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General Insurance Newsletter Friday 22nd May 2020

22 May 2020

The Ardonagh Group has published its 58-page report to investors for the three months ended March 31, and the independent insurance Broker’s financial results can be viewed from either a glass half-full or half-empty perspective. In the first quarter of 2020, Ardonagh posted a £13.7 million loss. The good news is, the figure represents an improvement from last year’s Q1 loss of £22.4 million. In addition, the group – which employs nearly 7,000 people in more than 100 office locations – recorded a £13.2 million operating profit, which is a major turnaround from 2019’s £1.7 million operating loss. Total income also saw an increase, from £157.6 million previously to £160.1 million this time around. Ardonagh’s EBITDA (earnings before interest, tax, depreciation, and amortisation) and adjusted EBITDA, meanwhile, both rose to £34.9 million and £43.6 million, respectively.

Bragar Eagel & Squire, P.C. is reminding Willis Towers Watson shareholders of the US stockholder rights law firm’s investigation concerning the Broker’s pending mega merger with Aon Plc. Initiated following the deal announcement in March, the probe is examining whether Willis Towers Watson board members breached their fiduciary duties or violated federal securities laws in connection with the transaction which is slated to cross the finish line next year. “Bragar Eagel & Squire is concerned that Willis Tower Watson’s board of directors oversaw an unfair process and ultimately agreed to an inadequate deal price,” stated the law firm in a May 20 release.

It looks like not even a global health and economic crisis could derail the growth plans of insurtechs in the UK, with a handful of them seeing May as a positive month in terms of funding. The latest to be the bearer of good news are Insurtech UK members Bikmo and Urban Jungle, the successful funding activities of which were unveiled yesterday. Bikmo, a cycle insurance specialist, has secured its first venture capital funding to the tune of £1.8 million. The Series A funding was announced by the Development Bank of Wales (Banc), which led the investment alongside Hiscox as well as existing and new angel investors. Meanwhile fully digital insurer Urban Jungle, which specialises in flexible contents insurance, has raised a further £2.5 million from Eka Ventures and other backers – bringing the start-up’s total to £6.2 million. Currently, the insurance challenger employs a workforce of 22 people who cater to more than 20,000 customers.

Budget airline easyJet, which is still reeling from the impact of the coronavirus pandemic to the aviation industry, has been dealt another blow. A cyberattack from what the airline described as a “highly sophisticated source” managed to access the email address and travel details of approximately nine million easyJet customers. “These affected customers will be contacted in the next few days,” said the British airline in a statement. “If you are not contacted, then your information has not been accessed. Other than as referenced in the following paragraph, passport details and credit card details of these customers were not accessed.

To many, London is the centre of the insurance universe. The birthplace of Lloyd’s of London, home to the famous coffee house and Fenchurch Street, the city houses office bases for just about every major insurer and broker in the world. However, with the world changing rapidly, does it still hold its lustre? According to a new report, entitled London Matters 2020, the market is still in good shape – remaining the largest global reinsurance hub. This flies against predictions that bordered on doom and gloom for the industry, with feelings that businesses would move towards more regionalised locations. In fact, the report suggests that the gap has only widened in recent times. Compared to the total amount written in Singapore, Switzerland and Bermuda, the gap has stretched from US$16 billion back in 2015 to US$23 billion as of 2018 – the most recent year included in the report.

The British Insurance Brokers’ Association (BIBA) has re-appointed Premium Credit Limited as the premium finance facility provider for its nearly 2,000 members. Premium Credit has been the only accredited provider since 2005 and it’s a testament to the success of the partnership that both parties have agreed to work together for a further five years.

The ARAG Group looks back on the most successful business year in its history. "We achieved a marked improvement on the very good results of the preceding years. ARAG is positioned for sustained successs," explained Dr. Paul-Otto Faßbender, Chairman of the Board of Management and majority shareholder of the ARAG Group, at the annual press conference. Due to the COVID-19 pandemic, this year's annual press conference was conducted by telephone. ARAG reported gross written premium income of €1.76 billion as compared to €1.65 billion in 2018. That amounts to a gain of €110 million or 6.6 percent. Consolidated turnover - including revenue from ARAG service companies - came to €1.79 billion. The underwriting result reached another ten-year high at €98.5 million. Profit on ordinary activities rose sharply by 70.7 percent to €119.9 million. With net after- tax income of €77.5 million, ARAG achieved the best result in its history.

Airmic, the UK association for risk and insurance professionals, has announced it will be hosting a major three-day virtual festival in September for risk and insurance professionals and the wider risk and insurance community. Airmic Fest will take place on 22 – 24 September 2020 and is expected to be the biggest ever online risk management event in the UK. The three-day programme will include a combination of webinars, bite-sized HUB sessions, high-profile speakers, panel debates and online networking opportunities as well as a festival floor where exhibitors can showcase.

