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General Insurance Newsletter Friday 26th June 2020

26 Jun 2020

Howden Broking Group announced that it has been granted its licence to operate in the Belgian market. As the largest international insurance Broker with employee ownership at its heart, Howden combines in-depth local knowledge with the scale of a global player. Industry veteran Herman Kerremans will lead this latest opening and, with an established team, deliver best-in-class specialty solutions to clients across the Benelux region, further strengthening the Group’s presence in Europe.

In further news... The Cyber insurance landscape is highly competitive – so earning a top honour in the segment is certainly something to be proud of. That’s why celebrations are due for Howden Broking Group, which has been named Risk Retail Broking Team of the Year at the Advisen Cyber Risk Awards.

UK-based Capacity Place, which has been likened to digital marketplaces such as Amazon or Ebay, but for the insurance programs market, has launched. The company has been set up to make it easier for insurance professionals to find relevant trading partners for their insurance programs and is initially targeting the London insurance market. “We believe this is a unique product that will revolutionise the way the market interacts,” said Capacity Place CEO, Marco Del Carlo. “Many companies seeking capacity for their insurance programs are struggling with knowing which risk carriers to approach, how to approach them, what information is needed and how can they safeguard their commercially-sensitive information.”

Acturis has reported a 15.6% rise in revenue for the year ended 30 September 2019, according to its latest set of financial results. The software house said revenue for the year was £89.7m, up from £77.6m in 2018. However, it also revealed a drop in operating profit to £26.8m in 2019 (2018: £29.1m) and a pre-tax profit of £29.9m, down from £29.3m in the preceding year. In total, Acturis reported a profit for the year of £30.3m, an uptick on the £24.1m achieved in 2018.

Marsh has launched a dedicated Sport, Entertainment and Media (SEM) industry group in the UK and Ireland to support the sector, which has been heavily hit by Covid-19. The Broker stated that the group, led by Richard Tolley, brings together over 60 client management, technical, placement and risk management specialists from across the business. It aims to support Marsh’s SEM industry clients – from SMEs to global corporations – in mitigating the risks they face.

Thomas Carroll’s 2019 Report and Accounts have been published following another successful trading year.  The core insurance broking business Thomas, Carroll (Brokers) Ltd, including the wholly owned subsidiary Thomas Carroll Brokers Swansea Ltd, have delivered another year of sustainable, profitable growth against a backdrop of continued investment across the business. Across these two businesses alone, income has grown 8.7% to in excess of £7.8m and profit before tax increased 35.9% to £990,298 from £728,958 in 2018.  Through investment, expenditure has modestly increased 5.9% with growth in employee numbers, expansion of office space in Newport and London premises and a full refurbishment of the Caerphilly HQ to create a new modern and more comfortable working environment.

The Ardonagh Group has agreed to buy the holding companies of Bravo Group and Arachas and announced a $500m (£401.3m) notes offering. Bravo Group comprises Ethos Broking and Compass as well as Broker Network, which Ardonagh, then Towergate, sold to HPS Investment Partners and Madison Dearborn Partners in 2016. According to Ardonagh Bravo placed approximately £2.6bn of GWP, both directly through Ethos and indirectly through its networks last year.
In other news...Mergers in the insurance industry are commonplace, but it’s bigger-than-usual news when the buyer isn’t even profitable. Actually in the red, Ardonagh suffered £102.7 million and £74 million in full-year losses in 2018 and 2019, respectively. Ardonagh’s expansion is loan-powered, this has resulted in credit rating agency Fitch Ratings downgrading the insurance Broker’s long-term issuer default rating from ‘B’ to ‘B-’. “The downgrade of Ardonagh follows the total £2 billion refinancing of its debt structure enabling the company to fund the acquisitions of the Bravo Group and the Arachas Group,” noted Fitch Ratings.

