INSIDE ISSUE 19 n NZ quake n Andrew Mak n Death & disgrace n Russia n Chile n 2010 losses

Our sister publication » » »

Insight and Intelligence on the Global Facultative Markets December 2010 ICAT mulls D&F entry Ironshore launches once market turns Irish insurer Despite a number of recent withdrawals by London market underwriters from the Bermudian (re)insurer Ironshore is direct and facultative (D&F) market at direct and facultative (D&F) sphere, the continuing its international expansion by present, this portion of the business, medium-term prospects for the market opening a Dublin-domiciled (re)insurance headed by Rod Todd, will not increase look encouraging, with Bermudian player company, Inside FAC can reveal. capacity. ICAT mulling an entry once rating improves, The new company will have a branch Todd, formerly the senior vice president Inside FAC understands. that sits alongside Ironshore’s Lloyd’s and property underwriter for Ironshore The company, which has recently been subsidiary, Pembroke Managing Agency, Insurance in Bermuda, returned to the bought by management via private-equity based in Minster Court. London market in autumn 2009 to write backed Paraline Group, has underwritten on The opening of the new operation, part of a D&F book for Pembroke. Todd was Les its Chaucer-managed Syndicate 4242 since Ironshore International, follows approval Rock’s number two before Rock left the 2006. from the Bank of Ireland and discussions company in October 2008. Speaking about writing a D&F book, with the UK’s Financial Services Authority. Financial institutions business is also Jack Graham, ICAT’s chairman and CEO, The intention is to provide a passport expected to be cut back in 2011, given that accepted there is “a possibility that could into Europe to write Continental risks the up-to-50-percent rate increases some take place”. that historically have struggled to find a were anticipating going into the year have However, he stressed that any such entry placement in the Lloyd’s market. proven fantasy, with reductions of around would be dependent on market conditions, Although Pembroke Syndicate 4000 10 percent for the rate on line. adding: “It’s difficult to get into Lloyd’s will remain the cornerstone of Ironshore Speaking more widely, Wheeler today. The Franchise Performance Board International’s underwriting capabilities, commented that while the company’s has made it pretty clear at this point that the the plan is for something in the region of US distribution foundations are door may not be closed but it’s a tiny little 25-40 percent of the division’s business to “fundamentally laid out”, one of the key crack at this point. “From my perspective I be written out of the new company within a areas of focus for the foreseeable future think it’s appropriate given how competitive five-year timeframe. will be building the international side of the marketplace is – there’s not a need for a The opening of the new operation does the business, with retail growth a pivotal whole lot of capital in that marketplace or not mean that Ironshore’s capacity at component. any marketplace for that matter right now.” Lloyd’s will diminish. Indeed, Pembroke “What we’re really concentrating on now Planned 2011 capacity on its syndicate has received approval from the Society’s is distribution, as the distribution game reflects this stance, with a de-emption of 19 Franchise Performance Directorate to has changed so much recently. We’d like to percent from $148mn to $120mn. increase stamp capacity on Syndicate 4000 build more retail business because we feel His comments follow a string of recent from £145mn to £175mn next year. that it can add more value.” exits from the D&F market. Chaucer has The plans for the new Irish company “Of course, wholesale is still an important withdrawn from US D&F, while Antares were outlined by Mark Wheeler, CEO part of the mix, but we need to find ways and Ecclesiastical (which announced it of Ironshore International, who added of building the retail business as well,” was closing its worldwide property risks that the division’s focus next year will be Wheeler added. “Look at our Toronto office unit in September after the retirement of on organic growth in existing lines and – it is branded as Ironshore but writes on underwriter Kevin Cannon) have left the importing business such as environmental, Lloyd’s paper.” class altogether. healthcare and professional lines in the US. Although no specific proposals have yet “People don’t tend to exit classes if they’re “Environmental is the kind of product I’d been drawn up, potential medium-term making money from it,” said market veteran like Ironshore to build a real brand on,” he growth plans for Ironshore International Michael Pritchard. “Generally, if people added, referencing what Hiscox has been could see further overseas offices are making money from a class they would able to achieve in fine art. established in regions such as the Far East, continue in it. Lots of the larger syndicates Not all lines are expected to grow in 2011 Latin America and Switzerland. are taking capacity away from D&F and at Ironshore International, however. Given Creating tie-ups with other business, binder books and putting it to treaty because

