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EC News (21st June 2018)

June 21, 2018

Round-up of the weekly news and developments from the global (re)insurance market with stories from Allianz, AJ Gallagher, Enstar and more.

Allianz eyeing large UK acquisition: reports

German heavyweight Allianz is said to be weighing up a large-scale UK acquisition according to reports, with RSA and Aviva named as potential targets.

A report from The Times suggests that Allianz CEO Oliver Bäte has been working with investment bankers for several months to develop a hit list of possible deals, with the insurer mulling a possible takeover approach for major UK carriers including RSA and Aviva.

Zurich and QBE were also said to be in the frame.

The publication indicated that Bäte, who has been CEO of the German carrier since 2015, is keen to make use of a growing cash pile and pursue new investments.

Bäte is said to be frustrated after missing on the acquisition of XL Group, which was snapped up by French rival Axa in a $15.3bn deal in March.

Last August, Allianz agreed to acquire a 49 percent stake in LV=’s general insurance business for £500mn, with the two carriers agreeing to launch a joint venture under the LV= name.

The transaction will see Allianz acquire a 69.9 percent stake in the joint venture. The agreement also contains a provision for Allianz to pay LV= a further £213mn by 2019 for an additional 20.9 percent stake in the joint venture through an agreed forward purchase based on a total valuation of £1.02bn.

Chilton to step down as Gallagher UK CEO

Grahame "Chily" Chilton is stepping down from his role as CEO of AJ Gallagher’s UK-based brokerage and underwriting division later this year.

He will be succeeded by Simon Matson, who currently serves as head of Gallagher's London Market and Alesco businesses.

Chilton took the helm of the broker’s UK-based international brokerage operations in February 2015, having worked in close partnership with Gallagher since December 2013 to establish reinsurance broker Capsicum Re, led by Chilton as founding partner.

He was appointed as CEO of the Benfield Group in 1996, and subsequently led the management buyout of the reinsurance broker in 1998, eventually overseeing its sale to Aon in 2008.

He then became chairman of Aon Benfield as well as overseeing a number of the group’s broking units, before transitioning out of the business in 2012.

Gallagher chairman, president and CEO, Patrick Gallagher remarked: "Chily has been an outstanding broker and entrepreneur who has led our 4,500 strong UK broking and underwriting teams to achieve fantastic client service and growth. 

“Under his stewardship, the UK broking and underwriting business has become the blueprint for what a well-managed, well-governed, high performing and ethical business should look like."

He said that the broker has a “long history”of smooth and successful leadership changes, adding:"Chily's transition is no different, and I want to thank him for his leadership and tremendous contributions as he now hands over the leadership baton to Simon Matson.”

Meanwhile, Gallagher’s UK non-executive chairman Sue Langley said: “Simon has demonstrated his own exceptional broking and inspirational leadership credentials over the past 10 years with the company. 

“With Simon at the helm, we'll continue the strong growth and evolution of our UK broking and underwriting businesses.”

Chilton commented: “Gallagher is a superb business with a culture and genuine sense of teamwork like no other insurance broker.”

“It has been a pleasure to work alongside the Gallagher UK executive team which is, in my opinion, the best in the business, and I know the team will continue to achieve great things under Simon’s leadership,” he concluded.

Enstar mulling sale of Atrium and StarStone

Enstar is exploring a potential sale of its active underwriting businesses, Atrium and StarStone.

In a Securities and Exchange Commission filing dated 18 June, the company said that it had retained investment bank Evercore to “assist in evaluating market interest regarding the potential sale” of the two carriers. 

Enstar said that it had made the decision along with private equity firm Stone Point Capital, which owns a share of the two businesses through its Trident V funds.

“The company and Stone Point reached the decision to engage Evercore in light of their favorable perception of market conditions, following several other recent transactions in the industry, and will explore whether there is interest in these businesses at attractive pricing levels,” Enstar said in the statement.

Enstar and Stone Point acquired Atrium, which manages Lloyd’s Syndicate 609, for around $153mn in 2013, as part of the legacy firm’s efforts to move into the live non-life underwriting market.

Enstar owns 60 percent of the Lloyd’s managing agency, while the Stone Point-managed Trident V fund owns the remaining 40 percent.

