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EC News (21st September 2017)

September 21, 2017

Round-up of the weekly news and developments from the global insurance market with stories from Hiscox, XL Group, LSM and more.

Hiscox hires former GCHQ director as cyber security adviser

Hiscox has brought on board former GCHQ director Robert Hannigan as a special advisor on cyber security.

During the three years he spent working for the UK intelligence agency between 2014 and 2017, Hannigan established the UK National Cyber Security Centre and led the country's cyber defence strategy.

As part of his new role at Hiscox, he will work closely with the carrier and its specialist cyber division to provide market intelligence, staff training and inform the development of new and existing cyber products.

This will include advising the UK business on emerging threats and cutting-edge criminal techniques that could impact customers both now and in the future, as well as helping to educate staff and customers about the importance of managing cyber risk.

Hiscox began writing cyber insurance in the late 1990’s and provides insurance to the UK SME market.

Commenting on the new appointment Steve Langan, chief executive at Hiscox Insurance said: “There are few experts better-placed to advise on cyber risk than Mr Hannigan.

“Our aim is not just to protect customers against the impact of cyber-crime, but to play a constructive role in helping them better manage and understand the evolving risks they face. As a specialist insurer with a focus on cyber security, it’s vital that we stay ahead of the curve, and the deep expertise and experience Mr Hannigan brings to the business will play a key part in ensuring this.

XL Group chooses Dublin for EU hub

XL Group has announced its plans to move its EU headquarters to Dublin in response to Brexit.

Subject to regulatory approvals, XL said it will redomesticate its principal EU insurance company, XL Insurance Company SE (XLICSE), from the UK to Ireland in 2018. The subsidiary also serves as the company’s main operating platform in Asia.

XL has had a long established presence in Ireland, having opened its first European insurance in Dublin in 1990. In 2006, the group formed its Irish-domiciled reinsurer, XL Re Europe and still maintains other (re)insurance operations and corporate functions in Dublin.

The Irish capital was also the domicile for XL Group’s corporate headquarters between 2010 and 2016, before moving to Bermuda following XL’s acquisition of Catlin.

Dublin is a natural home for us in Europe,” remarked XL Group CEO Mike McGavick. "We have a long and established presence in Ireland and we understand and respect the high quality business environment, the regulatory environment and the talent of the people here."

The company said it would retain its Catlin Insurance Company (CICL UK) and its Lloyd's Syndicates 2003 and 3002 in the UK.

It added that the combination of being able to issue Lloyd’s and CICL UK paper in the UK as well as XLICSE paper in the EU will ensure that XL Group is well positioned to work with clients and brokers to offer solutions for business that could otherwise potentially be disrupted by any loss of passporting rights as a result of Brexit.

XL follows in the footsteps of Beazley and Chaucer, which have both selected Dublin as the home of their post-Brexit EU bases.

While this serves as a victory for the Irish capital, which was initially expected to be the preferred location for (re)insurers looking to set up EU bases in response to the Brexit vote, the Benelux states have proved most popular, with the majority of carriers selecting Luxembourg.

LSM names Hobbs as deputy MD

Liberty Specialty Markets (LSM) has named Phil Hobbs as deputy managing director as part of a wider leadership team reorganisation, the carrier has announced.

Hobbs, who previously served as chief actuary of LSM, will be replaced by Chris Short.

Meanwhile, Dieter Winkel has been appointed president of Liberty Mutual Reinsurance – LSM’s assumed reinsurance business, having previously been chief underwriting officer (CUO) for reinsurance.

In addition, Peter Smith has been named executive underwriting officer. He has been CUO of specialty since early last year and dually served as the active underwriter of Liberty’s Lloyd’s Syndicate 4472.

Commenting on the appointments, recently instated LSM president and managing director Matthew Moore said: “I am delighted to announce these appointments, which will build on the existing success of LSM while helping to power the next phase of our evolution.”

“There is tremendous change and opportunity in the insurance market today, and to achieve the goals we have set ourselves some alternations were required to the way we are organised.”

Moore took over the running of LSM from retiring Nick Metcalf in August this year in what had been a long-planned handover.

Hurricane Irma claims reach $2.75bn in Florida

Insurers in Florida have received more than 450,000 claims totalling $2.75bn from Hurricane Irma in the week following the natural catastrophe, according to data compiled by the Florida Office of Insurance Regulation (FLOIR).

As of 4pm local time on 19 September, the state industry regulator said it had received a total of 452,205 claims covering filings up to this time, with the vast majority emanating from the east coast of Florida. Miami-Dade, Broward, and Palm Beach were among the areas where more than 10,000 claims have already been received.

