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General Insurance Newsletter Friday 7th August 2020

07 Aug 2020

Two of Northern Ireland’s most established insurance Brokers, Abbey Insurance and Autoline Insurance, have announced they are to unite under the new name AbbeyAutoline from 1 September 2020. The Brokers have both been part of the Prestige Insurance Holdings group since December 2018, when the parent of Abbey Insurance acquired Newry-based Autoline Insurance.

Bennett Christmas has purchased Canterbury-based independent Broker, Sennet Insurance Services for an undisclosed sum. This is the third acquisition for the business this year and it marks the first anniversary of Bennett Christmas joining as an Ethos Broking Partner in August 2019.

There’s a long way to go before ‘two become one’ for brokerage giants Aon Plc and Willis Towers Watson, whose courtship was first confirmed in March 2019. In the interim, Aon is trumpeting the benefits of the union which is slated to become official – assuming the mammoth merger doesn’t hit a snag – sometime next year. In the company’s earnings conference call following the release of its second quarter results, Aon Chief Executive Greg Case was quoted by Seeking Alpha as noting: “Our global risk survey highlights one of the top 10 risks our clients face – only one is fully insured; four are partially insured; and five are not insured at all. The mandate is clear. We must innovate faster to provide answers to these growing areas of client demand.

Hot on the heels of Willis Towers Watson reporting its Q2 results, it’s now time for its mega-merger partner Aon to do the same. According to the Q2 release from Aon, the brokerage giant’s total revenue fell by 4% to US$2.5 billion (around £1.9 billion) while organic revenue declined by 1%. However, net income from continuing operations attributable to Aon shareholders came in at US$397 million (around £302.3 million), or US$1.70 per share, versus US$277 million (around £210.9 million), or US$1.14 per share, in the same period last year.

In other news... Aon and WTW have commented on five legal proceedings which have been launched following the announcement of the takeover of WTW by Aon. An SEC filing detailed that the complainants have claimed “allegedly false and misleading statements in the Definitive Proxy Statement; and against certain defendants under Section 20(a) of the Exchange Act for alleged “control person” liability with respect to such allegedly false and misleading statements.”

In further news... “In order to reduce the risk of the complaints delaying or adversely affecting the transaction and to minimise the costs, risks, and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, WTW and Aon have determined to voluntarily supplement the Definitive Proxy Statement by providing the additional information…”. Those were the words of Aon Plc and Willis Towers Watson (WTW) when the merging brokerage giants issued a proxy supplement relating to their pending business combination. A new SEC (US Securities and Exchange Commission) filing by Aon cites five complaints, which were all filed in courts by purported WTW shareholders.

The British Insurance Brokers’ Association (Biba) has entered in an agreement with Mental Health In Business (MHIB) to provide members with mental wellbeing support in a newly agreed facility. The provision of the facility follows a period when many Brokers began to recognise that mental health in the workplace is as important as physical health and safety.

Markerstudy has confirmed that up to 200 roles at Co-op Insurance could be made redundant following the transfer of the business to the Provider. It is hoped that the deal, first inked in early 2019, will complete on 17 August subject to Prudential Regulation Authority approval. The Co-op has attacked claims by trade union, Unite, that its decision to sell its underwriting business to Markerstudy shows “no regard for the voice of its employees is “a betrayal of the ethical philosophy and principles of the Co-operative movement”. The union claimed (4 August): “This proposed sale by the Manchester based Co-op Insurance later this month will result in around 200 job losses and the loss of independent representation for the remaining 800 staff.

The results are in for Aviva for H1 2020 – the first announcement since new CEO Amanda Blanc took the helm around a month ago. There is likely to have been plenty of food for thought for the new boss too, as profits slipped back compared to the same period last year leaving her to hint at “decisive action.” Overall, the company saw operating profits of £1,225 million – a slip from last year’s £1,386 million. Economic returns, however, climbed to reach £890 million, up from H1 2019’s £780 million. According to GI CEO Colm Holmes, the Aviva UK results “are the product of the impact of Covid”. As it stands the UK COR hit 106.3% (H1 2019 restated: 97.2%). General insurance as a whole reported net written premiums (NWP) £4.7bn (H1 2019: £4.7bn). The GI COR was also reported as 99.8% (H1 2019: 96.8%).

