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every wednesday • Issue 21 • 19 november 2014
Nelson promotes Lloyd’s
local Indian presence
Lloyd’s Asian presence has caused facultative reinsurance to go from “strength to
strength” in Asia and it could similarly boost India’s insurance industry, argued Lloyd’s
chairman John Nelson at the Indian Insurance International Summit.
Lloyd’s could not only boost
the Indian (re)insurance
industries with a local presence but could also help India
to build a stronger economy
and gross domestic product
(GDP), John Nelson, chairman
of Lloyd’s told the summit:
“Lloyd's has always been a
crucible of innovation in its
long history and we are well
placed to lead in the innovation
of Indian products,” he said.
“A strong insurance industry
allows entrepreneurs to take
risks and fuels innovation. In
order to build the infrastructure required to sustain India’s
economic growth investors will
need sophisticated cover,” said
Nelson.
Demonstrating this, he compared the earthquakes that hit
Haiti and Christchurch, New
Zealand, in 2010.
New Zealand’s insured losses
were $4bn and economic losses
were $6.5bn from the quake but
by 2012 New Zealand’s GDP
had recovered and increased by
2.5%.
Comparatively, Haiti’s insured losses were just $200m,
while economic losses were
estimated at around $7.8bn.
“One of the reasons they [New
Zealand and Haiti] had such
different experience is the take
up or insurance and reinsurance. Haiti penetration as
below 1%,” said Nelson.
He went on to say that the
US is one of the most sophisticated insurance markets in the
world, with high penetration
Continued on page 7 >
John Nelson (Centre) talks with Alice Vaidyan, General Manager, GIC Re and
Sanath Kumar, Director and General Manager, New India Assurance, at the London
India event hosted GIC RE, New India Assurance, Indian Merchants’ Chamber,
Reactions and Asia Insurance Post.
Talanx investment
returns help bottom line
German insurance and reinsurance holding group Talanx has reported an operating
profit of €1.44bn for the first nine months of 2014, up 4.9% from €1.38bn in 9mo
2013, helped by strong investment returns and improved run-off results.
Group net income was €530m,
up 0.4% year on year. Gross
written premiums reached
€21.73bn for the first nine
months of 2014, up 1.6% from
the €21.38bn recorded in the
same period last year.
Net premiums earned inched
up 0.2% year on year to
€17.13bn.
The combined ratio edged up
Continued on page 4 >
ALSO in this issue: in the spotlight: Franz-Josef Hahn, Peak Re page 15
2 EDITORIAL comment
4 TOP STORIES
10 TOP STORIES
13 feature
20NEWS ROUND up
25people moves
• Towards a Global
Indian Insurance
Market
• PRA’s Moulder
warns on reserving
• Hensarling argues
for Tria reform
• Asset Managers
back less liquidity
for higher returns
• Aquiline takes stake
in Beach &
Associates
•RenRe’s Peter
Durhager
steps down
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Editorial comment
EDITORIAL
Managing editor
Peter Birks
Tel: +44 (0)20 7779 8755
Email: [email protected]
Deputy Editor
Lauren Gow
Tel: +44 (0)20 7779 8193
Email: [email protected]
Americas editor
Christopher Munro
Tel: +1 212 224 3473
Email: [email protected]
Senior reporter
Victoria Beckett
Tel: +44 (0)20 7779 8218
Email: [email protected]
Towards a Global
Indian Insurance
Market
Last week Reactions was honoured to be one
of the hosts of the Indian Insurance International Summit on “Towards a Global Indian
Insurance Market”. New India Assurance,
Indian Merchants’ Chamber, GIC Re and Asia
Insurance Post were also organisers.
This is not the time or place to give a complete summary of a fascinating afternoon of
speeches, followed by a panel, but there were
some interesting takeaways.
The inevitable comparison in the Asian market is between India and China, and not infrequently China comes out on top. The opinion
is that “China gets things done”. India might
be the world’s largest democracy, but a lack of
top-down control can be a disadvantage in the
business world.
To its credit, India seems to have spotted
this, and there is less talk these days of the
“Indian tiger”. The reference is instead to the
“Indian elephant” – an animal that can take its
time to get going, but, when at full pelt, is a
virtually unstoppable force.
One of the most telling points was not about
the nature of political control in China and
India; it was about demographics. Put simply,
China is now an ageing population, while India is still predominantly young. Fifteen years
from now, one of India’s great advantages will
be its considerably lower average age.
Population control remains an issue in India;
this was, at it were, one more example of
China “getting things done”. But this was also
an example of where having first-mover status
was far from an advantage. The near-brutal
one child per family rule in China failed to
anticipate the demographic implications 40
years down the line. In the UK the unimposed
decline in fertility has been compensated for
through much-needed immigration. China
does not have that luxury. Its population has
an average age of about 36. India’s is about
26. (By comparison, the UK is about 41, while
the US is little more than China’s).
Reporter
Samuel Kerr
Tel: +44 (0)20 7779 8719
Email: [email protected]
Contributing editor
Garry Booth
Email: [email protected]
The implications for this in 20 years time
are dramatic. China will see a dramatic rise in
the cost of human capital, forcing it to become
more efficient in terms of production techniques. India, by contrast, will see an expanding workforce, putting wage levels under
pressure. India, quite simply MUST expand at
a rapid rate even to maintain living standards
at their present level. For China, GDP growth
will soon be a bonus rather than a necessity.
While for the average inhabitant of India
this will not be good news, for potential investors in any business that uses large number of
staff, India will look more attractive. China’s
best way to fight back against this would be
to allow more economic immigration. But
Chinese society is not a great one for welcoming newcomers. It is not as homogeneous as
Japan Look at the Ürümqi riots in 2009, or, of
course, at Tibet. Islamic insurgency remains a
potential threat. The inevitable result in China
will be upward pressure on wages, which
could in itself lead to dramatic social unrest.
The Black Death in England in 1348 kill perhaps half the population, but for the surviving
peasantry it was the equivalent of winning the
lottery. Serfdom effectively ended because of a
shortage of labour, but it did not do so without
resistance.
China faces similar potential unrest, while
India’s very slowness to change could, in the
long run, turn to its advantage. Perhaps even
Indian elephant is the wrong animal metaphor.
It could be an Indian tortoise against a Chinese
hare.
Peter Birks, Managing Editor, Reactions
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19 november 2014
|3
top stories
PRA’s Moulder warns on reserving
The UK Prudential Regulation Authority (PRA) has warned retail
insurers against drawing down too far on their reserves in order to
bolster present-day profits.
In a letter dated November 13 from Chris
Moulder, director for general insurance,
the PRA said that it would “question the
robustness of the underwriting practices at
firms that rely unduly on prior-year reserve
releases to support ongoing underwriting
activity for any substantial period of time”.
Moulder also observed that some insurers
had been tempting to relax their underwriting criteria in order to protect their market
position. That, he said also led to in increase
in the risk of mispricing business. The PRA
also restated its fear that some claims could
end up costing more than expected, including Periodical Payment Orders, even though
non-life insurers have pointed out that most
of their liabilities are short-tail and that any
problems they might face would be very different from those faced by the life sector.
Analysts felt that one impact on the nonlife sector could be for them to conservative
on reserve releases for full-year 2014, given
that the letter was timed to coincide with the
period when insurers would begin to prepare
their full-year results. That in turn could put
pressure on earnings. n
Talanx investment returns
help bottom line
< Continued from page 1
0.1pp to 97.7% Net investment income
was up 6.5%, to €3.00bn, from €2.81bn in
9mo 2013. The return on equity was 9.4%,
down 0.6pp from the RoE in 9mo 2013.
Talanx said that, after excluding a
one-off effect from the sale of Swiss Life
shares the previous year, profits were up
23% year on year.
Talanx chief executive Herbert Haas
noted that "business performance was
in line with our expectations, despite
significant large losses in the Industrial
Lines Division and the absence of the
one-off effects seen in the previous year.
We are confident of reaching our earnings
forecast of at least €700m in 2014".
Large losses in the reinsurance sector (mainly Hannover Re) were down by
nearly 50% year on year to €242m, but
they rose in the primary sector to €259m,
from €221m in 9mo 2013. This was due
to "another unusual accumulation of
mid-sized and major cases of property
damage".
At group level the net large-burden loss
was down to €501m, from €668m in 9mo
2013, mainly because of the high level of
losses incurred in Germany in 2013 from
hail and floods. For the third quarter, operating profit rose to €439m, from €344m
in Q3 2013.
Group net income was €149m, up
26.3% from the €118m recorded in the
same period last year. Gross written
premiums were up 5.3% year on year to
€6.76bn, while net earned premiums rose
3.9% year on year to €5.82bn.
The combined ratio was 100.0%, 0.7pp
4
| 19 november 2014
down on the 100.7% recorded in Q3 2013.
Net investment income was €1.05bn, compared with €937m in Q3 last year.
Growth in top line across all
divisions
Division by division, Industrial Lines
recorded GWP of €3.2bn, up from €3.1bn,
"largely driven by growth of foreign
branches and subsidiaries". The underwriting result of minus €66m was an
improvement on the minus €93m recorded
in the first nine months of 2013. This
however was due to an improved run-off
result.
Industrial Lines' contribution to the
group's net income was €85m, up from
€28m in the corresponding period last
year. Retail Germany Division, covering
non-life and life, saw premium income
down by 2.2% year on year to €3.8bn.
Annual Premium Equivalent income was
down 2.8% to €313m.
Property-casualty was flat at €1.3bn.
Talanx observed that the underwriting
result was "dominated by the life insurers", and the result fell by 11.9% year on
year to minus €1.3m. Although there was
a lower run-off result for property, the
combined ratio was only 0.1pp higher at
101.7%. The contribution to group net
income was €72m, up from €63m In the
Retail International Division, GWP was
up 5.5% year on year to €3.3bn. Brazil
recorded a 13.1% increase in GWP in
local currency terms, but only 1.7% in
euros, to €640m. Mexico saw a 6.6% gain
in local terms, but only 1.4% in euros, to
€133m. Turkey saw a 21.7% growth in lo-
cal currency, but only by 2.9% in euros to
€142m. The underwriting result declined
to minus €6m, from plus €23m in 9mo
2013. The contribution made to the Group
was €96m, up fractionally from the €93m
recorded for 9mo 2013.
Non-life reinsurance saw slight
premium growth, "amid ongoing strong
competition and despite its selective
underwriting policy". GWP was up 1.6%
year on year to €6.1bn. The combined ratio edged up 0.3pp to 95.3%, "well within
the target of below 96%". The underwriting result declined to €224m from €245m.
The segment contributed €271m to group
net income, up from €247m.
Life and health reinsurance saw GWP
virtually unchanged at €4.6bn, up by 1.4%
year on year. The underwriting result
was minus €242m, compared with minus
€273m in 9mo 2013. The segment's contribution to group net income was €86m,
up from €74m in 9mo 2013.
Premium growth anticipated in 2015
Looking ahead, Talanx anticipates premium growth of between 2% and 3% for
2014, "the bulk of which will come from
international markets". Talanx maintained
its target of at least €700m Group Net
Income, equal to a return on equity of
between 9% and 10%. The dividend distribution plan of between 35% and 45% of
Group Net Income remains unchanged. n
TUNIS RE CAPITAL INCREASE RESERVED TO A STRATEGIC PARTNER
CALL FOR EXPRESSIONS OF INTEREST
OBJECT OF THE TENDER
As part of the final step of its development plan for the period 20102014, Société Tunisienne de Réassurance ("Tunis Re" or the
"Company") plans to open its capital through a capital increase
reserved to a strategic partner ("Strategic Partner"), to 25% of its
share capital after increase (the "Transaction").
The extraordinary general meeting held September 19, 2014 decided
a capital increase reserved to a Strategic Partner with the amount of
25 million dinars, divided into 5,000,000 shares with a nominal value 5
dinars, from 75 million to 100 million dinars.
It’s expected that the Strategic Partner provide strong expertise in
order to participate to the improvement of its technical and financial
ratings including the strengthening of its financial and commercial
capacity at the regional and international levels.
KEY HIGHLIGHTS
 Tunis Re, a leading reinsurer in the Tunisian market, was








established March 25, 1981 at the initiative of the authorities with
the help of insurance and reinsurance companies as well as some
local banks.
At the end of June 2014, Tunis Re generates nearly 64% of its sales
in the local market and 36% in the MENA region including 14% in
Africa.
To confirm its status as a regional reinsurer, Tunis Re initiated in
2012, its first representative office in Ivory Coast.