Pukka Services, part of Freedom Services Group has signed to adopt SSP’s award winning Insurer Hosted Pricing Solution – Intelligent Quotes Hub (IQH) for rating, pricing and data enrichment across the whole of market broker distribution to support its impressive growth plans.

Beazley has raised £247m through a placing and subscription of new ordinary shares, representing around 15% of its ordinary share capital prior to the move. The Provider noted that the funds will be used to position the business for organic growth and strengthen the balance sheet in light of continued uncertainty arising from Covid-19. Beazley’s share price has increased by almost 10% since the move was announced on 19th May. Over 78.5 million new ordinary shares of five pence each in the capital of the company (the "placing shares") were placed by J.P. Morgan Securities plc and Numis Securities Limited at a placing price of 315 pence per placing share. This placing has led to Beazley raising £247 million in fresh capital. The placing price of 315 pence represents a discount of 4.9% to the specialist insurer’s closing share price of 331.4 pence on May 18, 2020.

Amid the coronavirus outbreak, digitalisation has arguably never been more important. With that idea in mind, AXA Partners is offering a new way of managing home emergency claims that it believes will enhance the online customer journey. The company has developed ‘Home Manager’, which allows customers to digitally track claims and provides full transparency through the claims journey. The idea is that once a claim is registered, the customer will receive an SMS directing them to Home Manager where they can upload photos, set appointment times and track the contractor’s arrival. A summary of the repair is also outlined.

Warren Buffett’s Berkshire Hathaway has sold its remaining stake in insurance firm Traveler Companies Inc. as part of several divestments, a financial filing released by the Security and Exchange Commission (SEC) on Friday revealed. The stakes were worth about US$43 million on December 31. The billionaire investor’s company also slashed its Goldman Sachs holdings by 84%, from about 12 million shares at the end of last year to fewer than two million on March 31, shrinking the value down from about US$2.8 billion to less than US$300 million. Goldman’s stock price fell by a third in the first quarter.

Chill Insurance has reportedly caught the eye of several private equity (PE) investors, with the race being led by London-headquartered mid-market PE firm Livingbridge. The latter has emerged as the top contender for an investment in the Irish online insurance broker, according to sources cited by The Sunday Times. The Dublin-based intermediary is looking to grow further after snapping up Aaran Insurances last year, and PE backing is among the likely routes to take.

Insurer AXA has announced a strategic partnership with hospitality company Accor to provide medical support to guests across 5,000 Accor hotels worldwide. The partnership will enable Accor guests to benefit from the medical services of AXA Partners, AXA’s international entity specialising in assistance services, travel insurance and credit protection. Accor guests will be able to access the benefits as soon as July, AXA said.

AXA UK has offered its insights as part of the flooding consultation conducted by the Parliament’s Environment, Food, and Rural Affairs Committee (EFRA), and the Insurer has a number of proposals in mind. These include reforming building regulations and maintaining a special Flood Re database. In AXA UK’s view, building regulations should be reviewed and reformed to build flood resilience into properties as standard. In its response to the EFRA inquiry, the British operations of AXA Group said doing so would allow Insurers to provide support to their customers in all at-risk properties.

During a time when most insurers have been reporting expensive hits from the COVID-19 pandemic, it seems the waters are comparatively smooth for Marine Insurer Skuld. Admittedly, its full year financial results, which have just been reported for the year ending February 20, 2020, don’t take into account the peak period of the coronavirus pandemic – but, nonetheless, they are still eye catching. The firm has enjoyed a bottom line result of US$25 million – that’s a 127% increase on its US$11 million result in 2018/19.

The battle against fraud is one that the insurance sector is well accustomed to, but when a medical professional is struck off as a result it’s a reminder that the issue cannot be taken lightly. That is what has happened to Mr Adeshina, the director of Physique Rehab Ltd. Having previously been given an 18-month suspension from the Healthcare Professions Tribunal Service (HCPTS), he has now been taken off the HCPC register on the back of an investigation by Mulsanne Insurance and insurance law firm Keoghs.

 

Coronavirus-related News

Brokers with clients in the UK need to look closely at their post-Brexit arrangements even throughout the difficulties caused by Covid-19. The British Insurance Brokers Association (Biba) has warned Brokers with EU clients could be forced to give them up if the UK crashes out of the EU with no deal on 31 December this year. The UK is currently in an implementation period where it still abides by customs union and single market agreements and obeys EU rules after officially leaving the union on 31 January this year.

