October 18, 2017
Round-up of the weekly news and developments from the global insurance market with stories from Novae, Apollo, Barbican and more.
Novae to adopt Axis brand as deal completes
Axis Capital has announced the completion of its £478mn takeover of Novae having received clearance from all applicable regulators, concurrently revealing a new structure that will see Novae adopt the Axis brand.
Axis said the acquisition creates a $2bn insurer in London and a top 10 (re)insurer at Lloyd's, with total global gross written premiums of $6bn based on 2016 figures.
In a statement, Axis said that Novae’s insurance business will be merged into its international insurance division, which is led by CEO Mark Gregory. Gregory will continue to report to Axis Insurance CEO Pete Wilson.
It was also announced that Novae’s reinsurance business will be absorbed into Axis Re and will form the core of Axis’ London reinsurance business. The division will be led by Richard Milner, president and CUO for Axis Re London and the Asia Pacific.
Meanwhile, current Axis Insurance International CUO Alistair Robson will take on the position of P&C CUO for the combined organisation, whilst former Novae CUO Robert Forster will become CUO of specialty lines.
Across in Asia, Rory MacGregor, currently executive vice president and underwriting manager for Singapore for Axis Insurance, will adopt the role of head of regional hubs and distribution.
John Isachsen, currently senior vice president for claims at Axis Insurance International, and Dax Gulmohamed, head of professional lines at Axis Insurance International will remain in these roles.
As previously announced, Novae CEO Matthew Fosh will become executive chair for Europe at Axis Capital, and will report to Axis Capital president and CEO Albert Benchimol.
Benchimol commented: “This is a significant acquisition and an important milestone for Axis. Acquiring Novae greatly adds to the scale and breadth of our international business and also underscores our commitment to London and to Lloyd’s, which continues to be the pre-eminent market for specialty risks.
“Novae is known for its market-leading underwriting talent, which we expect will thrive at Axis. Our goal is to bring out the best in both firms as we become one organisation that is even stronger together.”
Meanwhile, Fosh said: “The combination of Axis and Novae creates a bigger, better business with a wider range of products and services, enabling us to do even more for our clients and partners. Both companies share similar values and priorities – we are specialty businesses that place a high priority on our clients and employees. Our culture fosters innovation and entrepreneurialism, and I expect that to continue as we bring together the best of our two companies.”
Apollo to acquire majority stake in Catalina
Global investment firm Apollo Global Management has signed a conclusive agreement to acquire a majority shareholding in legacy specialist Catalina, it has been announced.
Affiliates of Apollo made an initial investment in Catalina in December 2013 and, as a result of the latest transaction, the Apollo acquisition vehicle, which is expected to include investment from certain long-term institutional and strategic investors, will have a controlling interest in the business.
The terms of the transaction were not disclosed.
The existing management team, which is headed up by founders Chris Fagan and Dean Dwonczyk, will continue to run the business and maintain a significant shareholding.
Since Apollo’s involvement in 2013, Catalina has grown substantially; doubling in size over the past three years, whilst maintaining its profitability. Catalina has completed 23 transactions acquiring $4.7bn of non-life insurance and reinsurance liabilities and had total assets of $3.6bn and shareholders’ equity of $700mn as of 30 June 2017.
Catalina CEO Chris Fagan said: “We’re delighted that Apollo, and the long-term institutional shareholders supporting it, are increasing their shareholding in Catalina. They are doing so at a time of significant change in the non-life insurance legacy sector which is developing faster now than at any point over the last 15 years. Catalina is one of the leading consolidators in the non-life run-off sector and together with our new shareholders; we believe the company is ideally positioned to continue our strong growth and development.”
Meanwhile, Gernot Lohr, senior partner at Apollo Global Management added: “We fully support the outstanding management team at Catalina and are excited about the opportunity to deepen our relationship with the business. Whilst already significant, the market for non-life legacy acquisitions continues to grow, and we believe Catalina is well positioned to capitalize on these opportunities due to its deep industry expertise as evidenced by its successful track record. We look forward to working with Catalina during the next phase of its growth and development.”
Catalina was advised by Barclays, JP Morgan and Allen & Overy. Apollo was advised by Sidley Austin
The transaction is expected to close in the first quarter of 2018, subject to regulatory approvals.
