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EC News (10th August 2017)

August 10, 2017

Round-up of the weekly news and developments from the global insurance market with stories from Allianz, Blenheim, Ardonagh Group and more. 

Allianz acquires minority stake in LV= GI business, forms JV

Allianz has agreed to acquire a 49 percent stake in LV=’s general insurance business for £500mn, with the two carriers agreeing to launch a joint venture under the LV= name.

The joint venture will create the UK's third largest general insurer with annual premium income of over £1.7bn.

The new, long-term joint venture will acquire Allianz’s personal home and motor insurer’s renewal rights while AIlianz will obtain LV= GI’s commercial insurer’s renewal rights.

The joint venture will be run by Steve Treloar, reporting to a board of directors drawn from LV= and Allianz.

The transaction will see Allianz acquire a 69.9 percent stake in the joint venture. The agreement also contains a provision for Allianz to pay LV= a further £213mn by 2019 for an additional 20.9 percent stake in the joint venture through an agreed forward purchase based on a total valuation of £1.02bn.

The first stage of the transaction is expected to close during the second half of 2017 and remains subject to regulatory approvals.

LV= also has a put option under which it can sell all or part of its remaining shares to Allianz.

Allianz CEO Oliver Bäte commented: "This partnership will first and foremost benefit our customers who will have access to an expanded range of products backed by the financial strength of Allianz. We value LV='s strong brand and market positioning."

Richard Rowney, chief executive of LV=, said: “With this deal, LV= has a positive future in both general insurance and life and pensions.

“The strategic partnership with Allianz will allow us to continue to benefit from a growing personal insurance business while also enabling us to strengthen our capital position, leaving us well placed to continue to expand our life and pensions business and pursue new digital opportunities.”

Blenheim launches specialty reinsurance unit under Cutts

Blenheim has appointed Talbot underwriter John Cutts to develop a specialty reinsurance division within Lloyd’s Syndicate 5886.

Cutts will join the business in 2018 after completing his notice period at Talbot, where he has worked for the past 17 years.

He has served as head of treaty underwriting for Syndicate 1183 for more than a decade, focussing primarily on aviation treaty business.

Blenheim managing director John Lynch commented: “The launch of our specialty reinsurance division marks an important next step in Blenheim’s evolution, as we continue down the path to building the high quality independent business that we set out to our capital providers.

"Through the addition of John we will expand our capabilities to be able to offer reliable and consistent lead expertise across the majority of short-tail reinsurance business lines, throughout the trading cycle."

Blenheim Syndicate 5886 commenced underwriting in January 2017 with a £150mn stamp capacity and is managed by Asta. It is led by former Cathedral CEO Peter Scales.

Ross hints at Ardonagh Group IPO: report

David Ross, the chief executive of Ardonagh Group, has hinted that the holding company could consider an initial public offering (IPO) as early as 2018, according to a report.

In a recent interview with The Telegraph, Ross said that he’d consider an IPO or sale of the enlarged group once it becomes a “monster”.

"Decisions will be based on being in control of our own destiny in 10 years,” Ross told the newspaper.

"We could IPO, could stay with private equity, could go to a trade buyer. We'll enjoy being private for a while, but could be big enough to IPO. In 12 months, when this is a monster, the board will need to talk,” he said.

The group, which was temporarily named KIRS and rebranded as Ardonagh Group in July, was created in early May to bring together insurance brokers Autonet, Chase Templeton, Ryan Direct Group, Price Forbes and Towergate under a single holding structure, with all five businesses to be run independently.

The group is backed by private equity firms Madison Dearborn Partners and HPS Investment Partners.

In June, the holding company completed an £800mn bond offering. At the time, the company said it intends to use the funds to refinance existing debt, finance the acquisitions of both Direct Group and Chase Templeton, pay for transaction costs and put “incremental” cash on its balance sheet.

GIC files for IPO

State-owned Indian reinsurer GIC Re has filed for an initial public offering (IPO) which could raise more than $1bn, according to reports.

Reuters has reported that the Indian government will be selling about 107.5 million shares in GIC Re's IPO, while the insurer will sell 17.2 million new shares,

This amounts to a total of 124.7 million shares, or 14.22 percent of the company's post-issue share capital.

The IPO is being managed by Axis Capital, Citi, Deutsche Bank, HSBC and Kotak Investment Banking.

In a draft prospectus for the IPO, GIC Re claimed that it was 12th largest global reinsurer based on gross reinsurance premiums written in 2016, further highlighting that it was the third-largest reinsurer in Asia, behind China Re and Korean Re.