Risk Managers predict that a prolonged global recession due to the coronavirus pandemic is likely coming our way, according to “COVID-19 Risks Outlook: A Preliminary Mapping and Its Implications,” a survey published by the World Economic Forum (WEF) in partnership with Marsh & McLennan and Zurich Insurance Group. The nearly 350 respondents listed the economic fallout from COVID-19 as one of their top concerns. The repercussions include a recession, weakening in the fiscal position of key economies, stricter restrictions on the cross-border movement of goods and people, and the collapse of a major emerging market. Fifty per cent of risk managers surveyed expect bankruptcies and industry consolidation as well as challenges in industries struggling to recover and high levels of unemployment, especially among younger populations.

The COVID-19 pandemic has prompted a surge in cyber incidents – and now the UK Government appears to be ignoring a serious warning from the National Cyber Security Centre (NCSC). Major departments within the government have purchased more than 700 Zoom video conferencing licences, despite official warnings. A total of 731 licences have been ordered since the outbreak began with the Ministry of Defence picking up 550, the Cabinet Office 150, the Home Office eight, the Treasury five and the Foreign and Commonwealth Office 15.

The sector has united to highlight its disappointment in the insurance industry following the coronavirus pandemic and lockdown. The Association of British Insurers (ABI) Director General, Huw Evans, warned that the insurance industry has not collected enough premiums to pay for all claims arising from Covid-19. Evans wrote: “The scale of the problem would see the cost of such payments easily run into billions of pounds for which the insurance industry has not collected premiums or reserved."

Law firm Mishcon de Reya names Aviva and QBE and is in discussions with third party funders to fund the litigation on behalf of hospitality sector which it expects to move forward by 10 June. The Hospitality Insurance Group Action (HIGA) has revealed that its group litigation will be focused on two insurers, QBE and Aviva. The action group appointed law firm Mishcon de Reya, in conjunction with leading counsel Philip Edey QC, of Twenty Essex Chambers, to review over 500 business interruption policies submitted by applicants between 29 April and 6 May 2020.

It would be easy to think that leaving any building alone would reduce its risk level – after all, fewer people means fewer accidents. However, anyone in the insurance industry will tell you that simplistic view is far from accurate. Nowhere is that clearer than in the UK’s universities and research laboratories, which look set to remain empty for the foreseeable future amid the COVID-19 pandemic. New research from Zurich Insurance has highlighted that between 2016 and 2019, its university customers were hit with £15 million worth of water damage – and with buildings empty, the risk of water damage is on the rise.

Being at sea can be risky and difficult at the best of times – but amid the ravages of COVID-19, those concerns have only mounted. That is why Marine Insurers The American Club and Eagle Ocean Marine have produced a new YouTube video entitled Weathering the Storm to salute the services that seafarers are offering during the pandemic.

FM Global, one of the world’s largest Commercial Property Insurers, has issued a ranking of nearly 130 countries based on the resilience of their business environments – a factor the insurer deems especially critical amid the COVID-19 pandemic. The 2020 FM Global Resilience Index provides information about countries’ economic, risk quality and supply-chain resilience – which, the insurer said, “create a springboard for businesses working to recover from the pandemic.”

As lockdowns continue across the globe, insurance products and services are coming under greater scrutiny. Many are concerned that their products do not provide adequate cover or will keep them protected throughout the duration of the pandemic. There are also those who are in financial difficulty because of the coronavirus, making it difficult to afford keep up with payments of premiums or premium finance loans. To address these concerns, the Financial Conduct Authority (FCA) have announced a series of temporary measures that require firms to consider what options they can provide to customers. These measures will come into force on Monday 18 May 2020 and will be reviewed in the next three months in the light of developments regarding coronavirus, with revisions if appropriate.

The Night Time Industries Association says Provider has denied claims after previously telling policyholders they would be covered. Hiscox has been criticised for u-turning on its decision around a business interruption claim. According to the Night Time Industries Association (NTIA) the provider is refusing to pay out a claim after having previously confirmed that the policyholder, Senate Group, would be covered for coronavirus related Business Interruption losses of up to £100,000.

Hiscox Action Group is to launch an arbitration claim against Insurer Hiscox over unpaid BI claims within days and has been told by its lawyers, Mishcon de Reya it has a good chance of success. According to the pressure group it represents more than 400 SMEs with up to £40m in claims between them. Its law firm now intends to launch an “expedited arbitration claim” against Hiscox within days.

Younger employees most at risk of burnout during lockdown as survey reveals 1 in 5 are putting in more work hours due to career concerns Employers could see increases in burnout and decreases in mental wellbeing due to employees’ working from home habits during lockdown, research by QBE, the business insurance specialist, revealed. The survey of UK employees working from home with no change to their contracted hours following the Covid-19 government lockdown finds that younger employees, between 18-34, appeared to be struggling the most with finding a work/life balance under lockdown, with this age group reporting an average of 3 extra hours of work per week, and 17% saying they were working 10 hours or more extra each week. Younger employees were also most likely to admit that they felt under pressure to deliver more because they were worried about losing their jobs (36%) and the impact this current period could have on their careers (42%).