Meanwhile, in 2014, Enstar and Stone Point completed a $692mn deal to purchase Torus, which later rebranded to StarStone in 2015, continuing its expansion into live underwriting.

StarStone is a global specialty insurer and the holding company of five wholly owned insurance platforms, including Lloyd’s Syndicate 1301.

StarStone is owned 59 percent by Enstar, with the Trident V funds managed by Stone Point owning 39.3 percent and Dowling Capital Partners owning 1.7 percent.

Enstar said that it cannot predict whether or when any sale of Atrium or StarStone will occur.

Volante inks $900mn capacity deal

Volante Global, the new international MGA platform led by Talbir Bains, has secured a $900mn capacity deal that will see the launch of nine additional underwriting teams.

The multi-class, multi-territory capacity will be provided by a panel of three unnamed global A+ rated insurers.

The new teams are scheduled to launch on the Volante platform in the second half of 2018. 

They will work across seven distinct classes of business and operate in North America, Europe and Africa. Business lines include: property, general liability, space, international motor, facultative P&C, leisure and sport, financial institutions, North America auto and professional indemnity. 

The Nephila-backed MGA platform said that the single treaty agreement has been secured on a multi-year LTA basis with zero arbitrage fixed commissions.

Volante’s earnings will be fully contingent on profit commission which is calculated based on carrier performance over the period of the agreement, it added.

Volante founder and CEO Talbir Bains said: “What the transaction delivers in our view is a back-to-basics approach to the MGA-Carrier relationship.

“We have embedded within the commission structure of this deal a contractual alignment which necessitates that the underwriting profitability of our carriers is Volante’s primary focus in all aspects of the underwriting journey. This is about building a partnership predicated on complete alignment to the combined operating result of our capacity providers.”

Aon Reinsurance Solutions UK CEO Nick Frankland, who helped structure the transaction, said: “We are delighted to have played a role in building this unique partnership structure between Volante and its providers, which we believe sets a new standard for the multi-class MGA model. 

“By combining world-class capacity, leading sector expertise, and technology that enables business to be analysed and transacted quickly and efficiently, we feel that Volante is well-positioned to be a huge success.”

Volante already has two teams operating on its platform: Bridge Underwriting, a Stockholm-based specialist underwriting team operating across multiple P&C lines, and Edison Motor, a London Market-based team offering specialist commercial motor insurance products in the UK.

A third team, Horizon, is expected to commence underwriting treaty reinsurance business based in Zurich at the beginning of next year.

Volante launched in October 2017 with the backing of ILS manager Nephila Capital.

Ardonagh names CFO and CRO

The Ardonagh Group has updated its executive team with the appointment of Diane Cougill as CFO and Sarah Dalgarno as CRO.

Cougill, who begins her new role with immediate effect, was most recently CFO and insurance director at roadside assistance and insurance company, RAC. During her seven-year tenure with the firm, she oversaw the sale of the business out of Aviva to the Carlyle Group and more than doubled the enterprise value of the group ahead of the eventual sale to GIC and CVC.

Prior to that, she previously held senior management roles at a number of financial and energy companies including Aviva and TXU.

Meanwhile, Dalgarno has been named as Ardonagh’s CRO, having most recently served as the group’s strategic risk adviser. 

She originally joined The Towergate Group as CRO in 2015, before being appointed to the position of strategic risk director in May 2016, heading up a legacy resolution unit leading on the simplification of Towergate’s legal entity structure and tackling liabilities including ETV and UCIS redresses.

Prior to that, Sarah spent nine years at AJ Gallagher, latterly as serving as CRO. Previously, she managed the London Market Insurance Brokers team at the FSA.

Commenting on the appointments Ardonagh CEO David Ross said:“Diane has been working closely with the team at Ardonagh over the past couple of months on our full year 2017 and Q1 2018 financial results, closely followed by the completion of a successful £98m bond raise. Her advice and counsel over this time has naturally evolved into this appointment.

“Working closely with Antony Erotocritou as Group Finance Director, Diane is a hugely complementary addition to our finance leadership, bringing unique experience to the Executive table and working closely with our shareholders and the broader investment community.”

He added: “Sarah has spent the last two years tackling a project that only she could have done – the unravelling of legacy issues in Towergate which sat at the heart of the turmoil that engulfed the company back in 2014.”

