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EC News (7 March 2019)

March 07, 2019

Round-up of the weekly news and developments from the global (re)insurance market with stories from Lloyd's, Marsh, LMA and more.

Lloyd’s Brussels receives authorisation for Monaco licence

Lloyd’s Brussels has obtained authorisation to underwrite insurance and reinsurance risks located in Monaco which will allow it to ensure that business from the city-state will continue to be accessed by Lloyd’s members’ post-Brexit.

As a requirement of the authorisation, the subsidiary has chosen france country manager Guy-Antoine de La Rochefoucauld as its general representative for Monaco and as its financial representative for the territory.

However, Lloyd’s Brussels is not authorised to underwrite life insurance or life reinsurance business for risks located in Monaco.

Explaining the necessity for the licence, Lloyd’s stated: “Following the UK’s exit from the EU on 29 March 2019, Lloyd’s underwriters will cease to be authorised in Monaco. This is because Lloyd’s underwriters’ licence in Monaco is dependent on their authorisation in France, which will cease when UK firms lose their EU passporting rights.”

Adding: “Lloyd’s Brussels is authorised to write all non-life insurance classes 1-18, and non-life reinsurance business,” read the market bulletin seen by Insurance Business. “Business may be written on an onshore basis, i.e., by a coverholder located in Monaco, or on a cross-border basis, i.e., by a coverholder located outside Monaco or on an open market basis.”

Marsh Ireland announces Grogan as executive chairman & Howett to become CEO

Marsh Ireland has appointed Joe Grogan as executive chairman and announced that Patrick Howett will become CEO when the deal closes between Marsh & McLennan Companies and JLT.

Grogan has served in several leadership roles in his 28 years at Marsh. In September 2018 he was appointed chairman of Marsh Ireland and previously CEO of Marsh’s Corporate Division which provides risk management advice, insurance brokerage and claims advocacy services to mid-large organisations.

Howett has operated at JLT since 1983, in many senior posts before becoming managing director in 1995. He formerly worked in the audit and tax departments at Price Waterhouse Coopers. He has also served as a council member of Brokers Ireland, the country’s representative body for insurance brokers.

Both Grogan and Howett will be based in Dublin and report to Chris Lay, CEO of Marsh UK & Ireland.

Grogan commented: “Marsh is committed to providing our clients with a high-quality and seamless service. By strengthening our Irish operations, we will ensure we have the resources and talents required to support our clients as they navigate an increasingly complex risk landscape. I look forward to working with Pat and the highly-regarded JLT team.”

Howett said: “This is an exciting time for the teams at both Marsh and JLT. The combined organisation will lead the market in providing exceptional client service and risk and insurance expertise.”

LMA appoints new finance and operations duo

LMA has hired Rob Myers as its operations director and Paul Davenport as finance director.

Davenport has over 25 years' experience in the insurance industry. Before joining LMA, he held the position of international chief finance officer (CFO) at The Navigators Group. Prior to this, he was finance director at Chubb Insurance Company of Europe.

During his career Myers has held a number of senior roles. He began his career in the Corporation of Lloyd’s with the most recent being global chief operations officer (COO) for Xchanging Insurance & Banking Business Process Services and managing director of London Market Insurance Services JV businesses. For the last year he has been operating as an independent consultant.

Commenting on the appointment, Sheila Cameron, LMA CEO shared: “I am pleased to welcome Rob Myers and Paul Davenport to the LMA. Both bring with them a huge wealth of experience and understanding of the Lloyd’s insurance market.

She added: “Their expertise will add fresh impetus to the LMA’s priorities, including working with our members as they navigate the market’s digitisation journey and understanding how we can become a more future focused marketplace."

Aon partners with insurtech firm on satellite tracking

Aon has partnered with insurtech firm Skytek to provide real-time monitoring of insurers’ marine risks, identifying accumulations for enhanced underwriting and reinsurance programs.

This latest development was driven by the increase of major container ports and mega ships, which expose (re)insurers to risk accumulation during a catastrophe.

To manage this risk monitoring vessel movements and estimating cargo accumulation has become critical for insurers.

In answer to this need, Aon and Skytek have created a new consultancy based on the Skytek system, and supported by the European Space Agency, to use real-time satellite tracking that shows the precise location of insured risks alongside crucial vessel and cargo information.

Using this data, Aon will be able to analyse the potential accumulations and make recommendations specific to a (re)insurer’s portfolio for efficient reinsurance programmes and underwriting insights.

Commenting on the partnership, Christian Silies, head of marine and energy at Aon Reinsurance Solutions business, said: “As part of Aon’s commitment to data and analytics, this insurtech partnership is focused on using innovative technologies to enhance risk management practices.

As part of our development partnership, we will be taking the analysis beyond cargo and hull marine aggregation to also weave in business intelligence functionality using clients’ own data.”

Dr Sarah Bourke, CEO at Skytek, added: “The ability to take vast amounts of earth observation and space-based data and create tailored insurance products was inconceivable only a couple of years ago. These new products now open up an exciting future for deeper risk insights within the marine re/insurance world and beyond.

Aon and Skytek are already developing transparent algorithms to determine cargo exposures at ports in real-time, using the latest earth observation technology alongside the latest artificial intelligence and machine learning techniques.”

Arthur J Gallagher acquires JLT’s global aerospace operations

Arthur J. Gallagher has agreed to acquire JLT’s global aerospace operations.

The agreement consists of the acquisition of all assets within JLT's global aerospace retail and wholesale insurance broking division, which includes operations in the UK, US, Canada, Australia, New Zealand and 10 other countries across Europe, Latin America and Asia.