In further news... Amanda Blanc has outlined a triple-pronged strategy to drive Aviva forward and pledged to zone in on and invest in its strongest markets in the UK, Ireland and Canada. Speaking at a results briefing for H1 2020 Blanc, who was appointed CEO last month, detailed three key actions; focus the portfolio; transform performance; and financial strength. As part of that she flagged capital exits across some markets in the Asia region.

Up to 300 RSA staff could face redundancy as the business seeks to further reduce running costs in its UK business. On 5th August it announced a range of measures including a voluntary redundancy programme open to applications from all employees. In addition it also offered employees reduced working hours.

Allianz Holdings, which comprises Allianz and the LV/L&G personal lines business, hit gross written premium of £1.98bn compared to £1bn on the same period last year. Operating profit grew 109% to £179m (2019: £96m) and COR also improved to 92.7% from 95.7% in H1 2019. The group also noted more than 950 Covid-19 Business Interruption claims, totalling £14m paid out to date with the total impact likely to hit £80m net of reinsurance. According to the company’s earnings release, the net income attributable to shareholders in Q2 fell 28.6% to €1.5 billion (around £1.4 billion). In the three-month span, Allianz saw a 6.8% decline in total revenues to €30.9 billion (around £27.9 billion), while the insurer’s operating profit for the quarter stood at €2.6 billion (around £2.3 billion).

QBE is providing financial aid to underrepresented charities as part of its foundation’s latest round of charitable giving. The QBE Foundation, a charitable arm of QBE, has issued grants to support underrepresented charities amid the COVID-19 crisis. The grants are expected to help LGBTQ+ people, people with disabilities, refugees, asylum seekers, survivors of modern slavery, people of colour, and people affected by harmful coping mechanisms such as self-harm and addiction.

A reduced earnings target for 2020 and a decision not to make additional payouts to shareholders during the fourth quarter – those were the headline takeaways as Europe’s second largest Insurer AXA released its interim financial results. The company saw underlying earnings drop by 48% and gross revenues slip by 10% leaving it with net income of 1.429 billion euros (around £1.29 billion) – a 39% fall from the same period last year when it recorded 2.333 billion euros (around £2.11 billion) in net income.

“Despite the current challenging and uncertain public health, economic, and social environment, Everest reported another solid quarter and first half of 2020 results.” Those were the words of Everest Re Group President and Chief Executive Juan C. Andrade when the global (re)insurance provider released its latest numbers, which included US$160 million (around £121.8 million) of COVID-19 losses.

The time to celebrate is now for a host of top performing insurance and personal finance professionals after the Chartered Insurance Institute dished out 34 prizes for exceptional completion of its 2019 qualifications. Handed out annually since the body was formed back in 1912, the idea is to reward the high performers – with everyone who sits a test or submits coursework during the year automatically entered. Winners can pick up from £100 to £1,000, as well as a certificate.

Ensuring that workplaces are welcoming for all races and ethnicities has always been vitally important – but finally it seems the message is catching on in the insurance industry. Chubb UK has become the latest to show its commitment to improving outcomes for Black, Asian and minority ethnic (BAME) employees by signing the Race at Work Charter from Business in the Community.

PIB Group has announced the acquisition of Rigton Insurance Services, a Leeds-based Broker specialising in niche transport industry insurance. Established in 1974, Rigton offers Bus and Coach insurance, and schemes covering classic preserved bus, heritage and narrow gauge railways, as well as model retailers and manufacturers.

Hastings has confirmed an offer to buy the remaining shares in the group by a consortium known as Dorset Bidco which is comprised of Nordic insurer Sampo and Rand Merchant Investment Holdings (RMI). Hastings first addressed deal rumours this week and the announcement showed the deal valued Hastings at £1.66bn. RMI is already a 29.7% shareholder of Hastings having invested in 2017. 

