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EC News (28 February 2019)

February 28, 2019

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

RSA hires new CFO

RSA Insurance Group has appointed Charlotte Jones as its new chief financial officer (CFO), succeeding Scott Egan who moved to become CEO of the company's UK and international division. 

Jones will serve on the board as an executive director, reporting to group CEO Stephen Hester. She is expected to take up the CFO position by summer 2019.

Jones is currently a non-executive director of RSA and member of the group audit and board risk committees.

She will leave her executive role as CFO of Jupiter Fund Management to take up the new position at RSA.

Stephen Hester, RSA chief executive, commented: “We are delighted that Charlotte has agreed to join RSA as CFO. She has excellent financial services credentials and is well known to us, having served as a non-executive director on our board over the last year. She will be an able successor to Scott Egan and I’m looking forward to working with her.”

Jones commented: “I’ve enjoyed getting to know RSA as a non-executive director. The business has a clear, ambitious strategy and a strong team, and I’m pleased to be getting more deeply involved to help them take their plans forward.

Brit’s third-party capital hits $440mn as Versutus sidecar renewed

Brit has completed the fifth annual renewal and expansion of its Versutus sidecar, bringing the total amount of third-party capital under management to $440mn.

This capacity is spread across the Versutus 2019, Sussex Capital (its multi-use collateralised reinsurance PCC vehicle in the UK) and its Lloyd’s Syndicate 2988.

Versutus 2019 boasts $190mn (an increase from $187mn a year ago) of invested capital and offers access to Brit’s strong underwriting franchise through two sub series, one covering Worldwide Property Catastrophe Reinsurance business and the other North American Property Binders.

Additionally, Syndicate 2988 has a planned gross written premium (GWP) of $158.7mn for the 2019 year of account, an increase of 12 percent over 2018.

Brit CEO Matthew Wilson commented: “The renewal and expansion of our ILS capacity, alongside the growth in planned GWP for Syndicate 2988, continues our successful strategy of managing capital for third parties by offering access to Brit’s leading underwriting capabilities, deep client relationships and extensive distribution network,”

“In addition, the launch of Sussex Capital UK has also provided an important new access point to the property catastrophe segment. Taken together, these initiatives represent excellent progress as we continue to develop and enhance our capital markets participation.”

Sussex Capital writes through Sussex Re in Bermuda and Sussex Capital UK PCC in London, providing direct collateralised reinsurance as well as collateralised reinsurance to Brit’s reinsurance portfolio.

Mark Allan, Brit’s chief financial officer added: “Creating vehicles that attract a variety of capital providers ensures Brit can develop and bring to market the most appropriate capacity for our clients and their risk management needs.”

Aon expands restructuring plan

Initiated in 2017, Aon’s global restructuring plan has now estimated the number of job losses between 4,800 and 5,400, a 12 percent increase from a previous announcement in 2018.

The updated range was announced in the global broker’s most recent annual 10-K filing, which, alongside details of the company’s financial performance through 2018, also discusses Aon’s restructuring plan in connection with the sale of its Divested Business.

The restructuring plan is intended to streamline processes across the organisation improving efficiency, insight and connectivity.

The broker states that on-going restructuring activities are anticipated to impact the business through 2019.

From the plan’s inception through 31 December 2018, Aon has terminated 4,366 positions and incurred total expenses of $982mn for restructuring and related separation costs.

According to its annual 10-K filing, in Q4 2018, Aon expanded its restructuring plan, which led to additional expected costs of $200mn, comprised of $150mn of cash investment and $50mn of non-cash charges. As a result of the expanded program, annualised expected savings increased $50mn.

The program is expected to finalise in the final quarter of 2019, and Aon says that it does not expect any further changes to costs or savings prior to completion.

Combined, the plan is expected to result in costs of approximately $1.225bn, consisting of approximately $450mn in employee termination costs, $130mn in technology rationalisation costs, $65mn in real estate consolidation costs, and $50mn in non-cash asset impairments, as well as $530mn in other costs, which includes certain separation costs related to the sale of the Divested Business.

By the end of 2019, Aon says that it expects estimated annualised savings from the restructuring plan and other operational improvement initiatives will be roughly $500mn.

CFC appoints Jonathan Fletcher as CTO

CFC Underwriting has hired Jonathan Fletcher as chief technology officer (CTO).

In his role, Fletcher will oversee CFC’s technology and infrastructure strategy and lead the company’s development and application support teams. 

Fletcher joins CFC from Hiscox where he also served as CTO. He has 20 years’ experience leading IT, DevOps and digital transformation projects at Hiscox, Accenture and the London Stock Exchange.