Tunis Re has been assigned several national and international
missions, including the reduction of remittance flows of reinsurance
abroad and contributing to the establishment and development of
national reinsurance pools. Tunis Re is in charge of their
management on behalf of the Tunisian State.
Tunis Re is the first African reinsurance company listed on the stock
market. The IPO funds raising was achieved in May 2010. In 2012,
a second public offering was performed to increase the capital of
Tunis Re from 45 to 75 MTND.
Tunis Re is certified to MSI 20000 standards by the Institute of the
Paris Stock Exchange since October 2010.
The international rating agency AM Best reaffirmed, in July 10,
2014, the technical and financial ratings of Tunis Re B + (Good) with
a stable outlook, which confirm the strength of the Company and its
ability to overcome difficulties.
This confirmation reflects the good capitalization adjusted on the
Company risk, better underwriting policy and a strong position in its
market.
In early 2011, Tunis Re has launched a specialized unit of islamic
reinsurance "Retakaful" to target high added value crenel. This
structure operates in accordance with the Islamic insurance rules
and norms and is followed by a Chariaa supervisor.
PRE-QUALIFICATION PROCESS
Investors wishing to be pre-qualified to participate in the tender are
invited to express their interest individually or by forming a
consortium in accordance with the terms and calendar described in
the pre-qualification document ("DPQ").
The strategic partner should be an internationally renowned financial
institution:
A direct insurer or reinsurer interested in a presence in the
African and the MENA region markets
And/or
A bank, a specialized investment fund or an international
renowned financial institution those are willing to expand
or diversify its insurance and reinsurance activities.
Expressions of interest must be submitted at Banque d'Affaires de
Tunisie ("BAT") no later than November 14th, 2014 at 17:00 whose
contact details are mentioned below.
Tunis Re reserves the right, at any time during the process, to not
retain one or several Investors to participate in the process of
increasing the capital, in case of non-compliance by interested
Investor(s) with the current rules of law and public order.
REGISTRATION AND WITHDRAWAL OF DPQ
Investors interested in participating in the Transaction must register
first. To register, Investors should submit to the Advisor, whose
details appear at the end of this notice, by fax or email, the
Presentation Sheet ("Presentation Sheet") dully filled according to
model available at the Advisor.
Then, Investors will be invited to:
(i)
sign the non-disclosure agreement (the "NDA") available
at the Advisor (Cf. contact details at the end of this notice.
(ii)
Pay the non-refundable registration fee, amounting to
3,000 dinars or 1,300 Euros or 1,700 USD.
After steps (i) and (ii) Investors will be invited to withdraw DPQ,
which presents the investment opportunity, the process and prequalification criteria.
Registration fees are payable by certified check or by bank transfer to
BAT in its account #10.010.124.1085140.788.94 (STB Bank).
DUE DILIGENCE
Pre-qualified investors will have access to the tender document
("DAO") and the Rules of data room, and have the opportunity to (i)
conduct due diligence works as part of a virtual data room that will be
open according to a timetable and specific rules (rules of the data
room and list of available documents), (ii) to visit the Company
buildings and (iii) meet with its management.
The closing of the Transaction is planned for February 2015.
Contacts and information:
Banque d’Affaires de Tunisie ("BAT" or le "Advisor") was retained by Tunis Re as exclusive advisor to realize the Transaction. Any
request for information, NDA, presentation Sheet or DPQ must be sent to:
Mr Thameur CHAGOUR / Mr Tarek MANSOUR
10 bis, Rue Mahmoud El Materi, Mutuelleville, 1002 Tunis, Tunisie
Tel.: +216 71 143 804 / +216 71 143 806
Fax: +216 71 891 678
Emails: [email protected] / [email protected]
Web site: www.bat.com.tn
top stories
Catlin reports 11% rise in GWP
Bermuda-based Catlin group have reported an 11% rise to $4.89bn
in gross written premiums for the first nine months of the year.
ceded to third-party capital providers. Catlin
incurred claims from two catastrophe events
during the third quarter: Hurricane Odile,
which struck the Baja California peninsula
of Mexico in September, and the flooding in
the state of Jammu and Kashmir in northern
India in September.
Three large single-risk losses were also
sustained during the quarter: the loss of Malaysian Airlines Flight MH17 over Ukraine
in July, the aircraft losses caused by fighting
at the Tripoli airport in July and a fire at a
US sawmill in July. The group said it is also
likely to incur losses from Cyclone Hudhud,
which caused damage to eastern India and
Nepal in October. Operating expenditures
remained broadly in line with expectations
during the third quarter, according to the
insurer.
Catlin chief executive, Stephen Catlin
said: “The Group incurred two catastrophe
losses and three large single-risk losses
during the third quarter, including the two
Aviation-related losses on which we commented in the first-half results announcement. Despite these events, aggregate
catastrophe and large single-risk losses are
still below expectations for the nine-month
period.
“Rating levels are still adequate for most
classes of business, and rates across our entire portfolio decreased by 2.9 per cent during the nine-month period. We still firmly
believe that our highly diversified portfolio
– both by underwriting hub and by class of
business – provides Catlin with significant
advantages during a period of decreasing
rates in wholesale markets.” n
profitable, despite softer non-life pricing”. She
added: “Assets under management are growing
and the voluntary health market is expanding”,
but she noted that insurers’ profitability was
“vulnerable to shocks to the wider economy”.
Slovenia is dominated by the agency distribution channel in motor, which accounts for 50%
of non-life business in Slovenia. The top three
insurers in the country account for 62% of the
market by GWP.
New line from Argo Intl
Lloyd’s insurer Argo International (has launched
a contingency business line. David Boyle has
been appointed Contingency Underwriter, with
immediate effect.
Boyle will report to John Moffatt, Head of
Specialty. He joins from Sportscover Syndicate
3334 where he was Class Underwriter for its
Contingency account.
Lloyd’s insurer Argo International (has
launched a contingency business line. David
Boyle has been appointed Contingency Underwriter, with immediate effect. Boyle will report to
John Moffatt, Head of Specialty. He joins from
Sportscover Syndicate 3334 where he was Class
Underwriter for its Contingency account. Moffatt
said that “the contingency market is an area in
which we have identified significant potential
for expansion, which dovetails with our existing
expertise and growing suite of specialist products. David has focused on this area throughout
his career and developed a body of experience,
as well as a network of contacts, which will be
invaluable in developing our new offering. I am
very pleased to welcome him to Argo.”
Stephen Catlin at this year’s Reactions London Awards
Net premiums earned during the first nine
months increased by 6% to $3.08bn with
underlying growth calculated to be 3%.
Catlin had previously advised that growth
in net earned premiums at year-end 2014
would likely be 4 to 5 absolute percentage
points less than the growth in gross premiums written due to increased amounts
News in brief
Solvency II rules helping
Slovenian players
The implementation of Solvency II rules in
Slovenia is improving the risk management of
insurers “by driving a greater diversification of
their investment portfolios”, according to rating
agency Fitch, in a snapshot analysis of the Slovenian market. Clara Hughes, Senior Director
in Fitch’s insurance team, said that “we expect
the Slovenian insurance market to remain
6
| 19 november 2014
top stories
UK and Bermuda reinsurers
handed US boost
Trading conditions in the US are set to improve for reinsurers in
the UK and Bermuda after the National Association of Insurance
Commissioners (NAIC) recommended the two countries’
supervisors are granted approval as qualified jurisdictions.
That would mean reinsurers from the UK
and Bermuda would be able to operate in
the US with lower collateral requirements
than they currently face.
A total of five international reinsurance
supervisory authorities have been recommended by the NAIC’s Qualified Jurisdiction Working Group for approval: the UK’s
Prudential Regulation Authority of the Bank
of England (PRA); the Bermuda Monetary
Authority (BMA); the German Federal Financial Supervisory Authority (BaFin); the
French Autorité de Contrôle Prudentiel et de
Résolution (ACPR) and the Central Bank of
Ireland (Central Bank).
The NAIC’s entire membership needs to
back the proposals for the five authorities
to be granted the status. If that occurs, then
the quintet of regulators will find themselves
on the NAIC’s list of qualified jurisdictions
from the beginning of next year. Reinsurers
licensed and domiciled in the five jurisdictions will all then be eligible to be certified
for reduced collateral requirements under
the NAIC’s Credit for Reinsurance Model
Law.
“Another important step forward”
“The timely evaluation of these jurisdictions represents another important step
forward in implementing reinsurance
modernisation by the states,” said John Huff,
the chair of the NAIC’s Reinsurance Task
Force, as well as the director of the Missouri
Department of Insurance, Financial Institutions and Professional Registration.
Currently, 23 US states have adopted reinsurance collateral reforms which equates to
around 60% of primary insurance premium
in the US. The NAIC hopes to add another
five states to that list next year, taking the
primary premium total to around 80%. The
BMA has welcomed the announcement,
with the regulator’s chief executive, Jeremy
Cox, calling it a considerable achievement.
“The US remains Bermuda’s largest trading
partner,” Cox said. “As such, being approved
as a qualified jurisdiction is highly relevant
for Bermuda in terms of potentially facilitat-
ing efficiencies in the cross-border operations of Bermuda reinsurers with the US
insurance market. While we recognise the
process is not yet complete, we look forward
to receiving the NAIC’s final approval in the
coming weeks.”
The Association of Bermuda Insurers and
Reinsurers (ABIR) was similarly full of
praise at the news. Brad Kading, the ABIR’s
president, said the NAIC’s recommendation for Bermuda to be named a qualified
jurisdiction “is an endorsement of the
BMA’s robust and comprehensive supervisory regime applied to commercial insurers
and reinsurers domiciled in Bermuda”. “The
BMA shows leadership in many ways, it
is an important financial markets regulator
which is committed to meeting international
standards. Its strong risk based capital requirements, mandatory stress testing, public
disclosure requirements, enterprise and
catastrophe risk management assessments
put it at the forefront of supervisory authorities globally.”
The five jurisdictions must now wait to
see if the recommendations will be approved by the rest of the NAIC – a vote that
will take place before the end of the year.
Should a jurisdiction be approved, it will be
re-evaluated every five years, subject to any
material change in operations which would
require a reassessment in the shorter term.
While the BMA, BaFin, ACPR, Central
Bank and the PRA will now all be waiting
to see how the NAIC membership responds
to the recommendations, the Qualified
Jurisdiction Working Group is also currently
evaluating whether the Swiss Financial Market Supervisory Authority (FINMA) and the
Financial Services Agency of Japan (FSA)
should be added to the list. As the NAIC explained, these reviews should be completed
before the end of the year. n
Nelson promotes Lloyd’s local Indian presence
< Continued from page 1
levels while China has one of
the lowest, but both have very
high levels of risk.
“But both economies have
diversified their cover into the
international capital markets
precisely so they can retain
their GDP if and when a disaster strikes,” said Nelson.
“If you look at the US, 67%
of 9/11 losses were insured.
The US is still the world’s
largest economy, just,” he
added.
Lloyd’s would be able to
provide an intellectual power,
pricing metrics, product development, risk management and
claims management, Nelson
argued at the summit last
week.
“The reinsurance services
which Lloyd’s provides can
reduce the capital costs for
any insurer as well as the
volatility of loss that they may
be exposed to. Thus allowing them the freedom and
certainty to invest more in
developing their businesses,”
he said. n
19 november 2014
|7
top stories
News in brief
IRDA warns on group rates
India’s Insurance Regulatory & Development
Authority (IRDA) has warned insurers against
offering significant group-wide discounts, a move
which could see companies forced to deduct more
from the pay-packets of their employees to pay for
group health cover. In its guidelines on risk-pricing,
IRDA said that industry-wide loss averages should
be the guide. The authority has said that it would
monitor compliance closely. It noted that, despite
increases in loss ratios for fire, property and group
health, premiums had been cut for group offerings.
Health insurance is understood to have booked an
incurred claims ratio of 96.43% in full-year 2013,
up from 94% in 2012.
Munich Re’s
diversification
strategy praised
Munich Re’s diversification strategy has been praised by AM Best in
its report affirming the reinsurer’s ratings.
Crabel Re established in Bermuda on
Multi-Strat platform
Los Angeles based capital management company
Crabel Capital has launched a Bermudian reinsurance entity, Crabel Re, which will operate as part
of the Multi-Strat Re platform. Multi-Strat Re was
established by Taussig Capital to allow hedge
funds to outsource most aspects of setting up
and running a reinsurance firm. The Bermudabased Multi-Strat Re is designed to allow smaller
companies to enter the reinsurance market by
taking away some of the costs and time restraints
by outsourcing many aspects of the set up such as
underwriting various risks, structuring policies and
processing claims .
