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EC News (15th March 2018)

March 15, 2018

Round-up of the weekly news and developments from the global (re)insurance market with stories from Beach, Canopius, PartnerRe and more.

Beach launches specialty and wholesale platform

Beach has hired former Integro executives John Sutton and Toby Humphreys to launch a new specialty and wholesale platform.

Humphreys and Sutton, who will both lead the new platform, previously held joint leadership roles at Integro UK for over a decade, with Humphreys serving as chairman and Sutton as president of international operations and both joining the firm through its 2005 acquisition of Humphreys Haggas Sutton & Co. (HHS). Both left Integro in March 2017 to pursue other opportunities.

They will be joined at Beach by fellow HHS founder and director Simon Haggas.

The trio will join Beach on 19 March 2018 and will report to Beach Specialty CEO Shane Doyle.

Commenting on the formation of the new platform, Beach CEO Grahame Millwater said the broker is “rapidly evolving” and is now committed to developing a London-based wholesale operation that will have a “broker insurance specialty focus”.  

“We are delighted that John, Toby and Simon, a seasoned management team with a proven track record in building and expanding independent wholesale broker operations, will be joining us to lead this effort,” he said.

Sutton commented: “We have been flattered by a number of attractive options from broking firms and potential investors in the last year, but the opportunity presented by Beach is unique and impossible to pass up. Beach has a peerless reputation as a privately owned broking and advisory firm and their ambitions to further evolve in our particular areas of expertise present a tremendous opportunity.”

The news follows the announcement that Acrisure has completed its acquisition of Beach having obtained all necessary regulatory approvals, with the US retail broker now owning 100 percent of the company after buying out its existing shareholders which included private equity firm Aquiline and both current and former Beach management.

Under new ownership, Beach will retain its name, identity and unique approach and will continue to operate as an independent advisory and transactional broking business within Acrisure, with the existing management team, led by Millwater, remaining in place following the transaction.

Furthermore, Millwater and the remainder of the Beach management team will become shareholders in Acrisure.

Canopius names new CFO and COO

Lloyd’s carrier Canopius has appointed a new CFO and COO less than a week after it completed a $952mn buyout from Sompo.

Nigel Meyer will leave his position as Brit COO later this year to become group CFO at Canopius. Prior to Brit, he had previously held senior finance positions at Aviva and RSA.

Meanwhile, Canopius has named Laurie Davison as group COO and will join the carrier in April. She currently serves the same role at technology company Exari Group. She has spent two decades in the technology and insurance sectors, including senior roles at Adsensa, Faraday and Xchanging.

Commenting on the appointments, Canopius chairman Michael Watson said: “In a week full of good news for Canopius, I am delighted to announce these two new members of our senior team. Laurie understands our industry very well, bringing with her substantial experience on both the customer and insurer sides as well as deep technology expertise.

“Nigel’s experience across Lloyd’s and general insurance, his ability to manage a variety of stakeholders and regulators, and understanding of private equity ownership will be a great asset to Canopius. Together they bring excellent strength and breadth to our team.”

PartnerRe transfers upstream energy insurance portfolio to Ark

PartnerRe has struck an agreement to transfer its upstream energy insurance portfolio to Lloyd’s insurer Ark.

Under the terms of the deal, the book will be transferred to Ark Syndicate Management Limited (ASML) Syndicate NOA 3902.

The agreement relates to applicable policies incepting and written on or after 1 January 2018 alongside renewal rights for policies renewing subsequent to that date.

It is intended that PartnerRe maintains ongoing participation in the portfolio as reinsurer to Syndicate 3902.

PartnerRe president and CEO Emmanuel Clarke said that the decision to transfer the portfolio aligns with the company’s overall strategy of focussing on reinsurance and reinsurance-like solutions that don’t compete with its clients.

ASML CEO Ian Beaton said: “We have a longstanding and valued relationship with PartnerRe and this transaction allows ASML to strengthen its proposition in upstream energy insurance. ASML is privileged to be aligned with such a high quality reinsurer. 