ISSN: 1758-5422 the challenging conditions in the property along the lines of … continued on page 3 they can get better returns from there.”

www.insidefac.com

IF December 2010.indb 1 20/12/2010 11:38 02 | iNSIde comment

Contents 4-5 Loss file Rockin’ around 6-7 News digest 14-15 Global Fac index the Christmas tree 16 The Fac Door Dear Reader, Editor Marcus Alcock [email protected] The goose is ordered, the tree is up and the with budgets next year given the current Deputy editor Brussel sprouts will be arriving next week, sticky conditions. As one casualty fac Helen Yates [email protected] so I guess this must be the time to wish you underwriter said to me recently, rates contributing Editor all a very merry Christmas indeed and a cannot really go any lower, so it’s getting to Mark Geoghegan [email protected] delightful 2011. be a matter of the cost of providing capital. So what does 2011 have in store for us? A I quote: “If interest rates rise then it might MANAGING Editor Jerry Frank [email protected] few predictions: be better to stick my underwriting budget in Expect further retrenchment as the the bank!” Reporters extended reach of the soft market and Other predictions? Well… 2011 will be Adam McNestrie [email protected] Fiona Robertson [email protected] continuing oversupply force the hand of the year that the market really does turn David Stevenson [email protected] many. Thin returns won’t be justified in in the summer when a serious hurricane head of events this environment and if capital isn’t being rips through Florida, exposing the chaotic Cathy Turner [email protected] deployed effectively state of the current it’s best not to deploy arrangements and sales director “Local sourcing will be a Spencer Halladey [email protected] it at all. Hardly rocket causing the biggest science, but there you dominant theme of the hurricane loss ever Marketing Manager go. to the (re)insurance Amber Bates [email protected] Local sourcing year, both for brokers market. A little bit sales executive, SUBSCRIPTIONS & events will be a dominant overblown? Possibly, Annie Lightholder [email protected] theme of the year, and underwriters” but Florida can’t senior marketing EXECUTIVE both for brokers and escape unscathed Aimee Pitt [email protected] underwriters. On the broking front, expect forever, can it? Besides, some sort of serious events EXECUTIVE more firms to follow the example of Cooper hurricane loss next year seems more than Jessica Stacey [email protected] Gay and effectively get closer to the source. likely given that we’ve had two benign years SUB-EDITOR With the London wholesale market under in a row without a major loss. Peter Williams [email protected] so much pressure, I’m pretty convinced that What else to expect? The return of Les this won’t be the last move by those in the Rock, of course, as the underwriters’ Art Director Paul Sargent [email protected] middle tier to get closer to the business on underwriter decides he can no longer watch the ground. from the sidelines and decides to get stuck Printing For underwriters, perhaps we might even in at last. Zephyr see something of a return to local offices, Will Lloyd’s have him back? We’ll have PUBLISHING Editor as disenchantment with excessive broker to see, but even so there are plenty of other Peter Hastie [email protected] commissions in this excessively soft market avenues available even if he doesn’t decide Published by: leads them back to networks. to come back to Lime Street itself… Insider Publishing Ltd, Yes, I know what you’re thinking – it Asia House, 31-33 Lime St, was only yesterday that our Alpine friends Enjoy the read, London EC3M 7HT, UK. Tel Main: +44 (0)20 7397 0615 slimmed down their own networks Stateside Editorial: +44 (0)20 7397 0618 in favour of a more broker-orientated route. Subscriptions: +44 (0)20 7397 0619 But you and I know how fickle this market Fax: +44 (0)20 7397 0616 of ours is. e-mail: [email protected] © 2010 Insider Publishing Ltd. What seems like the most sensible, All rights reserved. straightforward strategy for most players Annual subscription: £895/$1350 one year can be ridiculed by others the next. Marcus Alcock, No part of this publication may be used, distributed, reproduced, stored in Don’t expect any movement on rates Editor, Inside FAC an information retrieval system or transmitted in any manner whatsoever without the express written permission of Insider Publishing Ltd. other than downwards while the current Distribution of Inside FAC is limited to the named subscriber only, unless oversupply lingers. separately licensed. Further distribution of or access in any form to Inside FAC by other persons is a breach of copyright and is prohibited whether Despite the moves by Chaucer et al working for the same entity or not. Inside FAC actively monitors the use and distribution of its publication and will take steps to prosecute any misuse. To recently, there’s still an awful lot of capacity ensure you don't infringe our copyright we offer Corporate Licences which enable companies to receive multiple copies of Inside FAC at discounted about. Just look at Lloyd’s, which incredibly rates. Corporate Licences can be tailored to meet your company needs and is set to have the same level of capacity next are the only viable way of protecting your company from prosecution by Insider Publishing Ltd if you do freely distribute our information without year as it had in 2010 of some £23bn. prior permission. I guess the question must be what to do