The coronavirus pandemic doesn’t appear to have slowed the “momentum” for Momentum Broker Solutions. The network for independent Brokers saw its GWP increase in the period up to March 31 this year and it has also snapped up nine new ARs and six new Broker start-ups during the lockdown period. Among its notable results, revenues have spiked by 14% while pre-tax profit has grown by 19%. Overall, the network has managed to double in size over the course of the last three years and now boasts more than £35 million in GWP.

Brokers should keep their eyes firmly fixed on creative businesses – the sector is booming, and, according to the Creative Industries Federation, now accounts for one in eight of all businesses. With market demand growing and more than two million people employed in the sector, Create Insurance has formed a partnership it hopes will help cover creative individuals through a deal with Mazuma. It claims the agreement will give freelancers and small businesses “unrivalled” access to both accountancy services and specialist insurance products.

Legacy specialist Compre has received the green light from the Bermuda Monetary Authority (BMA) to set up a Class 3A reinsurer on the island. The move, designed to give the firm more access to the US run-off market, is consistent with its plans for expansion across both the US and Lloyd’s legacy markets. The firm is now working with the BMA to finalise the registration and licensing process – something it expects to complete within the coming weeks.

Cyclist insurance challenger Laka has rolled out a new product designed to support policyholders not only on, but also off the bike. Backed by Zurich, the “Recovery” accident and injury policy covers even activities such as skiing, surfing, and hiking, and provides post-incident psychological treatments as well.

IT and business consulting firm CGI has announced a partnership with the Association for Cooperative Operations Research and Development (ACORD), the standard-setting body for the global insurance industry, as its strategic global messaging partner. CGI said it would focus on leveraging the ACORD Conductor service to “influence the benefits of data standards and facilitate inbound and outbound messaging transmission” through CGI’s insurance product.

Willis Re Securities, in collaboration with Willis Re – the reinsurance division of Willis Towers Watson – has announced that it has structured and placed €100 million (around £90 million) of insurance-linked securities (ILS) for Achmea Reinsurance Company N.V., the reinsurance arm of Dutch insurance group Achmea B.V.

The Lloyd’s Council has given Nephila Syndicate Management Ltd (NSM) the go-ahead to create Syndicate 2358 as part of the Future at Lloyd’s initiative. Slated to be launched in the fourth quarter, the new syndicate will write a diversified portfolio of Lloyd’s specialty risks aimed at offering a complementary source of returns for institutional insurance-linked securities (ILS) investors looking to broaden their exposure into specialty lines.

When developing your commercial flood proposition, why not call on the help of two market innovators? That is what Mason Owen Financial Services has done, with the brokerage teaming up with both Qlaims Insurance and FloodFlash for its latest proposition. FloodFlash, of course, installs mobile-connected sensors at the client’s property, which report on flooding. A parametric policy is agreed on from the outset and this automatically pays out when the water reaches a certain height and the sensor is triggered. Now, Mason Owen will offer the client a policy from Qlaims Insurance alongside the FloodFlash policy – clients can then call on Qlaims’ loss adjustors in a project manager capacity as the property is repaired.

Plum Underwriting has partnered with Pact Global to tap the latter’s AI-powered claims-as-a-service (CaaS) platform. According to a statement by the firms, the platform will help significantly reduce fraud exposure, accelerate the claims process, and gain enhanced customer insight. As part of the partnership, Pact developed a mobile app for iOS and Android and a web portal that allows Plum to quickly confirm the customer’s identity as well as help detect whether the claimant is not telling the truth, using variations in speech and facial or bodily expression.

Primary Group has confirmed that it is to take a majority stake in UK General Insurance. The deal, which has received regulatory approval, will return the Leeds-based MGA to Primary after it was sold to J C Flowers in 2017. Michael Warren, CFO at Primary Group, who will join the UK General board, said: “We are delighted to become the majority shareholder in UK General and believe the business is well-positioned to build its presence in the UK insurance market at a time of major change for the MGA sector.

TL Dallas has detailed that it is set to focus on growth after hiring Tim Mortimer, former Regional Director at Marsh Commercial, as Managing Director of its commercial division. MD Polly Staveley commented that "the firm is now ready to move into a growth phase. She detailed: “As with a lot of independent firms we’re all busy and client facing so the opportunity came for us to recruit Tim as someone who can spend time on the strategy of the business rather than the day-to-day client operations."