“We look forward to working closely with our policyholders and brokers in order to effect an orderly transfer in the near term and, over the longer term, in providing meaningful capacity, underwriting and claims capability to upstream energy customers”.

Hiscox publishes UK gender pay gap report

Hiscox has become the latest carrier to publish its 2017 UK gender pay report, highlighting that women employed by the company earn on average 31.1 percent less than their male counterparts on a mean hourly basis.  

On a median basis, Hiscox said that the hourly pay gap was 26.2 percent. The carrier said that the gap was driven by having fewer women at senior levels within the firm.

The company also reported a median bonus gap of 49.5 percent, or 71.1 percent on a mean basis, which they attributed to a higher representation of men at senior levels in the organisation, in roles which attract higher variable pay, which results in men’s bonuses being on average larger than women’s bonuses.

The firm added that these figures also include share options excised which can vary year to year as the timing is determined by employees, highlighting that there were some large share transactions by male employees during 2017, which is reflected in the 71.1 percent figure.

Commenting on the disclosure, Hiscox Group CEO Bronek Masojada said: “At Hiscox we want to employ and keep the best people, and provide them with the means and motivation to excel in their careers with us. We benchmark salaries and provide performance-related bonuses, employee share schemes and competitive benefits to all our employees. We also strive to be inclusive, so that everyone working here can fulfil their talent and ambition.

“Like many other businesses, Hiscox has a 50/50 gender split at entry level roles, but we see a decline in women filling senior, higher-paid roles. This is driving the gap between the average amount paid to men, compared to the average amount paid to women.”

“Our position is clear; we want more women in senior roles at Hiscox, which is why we have had a Women in Leadership programme since 2014. We recognise it will take time to reduce our gender pay and bonus gaps, but we are determined to make lasting changes,” he added.

Hiscox’s disclosure comes ahead of the 4 April government deadline for all UK companies with 250 or more employees to disclose their pay gaps, with Hiscox being the first London-listed Lloyd's insurer to issue a report.

Canopius completes $952mn buyout from Sompo

Canopius has returned to being an independent business following the completion of its $952mn private equity-backed management buyout from Sompo.

The transaction, which has received all necessary regulatory approvals, was led by a private equity consortium led by Centerbridge Partners and includes private investment firm Gallatin Point Capital LLC.

Canopius was established in 2003 and wrote more than $1.5bn of premium income in 2017 and become a top 10 insurer at Lloyd’s.

With support from Centerbridge and Gallatin, Canopius said that it is “poised for growth” on a scalable platform when conditions are conducive, adding that it will continue to focus on underwriting excellence and enhancing its value-added capabilities in support of brokers and clients.

The standalone business will be led by chairman Michael Watson and recently appointed group chief underwriting officer (CUO) Mike Duffy.

Watson commented: “I am delighted to herald the dawn of an exciting new chapter in Canopius’ journey. This has re-energised our exceptionally talented team who, with the financial strength and insights of our new owners, will continue to pursue our ambition of building a world-class specialty (re)insurance franchise.”

Senior managing directors at Centerbridge, Ben Langworthy and Matthew Kabaker said: “We’re very happy to have completed the investment in Canopius. Working with Michael Watson, Mike Duffy and the Canopius management team over the past few months has reinforced our view that this is a business with strong leadership and a clear strategy for the future. We recognise that 2018 marks a milestone year for Canopius being that it is 15 years since its original foundation. We believe Canopius has a great opportunity to build on its outstanding track record and look forward to helping grow the business responsibly.”

Argo acquires Italian specialty insurer Ariscom

Argo Group has acquired Italian specialty insurer Ariscom as it looks to expand its presence in continental Europe.

In the coming months, ArgoGlobal will rebrand Ariscom to highlight the strength of the new combined organisation.

“Our international team has a great deal of expertise that will improve the effectiveness, efficiency and, ultimately, profitability of Ariscom,” said Jose Hernandez, head of Argo Group’s International segment.

“We are planning an aggressive re-launch strategy and intend to deploy some of the company’s proven digital solutions to enhance the value we provide to clients,” he added.

