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EC News (1st February 2018)

February 01, 2018

Round-up of the weekly news and developments from the global (re)insurance market with stories from Zurich UK, Aspen, Enstar and more.

Trade credit insurers expected to absorb £31mn hit from Carillion collapse

Trade credit insurers are expected to payout around £31mn in claims relating to the collapse of British outsourcing company Carillion, according to the Association of British Insurers (ABI).

Carillion is the latest in a number of high profile company collapses including Monarch, Palmer & Harvey, Multiyork and Misco.

Trade credit insurance covers firms against the risk of not being paid for goods or services that they provide following an insolvency, protracted default or political upheaval. The ABI said that latest figures have shown that trade credit insurers paid out £210mn to businesses due to non-payment in 2016.

ABI head of property, commercial and specialist lines Mark Shepherd said: “The demise of Carillion is a powerful reminder of how trade credit insurance can be a lifeline for businesses in these uncertain trading times.

“This insurance is an essential business tool that helps firms trade and expand in the UK and overseas. For all businesses, large or small, bad debt could easily put their day-to-day operations at risk, threatening the jobs of their employees. One insolvency can risk a domino effect to hundreds of firms in the supply chain. Trade credit insurance is an essential resource that provides businesses with the confidence to trade, secure in the knowledge they are financially protected when insolvencies occur."  

Zurich UK publishes gender pay gap

Zurich’s UK operation has published its gender pay gap report, revealing that women earn on average 27 percent less than men as it pledged itself to three commitments that it believes will help achieve gender equality.

Both the mean and median gender pay gaps at Zurich UK were 27 percent. The mean bonus pay gap was 47 percent whilst the median bonus pay gap was 34 percent.

Zurich said that its pay and bonus rewards are consistently applied spanning all employees, irrespective of gender, and are regularly reviewed to ensure consistency. This has been recently confirmed by the EDGE re-certification audit.

In a statement Zurich UK CEO Tulsi Naidu said: "The gender pay gap is not the same thing as having equal pay, and we are confident that men and women in our organisation are paid equally for the same and similar jobs."

“We’ve calculated the figures in line with Government regulations and, like many others in our industry, we have found that differences in average pay are down to several different factors.”

She said that the gap can be explained by the fact that women working in financial services and in insurance specifically are under-represented in senior UK leadership roles and also in more highly paid technical and specialist roles such as actuarial and underwriting.

She added that the firm have seen a greater proportion of women choosing to work part-time and taking career breaks which has also affect gender pay gap results, with Zurich highlighting that only 1 percent of men choose to work part-time compared to 27 percent of women.

As such, the company said that it is committed to ensuring gender equality in the workplace and helping women reach the highest levels in its organisation by; making the industry and Zurich more appealing to women, continuing to create a truly diverse and inclusive workplace and improving opportunities for career progression for women and more flexible working for all employees in the organisation.

The trio of commitments from the insurer come alongside initiatives already in place which include Zurich's Women's Innovation Network, the development of an early careers programme, the extension of the company’s Youth Skills programme across UK locations, an ongoing commitment to flexible working practices, diversity and inclusion raining for managers, and participation in a cross-company, cross-sector mentoring scheme known as the 30 Percent Club.

“We know it will take long-term commitment to change the make-up of our workforce, and we will continue to invest in our gender and diversity initiatives to make Zurich an employer of choice. We’ve done a lot, but there is much more yet to do,” said Naidu.

“We’re proud to be an inclusive and forward-looking employer. We believe everyone can build a career that they too can be proud of, and we want people to join our business and progress their career here,” she added.

Cohen named Aspen Insurance CEO as Postlewhite departs

Stephen Postlewhite, CEO of Aspen’s insurance segment, is set to relinquish his role and depart from the business with immediate effect, the carrier has announced.

He will be replaced by Aspen Insurance president and chief underwriting officer (CUO) David Cohen, who will lead the day-to-day management of the insurance business. 

Cohen joined Aspen in November 2015. Prior to that, he was president (US) and global casualty CUO at Liberty International Underwriters. In his new role, he will report to Group CEO, Chris O’Kane.

The news comes after Aspen revealed that it anticipates booking a fourth-quarter underwriting loss of $245mn, driven by an increased frequency of mid-sized and attritional losses which largely stem from the carrier’s insurance business.

Aspen said the insurance segment losses came from a range of business lines, including the impacts of property and fire-related losses in the UK and US, as well as to a lesser extent, cyber losses and a rise in a previously reported surety loss.

Aspen CEO Chris O’Kane said that the company was taking actions to try to improve its underwriting results and that these would likely become evident in 2018.

Speaking on Cohen’s appointment, O’Kane said: “Since his arrival, he has upgraded the underwriting talent in our insurance segment, is refocusing our underwriting book and is positioning Aspen Insurance for success in the next stage of its development.

“David is a strong and well-respected leader and I am confident that as we move forward, he will drive improvements across our Insurance business.”

He added: “Steve has made a significant contribution to Aspen over the last 15 years and I would like to wish him all the best for the future.”

PPL used to close Aon Client Treaty facility

The London market electronic placement platform (PPL) was used to close the Aon Client Treaty facility for 2018.

This is said to be one of the largest and most complex transactions in the Lloyd’s market. Containing 191 pages, it covers 20 different underwriting authorities and almost every specialty risk class in the market, over 4,000 lines are transacted on an annual basis for nearly 2000 clients, according to the PPL board.