Inside December 2010 www.insidefac.com

IF December 2010.indb 2 20/12/2010 11:38 insin de ews | 03

Market escapes New FEATURED IN THIS ISSUE AIG/Chartis 4, 5 Guy Carpenter 7, 16 Pike River Coal 6, 14-15 Allied World 16 Hamilton-Grant, Jim 16 Platinum 3 Alterra 6 Hannover Re 3, 7, 8 Pritchard, Michael 1, 8 Amlin 5 Hardy 6 Rackliffe, Chris 13 Aon Benfield 4, 7, 8, HCC 16 RenRe 3 Zealand deterioration 14-15, 16 Herbert, Steven 16 Ribeiro, Jose 10 Arch Specialty 4 Hewitt, Paul 16 RK Harrison 16 PartnerRe suggests market loss could comprises approximately 81 percent of Argo 6 Hitchings, Andrew 16 Robertson, Andrew 6 Aspen’s total loss estimate for this event,” Aspen 3 Hiscox 5 Rock, Les 1, 2 reach $5.5bn Barker, Adam 16 ICAT 1 Ryan Specialty Group 16 the company said. Barnes, Matthew 16 Imedi L 7 Schneider, Reto 11 Barron, Robert 13 Ironshore 1, 3 Schymyck, Nick 10-11 Direct and facultative (D&F) underwriters Aspen added that its loss numbers were Beaufort 8 Johnson, Simon Sequel 13 Beazley 4, 6, 13, 14 Kiln 10, 16 Stockley, Duncan 16 look to have escaped relatively unscathed consistent with an industry loss of $4.1bn, Berkshire Hathaway 6 Kite, Stephen 16 Summers, James 16 BHP Billiton 16 Kofi-Sikah, Michael 16 Swiss Re 3, 6, 8, 11, 16 this month despite a series of substantial which is close to the upper end of initial Brimecome, Ian 16 Lang, David 16 Todd, Rod 1 upward revisions from (re)insurers to modelling agency estimates of $4.5bn. Bruch, Edgar 11 Leathem, David 16 Torus 16 Chaucer 2, 5 Liberty Syndicates 16 Tysers 5 their loss estimates from the New Zealand PartnerRe had previously increased Chaplin, Kent 16 Lockton 13 Valencia, Diane CMS, Russia 11 Macey-Dare, Julian 6 Ward, Richard 16 earthquake. its own forecast losses from just $64mn Coleman, Andy 16 Mak, Andrew 9 Wheeler, Mark 1 Cooper Gay 16 Marsh 4, 5, 6, 16 Whittington 6 Aspen and PartnerRe were the first to to $140mn-$160mn and suggested that Corfield, Tom 16 Merry, Barbara 6 Willis 16 increase their estimates after the New industry losses could hit $5.5bn. Cowley, Terry 16 Mildenhall, Stephen 7 Woods, Tiger 13 Creasy, Edward 16 Milton, Frank 16 Zaffino, Peter 7 Zealand Earthquake Commission (EQC) Bermudian reinsurer Platinum CV Starr 6, 16 Munich Re 3, 6, 8, Zlotowski, Yves 10-11 Dale, David 6 9, 11, 16 Zubarev, Leonid 11 announced to its reinsurers that it has Underwriters is another to warn of a Eutelsat 7 Nexus 16 Zurich 6, 16 Fairfield, Matt 16 O’Halloran Frank 8 increased its loss estimate to NZ$2.75bn- deterioration. In mid-November it said that Fox, Phil 16 Parker, Chris 5 $3.5bn ($1.84bn- $2.58bn), up from its initial $11.5mn reserve would have to be Graham, Jack 1 PartnerRe 3, 8 Graham, Michael 12 Pembroke 1, 5 NZ$1bn-$2bn. strengthened to $40mn. As Inside FAC went to press, Bermudian The hikes follow the expiration of the (re)insurer Aspen became the latest 6 December deadline for homeowners carrier to raise its loss estimates for the to make claims to the EQC, which had Fonterra CEO Andrew Ferrier said its earthquake after telling investors it had initially reported 21,800 claims as of 9 July. manufacturing sites at Clandeboyne, increased its reserve for the loss by 265 However, as of 14 December there were Takaka, Brightwater and Kaikoura were percent to $53mn. Aspen had initially 160 641 claims, of which 20,799 have been operating and processing milk. There informed investors that it had net exposure paid. had been minor damage at the Plains of $20mn to the Christchurch temblor. The EQC programme, which covers manufacturing site but the plant resumed “The upward revision reflects new residential claims, is reinsured above operation on the afternoon of 5 September. information and is mainly due to one large $1.5bn in the property treaty market, The fact that claims from the New domestic New Zealand cedant, which with noticeable participants understood Zealand quake are now looking more to include PartnerRe, Munich Re, costly follows the pattern of previous major RenaissanceRe and Hannover Re. earthquake losses for the market – most NZ quake claims to EQC The magnitude 7 quake struck on notably the Northridge earthquake in 1994. the morning of 4 September near Initial industry forecasts were around Christchurch, the country’s second largest $2.5bn, and by the time the claims were Claims city, at a shallow depth of just 5km.The settled towards the end of 1995 the losses city’s central business district with its older, had pushed past the $10bn mark. weaker buildings was heavily affected, with Others with significant losses from the streets littered with fallen masonry. New Zealand quake include Munich Re, Importantly for D&F writers, there have which told investors that it expects to pay 44,000 not been any reported major individual out EUR230mn – the largest reported loss