The UK insurance and long-term savings industry today launches a new fund to help support some of the people hardest hit by the Covid-19 crisis. The Covid-19 Support Fund aims to raise £100 million, with £82.6 million already having been pledged. The Fund will comprise voluntary contributions from firms right across the sector. It is in partnership with the Charities Aid Foundation, and a network of partners, including the National Emergencies Trust. The key aim is provide immediate relief to charities affected by Covid-19, as well as a longer-term programme of support for people, communities, and issues where there is the greatest need.

From impacting trading results to affecting the mental health of those in lockdown, COVID-19 has left no stone unturned when it comes to disrupting the operations of economies, businesses and individuals throughout the world. Now, new findings from one of the UK’s leading car Insurers, Admiral, have illustrated the impact that coronavirus is having on the driving habits of motorists across the country. The recent lockdown easing announced by Boris Johnson urged those who cannot work from home to return to work but included the caveat that public transport should still be avoided. Admiral’s report, which polled over 1,400 drivers in the UK, revealed that 87% of respondents are afraid to take underground trains or buses while only 27% feared using a personal car for transportation.

The Chartered Insurance Institute (CII) has committed to contacting more 2,500 candidates who were due to take written examinations for units AF7, AF1, AF5 and RO6 on July 06 and 07 this year to inform them that they can now complete their exam on-screen through an online remote invigilation while the exam centres remain closed.

Liberty Mutual Insurance has appointed David Perez to serve as Chief Underwriting Officer for Global Risk Solutions (GRS) – the company’s global Commercial and Specialty lines Re/Insurer. Perez succeeds James Slaughter, who will leave the company on June 30, 2020. In his new role, Perez will partner with underwriting leaders across GRS to drive strategy and operations – all to maximise the value Liberty Mutual provides to Brokers and clients.

Allianz Group has announced the appointment of Dr. Catharina Richter as Global Head of its Cyber Center of Competence (CoC). The appointment will take effect June 01. The CoC coordinates and steers Cyber risk underwriting and governance for Allianz Group, and is part of Allianz Global Corporate & Specialty (AGCS), Allianz Group’s corporate insurance specialist. In her new role, Richter will report to Thomas Sepp, AGCS Chief Underwriting Officer, Corporate, and Board Member.

Axa XL announces additions to its Private Clients team in the UK. The Insurer has made a number of appointments across its High Net Worth business. Chris Lewis has been appointed as Independent Broker Sales Manager, James Ellis is appointed as Underwriter (effective immediately), Steve Morse is appointed as UK Underwriting Manager (effective 1 June), Tom French is appointed as Sales Manager (effective 1 July).

Open GI has confirmed the appointment of Giles Baxter as Chief Information Officer for the group. In this newly created role, Baxter will take responsibility for leading the development and delivery of Open GI’s new software solutions for the GI market. The role takes effect from late June this year.

Arch Insurance (UK), part of Arch Capital Group, has appointed Alison Merriman as Broker Relationship Development Manager, with immediate effect. Based in Manchester, Merriman will be responsible for building and maintaining the division’s broker relationships. She will work closely with Louise Hopkins, branch manager for Manchester, and the underwriting teams and will focus on expanding Arch Insurance’s UK regional presence.

Clear Insurance Management has announced the Board appointments of Tim Money as Chief Financial Officer and Nick Gallimore as Group Operations Director, both subject to FCA approval.

Aviva has announced the appointment of George Culmer as Non-Executive Chairman with effect from the 27 May 2020, following the Aviva AGM. Culmer replaced Sir Adrian Montague who will retire from the Board on 31 May this year - a move originally announced in January.

MS Amlin Underwriting Limited (MS AUL) has announced the appointments of Johan Slabbert and Martin Hudson as Non-Executive Directors. Subject to regulatory approval, Slabbert will also be appointed Chairman of the MS AUL Board, taking over from Gilles Bonvarlet who will transition to an Independent Non-Executive Director role. Hudson will take on additional duties as Chairman of the MS AUL Underwriting Committee. MS AUL has also announced that Derek Thornton, who serves as a Non-Executive Director, is to retire from the Board.

Gallagher has announced that it has further invested in its litigation expertise with the appointment of two experienced insurance law practitioners. Ian Coleman has joined as both an Originator and Technical Director bringing a wealth of underwriting criteria and assessment experience, with a focus on policy wordings. Ian qualified as a Solicitor in 1992 and has held Senior Underwriter roles at leading ‘After The Event’ commercial and competition insurance litigation Insurers since 2006. James Bailey, also a qualified Solicitor, has joined as a Technical Director. James brings specialist experience relating to litigation, policy wordings and legal issues relating to the Insurance Act 2015.

 

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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