AM Best revises outlook to negative
for Century Casualty
US ratings agency AM Best has revised the outlook
to negative from stable and affirmed the financial
strength rating of B+ (Good) of Century Casualty
Company. The ratings agency said the revised outlook reflects Century Casualty’s unfavorable underwriting results year-to-date in 2014 and challenges
the company faces to improve near term results.
The weakness in underwriting performance
has primarily stemmed from newly written hotel/
motel and convenience store accounts. As a result,
recent operating losses have impacted Century
Casualty’s risk-adjusted capitalisation.
AIG closes Georgia claims site
AIG’s latest move in its bid to cut costs and
streamline its operations will see the company
shed around 420 jobs after the company decided
to close one of its US offices. The Alpharetta,
Georgia-based operation provides AIG, which is the
largest insurer in the US and Canada, with various
back-office services such as claims administration, Reactions understands. The company refers
to the site as its Georgia Shared Service Centre.
According to reports, it is hoped some of the staff
working at the Alpharetta office will move to other
AIG operations such as one in Olathe, Kansas.
8
| 19 november 2014
The ratings agency said that the reinsurer’s
diversified operations have allowed it to
withstand negative pressure from soft
market conditions in some large property
reinsurance segments over recent years.
Over the medium term, AM Best says that
it expects that Munich Re’s diversification
will continue to allow it to survive negative
market pressures. “Having diverse primary
and reinsurance operations also distinguishes Munich Re from many other global
reinsurers,” said AM Best. “Furthermore,
the group’s good balance between life and
non-life business allows it to maintain good
overall performance in spite of pressure
from the prolonged low interest rate environment on its life operations.”
In its report AM Best affirmed all debt ratings of Munich Re; the reinsurer has a financial strength rating (FSR) of A+ (Superior)
and an issuer credit ratings (ICR) of “aa-”.
The agency said that the ratings reflected
Munich Re’s excellent risk-adjusted capitalisation, strong competitive market position,
resilient operating performance and robust
risk-management framework. AM Best says
it expects the reinsurer to post a positive
result at the end of the year. “Munich Re is
expected to report strong overall earnings in
2014, broadly in line with those of 2013 and
2012,” said AM Best. “Property and casualty
reinsurance operations typically drive the
group’s overall earnings.
“Moderate levels of catastrophe losses
throughout 2012, 2013 and 2014-to-date
have allowed the group to maintain a combined ratio for this segment comfortably
below 95%. “Earnings from the group’s
life reinsurance, primary and international
health operations are more modest; however, provide stability over the longer term,
particularly during years of high catastrophe
losses.” AM Best said that upward rating
movement could occur if financial performance and risk-adjusted capitalisation
remained at an excellent level and compared
favourably to Munich Re’s peer group of
global reinsurers.
However it added that downward rating
movement could occur if risk-adjusted
capitalisation or financial performance were
to deteriorate substantially. n
top stories
R&Q 2014 profits to be
below expectations
Randall & Quilter Investment Holdings expects its pretax profit for 2014 to be materially below
market expectations, mainly because of asbestos related claims.
Ken Randall
The company has received preliminary
indications from external consulting actuaries
suggesting a need to increase net provisions
for asbestos-related claims at R&Q Re US.
The US insurance services division also recorded a disappointing trading performance,
and lower-than-anticipated investment
income because of poor financial market
conditions in recent months. "These developments will only have a limited cash impact
on the group and will not affect its ability
to pay dividends in line with current market
expectations," the company said.
Deteriorating net provisions for asbestos
related claims in R&Q Re US was a risk
highlighted in the interim results, and the currently estimated extent of the deterioration is
now above the Board's previous expectations.
The drop in investment income expectations was because of a widening in credit
spreads, particularly in structured and high
yield credit. The US service operations' disappointing trading performance was caused
by its recent failure to secure certain large
anticipated service contract wins.
"The group has correctly indicated that the
above have only a limited impact on cash and
hence will not affect its dividend paying ability," commented Eamonn Flanagan, a Shore
Capital analyst. Randall & Quilter's board has
signed two EU-based portfolio transfer agreements and an agreement to acquire two Bermuda based captives in recent weeks, which
Flanagan described as encouraging. All of
these transactions remain subject to regulatory approval, which is expected, though
not guaranteed, by year end. This means
that Randall & Quilter Investment Holdings
(RQIH) should still achieve its target of completed legacy related transactions for the year.
The UK based insurance services operations
have traded slightly ahead of expectations
whilst the underwriting management operations are broadly meeting expectations.
Trading prospects for 2015 remain encouraging, with a continued strong pipeline
Australian insurers benefit
from Chinese trade deal
Australian insurers are expected to gain increased access to the
expanding Chinese market under a new free trade deal signed today.
The deal is expected to open up opportunities for insurance companies and banks, as
well as other sectors, and will reportedly
include access to China’s lucrative thirdparty motor schemes.
The two nations agreed to start negotiations on a free trade agreement in 2005 after
a preliminary feasibility study. IAG was
one of several companies which submitted
papers to the Australian Federal government
outlining areas of focus for negotiations including foreign ownership rules and access
to the compulsory motor insurance market.
A spokesman for the insurer told insuranceNEWS.com.au IAG welcomes the agreement “and we look forward to seeing the
detail”. In 2012 IAG bought a 20% stake in
China’s Bohai Property Insurance Company
– which is primarily a motor insurer – as
part of its wider expansion in Asia. n
of legacy acquisition opportunities. Some
of these are already reasonably progressed.
Recent new business wins in underwriting
management and UK insurance services is
set to boost results in these divisions meeting
previous expectations.
The board anticipates an overall positive
contribution from a small number of business
and asset disposals in the UK and the US,
which are already being actively progressed
to bring greater focus to Randall & Quilter
and address some of the challenges detailed
above. Following the trading report Shore
Capital is downgrading Randall & Quilter's
2014 pre-tax profits to nil from £8.4m and
2014 net tangible asset value (NTAV) to 106p
from 117p.
"We leave our 2015F pre-tax profits
unchanged at £11.9m reflecting the positive
statement the group has made regarding its
pipeline but the NTAV reduces to 109p from
121p," said Flanagan. "Crucially we retain
our 2014 and 2015 dividend forecasts at
8.4p and 8.7p respectively. "We fully expect
weakness in the stock in today’s trading,
with the shares trading at c1.2x our previous
2014F NTAV at the close of play last night,"
he said. n
News in brief
LMA Academy launches climate
change course
The educational arm of the Lloyd’s Market Association – the LMA Academy – has launched
“2025: Strategic Risk Implications for Chief
Executives in Lloyd’s”, a programme in association with the University of Cambridge that will
“explore the strategic implications of climate
change for the insurance industry”. The programme is the first collaboration between the
LMA Academy and the University of Cambridge
Institute for Sustainability Leadership. It will
consist of four modules and a guest lecture,
presenting the latest science on climate change
and examining the challenges this entails for
the insurance and financial investment markets.
Al Gore, ex vice-president of the US, will join the
programme in April 2015 and will address a
wider audience of senior market practitioners in
the Old Library at Lloyd’s.
19 november 2014
|9
top stories
Hensarling argues for Tria reform
The driving force behind reforming the Terrorism Risk Insurance Act (Tria), Chairman Jeb Hensarling
(R-TX) of the House Financial Services Committee, has written in an op-ed for the Washington Times
a defence of his attempts to change the programme.
Hensarling argued in the piece that, despite
supporters of Tria asserting that the programme makes up a vital part of the nation’s
security effort, the fact that the programme
does not do anything to prevent attacks
means that this is not the case. He also argues that the programme was always meant
to be transitional and temporary, following
the devastating attacks of September 11, and
that it should not make up a part of the US's
national security framework. “The Terrorism Risk Insurance Act was designed to be
temporary and transitional so, over time,
insurance companies could resume pricing
terrorism insurance and develop better forecasting models to absorb any future losses,”
writes Hensarling in the Times’ op-ed. “The
law initially accomplished this by gradually
increasing Tria’s thresholds, and each year
insurance companies covered a little more of
their own risks so taxpayers were responsible for covering a little less.”
Hensarling argues that the programme
forces tax payers to take on the majority
of the burden for terrorism risk, and that
the industry has admitted that the burden
on the tax payer is incalculable under the
programme. And far from reforms being unpatriotic, as some critics have said,
Hensarling argues that the best thing for the
country would be to reform the programme
and to transition insurers into writing terrorism risk without the backstop. “The
federal government, free from competition
Jeb Hensarling
and unable to make hard choices, has a
long and ugly history of insurance schemes
that underestimate and misprice risk. Each
time the purported beneficiaries end up
more at risk while taxpayers end up footing
the bill,” writes Hensarling in the op-ed.
“Passing a Terrorism Risk Insurance Act
reform bill now is the only way to stop that
vicious circle and help prepare insurers and
commercial property owners for a less risky
future.”
The piece shows a lack of movement in
Hensarling’s position over reforming the
bill since his committee's Tria reform bill
failed to pass the House of Representatives
in June. If both sides remain intransigent,
then any further progress could be halted
and Tria may have to be extended for a short
period of time; Rep. Paul Ryan (R-Wis) suggested a one year extension before Congress
broke up for election campaigning, to allow
legislators more wiggle room for negotiation. It could also be the case that, if no
agreement can be found, the programme
may not be extended at all, and Hensarling's
position makes a straight extension of the
programme during the lame duck session
increasingly unlikely. n
Enstar reports $26.4m
Q3 consolidated net earnings
Bermuda-based Enstar Group has reported
consolidated net earnings of $26.4m for
2014’s third quarter and $107.8m for the
first nine months of the year. The quarterly
results are big drop from 2013’s third quarter
with consolidated net earnings of $40m, but
its 2014 first nine month results are streets
ahead of 2013’s $71.1m. Enstar’s shareholders’ equity at September 30, 2014, reached
$2.21bn, up from $1.76bn at December 31,
2013.
Enstar and its operating subsidiaries
acquire and manage diversified insurance
businesses through a network of service companies in Bermuda, the US, the UK, Europe,
Australia, and other international locations.
Stones settle $12.9m court claim
The Rolling Stones pop group has resolved an
insurance dispute relating to the cancellation of
tour dates following the death of lead singer Mick
Jagger’s girlfriend L’Wren Scott.
The case had been scheduled to be held in
London. However, a subpoena issued in Utah to
Ms Scott’s brother, seeking evidence relating to
what was known about Ms Scott’s mental health,
also printed the entire insurance policy, including
details of group members’ personal health.
The group said that the publicising of these
details had caused it immense hurt. The 12 underwriters include Swiss Re, Talbot, Brit, WRBC,
Catlin, Sportscover, Prosight Specialty, Liberty
Corporate Capital, RSA, Partner Re, Great Lakes
Reinsurance and Cathedral Capital. Details of
the out-of-court settlement were not disclosed.
News in brief
Arch acquires Resource
Underwriting Pacific
Arch Insurance Europe has acquired 100% of
Resource Underwriting Pacific, a Melbourne-based
managing general agent. Resource Underwriting
Pacific will be added to Arch Insurance Europe’s
current holdings in Australia. Paul Muller, the former
managing director of Resource Underwriting Pacific
will become senior vice-president of Arch Underwriting’s Australian affiliate in Australia. Muller said:
“This is fantastic news for both Resource Underwriting Pacific and our broker partners. “We have been
searching for a partner for a couple of years who
would share our vision to develop an all commercial lines platform in Australia. “This strategic step
will give Arch in Australia the best possible platform
with which to achieve our ambitions for growth in
this region,” Muller added
10
| 19 november 2014
top stories
Liberty Mutual boosts Q3 profits Warning hits
A positive third quarter for Liberty Mutual Holding Company saw
FBD share price
the US-based insurer increase its net profit by over a quarter year
on year after its revenues jumped up by $247m during the period.
Net profit for the Boston, Massachusettsheadquartered business reached $609m for
the three months to September 30, 2014,
an increase of $128m compared with the
same period last year. That result was
achieved partly because the group grew
its revenues for the third quarter of 2014
to almost $10.1bn, a rise of 2.5% over the
same stretch in the prior year. Net written
premium grew at a similar rate to revenue,
with the $9.45bn it generated in the three
months to the end of September, 2014 an
increase of 2.8%, or $253m, compared with
2013’s third quarter.
Its final net profit figure also benefited
from a lower level of catastrophe losses
during the third quarter, although this reduction was marginal. During 2013’s third
quarter, catastrophe losses hit Liberty Mu-
tual to the tune of $292m, but that dropped
by 1.4% year on year to $288m in the
most recent quarter. “We had a solid third
quarter, with net written premium growth
of 2.8%, net income of $609m and an
improvement of 2.4 points in the combined
ratio,” said David Long, Liberty Mutual’s
chairman and chief executive. Aside from
its results, the third quarter of 2014 also
saw Liberty Mutual enter into a specialist
deal with Berkshire Hathaway’s National
Indemnity Company that provides it with a
combined aggregate adverse development
coverage for all of the insurer’s US workers’ compensation, asbestos and environmental liabilities.