Booth promoted to Barbican Managing Agency underwriting director
Barbican has promoted Syndicate 1955 active underwriter David Booth to the new position of director of underwriting for Barbican Managing Agency Ltd (BMAL).
In his new role, Booth will be responsible for overseeing and monitoring the agency’s underwriting and reinsurance strategy, as well as having performance oversight for all managed syndicates.
Deputy active underwriter Andy Caldwell has also been promoted, taking over from Booth as active underwriter. His responsibilities include all activities relating to the syndicate, including business planning, performance management and liaising with Lloyd’s.
Both seniors joined Barbican in 2008. Booth, who has more than two decades of experience in the London and European insurance markets, became active underwriter of Syndicate 1955 in 2013.
Meanwhile, Calder was appointed deputy active underwriter of the syndicate in 2015 and boasts 25 years’ experience in the specialty casualty arena.
Commenting on the promotions, BMAL managing director Iain Bremner, said: “The creation of the director of underwriting role reflects the considerable success that BMAL has had in recent years, particularly in attracting and developing third party partnerships. I am delighted that someone of David’s market standing and underwriting acumen is taking up the position and look forward to working closely with him as we further expand our operations.
“It is also a pleasure to be announcing the promotion of Andy to active underwriter of Syndicate 1955. He has been a prominent figure in Barbican’s growth since our launch and has excelled in the position of deputy; he brings continuity and a wealth of market knowledge to the role.”
Ascot appoints CFO and COO
Ascot Group has named Joe Roberts as chief financial officer whilst promoting Rob Dimsey to the position of chief operating officer.
Roberts joins from Ironshore, where he was CFO and a member of the executive team from 2013. Before that, he was CFO at Alterra Capital Holdings.
Dimsey joined Ascot Underwriting in 2003, moving up to the position of COO and becoming a board member of Ascot Underwriting in 2008. His promotion to COO of Ascot Group is effective immediately.
Commenting on the appointments, Ascot Group chief executive Andrew Brooks said Roberts’ experience will be invaluable as the firm eyes expansion.
He added that Dimsey’s promotion was a "natural progression" of his Ascot career.
LMA expresses support for Ogden rate reforms
The Lloyd’s Market Association (LMA) has written to the Justice Committee conveying its support of reforms set out in the personal injury discount rate in the UK, also known as the Ogden rate.
On 7 September, the Ministry of Justice (MoJ) announced that the draft reforms would result in a rate of between 0 percent and 1 percent. This compares to the initial reduction in the Ogden discount rate from 2.5 percent to -0.75 percent in February.
In its consultation response, the LMA stated that the existing rate-setting mechanism and the unrepresentative rate of -0.75 percent is leading to over-compensation and is driving up insurance premiums, increasing costs for individuals and businesses.
The changes will provide for a triannual review of the rate, assume compensation recipients are low risk rather than very low risk investors, and use an independent panel of experts to advise the Lord Chancellor on what the rate should be.
The Government’s stated objective of legislation is to ‘reflect actual claimant investment behaviour and ensure claimants are compensated in full neither more or less’.
Whilst the LMA has shown its support of the Justice Committee’s ‘Pre-legislative scrutiny: draft personal injury discount rate legislation inquiry,’ it has also recommended improvements to be made to the draft legislation.
The LMA’s recommended improvements include a provision for a specific announcement on day 1 of any 180 day review to provide clarity on when the process will conclude.
It also recommended there should be a specific timescale for the actual implementation of any new rate. This should take place as soon as possible after the rate review process is finalised and the new rate is announced. The suggestion is a maximum delay of 60 days.
David Powell, non-marine manager at the LMA said; “In May, we responded to the Ministry of Justice consultation by calling for a new process that would provide greater certainty and transparency, reducing the risk of unexpected and significant changes in the rate.
“We believe that the draft legislation meets the Government’s objectives and will deliver a fairer and more predictable discount rate, reducing costs for insurance customers.”
Pioneer promotes McCluskey to head of PI
Pioneer Underwriters has promoted Kate McCluskey to head of professional indemnity (PI) international and US excess.
Based in London, McCluskey will report to Graeme Rayner, group director of underwriting.
