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General Insurance Newsletter Friday 23/02/2018

23 Feb 2018

Market News

Swinton Insurance is closing 40 of its branches in a move that puts 268 people at risk of redundancy. This follows on from the Broker’s restructure last year which put 900 roles at risk and 84 branches under review. Those branch changes were in addition to the 130 closures announced in February 2016.

Moneysupermarket has revealed a 12% jump in revenue from its insurance operations to £173.6m for the year ended 31 December 2017.

RSA UK has posted an underwriting loss of £116m in 2017, compared to an underwriting profit of £123m in 2016. The Insurer stated that the losses were a result of adverse weather events in the US and Mexico, adverse large loss volatility and higher claims inflation in its household business.

Even with US$120 million (around £86.3 million) in losses from the California wildfires in the fourth quarter and pretty much a whole year badly hit by catastrophes, PartnerRe stands on solid ground as it reports positive returns for shareholders.

This week fast food chain KFC has seen its chicken shortage create something of a national crisis - it was forced to close hundreds of its 900 UK outlets as a result of a major delivery disruption, which occurred after it switched delivery providers. But how are supply chain risks generally insured today and would KFC be covered? Mark Wing, Partner at international law firm Clyde & Co commented “Supply chain insurance is a great example of a cover that is still evolving to respond to the increasingly complex and interconnected environment in which businesses operate.” Cover for supply chain risks falls under Business Interruption insurance, which historically has been limited to interruption flowing from damage to the insured’s own property. “This meant, however, that an event which does not have a physical effect on the insured’s property – such as DHL’s failure to distribute chicken to KFC’s restaurants – would not give rise to an insured Business Interruption loss under a standard policy, even if that event had a significant effect on the insured’s business,” Wing explained. However, with the introduction of Contingent Business Interruption came the provision for limited cover in other types of scenario – for example, the loss of power to the insured’s property. More recently, Insurers have begun selling specific supply chain cover, which can be triggered by disruptions in the insured’s supply chain which have a negative impact on the business.

Shares in the AA hit an all-time low previously, but now there’s an even deeper low for the insurance and breakdown provider, which itself has revealed a dismal outlook. A report by Alliance News described the troubled roadside assistance firm as “languishing” at the bottom of the FTSE 250. On Wednesday, the AA saw its shares crash to a new low of 81.10 pence in early trade before closing down 28%.

Forget awards season, it’s results season in the insurance market and now it is AXA UK & Ireland’s turn to take center-stage. The firm has revealed its full-year 2017 results this morning and has pointed to a strong performance “in its preferred segments of health and commercial lines.”

Political risk is going to be a major concern for multinational businesses this year, according to a paper published on Wednesday by Marsh. Tensions will be driven by events including the North Korean missile crisis, trade protectionism and the ongoing Brexit negotiations, Marsh said.

Research by Ecclesiastical shows lack of knowledge in the Broker sector about the incoming General Data Protection Regulation (GDPR) legislation. Over half (59%) of Brokers don’t know enough about the forthcoming GDPR legislation according to a survey by Ecclesiastical. The survey further revealed that the majority of Brokers (70%) thought that the GDPR will not be of benefit to their business and 77% believed it would have a negative impact.

Arnott Marine has launched a product, backed by Lloyd’s capacity, which covers Employers, Public and Product Liability for small marine businesses. The facility is designed for firms with a turnover of up to £200,000 and includes limits of up to £10m and cover for tools. The insurance includes removal of wreck and foul berthing cover. Steve Gordon, Director for wholesale markets at Arnott Marine said: "We’re really happy to be bringing this product to market."

In other news... Kanye West and Lloyd’s have settled their legal disagreement after the rapper sued a number of Syndicates for $10m (£7.4m), according to reports. In an article badged as exclusive and entitled ‘Kanye West Kicks Lloyd’s of London’s Ass’, TMZ reported that the two parties had settled the case out of court.

Over before it’s even begun: A “secret” life insurance merger plan between Lloyds Banking Group and Standard Life Aberdeen (SLA) has reportedly gone kaput after advanced talks. Sky News said the two were close to reaching a deal but the bank didn’t want to pursue due to disagreements related to ownership structure. The merger would have involved £300 billion of client assets, according to the report.

Hiscox has been found not guilty of all charges brought against it by the Information Commissioner’s Office (ICO). The case had begun at Southwark Crown Court in London on Thursday 8th February. It had been brought by the ICO against Hiscox Underwriting on three charges of breaching the Data Protection Act 1998. If found guilty the Insurer, which had denied the charges, faced an unlimited fine.

Coversure Insurance Services has opened a new office in Falkirk in Scotland. The new location marks a return to Scotland for the Broker as Coversure has been without a Scottish office since 2004. The business stated that the new office is owned and run by Graham Lilley, who has previously worked at Giles Insurance Brokers, Lloyd’s of London and Westinsure.