“[This] reinsurance agreement with
National Indemnity Company substantially
mitigates the uncertainty of certain longtail liabilities,” said Long. On top of this,
Liberty Mutual also raised $1.05bn in debt
in another significant capital-related deal.
“These transactions further strengthened
the balance sheet and the overall financial
position of the company,” Long added. n
Pimco could withstand $300-350bn
of outflows over 2 years
Markel’s comprehensive income saw a drop to $36.5m for the
third quarter, compared to $144.4m for the same period of 2013. Allianz subsidiary Pacific Investment
Management Co (Pimco), the world’s
largest bond house, could withstand a
further $300-$350bn of outflows over the
next two years, according to research firm
Morningstar. Pimco is currently attempting to control a flow of departing investors
following the sudden departure of company co-founder Bill Gross on September
26. Gross’s acrimonious and unexpected
departure triggered a round of speculation
in the bond market over Pimco’s leadership
stability and a possible separation from
Allianz.
Despite this, research firm Morningstar is
confident in Pimco’s ability to persevere in
the face of even further redemptions. Analyst Sumit Desai, an analyst at Chicagobased Morningstar, said that the company’s
outflow estimate is based on the assumption that Pimco has strong firm-wide fund
performance, redemptions remain orderly
and that Allianz continues its support of the
bond house. Doug Hodge, chief executive
(CEO) of Pimco, said at a conference on
Monday that outflows have lessened somewhat since a large spike on September 26.
Many of Pimco’s firm-wide outflows in
October stemmed from investors pulling
money from Pimco Total Return Fund, the
bond house’s flagship entity, which was
managed by Gross. Sources close to the
company told Reactions in October that
Gross’ departure came as a complete shock
to the leadership team at Allianz, and had
led to the early announcement of the departure of Allianz CEO Michael Diekmann.
Despite the tribulations that have taken
place at the investment manager following
the resignation of Mohamed El-Erian in
January, Diekmann in particular had been
vocally supportive of Gross during the last
few months and had expressed his support
for Pimco in a call to investors in May. n
Ireland-based non-life player
FBD reported yesterday that the
claims environment in recent
months had been “far more
challenging than expected”.
As a result it predicted a full-year per share
operating loss for 2014 of between 0 cents
and 10 cents (from a previous gain of 70
cents to 80 cents).
It cut its earnings guidance for Q4 by
€10m. In an update on performance, FBD
said that its gross written premium (GWP)
was up about 4% year on year, marginally
increasing FBD’s share of the Irish non-life
market. It added that in H2 2014 this increase
in premiums had been entirely rate-led. FBD
added that “in the second half to date, the
frequency of attritional bodily injury claims
relating to car insurance was in line with
expectation. FBD has taken the rating and
underwriting actions necessary to compensate for the increased frequency of claims
associated with economic recovery.”
However, there had been a development
pattern in H2 on “a small number” of prioryear medium-sized injury claims, of a cost of
between €200,000 and €1m net of reinsurance, which had been “significantly higher
than normally expected”. The adverse development related to accidents that happened
in 2011 and 2012. FBD said that, following
a detailed review, there was “no reason to
believe that this development is systemic
or that the experience will recur in future
periods”. However, the combined cost of the
adverse development and maintenance of the
reserve level has generated a charge of €13m.
In addition to this, FBD reported an increase
in large claims costs (greater than €1m net
of reinsurance) for a very small number of
large accident and liability claims. They cost
€7m more than expected in the four months
to end-October. The dividend policy was left
unchanged.
Shares in FBD fell sharply on the news,
down 20% on the day. Investec’s Victoria
Geoghegan said that FBD’s guidance “had
disappointed for the third time this year”,
and attributed the share decline to fears of a
repeat of the reserving increases in the future.
“We cut our forecasts and target price (to
€13.80 from €18.60), but with the company
trading at 1.5x 2015E NAV and a supportive
2015E dividend yield of 5.0% (the group’s
progressive dividend policy was reaffirmed),
we remain Buyers (with implied upside of
24.9%)”. n
19 november 2014
| 11
top stories
Novae expands in MAP
Specialist Lloyd’s insurer and reinsurer Novae has reported a 6%
rise in gross written premiums (GWP) for 9mo 2014 to £515.1m,
from £484.6m in the same period last year. The investment return
for the first nine months of the year was 1.0%, up from 0.7%
in 9mo 2013. Novae said that the weighted average rates on
premium renewal were down 3.3% year on year.
The insurer said that there had been
"particularly pronounced rate reductions"
in US property casualty reinsurance,
which were down by 10% year on year.
Sector by sector, Property saw a 6.3%
decline in volume, to £206.5m from
£220.3m Casualty declined by 7.1% year
on year, to £114.8m, from £123.6m. But
Marine, Aviation & Political Risk was up
by 37.7%, to £193.8m, from £140.7m.
In property, Novae said that the division
continued to generate profitable new
business opportunities in, for example,
UK and US property insurance units.
Novae had taken "increased participation
on selected risks".
In casualty, Novae said that it had
reduced its exposure across international
liability, direct motor and professional
indemnity classes, "in response to challenging market conditions". The cutbacks
here were partially compensated for by
growth in direct UK liability business and
general liability reinsurance, "where good
opportunities for profitable growth were
identified".
In the one division where growth was
recorded, Marine, Aviation & Political
Risk (MAP) Novae said that there had been
growth across all units, despite increased
competition in a number of marine, energy
and political classes. Claims experience for
the year to date had been favourable, the re/
insurer said. Attritional losses were within
expectations and exposure to catastrophe
events remained limited, with Q3 being
"another quarter of benign experience".
The anticipated losses as a result of
the two Malaysian airlines disasters were
"within normal risk appetite". Novae
chief executive officer Matthew Fosh
said: "Good new business growth, active capital management and disciplined
underwriting has allowed us to build on
the positive momentum gained in the first
half of the year. This focus, in addition
to another quiet period for catastrophe
events, leaves the business in a strong
position for the final quarter and going
into 2015, despite the softening pricing
environment."
Looking ahead, Novae said that it remained focused on relying on its "expert
underwriting, consistent performance
and dynamic capital management" to
generate success in a softening market.
It added that it was continuing to look
at "its options in non-underwriting areas
of the business such as investments, debt
management and taxation", which it felt
could "yield benefits in future years".
Comment: Novae's big expansion in
MAP will be of interest to the market.
While there has been a hardening in
aviation (particularly war aviation) as a
result of disasters this year, Novae has
accepted that there is softening in some
MAP classes, but has said that it was
relying on "expert underwriting, consistent performance and dynamic capital
management" to generate profits. That
will be the field where investors will be
paying closest attention in the months to
come. n
Virginia lawmakers pass challenge to ACA
Republican lawmakers in Virginia have struck another blow against the Affordable Care Act (ACA) by
passing a measure that would allow customers to retain health policies that were set to be cancelled
under the act.
The bill’s supporters say that it could aid up
to 250,000 Virginians whose policies could
have been cancelled as they don’t meet the
minimum standards required by the ACA. A
similar bill failed earlier this year following
its failure to pass the Virginia Senate, which
was controlled by the Democrats at the time.
The issue of consumers losing healthcare
plans they had come to rely on has become a
politically emotive issue because of an earlier pledge made by President Obama. The
President had declared at the beginning of
the programme that if consumers liked their
coverage they could keep it. However, it has
been reported that despite this promise, the
administration did in fact know many policies would be cancelled.
This has been one of the more frequent
12
| 19 november 2014
attacks of Republican opponents to the ACA
who have claimed that the President and his
administration knowingly lied about some
plans being cancelled. It remains to be seen
whether other Republican controlled states
will seek to follow Virginia’s example and
pass bills allowing Americans to retain
health plans deemed substandard under the
ACA.
President Obama’s signature domestic
legislation came under further attack at a national level last week, when the US Supreme
Court agreed to hear a challenge on the legality of the federal government providing subsidies through the federal exchange healthcare.gov. The announcement led to a decline
in the stocks for health insurers and further
uncertainty surrounding the programme,
potentially following the decision in Virginia,
is not likely to be greeted with enthusiasm by
the health insurance market. n
top stories
Markel grows trade credit Oxbridge Re
Q3 combined
division in Singapore
Specialty insurer Markel International has moved to grow its trade
ratio of 29%
credit presence in Singapore by appointing GE capital’s Linda Naili
to its office in the region. Naili most recently worked at GE Capital
in Paris as a senior credit risk analyst.
The Markel trade credit desk in Singapore specialises in writing business from
around the region and offers non-payment
excess of loss multi-buyer and ground-up
specific buyer policies with an emphasis
on delivering specialist solutions such
as trade finance products and sovereign
default/contract frustration cover. Naili will
report directly to Abhishek Chhajer, senior
underwriter and head of trade credit in
Asia Pacific, and her focus will be to build
relationships with financial institutions and
brokers around the region. “We would like
to extend our warmest welcome to Linda,
whose experience will bring great value to
the trade credit team in Singapore,” said
Ewa Rose, managing director of Markel International’s trade credit division. “Linda’s
extensive risk underwriting knowledge
gained during her time at GE Capital will
support our existing product lines and our
business growth plans.”
Rose later spoke to Reactions about the
hire and said that the appointment of Naili
to the Singapore office represented the
continuing opportunities that the insurer
saw in the Asian hub. “It is a still a very
fast growing centre and it also presents a
great opportunity as a hub to deal with the
rest of Asia especially in markets such as
Malaysia which are very interesting to us.”
Naili told Reactions. “It’s a great place
to be located.” “Our team there has been
performing very well both in terms of business growth and in terms of loss ratios, so
Linda’s appointment is to really strengthen
that team.” Rose said that there remains a
huge amount of opportunity left to grow in
the Singapore market and that the company
would continue to build on its relationships
there. Naili’s appointment closely follows
the company’s expansion of its trade credit
team to New York and a licence application
in Dubai’s to offer trade credit cover
Rose says that the company sees a lot
of the same qualities in Dubai, as it saw
in Singapore a few years ago, and that it
remains an interesting market. She also
identified the US market as a potentially
exciting growth market for Markel. “We
have just opened up in New York, with
opened there this year and Philip Amlot [a
senior underwriter at Markel] moved from
our London office to New York,” says Rose.
“If you want to do business in a location
you have to be there.
“Also, in order to grow in the US, we
need to offer admitted paper and that was
part of the reason for locating a trade credit
division there.
“We do see the US as still having a lot of
opportunities. Compared to the size of the US
economy, the trade credit market is small, so
there are a lot of opportunities there.
“There is also a strong and buoyant
broking market, and we rely very much
on brokers to bring business to us. We are
not a direct market, so a strong broking
community is what we need to grow our
business.” n
Gulf Coast reinsurer Oxbridge
Re has reported a net income of
$1.4m in 2014’s third quarter,
up from $0.47m in the prior
year quarter.
Income was mainly bolstered by increased
net premiums earned, as well as $0.2m
of investment income, compared to no
investment income in 2013’s third quarter.
The drop in basic and diluted earnings per
share was because of an increase in the
number of shares outstanding.Net earned
premiums hit $1.6m compared with
$0.63m in the third quarter of 2013.
“The increase was driven by the continued growth in the number and size of
reinsurance contracts placed, including
one new reinsurance contract placed during the quarter,” said Oxbridge Re. Gross
premiums were $0.46m, from a contract
written in July. This contract expires December 31, 2014 and is projected to earn
a net underwriting income of $444,000
(assuming no losses), said Oxbridge Re.
The property and casualty reinsurer
reported a third quarter combined ratio of
29%.
“Our third quarter results were in line
with our expectations,” said Jay Madhu,
Oxbridge Re chief executive officer
(CEO).
“We continue to remain focused on diversifying our underwriting risk. Our board
of directors recently declared a dividend of
$0.12 per share, which demonstrates our
financial strength as well as our commitment to delivering shareholder value.
”The third quarter had a 0% loss ratio
and 29% expense ratio. Policy acquisition costs and underwriting expenses were
$0.12m, compared with $0.4m in the third
quarter of 2013.The increase in underwriting expenses was due to the recording
of an underwriting consulting expense
of $38,000, as well as the increase in
assumed premiums, and consequently,
increase in brokerage fees and federal
excise taxes.