“There was one person the board and shareholders entrusted this crucial task to; Sarah and her team have successfully liquidated and removed almost 50 percent of Towergate’s legal entities from the organisational structure, with 80 percent of Towergate’s distribution business now being renewed into a single legal entity, culminating in the rollout of Acturis across the advisory branch network,” he continued.

“With the back end of Towergate fixed, Sarah now steps into the CRO role for Ardonagh, where she deploys her commercial approach to working in a regulated environment so expertly,” Ross concluded.

Lee-Amies joins Hamilton Underwriting as head of treaty

Neil Lee-Amies has been appointed head of treaty at Hamilton Underwriting.

He joins the Lloyd’s managing agency having spent nearly 11 years at Chubb, where he most recently served as head of marine and energy treaty for Chubb Tempest Re following Ace’s $28.3bn acquisition of Chubb.

Lee-Amies appointment follows the resignation of former active underwriter and head of treaty, Trevor Carvey, in February, who has since been serving his notice period. 

At the time, Adrian Daws and Miles Osorio succeeded Carvey as joint active underwriters of Hamilton Underwriting Syndicate 3334.

In his new position, Lee-Amies will report to Osorio.

Prior to Chubb, Lee-Amies worked at Wurttembergische UK (now Antares Underwriting Services Limited) as marine non-proportional treaty manager/underwriter. His earlier roles include four years as deputy marine excess of loss underwriter at Eagle Star Reinsurance Company.

Commenting on the appointment, Hamilton Underwriting CEO Dermot O’Donohoe said: “I’m delighted that Neil has joined the Hamilton team,”

“He brings a proven track record of consistent, profitable underwriting results as well as strong client and broker relationships worldwide.”

“As we welcome Neil on board, we extend our sincere gratitude to Trevor for the significant contribution he made to the development of our Lloyd’s platform. We wish him every success in his future endeavours,” O’Donohoe added.

Aon appoints UK claims head from Marsh

Richard Moxon has been appointed head of UK claims at Aon Risk Solutions.

Moxon joins from Marsh, where he was most recently managing director of the education practice, which provides insurance and risk management advice to independent schools, academies, colleges, and universities across the UK.

During his nine years with the firm, he also served as head of the broker’s private clients business in the UK. Before that, he worked at Zurich and RSA.

In his new position, Moxon will report to global head of claims, Neil Harrison and join the Aon global claims executive board.

Bishopsgate hires Meredew

Bishopsgate has appointed Chris Meredew as director of UK and international liability, oil and gas and marine trades.

He joins the London market broker from RKH Specialty, where he worked on its marine and energy account.

Prior to that, Meredew spent 18 years at Windsor. He began his career at Furness Houlder before moving to SBJ Marine & Energy where he worked in the energy division. 

Commenting on the appointment, Bishopsgate CEO Neil Pearce said: “We are delighted to welcome Chris to the team. He has a wealth of experience in these specialisms and we are excited at the opportunities Chris’ appointment to Bishopsgate will bring.”

Sompo launches transaction risk insurance in Europe

Sompo International has expanded into transaction risk business through its European Specialty platform.

The (re)insurer will now provide warranties and indemnities (W&I) coverage for parties on either side of an M&A transaction in Europe, targeting public and private companies domiciled or conducting their core business throughout the continent. 

Sompo said that primary and excess attachments are available for buyer-side W&I, seller-side W&I, seller-induced buyer-side W&I and tax liability insurance for European tax risks related to M&A transactions.

Thomas Mannsdorfer, Sompo International’s head of European specialty underwriting, remarked: “Since the launch of Sompo International’s European platform in March, we’ve focused on delivering market-leading management liability, professional indemnity, financial institutions and cyber liability products to clients across Europe. 

“Our new M&A products expand these capabilities, further strengthening our ability to help companies manage the broad range of risks associated with their fiduciary and contractual responsibilities.” 

Richard Allen, head of professional lines, London Market and Europe Insurance, added: “Backed by Sompo International’s A+ rated underwriting capacity and with the flexibility to service accounts through both our London based and new European entities, the introduction of these additional professional lines products complement our growing portfolio. 

“Thomas’ in-depth knowledge in this area along with new underwriting talent recruited to our European Specialty team will enhance Sompo International’s presence in this important market.”