The carrier announced that Matt Harris, head of ArgoGlobal’s European and Asian operations, will assume the role of Ariscom managing director, effectively immediately.

Commenting on the rationale of the deal, Argo Group CEO Mark Watson highlighted that Italy was one of Europe’s largest and best-performing P&C insurance markets.

“We’re also eager to tap into Ariscom’s existing broker and client network throughout Italy, with longer-term opportunities to develop capabilities across Europe – particularly in Spain and Portugal,” he said.

This deal follows a series of recent senior leadership appointments within Argo’s International segment, and follows last year’s acquisition of Bermuda-based reinsurer Ariel Re and addition of a new team of property underwriters from Ironshore.

“We have the right team and most of the structure in place. I’m optimistic about the prospects for the future of the international business,” added Watson.

RMS launches probabilistic cyber risk model

Catastrophe modelling firm RMS has released third generation of its cyber risk management platform, marking the launch of the (re)insurance industry’s first probabilistic model for the peril.

Dubbed RMS Cyber Solutions, the upgraded platform provides losses at different return periods for all five of the major cyber loss processes, including events such as cloud outages, contagious malware and denial of service attacks, enabling insurers to allocate capital to cyber risk in a rigorous and quantitative way.

The latest release also adds additional functionality to apply to reinsurance of cyber losses, providing financial perspectives to all reinsurance stakeholders. Furthermore, it provides tools to allow model users to incorporate their own loss experience into the model and develop their own view of risk.

The platform also extends the functionality for carriers to analyse their 'silent' cyber exposure in other classes of insurance, such as property damage, energy, and marine, by relating policy terms and conditions and linking to portfolios of property exposure data in the RMS EDM, the data standard used by most of the insurance industry.

RMS Cyber Solutions also incorporates new analytics for selecting and pricing individual accounts, and for quantifying loss probabilities for cyber risk rating factors.

Commenting on the release, RMS’ head of cyber solutions Adam Sandler said: "RMS clients are seeing demand for cyber insurance growing rapidly and their ability to pursue this opportunity is constrained by their ability to allocate risk capital with confidence.

“Cyber is still relatively unknown and doesn't behave like other perils. Our clients' highest priority request to RMS over the past couple of years has been for cyber loss probabilities, particularly for our accumulation scenarios, to assess the cost of capital needed to support this growth opportunity. With this release, we are answering that need.”

Head of cyber model development at RMS, Dr. Christos Mitas added: "Statistical experience data only provides a few years of benchmarking, and the patterns of loss continue to shift. Our models show that loss processes such as contagious malware have the capability to scale and trigger large losses much more easily than others, such as data exfiltration, where attackers target individual companies to steal their sensitive data, or cloud outage, which is currently limited by the customer base of cloud service providers."

AFL launches commercial marine division

AFL has launched a commercial marine division appointing Alex Mott to lead the division.

Mott joins AFL as director of marine from Ed, where he previously managed the marine broking team. Throughout his career as a Lloyd’s broker and broking team manager, he has specialised in multiple marine risks, including hull and machinery, disbursements, war risks and P&I.

AFL chairman Toby Esser said the launch of the commercial marine division is a “logical step” for the independent broker as it continues to grow the business into a full service intermediary.

“We are responding to increased demand from clients for a modern, proactive approach to processing and placing marine business, and are delighted that a skilled insurance professional of Alex’s calibre is coming on board,” he said.

AFL CEO Bob Finch added: “An experienced Lloyd’s broker and team leader, Alex is the perfect fit to drive our marine division forward. Marine insurance is at the historic heart of the London Market, but London’s long-standing roots as a marine hub cannot be taken for granted. We are committed to developing and adopting the latest technology and modernisation initiatives to deliver efficiencies in processing and placing marine business, and maintain London’s position as a global leader in marine insurance.”

AFL has been slowly expanding its wholesale and retail capabilities, which has included the appointments of Barry Rowland and Chris Cavani as directors in its growing P&C businesses.