The company paid dividends of $0.12
per share during the third quarter compared with none in the same period of
2013.Net income for the first nine months
of 2014 reached $2.3m. n
19 november 2014
| 13
feature
top
stories
UK insurers at all time
low ie below banks
UK primary insurance companies really need to work on their
customer relations. A survey has found that consumers trust
banks more than their insurance provider.
The level of trust in insurers was also found
to be lower in the UK than in any other
European country, and over 50% below the
global average, according to a survey from
Ernst & Young.
EY surveyed 23,595 insurance customers across 30 countries, including 800 from
the UK. If insurance marketers feel gutted
by that news, Graham Handy, EY’s Global
Customer Insurance Leader twisted the
knife, saying: “At a time of great upheaval
across the entire UK insurance industry,
with the motor market reporting unprofitability, the home insurance market not far
behind and dramatic changes to pensions,
this news could not come at a worse time.”
Price is the key reason for switching,
however. Over a quarter (26%) of UK
customers surveyed claimed that they were
likely to switch insurance provider in the
next 12 months. Cost is the main reason,
with policy benefits and coverage at a
distant second and reputation and benefits
barely making an impact. EY says the UK
insurance consumer is also far more driven
by price than many of its international
counterparts - 83% of those likely to switch
stated cost as the primary reason, which is
higher than the global average (67%) and
other comparable markets such as the US
www.reactionsnet.com
14
| 19 november 2014
(64%), France (60%) or Germany (72%).
“In a price-driven market, it is very hard
to differentiate service offerings, but insurers need to find the touch points which are
important to customers in order to move
away from bargain basement prices being
the sole driver for customer decisions,”
Hardy said in a statement. Under a third of
customers have interacted with their insurer
in the last 18 months, according to the survey, placing the UK in last position across
Europe, the Middle East and Africa in terms
of customer communication, and compares
with a far higher global average of 56%
of customers having interacted with their
insurer over the last 18 months.
UK customers actually want to receive
more communication from their insurer; not
just general information or policy updates,
but also promotions. Over half (54%) of
customers are never contacted about promotions, and 23% would like to receive them
annually, the survey found. The majority of
UK insurance customers still prefer to manage their policy enquiries via the telephone,
but more than 30% claimed to be open to using emerging channels, including webchats
and smartphone apps. In addition, 17% of
customers would like to trade physical mail
and phone contact for email, demonstrating
a shift towards digital interaction. n
Follow us @reactionsnet
feature
In The Spotlight
Franz-Josef Hahn, Peak Re
It is nearly two years since Peak Re first launched in Hong Kong with a mission to modernise the
reinsurance industry in Asia Pacific. Nicky Burridge interviews chief executive Franz-Josef Hahn.
“Without the right people you cannot
get the firm to move in the right
direction. We needed to get the right
culture and understanding.”
Franz-Josef Hahn
Peak Re aims to bring a new reinsurance
culture to the region through providing
fresh, innovative solutions to its clients.
Chief executive officer Franz-Josef Hahn’s
modernising approach begins at the very core
of the company’s structure. He says: “When
we were talking about how we see ourselves
the word innovation and different came up
very often.”
After working for large multinational reinsurers in the past, Hahn wanted to create a
different culture at Peak Re. He says: “One of
the biggest problems is that sometimes large
organisations fight over turf, and unfortunately there is a lot of money falling between the
turf lines.” In order to avoid this issue, Peak
Re does not have departments, sections or
divisions. Hahn jokes: “The meaning of these
words already limits teamwork as they depart
and divide the organisation.” This elimination
of individual territory is an important aspect
of the culture at Peak Re. All 48 staff work in
an open-plan office, including Hahn himself.
Underwriting decisions are made mainly
through face-to-face conversations, supplemented by email communication, and
everyone is responsible for business at the
group. “If someone is not at their desk [and
something that needs their attention comes
in], someone else jumps on and takes care of
it. That is what you get if your people treat
this as group work, rather than individual
responsibilities.
“Everybody is responsible for the one firm
we have. That is what we see as modernisation,” Hahn says. One of the biggest challenges the group faced setting up was getting
the right people in place and communicating
Peak Re’s unique corporate DNA to them.
As a start-up firm, Hahn found they were attracting a certain profile of employees, people
with a strong entrepreneurial flare, who were
excited by the prospect of working for a new
company. Hahn says: “Without the right
people you cannot get the firm to move in
the right direction. We needed to get the right
culture and understanding.”
Peak Re currently employs 48 staff from
14 different nationalities. The majority of
staff are from Asia Pacific, but they also have
extensive experience working for multinational firms, offering clients the best of both
worlds. Hahn says: “We are very diverse
because our markets are very diverse. We
need to understand these markets, so it is better to have people from the various different
cultures, who can relate to clients in those
cultures.”
Ensuring Peak Re remains nimble and
can respond quickly is another key pillar
of Hahn’s modernising strategy. He says:
“Change is happening all the time, which is
why agility is so important.” The group also
put a great deal of effort into getting the right
19 november 2014
| 15
feature
IT systems in place. Hahn says: “We have the
leading IT systems you can use as a reinsurer.
Our data structure sits under the underwriting system and the administration system,
and these two systems talk to each other.”
He adds that it was crucially important to the
firm to have easy access to reliable data and
not to create an IT legacy.
The group, which was licensed in December 2012, started with an initial capital of
US$550 million, and has grown to have 152
clients in 29 markets around the world. It is
backed by investment group Fosun International, which holds a 85.1% stake, and
International Finance Corporation, which has
a 14.9% shareholding. At the end of 2013,
the latest year for which figures are available,
its biggest market was South Korea, which
accounted for 48.1% of its portfolio, after the
group identified significant opportunities in
the country. “Korea is geographically very
close to Hong Kong and we have a fantastic
underwriter and producer from Korea, who
used to be head of reinsurance buying at a
large Korean insurance company. His seniority gave us the chance to travel far in Korea
from the beginning,” Hahn says. But over
time he expects the amount of business they
do in Korea to shrink as a proportion of the
portfolio as they expand in other markets,
particularly Mainland China, where the group
has identified a significant insurance gap
among the country’s growing middle class.
The Greater China market accounted for
21.6% of business last year, and over time,
Hahn expects it to become the group’s largest
market. In the meantime, Peak Re has doubled the amount of business it does in Japan
during the past year, while it is also expanding in Australia and New Zealand. Although
its current focus is on Asia Pacific, the group
is eyeing up opportunities in other markets
including Europe, the US and Bermuda, and
it has already started to build up relationships
in these regions.
“Over the next couple of years, we would
like to build up a presence in all the major
reinsurance centres, but we will only do that
when we consider our portfolio stable and
we are 100% on top of our cost ratio,” Hahn
says. In 2013, more than 45% of Peak Re’s
business portfolio came from property and
41.5% came from motor. Hahn says: “We
do a lot of motor, it is a form of quota share,
it doesn’t bring in the biggest margins but it
brings volume and nice cash flow.” Agriculture accounted for just over 5% of the portfolio, with the balance made up of casualty,
engineering and marine business. In June
this year, Peak Re obtained a life reinsurance
licence in Hong Kong, and it hopes its life
business will expand to account for 20% of
its portfolio. It has also recently started doing
credit and bond business. So far, business
16
| 19 november 2014
growth has all been organic, but Hahn is on
the lookout for further opportunities. He says:
“The more capital we can get on the balance
sheet, the more eager we are to have inorganic growth, in the form of portfolio transfer
or M&A.”
In 2013, around 25% of the group’s business was done on a non-proportional basis.
The group only offers facultative cover on
a selective basis on specific lines, such as
credit. Hahn explains: “In my view a really
efficient facultative portfolio can only be
run by large organisation. You need more
people to do the underwriting and you must
pay much closer attention on a daily basis to
clients. We ran the costs many times but we
are not quite ready yet.”
“The more capital we can get on the
balance sheet, the more eager we are
to have inorganic growth, in the form of
portfolio transfer or M&A.”
Efficiency is something Hahn talks about a
lot. “Costs need to be controlled very tightly.
That is where the margin is. Reinsurance
in the main on the treaty side doesn’t bring
you too many margins, specifically when
operating in Asia Pacific. The only thing you
can control is your costs,” he says. Hahn is
determined to keep operating costs as low as
possible. As such, the group does not have
any offices outside of Hong Kong.
He says the group’s technical ratio has improved “significantly” since it was launched.
It has also been conservative with its
reserves. Hahn was pleased with Peak Re’s
first-year pre-tax profit of US$104.4 million,
which was made despite it being a bad year
for natural catastrophes in the region, including Super Typhoon Haiyan in the Philippines.
Losses from these catastrophes contributed
to the group recording a US$17.1 million underwriting loss, although this was more than
offset by investment income of US$106.7
million.
Unsurprisingly, Peak Re is strongly
focused on its underwriting business. Hahn
says: “It is a must that we produce stellar
results on the underwriting side, you cannot
just rely on the investment side to perform
very well.” The group takes a three-pronged
approach to its underwriting. Its actuaries do
the pricing and the natural catastrophe modelling in conjunction with the product underwriters. Both teams also work with market
underwriters, who have a deep understanding
of the individual markets and the clients.
Peak Re’s modernising strategy means it
strives to provide bespoke solutions to its
clients.
“We want to be guided by what the market needs. We try to find solutions that fit
ourselves and our balance sheet and which
fit the balance sheet of our clients,” Hahn
says. The group is taking a step-by-step
approach, and currently shies away from
larger programmes that would tie up a lot
of its capital. The majority of its business
comes through the syndicated market, while
it also does customised deals and it is looking to create new business. “We try to find
in emerging markets, those companies that
are thinking alike and that want to come up
with new products. “Because we are a small
organisation we have that energy and we can
do things very fast. We turnaround discussions about new deals extremely quickly,”
Hahn says. Speed is important to Peak Re
and goes hand in hand with Hahn’s aim to
keep the company nimble. The group prides
itself on turning around claims quickly.
Hahn says: “On the underwriting side it depends on the complexity of the deal because
we are pricing everything ourselves. But
we have always aimed for speedy responses
to ensure our analytical discussions do not
come at the cost of timely responses to our
cedents and brokers.”
Risk management is at the core of
everything Peak Re does, and in July this
year it finalised a review of its enterprise
risk management Hahn says: “Our head
of research works on every market we are
underwriting in, so we produce a Peak Re
methodology, we take others into consideration, but we do not just mix vendor
models and take the average.” Each time
the group enters into a new underwriting
contract, it identifies how much capital is
being utilised. It has set up trading limits
and limits for the different lines of business
it is involved in. It also has natural catastrophe ‘baskets’ for every natural catastrophe
scenario, which have total limits in relation
to shareholder equity.
“Whenever we have large pieces coming in the standard question is where do we
stand on our capital, how much capital is being utilised. I still want to see almost every
case, our chief underwriting officer does as
well,” Hahn says. The asset management
side of the business is monitored equally
closely. Hahn says: “I know on a daily basis
how much capital we have used, how much
cash we have, how much is in bonds, how
much is in equities, each and every position.
We have a very high analytical capability.
Our investment team does everything in
house.” But while the group is careful, Hahn
also stresses that it is important Peak Re is
bold. “We are eager, we love to analyse the
markets, we have the commitment and we
have the courage to deliver, it is very important that we have the courage,” he says. n
feature
Asset Managers back less
liquidity for higher returns
Reactions, in association with PineBridge Investments and BlackRock hosted a presentation and
panel discussion in the Old Library at Lloyd’s, where investment managers at insurers heard experts
from the macro-economic, asset management, equity analyst and hedge-fund strategy sectors,
discussing the challenges and opportunities facing investment managers today.
Markus Schomer
Keynote Presentation:
Markus Schomer, Chief Economist,
PineBridge Investments
Panel Moderator:
Peter Birks, Managing Editor,
Reactions
Panel:
Stephan Van Vliet, Managing
Director, Head of Insurance
Asset Management, PineBridge
Investments
Patrick Liedtke, Head of Financial
Institutions Group, EMEA, BlackRock
Eamonn Flanagan, Equity Analyst,
Shore Capital
Johannes Minho Roth, Partner,
Sanostro
Markus Schomer, Chief Economist at
PineBridge Investments, began proceedings
with a keynote speech on macro-economic
developments. He started with two major
themes: the emerging global rate hike cycle
and emerging market reform. Schomer
noted that “we have all gotten used to allocating and investing in fixed income markets
in a falling rate environment, which makes
it relatively easy, even if you don’t pick the
right horse in that race, you probably still
make some money”. But Schomer thought
that in a world where interest rates were rising, “it will be much harder to make money
in fixed income”.