Also included in the agreement is the assets of Hayward Aviation, a UK insurance broker that specialises in aviation for high-net worth individuals and smaller airlines.

An estimated 250 employees from JLT’s global aerospace division will join Gallagher as part of the agreement, including around 100 employees within JLT’s London Market operations who will become part of Gallagher’s existing aviation division.

Subject to European Commission approval the acquisition is expected to close this spring in connection with the closing of the JLT purchase by Marsh & McLennan Companies.

Commenting on the acquisition, J Patrick Gallagher, Jr., chairman, president and CEO said: “The addition of JLT’s global aerospace broking operations will firmly position Gallagher as a leading broker in the extremely attractive and dynamic aviation and aerospace sector,”

Adding: “The business portfolio is a highly complementary geographic fit with Gallagher’s existing footprint and will provide significant growth opportunities for our international businesses. We look forward to welcoming the team to Gallagher later this spring."

Aviva confirms new CEO

Aviva has confirmed the appointment of Maurice Tulloch as the groups new CEO, succeeding Mark Wilson who left the role at the end of last year.

Tulloch joined Aviva in 1992 and was appointed to the Board of Aviva plc in June 2017.

Currently Aviva’s CEO of International Insurance, Tulloch is responsible for Aviva’s life insurance and general insurance operations in France, Canada, Ireland, Italy, Poland, Turkey and India.

He was previously CEO of Aviva UK and Ireland General Insurance, one of the largest businesses in the Aviva group.

Commenting on his appointment Tulloch said: “There is a clear opportunity to realise Aviva’s significant but untapped potential. Aviva is financially strong, we have a well-known brand and excellent businesses. But there is more to do to improve returns to shareholders.

“We must focus on the fundamentals of insurance and giving our customers the best possible experience – being there when they need us, protecting what’s important to them and helping them save for the future.”

The announcement of Tulloch’s new role also sees Sir Adrian Montague, who had been acting in an executive capacity, return to his role as non-executive chairman. Montague described Tulloch’s appointment as a “unanimous conclusion and a great result for Aviva.”

Munich Re leads Pool Re's £2.3bn terrorism retro placement

Pool Re has renewed its 2019 retrocessional reinsurance program, at an expanded size, that covers property damage arising from nuclear, biological, chemical, and radiological attacks; those arising from cyber-triggered terrorist losses; as well as conventional terrorist acts.

Provided on a three-year basis and representing a £200mn increase from 2018, the £2.3bn program, was successfully placed with over 50 global reinsurers, led by Munich Re.

The retrocession is structured as an aggregate excess of loss treaty which will attach if Pool Re’s losses, individually or in aggregate, exceed £500mn in any year, after member insurers’ combined retention of £250mn per event or £410mn in aggregate.

The £2.3bn includes £75mn provided under Pool Re’s recent terrorism catastrophe bond.

The retrocession wraps around the bond to form a notional layer of £200mn in excess of £500mn.

The risk was modelled using Pool Re’s own model, developed in partnership with Cranfield University and Guy Carpenter.

The model fully deployed computational fluid dynamics to assess blast risk which considers how blasts move over, around and between buildings.

Pool Re CEO, Julian Enoizi said: “We are delighted with the ongoing support we have received from our continuing reinsurers, and pleased to welcome new carriers to the risk and I thank Guy Carpenter for their efforts in completing this record-breaking placement,”

“It provides resilience for UK businesses, while moving the taxpayer even further away from their implicit coverage of extreme commercial losses from terrorism.”

Steve Coates, Pool Re’s chief underwriting officer (CUO), added: “As our modelling technology has improved, we have been able to increase appetite for a share of Pool Re’s assumed risk.”

“We will continue to look for increased retrocession and capital markets capacity to shift even more of that risk to the private sector, provided of course the capacity is of acceptable security and can be written on a long-term basis.”

Arch announces leadership changes

Arch Capital Group (ACGL) has appointed Andrew Rippert as chief innovation and strategic investment officer.

In this newly created role Rippert will be responsible for pursuing innovative business models and developing a pipeline of creative products and services.

He will report to president and CEO Marc Grandisson.

Rippert joined Arch in 2010 and most recently served as CEO of the Global Mortgage Group for ACGL.

Commenting on the appointment Gansberg shared: “At Arch, we have always considered innovation a key part of expanding our business and meeting our customers’ needs.”

Adding: “What has been accomplished in the Mortgage segment over the past few years, under Andrew’s leadership, has been amazing. By creating this new role, we’re tasking Andrew with developing the long-term future of the firm and determining how we will capitalize on the opportunities ahead of us.”

Consequently, David Gansberg will succeed Rippert as CEO, Global Mortgage Group.

Gansberg will oversee all of Arch’s mortgage insurance operations worldwide, including Arch MI.

Gansberg joined ACGL in 2001 and most recently served as president and CEO of Arch Mortgage Insurance Company (Arch MI).

Grandisson commented: “This move is only possible because of the deep talent pool that exists in the Mortgage segment. David has been a key member of Arch’s leadership team since our founding in 2001 and has excelled in building and guiding Arch MI to its market leading position in the U.S.”

He added: “His promotion ensures the continuity of our strategy and approach to the business and provides him with new challenges and opportunities globally.”

Michael Schmeiser will become the new president and CEO of Arch MI. He will report to Gansberg.

Schmeiser joined ACGL in 2017 following Arch’s acquisition of United Guaranty from AIG, where he held senior strategic roles.

He has nearly 20 years of strategy experience, primarily in financial services.

Gansberg said: “Michael Schmeiser has been a real asset since joining Arch. I’ve enjoyed working with him and know that he’s had a great opportunity to learn directly from Andrew,”

“He’ll bring that insight and a fresh perspective to Arch MI.”