Global Risk Partners (GRP) has acquired the renewal rights to seven books of business from Aon in the UK for an undisclosed sum. Stephen Ross, Head of M&A for GRP, said the portfolios will be controlled by individual GRP hub brokers which have expertise in each of the relevant market segments. Ross also said that the deal included a significant Northern Ireland book of business, which is the largest in the portfolio and includes a high-quality mix of Motor Fleet, SME and corporate policies.

AA Plc is proving to be a hot item, after the insurance and roadside assistance provider revealed itself as having caught the eye of three potential buyers – Centerbridge Partners Europe, LLP and TowerBrook Capital Partners (U.K.) LLP, who are acting jointly; Platinum Equity Advisors LLC; and Warburg Pincus International LLC. In a regulatory filing, The AA said the private equity (PE) firms have approached the company regarding possible cash offers for its entire issued and to be issued ordinary share capital. Each party has also indicated that any offer would involve a significant new equity capital injection, in order to reduce The AA’s indebtedness. The AA has confirmed that, as part of its refinancing, there is the possibility of an offer being made in connection with any refinancing deal. As stated in its preliminary results announcement in May the Group has approximately £2.65bn of total net debt, of which £913m is scheduled to fall due for repayment within the next two years.

Travelers Europe has announced it has enhanced its Cyber insurance product, Travelers CyberRisk, to provide more coverages and risk management solutions to strengthen customers’ overall cybersecurity programs. The product is available to organisations of all sizes in the United Kingdom and Ireland.

Loss adjustor QuestGates is ramping up its focus on public transportation claims with a new dedicated unit. Led by Andy Anderson, the unit will be part of its specialist services division. Anderson joins the firm having worked for the last four years with The Liability Network and having racked up a total of 17 years in the industry.

HB Underwriting has confirmed that it is now ready to “take its business into the future” by selecting specialist insurance software company Total Systems to support its tech evolution. HB Underwriting has picked Total Systems’ bluescape digital platform to help the company prepare for its digital transformation.

Britain’s biggest car Insurer, Direct Line Group (DLG), became the latest to release its interim 2020 results, and to reveal the impact of COVID-19 on its financials. The Insurer, which posted a combined operating ratio of 90.3% and a pre-tax operating profit of £264.9 million for the period ending June 30 2020, said that its demonstration of financial resilience in the face of the disruption from the pandemic has enabled it to declare its 2020 interim dividend of 7.4 pence per share, as well as a special “catch-up” dividend for its cancelled 2019 final dividend of 14.4 pence share.

Results season continues, and among the latest to release their second quarter report is American International Group (AIG) which is the bearer of not-so-stellar news. In the three months ended June 30, the Insurer suffered a net loss attributable to AIG common shareholders of US$7.9 billion (around £6 billion). The figure represents a nosedive from the US$1.1 billion (around £841 million) attributable net income recorded in the same period in 2019.

It’s been a successful first year of operation – that’s the verdict of independent managing general underwriter (MGU) Carbon Underwriting Limited as it summarises its year one ambitions. The company, which wants to be the “Lloyd’s benchmark for data driven quality delegated underwriting” has achieved a number of milestones over the last 12 months. These include receiving permission for Syndicate 4747 to underwrite two classes of business across three continents; securing its first three coverholder clients; and the launch of the Graphene platform.

It is one of the biggest Car insurance Providers in the country – and now it has a new offering to extend its appeal. LV= has announced the launch of Flow, a monthly Car insurance subscription service that targets the younger generation of drivers and those who want more flexible car cover, particularly in light of the coronavirus pandemic.

A vision of the “underwriter of the future.” That is what Artesian Solutions says it is offering QBE Europe after the companies signed a multi-year deal. The agreement, which spans QBE UK’s underwriting division, will see Artesian deliver its digital data platform to the company. The idea is that it offers a central resource for externally derived insight and offers QBE a more consistent approach to risk selection decisions.