Schomer said that the lead in the rate hike
cycle would have to come from the US. This
was because when smaller companies that
were coming strongly out of recession and
were resuming rapid growth tried to raise
interest rates, they were immediately subject
to huge levels of so-called “carry trade”
investment. This in turn led to a rapid appreciation in the that country’s exchange rate,
hampering the country’s export industry.
New Zealand was a clear sufferer of this a
few years ago. The US was able to take the
lead, said Schomer, because it does not have
such a large proportion of its gross domestic
product involved in external trade. He also
noted that the key driver would be when the
US moved from sub-2% growth to around
3% growth. The importance of such a shift
was that the US needed to grow at about
2% a year to remain stable. At less than
2%, the need for stimulus remained. At 3%,
interest rates could return closer to a normal
level. Schomer’s outlook for the next few
quarters in the US was essentially a fairly
steady 3% growth trend. Although a number
of economists have forecast this, “it seems
like the markets have not really bought into
this with the same kind of conviction”. He
said that PineBridge was tracking whether
the US economy was on track and whether
there was any reason not to buy into what
the Federal Reserve was expecting. If things
were going according to plan, said Schomer,
“then there’s no reason to not buy into what
the Fed is telling us, which is that they will
start raising rates next summer.
As Schomer observed, rising interest rates
“can be a little scary”, particularly if you are
a fixed-income investor. However, an interesting difference in this cycle from many of
those in the past is that the gradual hikes in
the base rate would not be a response to rising inflation, and would not be a case of the
Federal Reserve being “behind the curve”.
When that happened in the past a steeper
yield curve would frequently be the result.
But PineBridge was not forecasting that this
time round. “We have inflation around a 2%
trend. We’ll maybe drift a little bit above
2%, but I don’t think at any stage, if these
forecasts turn out to be true, will there be
a reason for the Fed to panic and start accelerating the pace of rate increases against
what markets are pricing in”. So, instead of
a steeper yield curve, PineBridge expects
the yield curve in the US to flatten, with the
increases in 10-year and 30-year yields far
lower than the rises in the two-to-five year
19 november 2014
| 17
feature
The panel: current views
From left, Johannes Roth, Eamonn Flanagan, Stephan van Vliet, Patrick Liedtke, Peter Birks
rates. The cause of this is that the interest rate hikes are being driven by stronger
growth rather than price increases. “So this
is probably the most important forecast that
we have right now”, he said.
Moving on from the US, Schomer
observed that things in Europe were very
different. Here they were fighting recession risk and deflation risk. “And they are
fighting it without real tools”. Schomer
noted that the eurozone had started a kind
of “QE lite”, but personally he did not think
that there would be a larger effort in terms
of EU quantitative easing. But, as Schomer
observed, it was no longer a matter of banks
not having enough money. He also felt that
were in a way misdiagnosing the problem.
Low inflation, provided it was distributed
throughout the eurozone in the correct way,
was precisely what was needed, Schomer
said. “The debt crisis of 2010/2011 really arose because all the other eurozone
members had lost competitiveness vis a vis
Germany, so how do you restore that competitiveness in a fixed exchange rate environment? You can’t devalue, obviously, you
have to run inflation below your anchor’s
inflation rate. And that’s what everybody’s
doing”.
But, Schomer conceded, it was the slowdown in Germany’s inflation rate that was
the real problem. “It would be nice if Germany could run slightly higher inflation”,
he said. Schomer commented that the real
problem in Europe was that bank lending
was still contracting. While in the US, the
UK and even in Japan there had been a re-
18
| 19 november 2014
vival in bank lending, the eurozone still saw
it contracting. Schomer said that one reason
for this was that in Europe, because of lack
of transparency between countries,
“there’s really no incentive for the banks
to start lending again”, at least not until
someone high up told the banks that the entire system was fine. Schomer also covered
Abenomics in Japan, noting “a typically
Japanese” tax hike just as the recovery was
gaining traction, the UK (asset prices a
source of inflation not reflected in the public
consumer price index), China (“Managing
the inevitable slowdown”), India (“slower
growth trend, stubborn inflation and
structural rigidities that new administration
should address”), and Brazil, where political
uncertainty made the future outlook uncertain. Schomer’s all-encompassing theme
was the most important here: he noted that,
if reforms were only in one or two small
companies, that would not make a large difference, but PineBridge anticipated economic reforms in a whole host of countries and,
together, this would make a difference in
emerging markets. To summarise, Schomer
said that PineBridge anticipated global
economic growth stuck in the 3% range. By
2017 he anticipated a return to the pre-crisis
global average of 4%. “So I think that, despite the fact that we are looking for higher
interest rates in the developed world, and
particularly in the US, we don’t think it will
be detrimental to growth”. This was because
in the developed world the rate rises would
be driven by growth. So if growth slows
down, the monetary tightening will pause.
The panel was then asked to consider
Schomer’s comments and to add their own
views on the current challenges for asset managers, from their own particular
perspective. Patrick Liedtke observed that
insurance chief investment officers were
“following very, very closely whatever is
being communicated by the central banks”.
He said that, from BlackRock’s perspective,
the key issue was “be efficient in your asset
allocation in the current environment, but be
resilient enough to withstand some potential
future shocks”. Liedtke noted that insurers
were also long-term investors, and that some
portfolios had liabilities spreading 10 to 20
years down the road. If you look at the long
trends then “we know that there is an end to
the 30 year downward trending interest rate
scenario.
And other thing we know from economic
history is that whenever we are at the trend
of a very, very long cycle, there is period of
added uncertainty, higher volatility, shocks
to the market, until we find a new equilibrium.” Patrick Liedtke At the moment,
said Liedtke, insurers were closing their
duration gap. “They are running money
very tightly linked to their liabilities”. He
felt that this probably made sense, because
there could be a massive shift in monetary
policy but, even if there were, “we don’t
know whether its six months, nine months
or 12 months away”. Liedtke also observed that there could be a “tipping point”
somewhere in the future, “where we go
from the very benign scenario of slowly
increasing rates to a run-away scenario
that accelerates itself very fast”. This, said
Liedtke, dictated the correct strategy at the
moment. “You run a strategy that would
survive a shock like this, should it come. Is
it highly likely? No. But could it happen?
Absolutely. And in a situation like that, you
don’t want to bet the company”. Johannes
Minho Roth said that asset managers had
two major jobs – the first was to “harvest
risk premiums”, which meant that, ideally,
these exceeded liabilities and a profit was
made on that side as well. The second job
was where Roth and his company came in
– avoiding the impact of downturns when
they appear. “Why should you do this?
Because the negative compounding can
kill you”. Stephan van Vliet agreed that the
current situation was “extremely challenging” if you were a European or Japan-based
insurer. “You really need that yield, but,
from the way it looks now, it’s not going
to be there for a couple of years”. On the
US side, meanwhile, “you’re going to have
those rising rates, and fully valued equity
markets. So where do you go from there?*
Van Vliet said that one possible change in
feature
investment managers’ outlook could be in
emerging market corporate debt. “For some
reason we have always looked at emerging
markets as one allocation, or international.
I think that it’s time we segmented, and
said, ‘this is local currency, this is hard
currency, this is sovereign’”. Stephan van
Vliet Van Vliet also took an interesting
stance on currency allocation. “I’ve always
been told not to take currency risk on
insurance companies, but we have a very
special environment right now in terms of
currency risk, whereby the Europeans and
the Japanese are going to try to keep their
currencies low. So why not open up a little
bit on that?” However, Van Vliet insisted
that he agreed with Roth, that it was vital
to have strong controls in place on total
risk appetite and protection against sudden
shifts. “But within those parameters I think
this is the time to dynamically allocate, and
capture all those opportunities”.
Equity analyst Eamonn Flanagan said
that, from the non-life perspective, boring
was good. What the investment community
wanted most on the asset management side
was capital preservation, with underwriting returns on the other side of the balance
sheet, plus capital discipline, “and return
the money if you can’t use it”. Flanagan observed that the overriding message he heard
from the investment community to insurers
was “we value you as underwriters, not as
investment managers”. He recalled certain
situations where London market insurers
had moved into the investment side, and had
outperformed for a few years, but then it all
went bang, and they fell out of bed.
“I think the message on the investor
relations side, from the investment point of
view, is capital preservation, and being the
right side of duration risk”. Flanagan said
that, while the chief financial officer would
undoubtedly like to report better earnings,
the downside risk also had to be considered.
Liedtke responded that there were two sides
to the balance sheet, assets and liabilities.
“On the liability side, the insurance industry
has made tremendous progress over the past
few years to make sure that they strip out
costs, to make sure that the business being
written is profitable.” But, he said, after such
an intensive programme, there was not much
slack left. “So now it’s probably time to have
a look at what the assets side contributes to
the business. This is the new world we are
in”. Liedtke said that on the investment side
for many insurer investors, there was something magical about 4% return. “That’s the
yield they want. But if you look at traditional
asset classes, 4% yields are hard to find”.
“The last time you got a 4% yield on
US Treasuries was in 2007, on euro core it
was also in 2007. In the US muni market
“For some reason we have always
looked at emerging markets as one
allocation, or international. I think that
it’s time we segmented, and said, ‘this
is local currency, this is hard currency,
this is sovereign’” – Stephan Van Vliet,
Managing Director, Head of Insurance Asset
Management, PineBridge Investments
the last time you really saw more than 4%
across the board was 2008. Even global
corporate credit, the last time you hit a
4% coupon was 2009. You’re running out
of asset classes. Yes, in 2011, 2012, at the
height of the European debt crisis, you
could go into euro periphery and get more
than 4%, but is that really the place to be?
Probably not Liedtke noted that insurers
were moving a higher proportion of their
business into lower liquidity investments,
rather than increasing their gearing or seeking out high-yield products. “Three years
ago just 2% of insurers had 16% or more
of their investments in alternative investment strategies (private market investments,
infrastructure debt, etc). Today it’s 26%. At
that rate, almost half of insurers will move
to having more than 16% of their balance
sheet in these assets. That’s a massive movement”. He noted that a move of just 1% of
the total $23trn to $25trn in investable assets
held by the life and non-life sectors into
such assets would bring in around $240bn a
year. Van Vliet said that it always depended
on the insurer’s liability book, but that in
most cases, “a business can carry much
more liquidity risk than they currently do”.
Commenting on Asia, Van Vliet observed
that there were tremendous savings levels
and that this would impact the supply and
demand for bonds. Van Vliet definitely
saw currency opportunities and strategies
that could be deployed. And, with some
liabilities being written in local currency, the
currency risk went away, while the higher
interest rate benefited the asset side of the
sheet. Flanagan said that he would have no
problem with a loss of liquidity on the life
side, but in a long life book, “I think we
would have an issue”. He noted the case of
an insurer where the returns were highlighted but, when cash was required, “all sorts of
exit clauses” appeared. There was a lack of
liquidity that was not transparent. Van Vliet
took up this point on liquidity. “Obviously
every insurance firm needs to have a very
good grasp on its liquidity risk”, but he said
that even in life firms “we were always 90%
liquid”. He saw no reason why investment
managers should not try to capture a little
more liquidity premium.
Moving onto the topic of attractive asset
classes for investment managers at insurers
were interested in, Liedtke observed that
for the next three years the intention was
to underweight emerging market debt and
fixed income asset classes generally. “That
doesn’t mean that insurers stop being fixed
income investors; I mean, far from it.” But
that meant that investors were stuck with
either equities or alternative asset classes.
And “equity is a story of too many companies having got burned, and regulators
don’t like the insurance companies to run
equity exposure”. Here Liedtke pointed to
one advantage of infrastructure as an asset
class. While the group of investors putting
money into Treasuries and corporate credit
was wide, in infrastructure debt the potential
investor class was narrower. “You’re actually in a fairly exclusive club of investors”.
The degree of allocation should not be to
the point where it becomes threatening, but
Liedtke felt there was “room to do more” in
this segment. He also noted, when referring
to regulatory restrictions, that it was important to recognize that insurance was not the
banking industry.
“Is it better to be liquid than illiquid? Yes.
But at which point does it make sense for
me to have more exposure to illiquidity if
I’m been compensated by the market?
“And then I would like to run that illiquidity risk against all the other risks that I take.
If I invest in a sovereign debt fund bond, my
regulator tells me that actually that’s risk
free. But I know it is not risk free. So I have
to have an appetite and say yes, it might
be tremendously liquid, but guess what, if
Spain or it Italy had gone under, we would
have had a totally different environment
here.” Van Vliet observed that one should
never be committed to a product where one
could be forced to take a hit at a set price
when everyone was heading for the exit at
once.
