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EC News (18th January 2018)

January 18, 2018

Round-up of the weekly news and developments from the global (re)insurance market with stories from Thomas Miller, AmWins, Allianz and more.

Thomas Miller in exclusive talks to acquire Navigators’ fixed-premium P&I book

Navigators has entered into exclusive talks with Thomas Miller Specialty to transfer its fixed-premium protection indemnity (P&I) book to the marine specialist managing general agency (MGA).

Navigators affirmed that it remained committed to the market, adding that it will continue to provide capacity to book once it has been transferred to Thomas Miller Specialty.

“This is a logical and progressive step for Thomas Miller Specialty, enabling us to create scale in a competitive market, whilst focusing on the specific and complex servicing needs of clients,” remarked Thomas Miller Specialty CEO, Guy Pierpoint.

Navigators international insurance CUO, Colin Sprott, said: “The most important element of this mutually beneficial transaction is that it will meet the long-term needs of our clients,”

“Thomas Miller Specialty shares Navigators’ commitment to high-quality customer service, making them an excellent choice to support the much-needed process of consolidation in the protection and indemnity market.  We remain committed to this market, demonstrated by the fact that we will continue to provide underwriting capacity to Thomas Miller Specialty.”

It is anticipated that the transfer will be completed by 20 February 2018, subject to regulatory approval.

AmWins names Purviance as CEO

AmWins has named Scott Purviance as the successor to CEO Steven DeCarlo.

Purviance, who takes the helm of the broker on 1 May, has been a part of the leadership team since June 2001. He held the role of CFO from 2001 for fifteen years before assuming his most recent position as COO. In November 2016, he was elected to the board of directors of the broker.

DeCarlo, who has served as CEO of AmWins since joining in December 2000, will transition into the newly created role of executive chairman and remain chairman of the board.

Meanwhile, Skip Cooper will transition from his current role as president of AmWins to vice chairman and will remain on the board of directors. DeCarlo and Cooper will continue to focus on select key growth initiatives of the company.

Current president of AmWins Brokerage, James Drinkwater will succeed Cooper as president of AmWins whilst retaining his position as president of the Brokerage division.

In addition, Benjamin Sloop, who currently serves as president of AmWins Access will succeed Purviance as COO of the broker. James “Tony” Gresham, who has served as COO of AmWINS Access since its establishment, will succeed Sloop as president of the division.

DeCarlo said: “For the past 17 years, Scott has played an essential role in building AmWINS into the industry leader it is today,”

“Scott knows our business better than anyone, and I’m pleased that he will continue to lead the strategic direction of the company.”

In a statement, AmWins independent director Jeff Consolino said: “Under Steve, Skip and Scott's remarkable leadership, AmWINS has grown from a regional wholesale broker to a leading player in the global specialty insurance marketplace,

“For almost two decades, Scott has been a key member of the team that has directed and managed the evolution of the business. The Board is confident that Scott will continue to drive the company forward, and we are excited about the opportunities that lie ahead for AmWins.”

Cyber risk rises to second largest concern: Allianz

Cyber risk has risen to become the second largest concern for companies globally, up from 15th place five years ago according to respondents to the 2018 Allianz Risk Barometer survey.

The survey, which captured the views of 1,911 respondents from 80 countries, revealed that cyber risk was the top concern for eight countries, including the UK and US, with threats such as “cyber hurricanes”, increasing reputational risk and tougher data rules bringing cyber into the spotlight for businesses and risk experts.

Furthermore, 54 percent of Risk Barometer responses ranked cyber as the most underestimated business risk, with respondents increasingly worried about new perils such as cyber extortion and, particularly, business interruption (BI).

Just like a natural disaster, a single cyber-attack can potentially impact hundreds of companies, leading to severe business interruption and loss of customers and reputation,” the report explained, adding that businesses are increasingly worried about the growing trend of broader accumulation events or “cyber hurricanes”, particularly following the WannaCry, Petya and Mirai hacks.

“Hackers can disrupt larger numbers of companies by targeting common internet infrastructure dependencies, for example – a trend that will likely continue through 2018,” Allianz said.