Aspen Insurance Holdings has announced that it has ceased underwriting Property insurance on its Bermuda platform. In a release, the company said that the move was a result of its considerable catastrophe losses in 2017. The Royal Gazette reported that the unit was closed last week, just a few days after the company reported losses for Q4 2017.

Insurtech eviid, or YRFree Technologies Ltd, has expanded both its workforce and reach after what it described as a “highly successful” fourth quarter. Based in London and Liverpool, the young company is growing beyond the UK with the opening of a sales office in the Netherlands. It has also beefed up its developer and support teams with six new hires since January.

The Fintech Delivery Panel has formed an insurance technology and innovation subgroup with representatives from InsurTech startups, Insurers and market bodies including the British Insurance Brokers’ Association, the Association of British Insurers and Lloyd’s of London. The initial priority for the group is to establish a common vision for InsurTech in the UK in order to position the UK as the best environment to start or locate an InsurTech business. The Fintech Delivery Panel was launched in January 2017 by Tech City UK at the request of HM Treasury to promote the UK InsurTech agenda and help InsurTech companies to scale up and compete on a global stage.

Figures from the Financial Conduct Authority (FCA) have revealed that the number of cyber incidents reported to the regulator by financial services firms went up to 69 in 2017. This is up from 38 and 24 in 2015 and 2016 respectively. Focusing on general insurance and protection, 2017 saw 11 cyber attacks reported compared to just one in the previous year.

Ageas UK has posted a net profit of €29m (£25.5m) in 2017, compared to a loss of €156m in 2016. The provider stated that its profit had been affected by a residual Ogden impact of €46m. Its combined operating ratio (COR) for 2017 improved to 103.2% (2016: 112.2%) and the Insurer noted that excluding the impact from Ogden its COR was 99.5%.

Jon Dye has described the 2017 figures for Allianz UK as a solid set of numbers. The Insurer posted a combined operating ratio (COR) of 97.8% for the year and an operating profit of £121.3m for the 12 months of which £36.7m came in the final quarter.

Zurich has launched the UK Innovation Foundry, a formal brand through which it will run its InsurTech and innovation ideas. A spokesman for the Insurer told Insurance Age that the new venture, led by Zurich UK Head of Innovation Mark Budd, would look to partner with external InsurTech firms as well as explore ideas coming from within Zurich.



Market Movers and Shakers

GoCompare welcomes Silicon Valley tech executive Joe Hurd. The Board of Group Plc ("GoCompare") is pleased to announce the appointment of Joe Hurd as an Independent Non-Executive Director with effect from 22 February 2018.

The Managing General Agents’ Association (MGAA) has announced the appointment of Marco Del Carlo, Managing Director of Tempo Underwriting, as a new Board Director at its annual general meeting today. Del Carlo is founder of Tempo Underwriting, which is an underwriter-led, multi-line MGA, focused on specialty lines business. 

The Insurance Fraud Bureau (IFB) is pleased to welcome David Nichols, Chief Claims Officer at Zurich and Graham Gibson, Chief Claims Officer at Allianz onto the IFB Board. This follows the unveiling of the new two-tiered Board structure last October, with the announcement of the new IFB Board and a General Insurance Fraud Committee (GIFC). 

Industry veteran Paul Silver is handing over the reins to Charles Taylor Adjusting’s (CTA) new Marine Managing Director for Europe and Singapore. Oliver Hutchings, former divisional head at Charles Taylor’s management services business, has been appointed as Silver’s successor and will look after the Marine unit’s specialist claims management and adjusting services in the areas of Hull, Superyacht, Marine Liabilities and Cargo, as well as marine average adjusting under the Richards Hogg Lindley brand. Trained as a Barrister, the MD has more than 10 years of experience in managing specialist Marine Liability claims.

Group CEO Ian Laycock and group MD Andy Morley have led a management buyout of Yorkshire-based ProAktive Risk Group. The £2m deal sees founder Jon Whiteley step down from the day to day management although the business confirmed that he will continue to play a role and “retain a significant shareholding”.

There is a new man at the helm of Saga. The specialist Insurer, which focuses on products for the over 50s, has named Patrick O’Sullivan its new Chairman effective on May 1st 2018. O’Sullivan’s most high-profile role is at Old Mutual, where he has been Chairman since 2010.

Former National House-Building Council (NHBC) Finance Director Richard Tamayo has been appointed to CRL’s board. Effective immediately, Tamayo is joining the Construction insurance specialist as independent Non-Executive Director. With more than two decades of experience in both construction and insurance, the latest board addition also served as Finance Director at the likes of Berkeley Homes.

BIBA has appointed Julie Page, CEO of Aon Risk Solutions as its Deputy Chair. She has been on BIBA’s board for nearly four years and replaces Tim Ryan from Ryan Insurance Group who has been Deputy Chair since 2015 and remains as a BIBA board member.

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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