Continuing into the regulatory arena,
Liedtke observed that in Lloyd’s Old
Library only a short time previously the insurance industry had told the regulators that
they had got it totally wrong on infrastructure debt. What was not a matter of contention was that the move towards Solvency II
was obliging everybody to take a new look
at risk and at risk diversification”. Van Vliet
observed that there were great variations in
regulatory capital regimes at the moment,
and in Asia Singapore was probably leading
the pack. However, a potential danger was
that if a country such as, say, Malaysia, went
fully Solvency II compliant, then you would
have investment requirements that the local
market could not supply. n
19 november 2014
| 19
news round-up
The introduction of the new programme
means that Aon can or repurchase up to
$6.1bn of its shares whenever it deems
the market conditions appropriate for it
to do so. Repurchases of Aon’s Class A
ordinary shares may be made under a Rule
10b5-1 plan, which would permit shares to
be repurchased when the company might
otherwise be precluded from doing so under
insider trading laws, said the broker.
Aon says that the repurchase programme
may be suspended or discontinued at any
time. The broker’s share price climbed
0.9% to $90.64 at 9:39am shortly after the
opening of the New York Stock Exchange
(NYSE).
The rise in the broker’s share price extended its yearly growth to around 8% from
Dec 31 2013.
Aquiline takes stake
in Beach & Associates
A busy week for Aquiline Capital Partners
has ended with the New York-based private
equity firm taking a majority stake in independent reinsurance broker Beach & Associates. The broker, which has been in business since 1988, is a commercial property
and casualty broker that serves the needs of
both insurance and reinsurance companies.
Beach & Associates has offices in London,
Bermuda, Toronto and New York. Jonathan
Beach, the broker’s founder and president,
will retain a significant investment in the
firm and will continue to have a seat on its
board of directors. On top of that, Beach &
Associate’s senior partners have invested in
the company alongside Aquiline and will
own approximately 15% of the broker.
“The Aquiline team shares our vision for
the company and we look forward to leveraging their insurance expertise and capital
investment to strengthen our business,” said
Grahame Millwater, Beach & Associate’s
chief executive “This investment will allow
us to continue our model of serving our
clients with a team-oriented and forwardlooking approach.”
Aquiline has invested in a business that is
slightly more streamlined that it was at the
beginning of the year. At the end of July,
Beach & Associates sold its Australian and
New Zealand reinsurance broking operation, called Beach & Associates Pty Ltd
(Beach Sydney), to the broker’s Australian
and New Zealand management team led
by Simon Cloney. It is the second time this
week that Aquiline has been part of a major
deal, with the private equity firm selling
insurance investment manager Conning
to Taiwan-based financial holdings firm
Cathay Financial Holding Co for a deal that
could be valued up to $240m.
20
| 19 november 2014
Aon authorises $5bn
share repurchase
Aon has authorised a further $5bn of funds
to be used towards share repurchases in
addition to $1.1bn that the company already
has authorised for buying back company
stock. The broker said that it intends to
complete the current $1.1bn repurchase
programme before repurchasing shares
under the new $5bn programme. “Today's
announcement continues to demonstrate our
belief in the underlying strength of the firm,
strong free cash flow generation outlook
and our continued focus on maximizing total return for shareholders,” said Greg Case,
president and chief executive (CEO).
“We have returned a record amount of
capital to shareholders through the first
nine months of 2014, highlighted by the
repurchase of 20.4m shares, equivalent
to 7% of actual shares outstanding as of
September 30, 2014, for a total of $1.75bn.”
Kansas quake brings coverage
enquiry influx
Kansas insurers have reportedly been inundated with earthquake coverage inquires
after a 4.8 magnitude quake last Wednesday. Kansas does not have a history of
earthquake losses, so the price and deductibles are low compared to more historically
high risk areas like California. Only about
7% of homeowners in the Midwest US have
quake insurance.
Last Wednesday’s quake was the largest
of dozens that have hit Kansas this year
despite the state traditionally suffering
earthquakes relatively infrequently. More
equipment is being brought in to explore
what is happening.
A rise in earthquakes in several US states
has raised suspicions that it could be connected to hydraulic fracturing for oil and
gas (“fracking”), especially the wells in
which the industry disposes of its wastewater. However, earlier this year Kansas
Governor Sam Brownback said there wasn’t
enough evidence to make this link.
In Kansas, earthquake insurance is
available with deductibles of 2% and 5%
of the covered amount - $2,000 or $5,000
on a $100,000 house. The epicentre of
Wednesday’s quake was near Milan, with a
population of only about 80, 10 miles south
of Conway Springs. The town suffered
structural damage to some of its older brick
buildings and residents had belongings
thrown from their shelves and cabinets.
news round-up
“Forker’s team is well known for their
industry experience and solid market
relationships” – AJG president and chief
executive, Pat Gallagher
UK Met Office enters
cat risk modelling space
The UK’s independent weather and climate
service, the Met Office, has launched a
suite of European windstorm products and
services aimed at ILS investors as well as
insurance and reinsurance firms.
The Insurance and Capital Markets Applied Science team at the Met Office has
developed hazard maps designed to support
risk pricing at a local level, with a catalogue
of historical windstorms for portfolio management and capital reserving. It will also
offer impact analysis of incoming storm
events for insurance operations.
The Euro Windstorm Event Response
service gives a daily modelled view of how
a storm will evolve, and will match the
predicted footprint to the closest historical
storm allowing insurers to compare previous losses to predict the financial impact.
The team will also deliver a contextual plot
against return periods, giving a quick view
of the significance of a storm.
To help insurers validate model conclusions for compliance purposes, the Met
Office is releasing a catalogue of 6000
historical storms for Europe, modelled to an
industry leading resolution of 4km, giving
expert insight into the probability, location and severity of events that could affect
insured portfolios. For insight into extreme
events that could happen, but have not happened in observed history, the Applied Science team is currently developing an 'event
set' of synthetic storms, modelling tens of
thousands of alternative and potentially
more extreme outcomes of 'seed' storms
that have occurred.
Paul Maisey, head of science for Insurance and Capital Markets said in a
statement: " As an independent scientific
organisation we can bring some real insight
into the hazard component of the risk calculation. These are early days for us in this industry but the signs are that the team's Euro
Windstorm services will be well received."
AJG acquires Illinois
insurance agent
Arthur J Gallagher (AJG) has acquired
Illinois based insurance agency The Forker
Company (Forker), in a move to bolster its
construction sales, and to continue its aggressive growth strategy in the US. Forker
is a retail insurance agency offering contract
surety solutions to its Midwest clients since
2000. This company specialises in providing surety coverage for the construction
industry. Following the acquisition, Peter
Forker, the president of Forker Company,
along with the company's other employees
associates will be under the supervision of
Michael Pesch, the head of AJG’s MidWest region retail property/casualty broking
operation. “Forker's team is well known for
their industry experience and solid market
relationships,” said AJG president and chief
executive (CEO) Pat Gallagher. “Their surety
expertise and outstanding client service will
be a wonderful complement to our Mid-West
Region.
“We look forward to working with Peter,
and we welcome them to our growing Gallagher family of professionals.” AJG has made
a number of recent acquisitions to boost its
geographic footprint. In the past few months
it has acquired California-based SGB-NIA
Insurance Brokers, Colorado-based Insurance Associates, Inc., Illinois-based Bennett
& Shade Co and New York-based Hagedorn
& Company. According to market research
company Zack’s the strategy is part of the
broker’s long-term plan of growth through
acquisition. “Arthur J. Gallagher, which generated annualized revenues of $693.6m for
the first nine months of 2014, is well known
for pursuing acquisitions that help to expand
its business globally,” wrote Zack’s. “While
the latest takeover marks the fifth one in the
current quarter, the company has made 43
acquisitions year-to-date.
“The acquisition spree is expected to continue in the coming quarters.”
However, the market research firm noted
that AJG’s strong liquidity continued to support its inorganic growth initiatives.
19 november 2014
| 21
news round-up
Insurance dividends poised to
rise in 2015: Nomura
Property/casualty insurers in the US could
be poised to raise dividends when boards
meet in 2015 says Nomura analyst Cliff
Gallant in a new note. Gallant says that one
of the industry’s biggest “problems” today
is excess capital and that this could lead to
higher dividends.
“Debt-to-total capital is a low 17.7% for
our coverage group, despite the cheap cost
of debt, and premiums-to-equity capital ratios are also low, well below 1.0x. Allstate,
XL, and AIG look particularly strong,” says
Gallant. Another factor that could lead to
a bump in dividends is that there are few
growth opportunities due to weak pricing
and a slow global economy leading to a
potential opportunity for capital return.
Less volatility in the market because of
fewer US catastrophes in recent years, the
proliferation of modelling technology, and
a diversified product offering could also
lead to the possibility of a higher dividend
payout in 2015, said Nomura.
All these factors could lead to insurers being more comfortable with a higher
dividend payout, says Gallant. Of all the
companies it monitors, Gallant says that
Nomura views Allstate as the most likely
to pay out a higher dividend in 2015. “We
view Allstate as the most likely to bump
up its dividend, due to a particularly strong
capital position, growth rates fundable
through internal cash generation, and muchreduced volatility in results,” said Gallant
in the note. “Other candidates include XL,
whose capital is strong post the sale of its
22
| 19 november 2014
run-off book, and AIG, although with the
caveat of a Sifi designation.
“We also expect a special dividend from
PGR (Progressive Corporation).”
AM Best downgrades
ratings of Farmers Fire
AM Best has downgraded the financial
strength rating (FSR) to B++ (Good)
from A- (Excellent) of The Farmers Fire
Insurance Company (Farmers Fire) with
the outlook for the FSR revised to stable
from negative. The rating’s agency said the
downgrade primarily reflects Farmers Fire’s
volatile operating results due to a “continuing unfavourable underwriting performance
in conjunction with declining surplus”
through the first nine month of 2014.
Farmers Fire’s unfavorable underwriting
performance has been due to a series of
frequent and severe weather-related events,
which included hurricanes, hail and windstorm events, and winter losses along with
increased fire losses. As a result, Farmers
Fire has reported significant underwriting
losses in four of the past five years which
have continued into 2014. As a single state
property writer, Farmers Fire’s surplus and
operating results are exposed to a wide
variety of weather-related events.
Despite this, AM Best said an adequate
reinsurance program is maintained by the
insurer to partially mitigate this risk.
In addition, management continues to
focus on improving operating performance
through rate increases, frequent inspections,
strict agency management, re-underwriting
of the personal lines book, strengthening of
reinsurance program and enhanced technology, while increasing top-line growth by
targeting specific personal and commercial
lines risk. "These negative rating factors are
partially offset by Farmers Fire’s adequate
risk-adjusted capitalisation, moderate
underwriting leverage and generally positive unrealised capital gains, as well as its
long-standing agency relationship and local
market presence,” said the ratings agency in
a report.
“In addition, despite an unfavorable
underwriting performance, Farmers Fire
continues to maintain adequate balance
sheet liquidity and reported favourable loss
reserve development in recent years on
both an accident- and calendar-year basis."
AM Best added that ratings pressure may
result if Farmers Fire has a continuation of
underwriting losses and adverse operating
results, which also could lead to weaker
risk-adjusted capitalisation.
Removal of the negative outlook on the
ICR is contingent upon Farmers Fire’s ability to reverse its adverse operating performance to a consistent pattern of operating
profitability, while maintaining supportive
risk-adjusted capitalisation.
news round-up
fied business model. “We are pleased with
the group’s overall steady performance,”
he said.
The group’s owned insurance companies
performed satisfactorily and the overall
the group is performing in line with the
Board’s expectations.
BMS launches specialty
reinsurance division
PZU expects slight decline in
full-year profit
Poland's leading insurer PZU has reported
gross written premiums of PLN12.4bn,
up from on a par with GWP in the same
period last year. Higher investment profit of
PLN2.16bn (9mo 2013, PLN1.86bn) counterbalanced higher net insurance claims
of PLN8.41bn (9mo 2013, PLN8.21bn).
However, gross profit declined year on year
to PLN3.22bn, from PLN3.46bn. Net profit
fell to PLN2.56bn, from PLN2.76bn.
The technical result on non-life for the
nine months was PLN706.0m, sharply
down from the PLN1.15bn reported in the
same period last year. PZU said that there
had been a "decrease in the profitability of
motor insurance, caused by a higher level
of provisions for claims in previous years".
It also reported a "slower rate of conversion
of long-term policies into yearly renewable
term agreements in type P group insurance". Part of the reason for the decline was
a one-off gain in 2013, where there was a
settlement with a reinsurer regarding Green
Card Insurance (a partial reversal of the
adjustment to estimates with the reinsurer
which reduced the 2011 result".