The prospectus also sized the Indian reinsurance market at around INR 388bn or $6.1bn in 2017 and said it was growing at a compound annual rate of about 15 percent.

Reuters reported that the sale would assist the Indian government in reaching its fiscal deficit target of 3.2 percent of gross domestic product (GDP) for the year ending March, which includes selling stakes in companies.

LSM enters Netherlands fine art & specie market

Liberty Specialty Markets (LSM) has entered the Netherlands fine art and specie market with the appointment of Paul Seip.

Seip joins the carrier as a senior fine art and specie underwriter and will report to David Saillen, head of fine arts and specie for continental Europe and also Rob Groenen, country manager for the Netherlands.

In his new role, Paul will be responsible for developing new business and bespoke solutions for a wide range of clients in the Netherlands and will be based in the firm’s office in The Hague.

Paul has over 12 years’ experience in the insurance sector as both an underwriter and broker. He joins LSM from AXA Art where he was senior underwriter for fine art and specie for five years.  Prior to that, he worked for Allianz.

Commenting the appointment, LSM’s head of Europe, Kadidja Sinz, said; “Paul’s appointment signals that our growth plans for Europe are well advanced.

“His arrival in The Hague opens up new avenues for our Netherlands team and will lead to the development of many great partnerships in this market. His established reputation and credentials in fine art and specie are valuable assets to Liberty and our ambitions in this sector.”

Kanye West sues Lloyd’s syndicates for $10mn

Kanye West and his touring company are suing various syndicates at Lloyd’s for $10mn in a claims dispute over cancelled tour dates, according to reports.

West cancelled the final 21 tour dates of his Saint Pablo tour after he fell ill in November 2016.

According to California court documents obtained by news outlet The Hollywood Reporter, West's lawyers accuse the syndicates of refusing to pay a valid claim.

The suit notes that the insurers have yet to "[provide] anything approaching a coherent explanation about why they have not paid, or any indication if they will ever pay or even make a coverage decision, implying that Kanye's use of marijuana may provide them with the basis to deny the claim".

The claim became acrimonious when lawyers were immediately drafted in to oversee the claims process, rather than loss adjusters.

"Immediately turning to legal counsel made it clear that the defendants' goal was to hunt for any ostensible excuse, no matter how fanciful, to deny coverage or to manoeuvre themselves into a position of trying to negotiate a discount on the loss payment," the document noted.

The suit attacked the insurers for collecting "bounteous" premiums and criticised the claims investigations process.

"The artists think they they're buying peace of mind. The insurers know they're just selling a ticket to the courthouse," it said.

Beale named new CII president

Lloyd’s CEO Inga Beale has been elected as the 121st president of the Chartered Insurance Institute (CII).

She succeeds John Moore, chairman of Thomas Carroll Group, as president of the professional body.

Commenting on her election, Beale said: "Attracting a new generation of digitally savvy talent will be crucial to our success in meeting the future needs of a more diverse and demanding group of customers across the globe.

“That's why I have chosen New Talent as the theme to underpin my presidency of the Chartered Insurance Institute."

CII chief executive Sian Fisher said: "It is a great pleasure for me to welcome Inga Beale as the new president of the CII.

Her extensive experience and achievements in the market will be a welcome addition and I very much look forward to working with her in the coming months. I would also like to congratulate Jonathan Clark as deputy president and thank John Moore for all his hard work and dedication in his year as CII president."

Beale became the first female CEO at Lloyd’s in 2013, having worked as CEO of Canopius Group from 2012 to 2013. Prior to that, she held positions at Zurich, Converium and GE insurance Solutions.

She was awarded a damehood in the 2017 New Year’s Honours list for services to the economy.

Chubb promotes Savvas to UK&I PI head

Chubb has promoted Chris Savvas to head of professional indemnity (PI) for UK and Ireland, effective immediately.

In his new role, Savvas will be primarily responsible for the management of Chubb’s PI portfolio and business in the UK and Ireland, having previously been a senior PI underwriter with the carrier.

He will be based in London and will report to Chubb’s financial lines manager for UK and Ireland, Grant Cairns.

Savvas joined Chubb in December 2016 from QBE where he ran the Middle East and North Africa PI portfolio for three and a half years and was based in Dubai. Prior to that, he spent seven years at Travelers, where he began his career as a graduate trainee, in a variety of underwriting positions.

Speaking on Savvas’ promotion, Cairns said: “It is a testament to the quality of our underwriting talent pool that we are, once again, able to promote from within the organisation. I very much look forward to continuing to work with Chris in his new capacity as he develops this important line of business.