62,015 111,070 115,413 121,426 129,112 159,059 160,641 property losses. One of the biggest fac to date. Swiss Re is forecasting a hit of accounts in the region is dairy giant $160mn. Following the upward revisions by

7 Sep 21,800 Fonterra, although the market is not PartnerRe and Aspen, these loss estimates 11 Sep 19 Sep 5 Nov 12 Nov 19 Nov 26 Nov 6 Dec 14 Dec Source: New Zealand Earthquake Commission expecting any sizeable claims in relation to are now likely to come under increasing the programme. scrutiny.

… Ironshore launches Irish insurer p1 has continued to develop its portfolio in the airports. Iron-Starr Excess In Bermuda, is a business run-up to the New Year. Earlier this month In establishing an Irish operation, model that is considered to have worked it announced that IronBuilt, the specialty Ironshore is joining a long list of for the company so far, and it would like to construction unit, increased limits of up to (re)insurers who have decided to set up extend such arrangements. “We’re actively $25mn in umbrella/excess, wrap-up and in the country recently. Ireland is now the looking for partners to build the business,” project specific liability capacity. domicicle of choice for major Bermudians he said. “We’re really looking to expand our IronBuilt offers construction risk Axis, Arch, Alterra, Everest Re, PartnerRe, agency business in London as well, and protection for diverse commercial and RenaissanceRe and XL, as well as Ace and we’d like to support other agencies coming industrial projects, including infrastructure Lloyd’s (re)insurer Beazley. into Lloyd’s.” improvements for power plants, energy Global broker Willis also moved its Outside of the London market, Ironshore projects, bridges, tunnels, railways and holding company to Ireland in 2010.