Kate has been with Pioneer since 2012, serving as professional indemnity underwriter. Prior to joining Pioneer, she worked as an underwriter at Antares, Mitsui and Liberty International, having begun her insurance career as an underwriting assistant at Brit in 2000.
Pioneer said that Brian Denton, senior class underwriter for PI international and PI US excess, will be stepping back to an underwriting role to support McCluskey in her promotion.
Commenting on her promotion, Rayner said: “Kate has proven herself to be a skilled technical underwriter and a natural leader and this promotion is a reflection of the contribution she has made not only to the professional indemnity team but to the whole company.”
Last month, Pioneer announced that it had received ‘in principle’ approval from Lloyd’s to set up a syndicate, which will be managed by Asta. Syndicate 1980 expects to begin underwriting business from 1 January 2018.
XL Group acquires 20% stake in Indian broker
XL Group has increased its Indian footprint with the acquisition of a minority stake in Indian broker, Mahindra Insurance Brokers Ltd (MIBL).
XL will acquire a total 20 percent stake in MIBL from existing shareholder, Leapfrog Financial Inclusion Fund, with the deal valuing the broker at around $200mn.
Since inception in 2004, MIBL has serviced over eight million insurance cases, safeguarding the livelihoods of millions across rural India by protecting their assets and loans taken for buying tractors and vehicles.
Through its subsidiary Inclusion Resources Private Ltd, Leapfrog Financial holds a 15 percent equity stake in MIBL and is set to purchase an additional five percent stake in the broker’s parent company, Mahindra & Mahindra Financial Services, taking its total equity shareholding to 20 percent. It will then sell its entire stake in the broker to XL.
Greg Hendrick, president, P&C insurance and reinsurance at XL Catlin, said: "This minority investment plays to our commitment to emerging markets and to supporting insurance penetration in developing economies, helping improve economic resilience by closing the gap between economic and insured losses."
“It will also provide us a chance to better understand the primary retail insurance and distribution landscapes in the rapidly developing Indian market.”
Jaideep Devare, managing director of MIBL, said: "We want to introduce insurance ideas from the global markets, suitably adapted for the Indian market."
"MIBL will continue to focus on the rural and semi-urban areas, where insurance penetration is low and the need for social and economic progress that insurance inclusion can bring is high," he continued.
In January, XL Catlin received approval from the Insurance Regulatory and Development Authority of India (Irdai) to open a full licensed reinsurance branch office in Mumbai, having had service operations in India since 2004, when it opened its first office in Gurgaon, later adding an office in Bangalore.
Demand for BI & supply chain cyber coverage surging, says Beazley and Munich Re
Demand for holistic cyber cover addressing business interruption and supply chain risks has increased significantly, Beazley and Munich Re have reported through their Vector partnership.
The duo forged the partnership back in 2015 to offer bespoke expertise and deep capacity for the world’s largest and most complex cyber risks, allowing some of the world’s largest companies to obtain cover of up to $100mn (or EUR100mn) for a wide range of first party and third party cyber exposures.
“Since we established Vector, we’ve seen a significant shift in the pattern of demand for cyber cover,” said Paul Bantick, technology, media and business services UK focus group leader at Beazley.
“Every company insured through Vector has sought considerably broader coverage, in particular for business interruption and contingent business interruption cover. While these businesses have traditional property and cyber liability policies in place, they have recognised that they do not have complete protection for cyber-related events and this is clearly an issue the boardroom wants to address.”
The carriers said that recent high profile cyber-attacks such as WannaCry and NotPetya have highlighted clients’ vulnerabilities.
While cyber policies back in 2015 only addressed third party liabilities arising from data breaches and were more relevant to firms holding large amounts of personally identifiable customer data such as banks, many other industries such as large manufacturers, industrial companies and critical infrastructure are now very worried about the loss of production capability, whether caused by an attack on the company’s own system or on a critical supplier.
Nonetheless, Beazley and Munich Re noted that the the loss of customers’ personal data is still a concern, and that concern is increasing with the European Union’s General Data Protection Regulation coming in to force next year.
Chris Storer, head of cyber solutions for Munich Re’s Corporate Insurance Partner, said: “Vector has been highly successful in areas where our shared and complementary expertise can help clients prepare for rapidly evolving cyber risks. The coming together of our specialised experts makes Vector a powerful proposition for companies looking beyond their traditional coverages.”