Meanwhile, at a global level, BI (including supply chain disruption) remained the number one risk for companies at a global level for the sixth year as 42 percent of respondents labelled it as their top concern. BI ranked top in 13 countries including China and Germany and in six sectors including aviation, food and beverage and manufacturing.

Allianz said that the average cost of a large BI property insurance claim is now in excess of $2mn. The average value of a BI claim was around $5.0mn where an energy platform incident was concerned, and $4.5mn when it stemmed from strike, riot or vandalism. Meanwhile, the average claim was $2.0mn when it resulted from fire or explosion, $1.4mn from flood-caused interruption and $900,000 where a storm was the cause.

The German carrier highlighted that as many businesses transition from being rich in physical assets to deriving more value from intangibles and services, increasingly, BI is being triggered by non-traditional risk exposures which don’t cause physical damage but result in lost income – often referred to an non-physical BI.

BI also ranked as the main cause of an economic loss following a cyber incident. Cyence Risk Analytics estimates that in the event of an outage at a cloud service provider lasting more than 12 hours, BI losses could total $850mn in North America and $700mn in Europe, based on 50,000 companies in three specific industry sectors (financial, healthcare and retail) being impacted by the outage in each region.

Natural catastrophes, market developments (e.g. volatility, intensified competition /new entrants, M&A, market stagnation, market fluctuation) and changes in legislation and regulation came in at third, fourth and fifth place of global business risks for 2018.

Meanwhile, one new cause of concern made it into the top 10 in the 2018 survey, with climate change and weather volatility coming in at number 10.

With cyber becoming an increasing focus for businesses, (re)insurers and brokers alike, Eames Partnership has recently completed an in-depth analysis of the talent landscape for both the London cyber insurance underwriting and broking markets.

If you are interested in learning more about this solution or want to find out how we can help you develop other areas of your business, please contact Matthew Eames at matthew.eames@eamespartnership.com  or on +44 (0)207 092 3257.

Lemonade co-founder criticises Amazon poaching practices

Shai Wininger, co-founder of insurance start-up Lemonade, has criticised retail giant Amazon’s staff poaching practices, according to reports.

Amazon is reportedly expanding its product insurance business in a move that could signal the start of broader ambitions in insurance. 

Taking to LinkedIn to voice his concerns, Wininger said: "Just learned that Amazon is actively targeting and trying to poach Lemonade Inc. employees,"

Adding: "I wonder if that's their idea of supporting the start-up ecosystem. Reconsidering Amazon AWS.”

Amazon Protect, which provides extensions to manufacturers’ warranties for items like mobile phones or washing machines bought on Amazon’s website, launched in Europe in 2016.

Job advertisements for the EU product insurance division described "launching a new business" and "creating a new palette of services," according to a Reuters report.

Amazon Web Services (AWS) offers cloud computing services. Lemonade is an AI-focused insurtech company first launched in September 2016 as a licensed insurance carrier offering homeowners and renters insurance in New York. 

Werner Vogels, Amazon's chief technology officer, replied to a similar post by Wininger on Facebook, saying: "Let me dive into this. It may be a sourcing agency vs Amazon proper. I find that sourcing from our customers would be extremely counter-effective. Let me follow up by PM."

Replying to a request for comment, an AWS spokesperson told Intelligent Insurer“We have many open positions around the world and recruit talent based on job-related skills and expertise, not the current employer. While we have employees that leave Amazon for other companies and vice versa, ‎we haven't built the type of customer base we have by specifically targeting our customers employees for hire – we focus our attention on helping our customers create great businesses on AWS. We’ve also looked back over the past year, and we are unaware of any hires AWS has made from the companies making these claims.”

Lemonade is in the process of expanding nationwide. In December 2017, it attracted £120mn in a funding round led by Japanese lender Softbank.

Beale confirms January 2019 launch date for Lloyd’s Brussels

Lloyd’s is set to open its Brussels office in January 2019, according to reports.

In March 2017, the Corporation announced that it had chosen Brussels as the site for its post-Brexit EU base, with the new subsidiary able to write risks from all 27 European Union and three European Economic Area states after the United Kingdom has left the EU.

At a financial forum in Hong Kong, Lloyd’s CEO Inga Beale told Reuters: “We are hiring people, we hope to make some appointments shortly. We will have the Brussels subsidiary up and running by January 1, 2019.”