Supported by www.insidefac.com December 2010

IF December 2010.indb 3 20/12/2010 11:38 04sf | los ile

Metrodome roof collapse to hit London market Chile losses climb to $8.5bn Quiñenco Group – with an estimated Losses are mounting for the damaged Total nat cat claims reach $38bn Minneapolis Metrodome, after its $255mn gross loss from insureds – and US roof dramatically collapsed after Reinforcing concerns over the ultimate Walmart Stores, with an estimated $140mn heavy snowfall in December across cost of the earthquake that devastated gross loss from insureds. the American Midwest. Inside FAC parts of Chile at the end of February, The Walmart global property programme understands Beazley was the lead reinsurance broker Aon Benfield has is understood to be led by Chartis, underwriter and Marsh placed the significantly increased its ultimate industry which only recently picked up these contingency cover for the National insured loss figure to $8.5bn. Chilean exposures through the retail Football League in the London In May, Aon Benfield estimated that the giant’s acquisition of a majority stake in market. Lost revenue from ticket sales total loss would fall within the $6bn-$8bn Distribución y Servicio (D&S), Chile’s alone are likely to cost contingency range. underwriters around $5mn. leading food retailer, last year. The Metrodome’s owner, the The broker included its revised loss Aon Benfield’s report showed that Metropolitan Sports Facilities forecast in its latest Annual Global Climate 2010 had been a heavy year for natural Commission (MSFC), has not yet and Catastrophe Report. catastrophe activity, with the industry released an estimate of the likely Of the companies whose (re)insurance escaping relatively unscathed. losses caused by its collapsed roof or estimated loss has been declared, Economic losses from nat cats more lost revenue from cancelled events. the largest so far is pulp and paper than quadrupled from $58bn to $252bn It is understood the $68mn structure, manufacturer Arauco, with the market as the number of events leapt from 222 to which is the home of the Minnesota expecting a $650mn gross loss. 314. But insured losses only came close to Vikings, is insured by Affiliated FM, Apart from Arauco, other major doubling from $20bn in 2009 to $38bn this a member of the FM Global Group, with a separate policy for the roof producers such as Empresas CMPC and time round. underwritten by Arch Specialty Norske Skog all have operations in the “2010’s catastrophes occurred, for the Insurance. The MSFC allocated Maule and Bío Bío regions hit hardest most part, in areas where low insurance $561,000 for insurance costs in its by the quake, with several operations penetration exists. Therefore insured losses 2010 budget. suspended. for these magnitudes of events were quite It is unsurprising that Arauco’s loss is low,” the report said. The Pakistan floods 2010 hurricane losses so high given that two of its paper plants offered one example, costing the country are located near the epicentre of the $30bn and (re)insurers just $200mn. below $500mn quake. These are the 355,000 tonnes/yr The majority of insured losses were The US may have escaped the worst unbleached kraft pulp Constitución mill in caused by the 10 costliest catastrophes. of the active 2010 hurricane season, the Maule region, and the 1.03mn tonnes Those events led to $23.4bn of insured but next year promises to be another per year bleached softwood kraft (BSK) losses, equivalent to 61 percent of total cat active one for storms in the North and bleached hardwood kraft (BHK) pulp losses. Atlantic, according to Tropical Storm Nueva Aldea unit in the Bío Bío region. European Windstorm Xynthia was the Risk. It predicts that Atlantic basin and The other affected Arauco pulp facilities second biggest cat loss at $3.65bn, with US landfalling tropical cyclone activity are its 790,000 tonnes/yr BSK and BHK September’s New Zealand earthquake will be 40 percent above the 1950- pulp mill in the Bío Bío region, its 140,000 estimated at $3.05bn. 2010 norm in 2011, with a 66 percent likelihood that activity will be in the tonnes/yr BSK Licancel mill in the Maule Other events include severe weather in top third of years historically. region and its 550,000 tonnes/yr BSK and Tennessee during May ($2bn), severe rain The forecast comes as the 2010 BHK Valdivia pulp mill in the Los Ríos and flash flooding in Western Australia season draws to a close, amassing region. in March ($1.06bn), and flood damage in modest insurance losses of under Other significant losses declared relate the mid-western US, also during March $500mn, according to RMS. While it to industrial and financial conglomerate ($1.0bn). was an active season, with the second highest number of hurricanes on record, the US coastline escaped the Top 10 human fatality events in 2010 worst of the storms. Event Date Event Name Or Type Event Location # Of Deaths 1/12 Earthquake Haiti 230,000 Verisk in med mal deal 6/15-8/15 Heat Wave Northern, Central, Eastern 15,000 Europe Verisk Analytics has signed an 4/14 Earthquake China 2,698 agreement to acquire medical claims information specialist Crowe Paradis 7/21-8/10 Flooding Pakistan 1,985 Services Corporation (Crowe Paradis) 8/8-8/9 Landslide China 1,765 from New York-based private equity 7/1-8/10 Flooding China 829 firm Clarion Capital Partners for an 7/17-7/24 Winter Weather South America 522 undisclosed sum. 2/27 Earthquake Chile 521 10/25 EQ/Tsunami Indonesia 509 6/13-6/30 Flooding China 381 Source: Aon Benfield