Commenting on the appointment, CFC’s CEO David Walsh, shared: “Technology innovation has long been at the heart of CFC’s business and continues to be one of the main drivers of our growth and success,”

“The addition of Jonathan to our leadership team is a testament to the calibre of the work we’ve done so far, and to our commitment to lead the market in digital innovation.” 

Fletcher commented: “Innovation and digital transformation are hot topics in insurance and financial services, but there are few companies who are actually walking the walk. CFC is using technology to transform the way they sell insurance - by transacting business more efficiently and delivering products to market faster. I’m excited to partner with the leadership team and our world-class development team to help drive the next phase of our growth.”

Argo adds two independent directors to the board

Argo Group has added Samuel Liss and Tony Latham to its board as independent directors.

Liss is currently managing principal of advisory firm Whitegate Partners LLC, and is also a board member of Verisk Analytics and J.S. Held.

He previously served as an executive vice president at Travelers Insurance, and before that served as a managing director in the investment banking and equity teams at Credit Suisse First Boston.

Argo Group chairman, Gary Woods, commented: “The nominating committee regularly evaluates the make-up of the board, determining opportunities for refreshment and reviewing succession plans. Our objective is to ensure we consistently have the right blend of expertise and to provide strong, independent oversight.

He added: “The board has added five new independent directors in the past two years,”

“Each new member provides unique value, skill and diversity of views to the board.”

Latham has global industry experience that spans more than forty years, and has served as an independent director of the board of Argo Managing Agency since 2016.

At the same time, he has held numerous board positions across the sector, including both director and chairman of Pool Re.

He started his career with Sedgwick, before spending 17 years with RSA Group where he served as a member of the group executive, and held other senior executive roles, including managing director of the global risks division.

Risk Transfer Group’s Limehouse Agencies acquires DeCyber

Limehouse Agencies, part of Risk Transfer Group Limited (RTG) has acquired DeCyber, as part of its corporate strategy to double revenues to £100mn by 2021.

Online specialist sport and resilience firm DeCyber, provides sports clubs and leisure associations with a fast, simple and easy to use way of improving their levels of cyber protection. This is achieved through the provision of tailored products and services including insurance.

Steven Beard, CEO of RTG, said: “Highly automated risk mitigation services and insurance allow us to provide a valuable offering to this underserved and high-growth market. DeCyber provide an innovative solution and are a great addition to the Group.”

Jonathon Lane, CEO of DeCyber and head of RFIB’s financial institutions, PI and cyber team, commented: “We look forward to working with RTG as an investor and owner to penetrate the sports and leisure cyber market, which is an area we believe is currently under served in terms of cyber resilience solutions and insurance provision”.

THB strengthens board with four senior appointments

THB Group has announced four senior appointments to its board.

Kay Smith joins as group chief financial officer (CFO), succeeding Rob Wilkinson, who transitions to commercial director.

Smith has held a number of senior financial positions in the insurance broking sector, most recently at Arthur J. Gallagher in London. Before this, she was at Towergate, as well as directing the financial planning and analysis operation of a large fintech business.

Frank Murphy, THB Group CEO shared: “I am delighted to welcome Kay to THB. Her experience across the sector, in retail and wholesale broking as well as MGA operations, gives her great insights into the challenges and opportunities for our business.”

“I am confident that with her fresh perspective Kay will make a valuable contribution to the development of our firm.”

Additionally, Malcolm Beane has been appointed as a chairman of the THB board. Beane has been a non-executive director with THB for over two years and serves as chair of the audit committee.

Lastly, Jane Comerford joins as a non-executive director. She has 40 years’ experience in broking, underwriting and MGA operations.

Murphy said: “We are constantly evolving and developing our business to be focused on the future. These appointments represent an important part of that planning process.”

Germany extends passporting rights for UK insurers

Germany has adopted preliminary provisions to authorise the temporary extension of UK financial institutions’ passporting rights, including insurers, in the event of a no-deal Brexit, Clyde & Co analysts have reported.

These measures are reportedly part of a wider set of legislation concerning primarily tax matters and allows the extension of passporting rights post-Brexit for up to 21 months.

The period is identical to the transition period that is foreseen under the withdrawal agreement.

Underwriting new business is explicitly excluded and the insurers will be required to end existing contracts, obtain a new authorisation, or transfer the business to a licensed risk carrier.

Henning Schaloske, partner at Clyde & Co in Dusseldorf, said: “This is a welcome move by the German legislator to remove some of the uncertainty for both insurers and policyholders in the event of a no-deal Brexit, which is increasingly being seen as a very real possibility.”

“The extension of passporting rights for up to 21 months post-Brexit is a significant development and should provide sufficient time for the resolution of outstanding contracts but it is important that regulators across the EU continue to work together in a spirit of cooperation to address issues relating to cross-border insurance.”