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EC News (4th October 2018)

October 04, 2018

Round-up of the weekly news and developments from the global (re)insurance market with stories from Brit, RenaissanceRe, Ardonagh and more.

Cloutier to exit Brit for Aspen

Brit executive chairman Mark Cloutier is set to leave the carrier to join Apollo Global Management in a consultative role to advise on the private equity firm’s $2.6bn acquisition of Aspen, with a view to becoming chairman and CEO of the (re)insurer upon deal completion.

Cloutier will step down from his current role in December 2018 and is expected to join an affiliate of Apollo as a consultant on 1 February 2019.

Cloutier was drafted in as Brit CEO in 2011 after private equity houses Apollo and CVC completed their £888mn takeover of the firm, during which time he was instrumental in transforming Brit into a leading Lloyd’s carrier, returning it to the public markets before it was subsequently acquired by Fairfax in 2015. He became executive chairman in January 2017.

With more than four decades of industry experience, Cloutier has held a string of executive roles during his career including CEO of the Alea Group, overseas CEO for PartnerRe and president of EW Blanch Insurance Services.

Commenting on Cloutier’s departure, Brit CEO Matthew Wilson said: “Mark has played a pivotal role in Brit’s recent history, driving the establishment of Brit as a top-quartile Lloyd’s insurer and leading the business through its return to the public markets and subsequent acquisition by Fairfax.”

“The high esteem with which Mark is held across the business is testament to what he has achieved at the highest levels in our industry.”

Cloutier remarked: “Being part of the Brit story has been an exciting and rewarding experience, I am proud of what we achieved and can leave knowing I leave an outstanding team and market leading business under Matthew’s very capable leadership.”

In a letter to his colleagues filed with the securities and exchange commission (SEC) on 1 October, incumbent Aspen CEO Chris O’Kane confirmed that he would be leaving the firm following the completion of its sale to Apollo.

“After more than 16 supremely enjoyable years leading Aspen I will step down from the position of CEO on or shortly after the completion of our acquisition by investment funds managed by affiliates of Apollo Global Management, LLC,” he said.

In his communication, he noted that Apollo are “very impressed by Aspen’s people”and confirmed that the firm has “no current plans to replace other members of the Aspen senior management team after closing”.

“Until our deal is concluded, I intend to be an extremely active CEO operating fully mindful of our continuing obligations to our public shareholders and other stakeholders, and to ensure that the Company is as healthy, vigorous and well positioned as it can be,” he added.

Apollo’s acquisition of Aspen is slated to close in the first half of 2019, subject to approval of regulators and Aspen’s shareholders and the satisfaction of other closing conditions.

RenRe investor TimesSquare calls for sales process

RenaissanceRe investor TimesSquare Capital Management is urging the Bermudian carrier to commence an “immediate” strategic review of the company, including the consideration of a potential sale.

On 2 October, TimesSquare – an institutional asset management firm and long-term shareholder in RenRe - publicly released a letter sent to RenRe’s board of directors on 7 September 2018, arguing that the carrier should look to capitalise on the current wave of M&A activity across the (re)insurance industry.

“We believe there are a number of potential acquirers that would covet RenRe’s dominant and unique position in third party capital management, as well as the Company’s proven track record of superior underwriting, risk management and tangible book value per share growth,” TimesSquare said the in the letter.

“Our opinion is that an active competitive sale process for the Company should be launched, which would likely yield a significant control premium over the current share price,” it added.

The firm pointed to a number of M&A deals in the last two years that have seen peer companies acquired at “escalating valuation multiples”, including Axa’s $15.3bn takeover of XL Group and Validus’ $5.6bn sale to AIG.

TimesSquare, which has held shares in the Bermudian carrier since 2008, said during the decade of its ownership it had “witnessed a structural transformation of RenRe’s core property catastrophe reinsurance business, driven by the growing participation of alternative capital.”

“In our view, this has had an adverse impact on the long-term risk-adjusted returns achievable in this business. Importantly, the degree of pricing response following large loss events over the past decade has been dampened relative to history and the duration of pricing gains has been ephemeral,” the letter went on.

“As the industry environment evolves, we have diminished conviction that RenRe’s share price will appropriately reflect intrinsic value. In our view, however, there is a way for RenRe to better realize its intrinsic value: through a review of strategic alternatives, including a possible sale of the Company,” the asset manager said.