The bulk of claims lodged were for homeowner property policies, comprising 320,224 claims in total and making up around 80 percent of all residential property claims, with the remainder attributed to dwelling (41,937), mobile homeowners (28,169) and commercial residential (2,637) filings.

Meanwhile, some 14,879 commercial property claims had been filed, with 799 private flood claims and 789 business interruption filings.

Around 7.4 percent claims filed to date have been closed, including 12,709 that were not paid.

On 19 September, data analytics provider CoreLogic estimated that US insured property losses from Hurricane Irma could reach up to $27bn. In contrast, AIR Worldwide has projected US losses (excluding NFIP claims) at between $25bn and $35bn while Karen Clark and Company has estimated $18bn of claims.

Markel’s Brazil steps down

Markel International has announced that Jeremy Brazil will be stepping down from his executive role as director of underwriting at the end of 2017.

Brazil will continue to provide consultancy advice to the board and the senior management team.

During his time at Markel International, the executive has overseen the underwriting division for almost a decade and was responsible for its reinsurance buying strategy. Following Markel’s acquisition of Terra Nova in 2000, Brazil played a key role in the creation of Markel International.

Chief actuary Nick Line will take over the responsibility for overseeing Markel International’s underwriting functions.

Meanwhile, head of reserving Stuart Lee will become head of actuarial, Julien Masselot will serve as head of capital, David Mowat, head of pricing and Andrew Green, head of catastrophe management, with all forming the new actuarial leadership team.

President of Markel International William Stovin said: Jeremy has contributed hugely to the success of Markel International since the acquisition of Terra Nova in 2000. He’s been a great colleague and we are all pleased that, as a consultant to the company, we will continue to be able to benefit from his experience and expertise. He goes with our thanks and best wishes.”

Both Nick and Stuart’s appointments are subject to regulatory approval.

Willis Towers Watson names Hiller as head of international construction

Willis Towers Watson (WTW) has named Martin Hiller as head of international construction within its corporate risk and broking unit.

Hiller joins from JLT, where he was a founding member and managing director for JLT’s construction team. Having started his career in the UK construction team at Stewart Wrightson he brings with him extensive experience across all aspects of the construction industry.

In his new role, Hiller will be responsible for leading client management, technical, placement and risk management specialists to support WTW’s construction clients in risk mitigation. He will report to Alex Clayton, CEO of construction.

Commenting on the appointment, Alastair Swift, head of corporate risk and broking at Willis Towers Watson UK said: “We are delighted to welcome Martin to lead our international construction arm.

“Today’s announcement demonstrates our continued ability to attract high quality talent. Martin’s extensive experience will strengthen our construction proposition for both our Willis International offices, US offices and clients.”

Sirius agrees to acquire Phoenix stake

Sirius has entered into a definitive agreement with Delek Group to acquire an initial 4.9 percent stake in Israeli insurer Phoenix Holdings, with an option to purchase the remainder of Delek’s share of the business.

This comes just months after Delek Group’s 2.2bn shekel ($610mn) sale of its 52.3 percent stake in Phoenix to China’s Yango Group collapsed after failing to secure regulatory approval.

Under the terms of the latest deal, Sirius will pay 208mn shekels ($0.6mn) in exchange for a 4.9 percent stake. Sirius will then have 45 days to apply to the Israeli Commissioner of Capital Markets, Insurance and Savings for a permit to control the insurer. 

Sirius also has a 60-day exclusivity period during which it has the option to acquire the rest of Delek's interest in Phoenix, which amounts to around 47.4 percent, for an additional cash sum of 2.3bn shekels ($657mn), subject to certain adjustments for interest and earnings.

Commenting on the announcement, Sirius chairman and CEO Allan Waters said that the company was confident that the Israeli Commissioner of Insurance will approve it as a controller of Phoenix.

Waters said that Phoenix and Sirius had been business partners for “decades”, adding that through the acquisition of Phoenix, Sirius plans to offer new products to the Israeli market, and views this as an opportunity to develop new technology solutions, while protecting the interests of the Israeli public insured by the company.

Israeli energy conglomerate Delek has been looking to divest its stake in Phoenix in response to an Israeli regulation that prohibits large domestic conglomerates from holding both financial and non-financial businesses.

The latest agreement marks the fourth time the firm has tried to sell its Phoenix share. A 1.8bn shekel deal to sell the Phoenix stake to Fosun collapsed early last year, followed by the failure of a bid from an unnamed US insurer, which was reported to be AmTrust. This was then followed by the abortive sale to Yango Group in June this year.