“That is ahead of the actual official exit, but we run a market and we want to be ready for all of our businesses and syndicates that operate within the market. That’s why we are really pushing ahead.”

Beale said that the application for setting up the Brussels subsidiary was with the Belgium regulator and that Lloyd’s is seeking office space and putting technology systems in place.

“The only thing that might change it is any sort of delay to an actual impact of Brexit,” she told the publication, referring to the launch plan.

On the hiring plans for the Brussels unit, Beale said: “It will be in the tens, probably, up to 40 or something”, adding that the group would also move some roles from other centres to the new subsidiary.

Lloyd‘s, which earns about 10 percent of its global revenue from insurance premiums underwritten in Asia Pacific, has also been expanding in the region and set up an onshore presence in India last year. Its major markets in the Asia Pacific region include China, Hong Kong, Japan and Singapore.

“It’s very, very important and we will be growing,” Beale said, referring to the Asia Pacific region, adding that there is growing demand for insurance providing coverage for political risk, terrorism and cyber breaches.

CNA Hardy names Middleton as Luxembourg CEO

CNA Hardy has appointed former Exin executive Stuart Middleton as CEO of its Luxembourg subsidiary.

In his new position, which is subject to regulatory approval, Middleton will be responsible for continuing to build out the CNA Hardy’s operations and capabilities across Europe.

He will report to CNA Hardy chief executive Dave Brosnan.

Based in Luxembourg, Middleton will promptly begin recruiting a local management team comprising risk, finance and compliance functions to build out the local footprint.

Prior to CNA Hardy, Middleton most recently served as chief underwriting officer and joint managing director of Exin's wholesale division, based in Barcelona. His other previous leadership roles include CUO for Europe at Hiscox.

Commenting on the appointment, Brosnan said: We are delighted that we can leverage both his underwriting expertise as well as his strong broker relationships to build out our proposition and capabilities across the Continent in this manner.”

Newman steps down as Carole Nash CEO

The Ardonagh Group has announced that David Newman will be stepping down as CEO of Carole Nash at the end of March.

Ian Donaldson will take the helm of the UK motorcycle insurance broker, alongside his responsibilities as chief executive of Autonet, subject to regulatory approval.

Ardonagh completed its acquisition of Carole Nash at the end of last year.

Donaldson said: “Carole Nash is a hugely important part of The Ardonagh Group family and is a well-run and dynamic business with bags of potential to take an even larger chunk of a market in which it is so well known.

“Together with Autonet, we employ over 1,000 people across Manchester, Stoke-on-Trent, Altrincham and Dublin and already we are working quickly to identify the shared opportunities on which this collective force can capitalise.”

Speaking on his departure, Newman said that it was “absolutely the right time” for him to move onto the next phase of his life and career. 

“I have been privileged to work with a fantastic team at Carole Nash and together we have taken the biggest motorcycle insurance broker in the UK and Ireland into a new and exciting chapter, one which I truly believe will see real benefits for clients and exciting opportunities for employees,” he remarked.

Qatar Re gains regulatory approval in the UK

Qatar Re has received authorisation by the Prudential Regulation Authority (PRA) to carry out certain regulated activities in the UK from its London branch.

Michael van der Straaten will lead the branch, in addition to his current role as the company’s CUO for long tail and specialty classes.

Commenting on the news, Qatar Re CEO Gunther Saacke said: “We are very pleased with Qatar Re’s authorisation in the UK. London is the leading global hub for specialty and wholesale insurance. Therefore, a local underwriting presence is almost imperative for any aspiring global reinsurer. This is particularly true for Qatar Re as proximity to our clients and brokers is one of our proven value drivers.”

He continued: “For Qatar Re, Britain is a major market of growing importance. Only a few days ago, we announced the acquisition, subject to regulatory approvals, of Markerstudy Group’s Gibraltar-based insurance companies which underwrite more than 5 percent of the UK motor insurance market, generating annual premiums of about £ 750mn.”

Michael van der Straaten remarked: “I am excited about my additional role as London branch head. Our local presence allows us to further enhance our access and offering to our UK clients and brokers. Qatar Re is looking forward to becoming an important member of the UK insurance community.”