Hiscox has reported a group loss of $138.9m (£106m) compared to a profit of $168.0m in the same period last year. The COR also deteriorated to 114.6% after H1 2019 saw it record a sub-100% figure of 98.8%. GWP also fell to $2.23bn from $2.33bn in the first half of 2019.

Aston Lark, the Chartered insurance Broker backed by Goldman Sachs, has today announced the acquisition of Private Healthcare Managers (PHM). According to Aston Lark, PHM is a specialist employee benefits intermediary providing advice and tailored solutions to SME and corporate clients for their private medical insurance and group risk benefit packages, placing around £4m GWP per annum across its portfolio.

Lloyd’s has published a new Culture Dashboard alongside setting a gender target for the market and committing to achieve parity over the next decade. According to the organisation, these measures mark the fulfilment of its 2019 commitments to drive long-term change across the Lloyd’s market and form the foundation of ongoing initiatives to build a more inclusive environment. The market has set an interim target of 35% female representation in leadership positions to be achieved.

Pen Underwriting has secured an enhanced multi-year capacity deal that will enable it to write 20% more premium for solicitors’ Professional Indemnity (PI) on an annual basis. The move takes its capacity up to more than £100m over three years and is backed by A-rated security.

Following the Covid-19 induced slowdown in global InsurTech investment during the first months of 2020, $1.56 billion was raised by InsurTech firms in Q2. The total, up 71% over Q1, was driven in part by later-stage investments, including four ‘mega-rounds’ in excess of US$100 million, according to the new Quarterly InsurTech Briefing from Willis Towers Watson. At 74, deal count was down 23% from Q1, but many individual rounds were larger as investors continued to turn away from Seed and Angel deals in favour of support for more mature ventures.

Leading Italian insurer Cattolica Assicurazioni – which is reportedly on the brink of a major tie-up with country compatriot Generali – was thrust into the spotlight this weekend. According to a report by Reuters, a source claims that three executives at the firm – including both its managing director and chairman – are under investigation for “undue influence” over shareholder meetings. The company has reportedly admitted that some of its executives are being investigated by market regulator Consob, but has not named them.
In other news...Shareholders in Cattolica Assicurazioni, an Italian cooperative insurer, approved its conversion into a joint-stock company on Friday, according to a Reuters report. The approval clears the way for a tie-up with Generali. Nearly 71% of shareholders agreed to the conversion, just above the required two-thirds majority. Last month, Generali agreed to buy 24.4% of Cattolica and signed a multi-year partnership in asset management, healthcare, the internet of things, and reinsurance, Reuters reported. The investment will make Generali the largest shareholder in Cattolica.

In the second quarter, net income available to Bermuda-headquartered Arch Capital Group common shareholders amounted to US$288.4 million (around £219.2 million). The figure represents a decrease from the US$458.6 million (around £348.6 million) posted in the same period last year.

 

 

Coronavirus-related News

The Financial Conduct Authority (FCA) has warned it will act to ensure customers are treated fairly when insurers calculate claim payouts for business interruption for firms which have received government support amid the coronavirus pandemic. The move is separate to the business interruption test case to assess the validity of Covid-19 claims which concluded last week. The test case does not directly address how any resulting claims payments will be calculated.  

BI court case judges aiming for draft judgment in mid-September. However, Flaux also stressed that he was not giving “any sort of binding indication”. He warned that while he hoped it would be available by then “inevitably there may be slippage” adding the judges were conscious of how important the issues in the case were for everybody involved and that the process would not be rushed.

New research from The Aviva Fraud Report - which launched today and investigates fraud and financial scams relating to pensions, savings, investments and insurance – found 1 in 5 (22%) of those surveyed report having been targeted by suspicious communications (e.g. emails, texts and phone calls) which mentioned coronavirus – which equates to 11.7 million people in the UK. Almost half (46%) didn’t report these suspicious communications, even though they suspected it was a financial scam. The most common (41%) reason given was because they didn't know who to report the communication to.