NMU has enhanced its Cargo offering with a new product. The Provider said the policy is one of the most comprehensive yet easy to understand Cargo wordings in the UK market. It also incorporates new extensions for financial loss, unauthorised occupants of vehicles and unexpected return of goods.

Park Insurance has been awarded corporate Chartered status by the Chartered Insurance Institute (CII). Managing Director, Marc Loud, commented: “Achieving Chartered Insurance Broker status means a huge amount to us, as it shows to our customers that we’re a reputable, trustworthy business that delivers fair and impartial advice, as well as following all the strict protocol laid down by the Institute. It’s a great achievement and we’ll be displaying our certificate with pride!"

Castle Insurance Services Managing Director Paul Younger has stated that the Broker is actively looking to make more acquisitions. This follows the Durham-based firm’s purchase of another local independent Broker, EW Knapton, which was announced earlier this month.

Livingbridge, a mid-market private equity investor, has announced investment in Chill Insurance, a Personal Lines Broker based in Dublin. Chill has around 250 staff and was founded in 2006 by brothers Padraig and Seamus Lynch. It now has 200,000 policyholders and 6% of market share. The deal was for an undisclosed sum.

The Central Bank of Ireland has disqualified Rory O’Connor, former Executive Director and Chief Financial Officer of RSA Ireland (RSAII), from being a person concerned in the management of a regulated financial services provider for eight years and four months. O’Connor was also fined €70,000 (£63,380) by the Central Bank for his admitted participation in a breach of financial services law by RSAII.

Swiss Re Corporate Solutions announces a strategic agreement to bring LocalTapiola onto its International Programme Administration (IPA) platform. Additionally, the agreement gives the Finnish Insurer access to Swiss Re Corporate Solutions' network of over 150 local offices and network partners. The collaboration supports LocalTapiola's ambitions to grow its corporate business book by competing as lead for international programme business.

Saga Plc has provided a peek into its operating performance for the February 01 to June 21 period, with a trading update issued ahead of the company’s online annual general meeting on June 22. “The insurance business has been resilient and continues to make progress, with performance led by the success of our three-year fixed-price policies,” stated the Kent-headquartered group, which specialises in products and services for people aged 50 and over.

The American Club held its first-ever virtual annual meeting last week, a move made necessary by the COVID-19 pandemic. Members were told during the meeting that the club had made solid progress across all business lines over the previous year, with 2020 also starting on a positive note.

There will soon be a new Managing Agency after Lloyd’s gave the green light to what has been described as a “big milestone.” Probitas 1492 will establish Probitas Managing Agency Limited after assuming the management of Syndicate 1492 from Capita Managing Agency. It has received in principle approval from Lloyd’s and will now look for the final stamp of approval from the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).

Legal Expenses Insurer Arc Legal Assistance has struck a deal in the Republic of Ireland. The company will provide commercial Legal Expenses cover for Optis Insurance. The product is set to be offered as standard within its commercial insurance offering, meaning policyholders can benefit from expert legal expenses cover for employment disputes.

Two giants of their respective industries have announced a new partnership – with AXA to team up with Western Union. The move will see AXA provide insurance products to the money movement firm’s customers via its online service. Known as Transfer Protect, and initially launched as a pilot in France with AXA Partners, it means that customers sending money via the service have the option to sign up for a life and disability insurance solution. It is hoped this will provide “peace of mind” to migrant workers and family members that they will receive payments even in case of a life or disability event.

BIBA’s member Cyber insurance scheme has just been renewed with CFC Underwriting. Originally launched back in 2004, the scheme sees the MGA provide support and guidance on Cyber issues to members and included the launch of a Cyber insurance guide back in 2018.