Inside December 2010 www.insidefac.com

IF December 2010.indb 4 20/12/2010 11:38 losf s ile | 05

Bermuda market facing Pemex pipeline loss The Bermudian excess casualty market Major 2010 market losses to date looks set for another significant loss as a result of an oil pipeline rupture following Event Date Est market loss Cover the blast at Mexico’s state-owned operator Chile earthquake 27 Feb $6.5bn-$12bn Significant fac losses stem from Arauco and CMPC pulp and paper mills Windstorm Xynthia 26-28 Feb $1.6bn-$4.1bn Losses led by Munich Re with EUR100mn estimate Petroleos Mexicanos (Pemex) on 19 New Zealand 4 Sep $1bn-$5.5bn Fac market likely to escape significant individual claims December – a loss which once again puts earthquake pressure on the structure of energy liability Deepwater Horizon 20 Apr $1.5bn-$3.5bn $945 physical damage; potential liability losses in relation to programmes in 2011. Transocean, Halliburton and Cameron etc of some $2bn Pemex CEO Juan Jose Suarez Coppel Bangkok riots 19 May $500mn+ Losses understood to be split evenly between property market and standalone terrorism market said that fuel thieves were the most likely French flash flooding 15 Jun $870mn Estimate from Fédération Française des Sociétés d’Assurance cause of the pipeline explosion that ripped Perth windstorm 22 Mar $734mn Total Australian storm claims in March cost $1.3bn through the south-central Mexican town of US windstorms 1-11 Feb $400mn-$1bn Affected Mid-West and East Coast regions San Martin Texmelucan, killing at least 28 Mexico hurricanes 27 Jun/17 $500mn Losses from hurricanes Alex and Karl are spread across the people and damaging dozens of homes. The Sep Mexican primary and reinsurance market town is just outside Mexico City on the road Typhoon Kompasu 2 Sep <$500mn Eqecat estimates insurable damages of up to $2bn to the capital of Puebla state. Enbridge US pipeline 26 Jul $491mn Cover placed by JLT on a layered basis and the primary is led by The company said 52 people were injured leaks Catlin and QBE. It is thought the liabilities are placed separately and taken to area hospitals. At least 32 Australian hail storms 6 Mar $458mn Third-largest Australian hail event on record homes were seriously damaged by the Jeddah warehouse 10 Jun $360mn Ace leads cover for Saudi Arabian Airlines hangar fire powerful blast and subsequent fires. The Eutelsat W3B satellite 31 Oct $307mn Most players in the London space insurance market are thought to loss be on the Willis slip company added that as soon as it detected a US windstorm 23-28 Feb $150mn-$350mn Affected Mid-Atlantic region and New England drop in pressure at the San Martin pumping Aban Pearl 13 May $235mn Cover placed 95% by Willis; Argenta Syndicate 2121 wrote 8.44% station at around 5:50 am local time, the line facility was shut down. Minutes later, the Cyclone Phet 4-5 Jun $200mn Oman insurers report OMR77mn ($200mn) claims, Pakistan also hit pipeline exploded. Kleen energy 7 Feb $150mn Construction all risks policy led by AIG and Munich Re. Placed by The pipeline runs from the port of Dos explosion Beecher Carlson Bocas in Tabasco state to the Tula refinery UPS crash 3 Sep $145mn Programme brokered by JLT and led by Allianz Afriqiyah Airways 12 May $124mn A330 crashed at Tripoli airport killing 103 of 104 people on board. in Hidalgo state. crash Aon brokered, Catlin led. Hull loss estimate only The Pemex programme is one of the Substation