However, in its response to TimesSquare’s letter on 2 October, RenRe vowed to continue its strategic plan.

“We have considered fully TimesSquare’s views and have shared them with our oard. Our Board understands, and is committed to, its fiduciary duties to act in the best interests of all shareholders,” the statement said.

“Our Board and management team continuously focus on enhancing shareholder value through execution of the Company’s strategic plan. We will maintain an open and active dialogue with all of our shareholders as we continue to work to enhance shareholder value”, it continued.

The carrier said that it “welcomes open and constructive communications with all shareholders and values their input”, adding that “members of our senior management team have held numerous meetings with TimesSquare over the past few years”.

“In particular, both our chairman of the Board and our chief executive officer have separately met with TimesSquare in recent months,” the firm noted.

This campaign follows recent pressure from activist investor CIAM on Scor’s management team after the French reinsurer rejected a EUR8.2bn takeover offer from Covéa last month.

Ardonagh snaps up Swinton in £165mn deal

The Ardonagh Group has struck a deal to acquire UK personal lines broker Swinton.

The terms of the transaction will see Ardonagh pay Swinton’s owner, French mutual insurance group Covéa, a cash consideration of around £165mn.

In a statement, Ardonagh said that it intends to fund the purchase price with committed financing from its existing bank group, along with cash from monetizing certain Swinton assets.

Founded in 1957, Swinton is a UK personal lines broker that focuses on motor and home insurance and additional leadership positions in specialist lines including caravan, motorhome and motorbike. It employs around 1,550 people.

In the financial year ended 31 December 2017, Swinton reported turnover of £168mn, in excess of one million customers and 1.6 million live policies.

The statement highlighted that Swinton has invested £45mn over two years in digital capabilities and transformation in response to changing customer buying preferences.

Commenting on the deal, Ardonagh CEO David Ross said: “We are delighted to be welcoming Swinton into the Ardonagh group of companies; a personal lines household name steeped in heritage and another best in class brand which will be the perfect addition to our portfolio.

“The opportunity to share expertise in the development of our digital platforms to accelerate the scale and scope of our offerings is clear to see. Swinton is a hugely complementary, highly accretive acquisition, enabling us to occupy a significant space in personal lines broking.”

Pierre Michel, managing director of reinsurance and international operations at Covéa said: “Over the last few years, Swinton and its executive team have transformed and repositioned the business and now is the right time for it to move into new ownership.

“Swinton will become part of a growing and innovative UK insurance brokerage group, and I am confident that being part of The Ardonagh Group will provide Swinton with a great platform from which to deliver significant benefits to all its stakeholders, including its customers and employees.”

Ascent taps Brit for cyber head

Specialist managing general agent (MGA) Ascent Underwriting has appointed Caspar Stops as head of cyber.

Stops moves over from Brit where he served as an underwriter in the global cyber, privacy and technology team. During his (re)insurance career, he has also held cyber underwriting positions at Aegis and Hiscox.

He will begin his new role at the end of November and will report to Ascent’s chief underwriting officer Gareth Tungatt.

The firm said that Stops will be responsible for spearheading the development of further innovative products, including focusing on Ascent’s increased appetite for large risks, while contributing to the continued profitable growth of the existing portfolio.

Commenting on the appointment, Tungatt said: “It is great to welcome Caspar at such an exciting and important time for Ascent. Caspar is well-respected and an exceptionally talented underwriter, highly regarded by brokers.”

“He will be a significant addition to the team as we look to capitalise on our market-leading proposition and further extend our product base.”

Stops’ hire follows a number of senior appointments at Ascent since the beginning of the year, including James Weatherstone as non-executive chairman in March and Rob Harden as CFO in June.

This comes after the MGA received significant investment from private equity firm Preservation Capital in January to support its growth ambitions. As such, Ascent teased that further appointments and product announcements are expected this year.

LSM expands FI team

Liberty Specialty Markets (LSM) has bolstered its London-based financial institutions (FI) team with two new hires and a promotion.

Formerly a senior underwriter within the team, Sam Adamson has been promoted to underwriting manager of financial institutions business for the UK and Ireland.