British insurance giant Prudential Plc, which in 2019 let go of its UK and European savings and investments arm and now describes the group’s portfolio as “Asia-led,” has moved to own less of its operations in the US. An agreement has been reached with Athene Holding Ltd that will see its subsidiary Athene Life Re invest US$500 million in Prudential’s US business in exchange for an 11.1% economic interest with a corresponding voting interest of 9.9%.

New York’s MetLife, Inc. subsidiary Metropolitan Tower Life Insurance Company has entered the world of longevity reinsurance in the UK through a Pension Insurance Corporation Plc (PIC) deal involving approximately £280 million of pension liabilities.

In what has been dubbed a “landmark” agreement, the Association of Medical Insurers and Intermediaries (AMII) has revealed that the PMI industry in the UK will be adopting the electronic transfer of underwriting direct between Insurers. Executive Chairman, Stuart Scullion, described it as an “immensely proud moment” while praising the “vision and determination” of those who had made it come together.

 

Coronavirus-related News

Lloyd’s announces plan to reopen Underwriting Room on 1st September. They commented "There are detailed plans in place to enable the reopening of our London headquarters and iconic underwriting room on 1 September 2020*, whilst adhering to government guidelines ensuring social distancing. The health and safety of all market participants and minimising the spread of the COVID-19 virus remain the principal priorities. Therefore, the Lloyd’s building and underwriting room will reopen with several important safety measures in place."

Marsh has disputed RSA allegations its clients should be liable for brokered policy contract issues in the Financial Conduct Authority’s Business Interruption test case, as Brokers were dragged into the ongoing proceedings. Insurers hit back at claims they were liable to pay out on BI policies in defense documents filed on Tuesday 23 June, all arguing that policies were never meant to pay out for global events. Arguing on behalf of policyholders, the FCA has said if necessary it will rely on the contra proferentem argument, also known as ‘interpretation against the draftsman’, which it says means the defendants’ subjective intentions are “neither relevant or admissible”. A number of insurers also turned on brokers arguing that it was their job to advise their clients to purchase the right sort of policy.

The Hiscox Action Group (HAG) has formally applied to intervene in the Financial Conduct Authority (FCA) insurance test case following, the group claimed, “Hiscox’s failure to agree to an expedited arbitration process”. The group, which initially elected to pursue its own action, now wishes to take part in the case and, despite the FCA acting on behalf of policyholders for the proceeding, it also wants policyholders to be involved and “have a voice”.

The Chartered Insurance Institute’s 2019 annual report is now available to view online and the professional body will hold its first ever virtual annual general meeting in October. For the first time in the professional body’s 108-year history the CII’s annual general meeting will take place online only at 2pm BST (GMT+1) on Thursday 8 October.

The rise in remote working due to the COVID-19 pandemic will increase the risk of cyberattacks, giving Insurers an opportunity to improve their Cyber insurance penetration rate, according to analytics firm GlobalData. The company said that cyber uptake had been on the rise even prior to the outbreak. “Cyber insurance uptake has been most impactful among micro businesses, which saw a 300% increase between 2016 and 2019, reaching 17.8%,” said Jazmin Chong, GlobalData analyst. “This huge increase is due to the very low proportion of micro businesses that held cyber insurance in the past. However, small and medium businesses have also recorded notable rises. More than 50% of medium enterprises now hold Cyber insurance, highlighting the growing awareness around the importance of protection against cyber incidents among larger-sized businesses. Meanwhile, 40% of small enterprises held Cyber insurance as of 2019.”

Beazley has launched a contingency policy designed to cover event organisers if a transmission failure disrupts or cancels a virtual event. The insurer detailed that while streaming live events is not new in itself, with social distancing rules in place to reduce the spread of Covid-19, many major events have been either cancelled, postponed or moved online.

The personal lines market in the UK will contract in 2020 as a result of COVID-19 impacting a range of different lines of business. Travel insurance will be the worst affected personal lines product in the UK, says GlobalData, a leading data and analytics company. GlobalData’s UK Insurance Market Essentials: COVID-19 Update report forecast suggests that the gross written premiums (GWP) will contract by 48.7%. GlobalData expects it to be a short-term hit; however, it forecasts strong GWP in 2021 and 2022. Subsequently, the growth should then return to more normal levels in 2023.