Allianz colleagues across the UK have covered the distance of 140,785 km during its ‘Stronger Together’ campaign, raising £30,000 for charity partner Mind – the mental health charity. Over the past two months, the ‘Stronger Together’ challenge has provided employees with a way to stay connected and motivated during lockdown. Using an app teams have been logging their fitness activities to compete for prizes and earn charity points, which raise funds for Mind. Exercising employees mentally and physically the activities have ranged from socially distanced runs to indoor activities such as squat and plank mini challenges and even energetic housework.

Insurance has faced its fair share of negative headlines over the last year or two, with many of them revolving around access to insurance – or rather, the lack thereof. Now, in an effort to drive forward progress in the area, the British Insurance Brokers’ Association (BIBA) has put together the Access to Insurance Committee. The committee is chaired by Caroline Barr, former member of the Financial Services Consumer Panel. She is joined by BIBA’s own executive director Graeme Trudgill, industry disability champion Johnny Timpson and representatives from various brokers, charities and other stakeholders.

 

Allianz Holdings has appointed Julie Harrison to the role of Chief HR Officer. Reporting to Jon Dye, Allianz Holdings CEO, Julie will lead the HR function across Allianz Insurance and LV= General Insurance. Julie has held several senior HR roles for Allianz including Global Head of Human Resources for Allianz Reinsurance and Group Head of Talent Development for Allianz SE, both based in Munich. Her most recent role in Singapore was as Regional Chief HR Officer for Allianz Asia Pacific.

Duck Creek Technologies has announced the appointment of Eva F. Huston as Chief Strategy Officer. In her new role, Huston will report to CEO Michael Jackowski.

Tavaziva Madzinga, the Chief Executive of Swiss Re for the UK and Ireland, has become a member of the Association of British Insurers (ABI) board. “The ABI plays a pivotal role in our industry particularly at this time as we face many challenges, opportunities, and uncertainty,” said Madzinga, who joined Swiss Re in 2016 and has held his current role since 2019.

Ed has named Assad Ulhaq as Senior Broker and Producer, focusing on International Property Facultative reinsurance, primarily in Europe, the Middle East, and Africa. The appointment is effective immediately.

Cobra London Markets latest acquisition is Tom Shipston, who joins as a Head of Property & Casualty. He previously worked at RK Harrison where he learned the basics of broking and after four years he went on to found his own brokerage, a wholesale operation which was acquired by a larger Broker.

Gallagher strengthens it's Energy practice with the appointment of Gavin Tidman to its global Energy practice. Based in London in Gallagher’s Specialty division, Gavin joins the senior management team as Executive Partner to focus on business development within the global Energy and Power sector, enabling the business to grow its presence in international markets, as well as strengthening relationships with clients. 

Scottish independent insurance Broker Blackford has confirmed its long-term commitment to the market in the north by recruiting industry veteran Chris Tosh to its Board of Directors. Also joining the Aberdeen operation from Marsh are Pamela Mackintosh and Maureen Stewart. Mackintosh joins as Client Manager having previously fulfilled Client Service Director and Head of Affinity positions in Scotland during her 29 years at the firm. Stewart, who has worked in the insurance trade for four decades, was previously a Commercial Team Leader at Marsh in Aberdeen. She takes up a Senior Broker position.

Partners& has appointed Campbell McClean as Chief Information Officer. Campbell is an industry recognised information technology executive whose core interest has been in the design and delivery of technology to support business change and value creation. He has most recently worked as both Chief Architect and CIO in the telecommunications sector across North America, Europe, Africa and South Asia in both operational business roles and consulting in a range of sectors, including utilities, manufacturing, health, government and defence. 

FBD Holdings Plc has hired Tomás O’Midheach as Chief Executive Officer and Executive Director of both the group and of FBD Insurance Plc. He joins the Irish Property & Casualty insurance giant on February 01 next year.  

On the back of naming a new Non-Executive Director, Oneglobal is hiring again – this time bringing in a General Counsel. Christopher Galyer will take the role, subject to regulatory approval, reporting to CEO Mike Reynolds. Galyer is a senior legal professional who has held a host of leadership roles in insurance broking, including as the head of group legal at JLT. His background includes training with Stephenson and Harwood, as well as being a solicitor at Eversheds.

 

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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