explosion 20 Sep >$100mn Cover understood to be placed by Cooper Gay biggest in the energy market, and is Pike River coal mine 19 Nov $100mn Property programme led by Beazley understood to be placed by Aon retail in US storms 1-3 Jun $100mn Hail and flooding hits Texas, Nebraska and Iowa, 25,000 claims Houston and wholesaled into London. US tornados 4-6 Jun $100mn Tornados sweep Midwest, 20,000 claims According to market sources, the Massey energy 5 Apr $50mn Placed by Willis and led by Beazley. Massey Energy did not purchase Bermudian liability market is likely to explosion BI face the bulk of losses stemming from the Ethiopian Airlines 25 Jan $38mn Boeing 737 crashed into sea after take-off from Beirut, killing all 90 explosion, which is only the latest in series crash on board. Ace led insurance. Hull loss estimate only US snow storms 10-12 Dec Not available Severe snow storms caused substantial damage across wide of high profile incidents to have cost the swathes of the US, including the Mid-West and Eastern coast market dear in 2010. Pemex pipeline 19 Dec Not available Significant energy programme understood to be placed by Aon The Bermudian excess casualty market is explosion also set to bear the brunt of September’s San Total Up to $33bn Bruno gas pipeline explosion. The PGEC Source: Inside FAC insurance programme is placed by Marsh released 819,000 gallons of oil into a Lake is part of the 1,900-mile Lakehead System, while Aegis is the lead primary market Michigan tributary, is also estimated to cost the US portion of the crude oil network that on the slip, with a $35mn participation in some $491mn. transports oil from Western Canada to the excess of a self-insured retention of $10mn. Inside FAC understands the physical US. EIM also participates at the primary end damage and business interruption for the However, it is not the only claim involving with a $25mn layer in excess of $45mn and Enbridge claim is placed by JLT on a layered a ruptured pipeline that affects Enbridge. XL writes a $50mn layer in excess of $70mn basis and the primary is led by Catlin On 9 September the company reported The pipeline ruptured at 18:00 hours local and QBE’s O’Farrell Syndicate 1036. The another pipeline leak in the Midwest - this time in the town of San Bruno in San Mateo liabilities are placed separately. time on Line 6A of the Lakehead System County, central California, and caused eight The spill in Michigan occurred on Line 6B in Romeoville, Illinois. An estimated 2,000 confirmed fatalities, as well as destroying of the Lakehead System on 26 July when a gallons of oil leaked into a storm retention 38 homes. Although the programme limit 30-inch pipeline ruptured near Marshall, pond and wastewater treatment plant in relation to PGEC appears to be safe, the dumping hundreds of thousands of gallons before the pipeline was shut down. market is still expecting total payouts in the of oil into the Kalamazoo River and other As noted in last month’s issue, the size region of $350mn. waterways. Line 6B is a 30-inch, 190,000 of these claims is such that the energy And, as reported by Inside FAC, a spill barrels per day line transporting light reinsurance market is now considering from a pipeline rupture in July for Calgary- synthetics, heavy and medium crude oil splitting out liability coverage as part of based Enbridge Energy Partners, which from Griffith, Indiana to Sarnia, Ontario. It future programmes.