Adamson joined LSM in 2012, having spent nearly three years as an FI underwriter at Travelers.

Alongside Adamson’s promotion, LSM also announced the appointment of two new FI senior underwriters.

Pavittar Bansel moves over from Sompo International, prior to which he served a number of FI underwriting positions in the London market at the likes of Endurance and Chubb.

Meanwhile, Joe Dearsley joins from Axis, where he was most recently a senior underwriter in the FI team. He began his insurance career with Liberty Syndicates in 2010.

LSM noted that another underwriting position is currently in the process of being filled.

Adamson commented: “FI remains a challenging class, but at Liberty we believe conditions are right to invest in our team and build a strong basis for the future development of our book. That’s why we’re excited to have Pav and Joe join us, complementing our team’s existing talent and experience.”

“Our FI account is one of the largest and longest standing in the market. Having been there for our clients throughout the financial crisis and years of recovery since, we’ve built a reputation as a reliable partner for our brokers and insureds,” he added.

Starr appoints Vink as Europe head

Starr Companies has named Joost Vink as head of its European operations.

Vink joins from HDI Global SE, where he was managing director of the Netherlands branch.

In his new position, Vink will be responsible for the profitable growth of all European operations except the United Kingdom.

He will report directly to Jim Herbert, CEO of Starr Underwriting Agents.

“We are excited for Joost to join Starr and head our European operations, he brings more than 34 years of insurance and client relationship experience,” said Herbert, who currently leads all of Starr’s European and UK operations.

“His extensive background and leadership skills will significantly enhance Starr’s growth plans for the region and strengthen relationships with clients and producers,” he concluded.

International Group names new chairman and CEO

The International Group (IG) has appointed Nick Shaw as its new group CEO, whilst Paul Jennings will become chairman.

Shaw will succeed Andrew Bardot following his retirement in July 2019.

Shaw currently serves as global industry group leader at international law firm Reed Smith, a position he has held since 2007.

He will join IG as the group secretariat in April 2019 and will work alongside Bardot during the handover period before taking the reins as CEO of the P&I group.

Shaw has practised in shipping and marine insurance law since 1990 and has worked closely with the group clubs throughout his career.

IG also announced that Hugo Wynn-Williams will step down as group chairman next month following the conclusion of his three-year term in the role. He will be replaced by Paul Jennings, CEO of the North of England Club.

Commenting on Shaw’s appointment, Wynn-Williams said: "The Group is delighted to have secured such a strong candidate to take over and build on the considerable progress which the Group Secretariat team under the leadership of Andrew Bardot has achieved over the past 13 years, in particular in raising the effectiveness and wider awareness of the vital role played by the Group and its member clubs in facilitating maritime trade, and in ensuring a sustainable and robust global compensation mechanism to meet the needs of those impacted by Maritime accidents.

“Nick has a strong background and reputation in the Maritime legal sector, and is very well known to the Group clubs with whom he has worked over many years, and he and the Secretariat team will be very well placed to continue the work to raise levels of awareness and understanding of the collective benefits which the Group system delivers, and to assist the Group in identifying and navigating the challenges in the years ahead."

AFL hires JLT Re’s Moretti

Independent Lloyd’s broker AFL has appointed Julia Moretti as director of casualty.

Moretti joins from JLT Re, where she served as a partner and senior casualty producer in the reinsurance broker’s facultative division. Prior to that, she spent nine years at UIB.

AFL chairman Toby Esser said: “I am delighted Julia has joined AFL to support our growth in the casualty space, where we are presenting a real alternative, independent choice for complex, multi-layered global risks.

“Julia’s experience and well-established relationships in the market, and dedication to a client-first approach are a perfect fit with the values we have built at AFL, and I welcome her to our team.”

Meanwhile, Moretti commented: “I am excited to join AFL and look forward to helping build out its growing casualty business. I have been impressed by the company’s commitment to modernising process in insurance, combined with senior management’s active support for new ideas and entrepreneurial team spirit.

“The casualty sector is changing rapidly with new areas of liability risk emerging. Now, more than ever, clients require trusted, experienced advisors that tailor products and services to their needs, rather than taking a one-size-fits-all approach. The opportunity to assist in developing new and innovative approaches for AFL’s clients is very appealing.”