The Association of British Insurers (ABI) has offered assurances that doctors and healthcare workers will be treated the same as other workers when applying for life insurance or income protection amid the coronavirus pandemic. It’s been clarified that each policy application will be assessed individually, regardless of profession.

Around 100 professionals suffering from financial hardship amid the coronavirus pandemic (COVID-19) have been boosted thanks to a sizeable donation from the Chartered Insurance Institute’s (CII) education and training trust. It has given £25,000 to the Insurance Charities which will now administer applications for the full funding of training and reimburse eligible applicants. In a release it was outlined that applicants do not need to be CII members to request funding – but they do need to work in the insurance/financial planning profession either currently or in the past and be looking to engage in independent study.

Lord David Hunt of Wirral, former Chairman of the British Insurance Brokers’ Association (Biba), has taken on a role as a Director on Global Risk Partners’ (GRP) main board. A spokesperson for GRP explained that Lord Hunt has been a Non-executive Director on GRP’s MGA board since 2016.

As it looks to further its global expansion, professional services and technology firm Davies Group has swooped for a new lead on all legal matters. The company has appointed Jeff Chang in a newly created role as General Counsel. The Partner at Osborne Clarke LLP has made a name for himself as a specialist in M&A transactional services and is now set to join Davies on July 01 reporting to Tony Debiase, the Group Chief Financial Officer.

Netherlands-headquartered Aegon has snapped up Admiral Group alumnus Duncan Russell to serve as the company’s first-ever Chief Transformation Officer later this year. Effective in September, the appointment will see the British executive make the switch from Cardiff firm Admiral Financial Services where he was Chief Financial Officer.

Independent broker and Risk Manager TL Dallas has enhanced its Trade Credit team, with a double swoop. Firstly, it has brought in David Wilson who will lead both Trade Credit and Surety across the firm’s operations in Northern Ireland and Scotland. He will be based in the Falkirk office and makes the switch from Aon. Meanwhile, also joining the firm is Jennifer McGuffie, who will take on an Account Executive role. She has held a host of roles in the Invoice Discounting sector.

Trade Credit Insurer Euler Hermes has hired Andrew Hodson as Director of Risk, Information, Claims and Collections (RICC) of Euler Hermes UK & Ireland. The Allianz-owned provider stated that Hodson, who took on his new post on 1 June, is responsible for implementing its RICC strategy, managing risk underwriting, delivering operational targets and engaging with key stakeholders.

HM Treasury has announced the appointment of Nikhil Rathi as the new permanent Chief Executive of the Financial Conduct Authority (FCA). He replaces Andrew Bailey who stepped down to take the position of Governor of the Bank of England in March this year. Rathi is currently the Chief Executive of London Stock Exchange.

Broking giant Willis Towers Watson is ready to take its climate and resilience hub to a new level, announcing a Senior Director of Science and Analytics. The company has brought in Matt Foote from the World Bank’s Disaster Risk Financing and Insurance Programme to take the role. Foote will be based in London and will focus on integrating climate information and expertise into the company’s risk management and decision-making systems.

There are two fresh faces at SME specialist Insurer Markel UK. The firm has attempted to bolster its business development and underwriting functions across the South of England and Wales with a double swoop. First, it has added Simon Marriott, who is set to lead the business development function across both the South West and South Wales. His responsibilities include accelerating the team’s growth and expanding Broker relations. Marriott makes the switch from RSA, where he had been a Regional Manager – he has also enjoyed stints at the likes of NIG and AXA. Meanwhile, Vishal Patel becomes Senior Underwriter and will lead Markel’s Technology and Life Sciences product across the South.

There will soon be a new Group Chief Underwriting Officer at Reinsurance giant Swiss Re, with Edi Schmid stepping down “for personal reasons” and moving into an advisory role, Thierry Leger will move into the role on September 01.

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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