The insurer expects a slight decline in
full year profit, compared with 2013. For
Q3 2014, GWP rose to PLN3.97bn, up
from PLN3.91bn. Net insurance claims rose
to PLN2.99bn, up 9% from PLN2.75bn
Gross profit declined to PLN1.04bn, from
PLN1.35bn. Net profit declined to PLN,
from PLN1.09bn in Q3 2013. Investment income for the quarter fell 10%
year on year, down to PLN805.4m, from
PLN891.6m.
Charles Taylor reports overall
steady performance
Charles Taylor Group reported results in
line with expectations this morning, but
its Adjusting Services division’s profits
suffered because insurers globally experienced an unusually low level of large
insurance losses globally
The Adjusting Service division was also
impacted because it performs many of its
services overseas, and consequentially
its earnings were impacted by a stronger
pound. The company’s Management Services arm, managing mutual insurers, delivered
a good performance, despite a negative
impact from foreign exchange movements.
The mutuals managed by the Group also
performed well on behalf of their members.
The Insurance Support Services arm also
had a good performance, which was greatly improved from 2013. The business delivers professional and technical services.
This includes outsourced insurance support services, insurance company run-off
services, investment management, captive
management and specialty risk management David Marock, group chief executive
officer, said: “Whilst the unusually low
level of large insured claims across the
market has affected our Adjusting Services
business, our strategy of investing in new
adjusting offices and senior staff puts us in
a strong position to benefit when insurance claims return to more normal levels.
“Our Management Services business has
delivered a good performance alongside
the much improved performance of our
Insurance Support Services business. This
demonstrates the resilience of our diversi-
Specialist insurance and reinsurance broker BMS Group, part of Minova Holdings,
has launched a Specialty Reinsurance division, naming Andrew Hitchings as Managing Director. Hitchings, who joins from
Cooper Gay, will report to BMS Group
chief executive Nick Cook. BMS said that
the new division would focus initially on
he addition of new product lines to BMS'
existing Property-Casualty offering, in reinsurance and in retrocession. CEO Cook
said that BMS saw "enormous potential"
in is specialty reinsurance business. "The
continued consolidation in the reinsurance
market presents BMS with a unique opportunity of offering our clients an independent choice".
Newly named TMK Syndicates
update forecasts
Tokio Marine Kiln Syndicates, formerly
RJ Kiln and Co, has released updated forecasts for the 2012 and 2013 years of account for its three non-aligned syndicates.
The main syndicate, 510, with a capacity
of £1.062bn for 2012, saw a 0.7pp rise in its
forecast range. to between 4.9% and 9.9%.
Reinsurance-focused Syndicate 557 (capacity £56m) also rose by 0.7pp, to a range of
between 2.8% and 7.8%. Dedicated Life
Syndicate 308 (capacity £23m) rose 0.3pp
to a range of between 2.6% and 7.6%.
For the 2013 year of account, syndicate
510 (capacity £1.064bn) had its forecast
range increased by 0.4pp to between 5.0%
and 10.0%. Syndicate 557 (capacity £46m)
saw a decline of 0.7pp, to a range of between 9.2% and 14.2%. Syndicate 308 (capacity £27m) improved 0.7pp, to a range
of between minus 3.4% and plus 1.6%.
TMK said that, "despite incurring losses
from the fighting at Tripoli airport and
on the Malaysian Airlines flight disasters. there was a small improvement on
Syndicate 510, driven by reserve releases
following a benign hurricane season". The
minor deterioration for Syndicate 557 in
2013 was due to a reduction in expected
premium income.
Charles Franks, Group Chief Executive
Officer of Tokio Marine Kiln, said: I am
pleased to report that we have delivered
a good performance despite continuing
market challenges."
19 november 2014
| 23
people
news
round-up
moves
the damage to already waterlogged ground.
Large numbers of greenhouses and storage
depots used for the production of flowers
and aromatic herbs were reported destroyed
in Liguria and Piemontein in the north. The
central region of Emilia Romagna.
More heavy rain is expected today and
tomorrow on both sides of the Swiss-Italian
border.
Cathay acquires Conning
At least four dead in
Swiss-Italian floods
At least four people have been reported
killed by mudslides that engulfed their
homes in the border area between Italy and
Switzerland over the weekend. There have
been heavy rains in the last few weeks,
causing floods in many areas of northern
Italy A 70-year-old man and a 16-yearold girl died when their house in Cerro di
Laveno was destroyed by a mudslide late on
Saturday. Two women were reported dead
in Switzerland when a building in DavescoSoragno was struck. A 67-year-old man,
reported missing in Serra Rocco, a village
near Genoa in the northwestern Italian
region of Liguria, was still not accounted
for yesterday.
The deaths at the weekend bring to 11 the
number of people who have died as a result
of floods in Italy in the past month. Several
rivers burst their banks, flooding the streets
of Genoa and other towns nearby. Lake Lugano also broke its banks, and Lake Maggiore might do the same. Genoa received
139mm of rain on Saturday, compounding
24
| 19 november 2014
Cathay Financial Holding Co, a Taiwan
based financial holdings company, is to
acquire insurance investment manager Conning, for up to $240m
The vendors are funds managed by Aquiline Capital Partners (a New York–based
private equity firm investing in financial
services), and other shareholders. Following the closing of the deal, Conning will
operate as an independent company within
the Cathay group and be governed by its
own board of directors, both companies
announced in a joint statement. Conning
will be led by its current president and chief
executive officer (CEO) Woody Bradford,
and the existing global management team.
The insurance investment manager’s teams
across asset management, risk and capital
management and insurance research will
remain in place, serving clients from Hartford, New York, Cologne and London, said
the statement.
“This transaction is good for Conning’s
clients and employees, as well as the longterm strategy of our company,” said Bradford. “Cathay supports the continuation of
our firm’s client-focused culture and service
model and will provide additional resources
to accelerate our business plans and further
enhance the value proposition for our
clients.” Conning says that In Asia Pacific,
Cathay Conning Asset Management (a joint
venture between Conning and Cathay) will
remain a core part of its strategy, providing investment and advisory solutions from
its offices in Hong Kong. Cathay said that
transaction represents its attempt to build a
complete financial services platform with
expertise in asset management, banking and
insurance.
The Taiwanese company said that it had
also expanded its investment management
agreement with Conning to include additional asset commitments and growth capital. “Cathay has been a client, shareholder
and strategic partner of Conning since
2011,” said Mr. Hong-tu Tsai, Chairman
of Cathay. “We are excited to broaden our
relationship with Conning and support the
leadership team as they continue to build
the business, both organically and through
acquisitions, across markets in Asia, Europe
and North America.” Cathay’s life insurance
country Cathay Life Insurance Company is
the largest insurance company in Taiwan.
As of June 30, 2014, the company had total
assets of over $146bn.
Nine-month volumes
up 5.5% for Baloise
Swiss composite Baloise has reported turnover of CHF7.48bn for the first nine months
of 2014, up 5.5% year on year. This was a
result of strong growth in its life division.
The non-life sector shrank by 1.5% year on
year to CHF2.88bn. Baloise said that this
was due to an “improvement in product
mix”.
The insurer said that its growth in life
business was a result of “consistently
strong demand for safe solutions in group
life business”. It said that it would report an
“excellent” result for 2014, helped by “excellent insurance operations, the disposal of
its shareholdings in Nationale Suisse and
Helvetia, and the sale of Basler Austria.
Business volumes as at 30 September
2014 (YTD) *Austria, Croatia and Serbia. n
people moves
ing Director of AIG in the UK. Aubert will
be CEO Designate in 2015, reporting to
Steve Hearn, Deputy CEO of Willis Group
and currently CEO of Willis UK Insurance. After taking on his new role Aubert
will report to Willis Group CEO Dominic
Casserley. Hearn will continue in his role as
Group Deputy CEO.
Willis Re appoints Japan MD
Willis Re has appointed Tsuyoshi Noguchi
as the new managing director (MD) for
its Japan to be based in Willis Re’s Tokyo
office. Noguchi will work with the existing
Willis Re Japan senior management team
to drive Willis Re’s service offering for the
Japanese market, said the broker.
Aon Benfield appoints US
accident and health MD
Peter Durhager
RenRe’s Peter Durhager
steps down
RenaissanceRe’s executive vice president
and chief administrative officer, Peter
Durhager, is stepping down, effective from
December 31. Jeffrey Kelly, RenaissanceRe’s executive vice-president and chief
financial officer (CFO) will become chief
operating officer (COO) while maintaining
his current role as CFO.
“Our entire team is grateful to Peter for
all he has accomplished over his more
than ten years at RenaissanceRe. He has
continually raised the bar on our operations
functions and systems, which I believe are
now key competitive advantages for our
company,” said Kevin O’Donnell, RenaissanceRe CEO. “We are pleased that Peter
has agreed to serve in an advisory capacity
at RenaissanceRe into the next year, even
as he focuses on his family, his intense
involvement in the economic development
of Bermuda, his corporate directorships
and other pursuits. “Jeff has significantly
enhanced our financial and strategic planning functions since joining us as CFO in
2009, and his input and insight as a member
of our executive team have contributed
meaningfully to our ongoing success,”
O’Donnell said.
As COO, Kelly will add to his current
duties the oversight of the company’s
global shared services functions, which
includes human resources and organizational development, marketing, operations,
information technology and administration.
Before joining RenaissanceRe as executive
vice president and CFO, Kelly was CFO of
National City Corporation from 2000 until
his retirement in 2008, and was named vice
chairman of the company in 2004.
New posts at ArgoGlobal
ArgoGlobal SE, the European subsidiary
of Argo Group International Holdings, has
added two new underwriting appointments.
Martin de Witte will be a professional lines
underwriter based at ArgoGlobal SE’s
branch office in Zurich. De Witte joins
from Aon Risk Solution Switzerland, Ltd.
where he was a senior financial lines broker.
Malgorzata Pietrzyk will be a professional
lines underwriter based at ArgoGlobal SE’s
base office in Sliema, Malta. Pietrzyk joins
the company after having served in similar
roles for Tempo Underwriting, HCC Global
and Royal Bank of Scotland.
Aon Benfield has expanded its accident,
health and life practice in the US by adding
Thomas Sass to its team in Minneapolis,
Minnesota. Sass will report to Roger Smith,
senior managing director at Aon Benfield
accident, health and life practice. The
broker says that Sass’s responsibilities will
include driving new business growth in the
healthcare sector, leading client teams, and
creating and maintaining a robust business
environment that is supportive to optimising
client results.
Aubert moves from AIG to Willis
Insurance and reinsurance broker and
global risk adviser Willis Group Holdings
has appointed Nicolas Aubert as Chief
Executive Officer (CEO) Designate of Willis UK Insurance. This includes the broker's
combined UK retail and global specialty
businesses. Aubert is currently the Chief
Operating Officer (COO) of American International Group (AIG) in Europe, Middle
East and Africa. Previously he was Manag-
Nicholas Aubert
Thomas Sass
Two new appointments at ABI
The Association of British Insurers (ABI)
has appointed Maurice Tulloch as chairman
of the General Insurance Council Management Committee (GIC) and Barry O’Dwyer
as Long Term Savings and Life Insurance
Committee chair. Maurice Tulloch is Aviva’s chairman of global general insurance
and chief executive officer, UK & Ireland
General Insurance.
He joined the GIC in 2013, and since
then he has played a leading role in the
ABI’s response to important industry issues. Maurice will also join the ABI Board
in the capacity of his new role. “The ABI’s
19 november 2014
| 25
people moves
GIC has a vital role to play as an industry
leadership forum to engage proactively with
the big public policy and regulatory issues
we face,” said Huw Evans, ABI director of
policy and deputy director general. “Maurice’s insight and perspective will be very
important as we address important issues
ranging from flood insurance, to compensation reform,” said Evans.
Maurice Tulloch, said: “We face major
challenges, from making insurance less
complex for our customers, to demonstrating our value to governments and working
with regulators to ensure we are operating
effectively.
There is a real opportunity for the ABI
to set the future shape of our industry; I am
confident that the GIC will continue to play
a leading role in these important debates
and take the right decisions for our industry
and its customers,” he added. O’Dwyer, the
new chairman of the Long Term Savings
and Life Insurance Committee, is Standard
Life workplace managing director.
He has served on the Committee for over
five years with two different firms. He will
also join the ABI Board in the capacity of
Maurice Tulloch
his new role. Evans said: ““At a crucial
time for the long-term savings and pensions
industry, the ABI has a vital role to play in
engaging proactively and helping shape the
outcome of the big public policy challenges
and opportunities, such as pension reform.”
O’Dwyer, said: “Delivering the exciting
pension reforms introduced in the Budget
will be a clear focus, along with encouraging a broader savings culture in the UK.” n
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