arc Legal Assistance has developed a Personal Cyber Support policy to offer household insurance customers access to expert support, restoration services and cover for cyber-attacks. The product is available via Brokers and according to Arc Legal can either be embedded into household cover or sold as part of a legal expenses policy.Arc Legal detailed that the policy is designed to provide immediate assistance for individuals and families in the event of a cyber-attack on their personal electronic devices. Cover is underwritten by AmTrust Europe.

InsurTech start-up Urban Jungle has completed a £1m round of seed investment from a group of angel investors. The London-based managing general agent said it would use the money to build a “better home insurance experience” for renters. According to the start-up, the round was led by Rob Devey, former chief executive officer of Prudential UK and HBOS Insurance, who also acts as the firm’s board advisor.

Stackhouse Poland has bought Caprica Healthcare for an undisclosed sum. Blackburn-based Caprica specialises in private medical insurance services to both commercial and private clients. Stackhouse Poland stated that the acquisition more than doubles the firm’s existing health insurance broking activities. Caprica was founded in 2008 by partners Peter Shaw and Kath Grimshaw.

Ten Insurance Servicesis launching a personal lines department based in Sutton Coldfield. The appointed representatives network stated that the new department will transact business from February and that the move follows on from the creation of its private clients team in September 2017. According to Ten, the new department will service most of its members. Ten staff will carry out the quotation, take-up and transaction, while client ownership will remain with the Broker. It added that network members who currently deal with personal lines themselves can continue to do so.

InsurTech start-up Digital Fineprint (DFP) has closed its second fundraising round, which it said saw new and existing investors commit $2.7m (£2m) into the company. DFP stated that UK-based software-focused venture capital firm Pentech led the round, adding that the new investors included Force Over Mass and angel investors from the insurance sector.The start-up highlighted that the list of new investors includes former Towergate CEO and latterly Non-executive Director Andy Homer. DFP uses machine learning technology, predictive modeling and social media analytics to help Insurers reach more customers.Following the investment, Marc Moens, partner at Pentech Ventures, will join DFP’s board of directors. In December 2016 DFP closed a $400,000 investment round led by Eos Venture Partners.

Organic growth in UK general insurance (GI) business at Hyperion came in at 8.3% for the year ended 30 September 2017. The UK retail arm of the Broker saw GI business rise to £39m (2016: £36m) however professional indemnity business was static at £25m. The firm did not provide profit figures.



Market Movers and Shakers

MS Amlin has announced that Simon Beale, MS Amlin’s Chief Underwriting Officer, will succeed Charles Philipps as CEO on 1st April 2018.

Liberty Specialty Markets (LSM), part of Liberty Mutual Insurance Group, has announced the appointment of Renske Franken-le-Clercq as Head of European Claims for Commercial and Specialty business written in LSM’s European branches outside London.

Covéa Insurancehas confirmed that it has appointed Nigel Johnstoneto the role of Midlands Branch Manager. Nigel will be leading teams in the Birmingham and Bristol branch offices, developing the profitable growth of its bespoke commercial and high net worth business and strengthening broker relationships in the region.  

XL Catlin’s insurance operations has appointed Simon Price to the position of Head of Mergers and Acquisitions, Insurance, EMEA. 

Marshhas announced that it had appointed Paul Moody to be CEO of its UK Specialties Division. In this role, Mr. Moody succeeds Roy White who Marsh announced that it had named Chairman of UK Specialties. Both appointments are effective as of 1 January, 2018.

Cardinus Risk Management’s CEO Andy Hawkes has been elected to the position of President of International Institute of Risk and Safety Management (IIRSM), the leading health, safety and risk management membership charity established for over 40 years with 7,500 members across the globe.

Lloyd’s Broker CBC UK has expanded its MGA, Bell Underwriting, with the appointment of Emma Bennett to head up its private client business.

DUAL, the underwriting arm of the Hyperion Insurance Group has announced two appointments: Mark Smithis the new Director of Corporate Development, and Justin Ansell is the new Head of M&A UK.

Fidelis Insurance has announced the promotion of Richard Coulson to the position of Chief Underwriting Officer of Fidelis Underwriting Limited. He takes up this role with immediate effect.

Thomas Miller, the international provider of market leading insurance services, has appointed Ann Haugh as Chief Operating Officer, with immediate effect.

LV= has announced two changes to its Group Executive Committee with the appointment of Richard Hoad to the role of Director of New Markets and Cheryl Binnis appointed as Group Strategy and Insight Director.

BGL Group has announced the appointment of Anna McEnteeto lead BGL’s Frontline business, which operates own insurance brands Budget Insurance and Dial Direct.

Aon has appointed Edward Smerdon as Head of Legal and Technical within the Financial and Professional Services division of its London-based Global Broking Centre (GBC).

Willis Towers Watsonhas appointed Patrick Murphy as Global Head of Cargo and Specie, within its Marine, Corporate Risk and Broking Division. Murphy will be responsible for client management, technical, placement and risk management specialists to support Willis Towers Watson marine clients in risk mitigation.

Chubbhas announced two key appointments to its Accident & Health senior leadership team in Continental Europe and the UK&I: Veronique Brionne has been appointed to the newly-created role of Senior Vice President, Accident & Health, Continental Europe while Andrew Nisbet becomes Senior Vice President, A&H UK&I.

All information provided in this Market Digest has been gathered from multiple General Insurance Media sources and individual company press releases.

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