London Market Group CEO Chris Beazley said the fact that the platform was used to complete this incredibly complex transaction is “proof positive that PPL has come of age.”

He added: “This is hard evidence that PPL has the functionality to handle the tough stuff and deliver real service improvements.

“The collaboration between the broker, underwriters and the PPL team in making this happen was first class and shows what the market can do when it pulls together.”

PPL began trading in July 2016 and is a core component of the London Market Target Operating Model.

Sompo International names Ashworth as head of London market marine

Sompo International has appointed Paul Ashworth as head of marine insurance at its London market operation.

In his new position, he will be responsible for managing a diverse portfolio, including hull and liability and cargo and specie marine classes.

Ashworth, whose insurance career spans three decades, most recently served as marine manager at Axis.  

The carrier has also promoted Ian Keegan to the newly created role of head of London market aerospace, energy and marine.

He will also serve as active underwriter for Sompo International’s Syndicate 5151.

Keegan joined the company in April 2016 as executive vice president, head of aerospace in the London office where he built the company’s presence in the aerospace market in London. Prior to Sompo International, he launched and managed similar aviation units at Hiscox and Faraday.

Keegan will report to Richard Housley, CUO London Market insurance and active underwriter of Syndicate 5151.

Meanwhile, the company said that executive vice president Clifford Easton will continue to coordinate the Sompo International marine & energy business globally and will be taking on additional leadership responsibilities related to Japan interest account business in Europe. 

In addition, the carrier announced that Tom Houston has been promoted to head of energy, London market insurance. Houston joined Sompo International in March 2014 as senior vice president, energy with a focus on exploration and production and other upstream energy accounts.

Sompo International CEO of London Market Insurance Graham Evans commented, “With the addition of Paul to our business leadership and Ian and Tom’s new roles, we have a strong team in place to further expand our presence in these markets.

“Our specialty business in both the London market and Continental Europe continue to be a strategic growth area for Sompo International. With a broad range of products, talented underwriting teams and experienced and responsive claims servicing, we are confident that we can add significant value to our client base.”

Enstar secures Novae legacy book

Enstar has struck an agreement with Axis to reinsure-to-close (RITC) the 2015 and prior underwriting years of account of Novae Syndicate 2007.

Enstar will assume net reinsurance reserves of roughly £600mn ($811mn) relating to the portfolio and gross reserves of around £840mn (US$1.136bn).

The RITC deal will be executed via Enstar’s Shelbourne Syndicate 2008 and covers the net reserve for losses and loss expenses associated with all business underwritten by Novae in the 2015 and prior years. The transaction was effective as of 1 January.

In a statement, Axis said the transaction resulted in a positive financial impact, which has been reflected in the fair values of Novae's assets acquired and liabilities assumed on the 2 October completion date of its acquisition of Novae.

Axis president and CEO Albert Benchimol said: "This transaction provides Axis Capital with finality on legacy Novae business underwritten in 2015 and prior years and positions the company to focus on advancing leadership positions in our targeted specialty risk markets.”

Meanwhile, Enstar CEO Dominic Silvester commented: “As one of several reinsurance-to-close transactions undertaken by Enstar recently - one of the largest transactions of its type in recent years - the Novae deal underlines Enstar’s capability as a leading reinsurance-to-close provider. By working closely with the Novae and AXIS teams, we were able to complete this significant transaction, highlighting our ability to efficiently enable our partners to restructure their liabilities, improve their capital position and strengthen their businesses.”

Last December, Enstar entered into an agreement to assume the liabilities of the 2015 underwriting year of Neon’s Syndicate 2468, comprising underwriting years 2008 to 2015, via an RITC transaction.

Alesco adds two partners to energy division

Alesco has appointed two partners to its expanding energy division.

In her new role Alison Schwab will primarily focus on Alesco’s energy casualty business and will report to managing partner Simon Clarkson. She joins the company from Wortham Insurance in Houston where she held the position of director. Prior to this, Schwab was with Lockton in Houston for eight years, and spent seven years as an environmental underwriter at AIG.

Meanwhile, Mark Smith is due to join the company in February. Smith joins Alesco from AAA Insurance & Reinsurance Brokers, bringing over two decades of experience in insurance broking, with particular expertise in technical trading within the African and Eastern European energy markets.

Commenting on the two new appointments, Clarkson said: "In 2017 we had a dozen new team members join Alesco's energy practice, with more than 100 across the wider business, so it's great to continue that momentum in 2018 with these two equally impressive hires from the global broking world."

UK Treasury sets dates for SMCR extension

The UK Treasury has announced that insurers have until 10 December 2018 to prepare for the Senior Managers and Certification Regime (SMCR).

The SMCR was introduced in 2016 for the banking sector to encourage a culture where staff at all levels take personal responsibility for their actions. The regulations will now be extended to all regulated financial services firms including insurance firms.

The SMCR will replace the current Senior Insurance Managers Regime for insurers and extend beyond the biggest insurers overseen by the PRA to encompass most of the firms regulated solely by the Financial Conduct Authority (FCA).

City minister and Economic Secretary to the Treasury John Glen said: "The extension of the regime to insurance firms will ensure individual accountability for misconduct at the most senior levels within the insurance sector.

"Britain's first-class regulation is one of many reasons our country is so attractive for financial services investment. The SM&CR plays a big part in this, ensuring that those at the top display the behaviours and values that the British people expect," Glen added.

Co-ordinated PRA and FCA consultations on SM&CR will close on 21 February.