Supported by www.insidefac.com December 2010

IF December 2010.indb 5 20/12/2010 11:38 06 | iNSIde news digest

Alterra hands Stock Exchange. Beazley’s first overtures to NZ mine blast management of Hardy valued the company at £160mn with firm in receivership a bid of 300p per share. It raised its offer Names syndicates to the following month to 330p per share. Hardy remained opposed to the offer Pike River Coal Ltd (PRCL), the Whittington operator of the New Zealand mine throughout, saying it undervalued the that exploded in November, killing Alterra at Lloyd’s has transferred the company and came at an opportunistic 29 men, has entered receivership. management of its non-aligned names- time when values were low. “It is business It has revealed it is facing backed syndicates 2525 and 2526 to as usual at Hardy,” said CEO Barbara insolvency and could not repay turnkey provider Whittington Capital Merry. “We are confident that our strategy its loans, and requested that New Management. Alterra at Lloyd’s is and growth plans will continue to deliver Zealand Oil & Gas (NZOG) appoint transferring the management of the shareholder value.” PricewaterhouseCoopers (PwC) as syndicates as it looks to concentrate on its receivers. 100 percent-aligned Syndicate 1400. Alterra As revealed by Inside FAC, Beazley president and chief executive Marty Becker is understood to lead the property Argo expands financial programme for PRCL. described it as “the natural step as we seek lines D&O business Others on the programme are to support the underwriting of Alterra at understood to include CV Starr, Lloyd’s with our own capital”. Syndicate Argo International has hired directors and Munich Re, Swiss Re and Zurich. The 2525 is a specialist liability syndicate officers’ (D&O) underwriter Andrew mining firm has estimated physical underwritten by David Dale, with flat Robertson as it expands its financial damage and business interruption of 2011 capacity of £42mn. Meanwhile 2526, products and financial lines business. approximately $100mn. the professional liability and medical Robertson has joined the company as class The cover involves “various sub- malpractice syndicate led by Andy Dore, underwriter for D&O liability and related limits and stand down periods” is pre-empting for 2011 from £31.8mn to classes for Syndicate 1200. He will be common to international policies, according to PRCL chairman John £50mn using Names capital. Syndicate involved in developing the company’s Dow. 1400 has an unchanged capacity of financial products and financial lines The firm had been given a 90-day £140mn for 2011 and will write across lines business. He joins from Dual Corporate standstill period from its main including property reinsurance, accident Risks, where he was director and manager funders, the Bank of New Zealand and and health and financial institutions. of the D&O team. At Argo, he will report to New Zealand Oil & Gas. Paul Kneafsey and Richard Smart, active “PRCL confirmed that it needs to underwriter and deputy underwriter address corporate solvency ahead AM Best grants Swiss Re respectively for casualty business. of the extension of time that its secured creditors had provided in a positive outlook the immediate days following the mine explosion,” revealed NZOG in a AM Best has upgraded the outlook on Marsh launches statement. “PRCL has debts which are Swiss Re’s A financial strength rating from political risk facility substantial and in excess of its cash stable to positive to reflect the action taken and other immediately foreseeable by management to repair the business Marsh has launched a political risk facility sources of funds”. following its difficulties in 2008. “The to provide up to $100mn of cover per risk Pike River has stressed its first positive outlook reflects the success of the for plant, equipment and inventories priority is to recover the bodies of the extraordinary measures taken by Swiss Re located in foreign countries and territorial 29 miners. following its major investment losses in waters or while in transit between sites. However, further underground 2008,” said the rating agency. It picked out The facility is placed in Lloyd’s and the explosions have hampered its efforts, with a jet engine standing by to inject Swiss Re’s “early repurchase” of the SFr3bn company market, and is co-led by two inert gases into the mine to extinguish convertible perpetual capital instrument unnamed Lloyd’s syndicates. Cover can be fires. (CPCI) from Berkshire Hathaway, which bought across a portfolio of assets, on a “These are very difficult times, was completed last month. However, country-by-country or location-specific especially for the families of the 29 it noted Swiss Re was still “somewhat basis and can also be assigned to lenders. men who have lost their lives and dependant” on Berkshire Hathaway, owing “The global recession, credit crisis, for the Pike River miners facing to the adverse development cover it has increased terrorist activity and political redundancy,” said NZOG chief purchased and the 20 percent quota share unrest have created a more complex executive David Salisbury. that it entered into in early 2007. risk landscape for companies investing, “Decisions on the mine’s future manufacturing and trading overseas,” said must at least await a conclusion to the recovery efforts, but NZOG Julian Macey-Dare, international head of is supportive of any intentions to Beazley withdraws Marsh’s political risks and structured credit eventually reopen the mine. It is business. to be hoped that the inquiries now third Hardy offer underway will result in findings Beazley withdrew its bid for fellow Lloyd’s which allow this to happen in a safe insurer Hardy after having its third and Hardy gets to manner.” final 350 pence per share offer rejected at a meeting between the two companies, it work in Singapore revealed in a statement to the London Hardy has begun underwriting in

Inside December 2010 www.insidefac.com

IF December 2010.indb 6 20/12/2010 11:38 insin de ews digest | 07

Singapore within the Lloyd’s Asia platform. awarded the Wholly Owned Foreign The new Asian office is headed by Richard Enterprise broking license by the China QBE named in US Lim, who began underwriting on 1 Insurance Regulatory Commission (CIRC), lawsuit against BP December 2010 for risks incepting on or making it the first licensed international after 1 January 2011. Hardy Asia will reinsurance broker in the country. QBE’s O’Farrell Syndicate 1036 has concentrate on writing and leading treaty It will provide services in China as Guy been named as part of a civil lawsuit business from the Asia Pacific region Carpenter Insurance Brokers (Beijing) Co filed by the United States against BP. (excluding Japan) on both a proportional Ltd. The broker currently has a The suit alleges the energy giant and non-proportional basis, along with representative office in Beijing and a full- and others violated federal safety associated reinsurance protections for key service office in Hong Kong. regulations in connection with the clients. Over time, it will develop a direct Deepwater Horizon oil spill. and facultative portfolio as well as other The explosion on 20 April killed 11 lines of business, including construction Jing-Ping to head Aon people and resulted in an estimated and engineering, terrorism, financial 4.9 million barrels of oil being spilled into the Gulf of Mexico before the institutions, accident and health and Benfield China well was finally capped on 15 July. marine and aviation. Aon Benfield has appointed Jing Ping The defendants named in the Zhang as head of facultative for the firm’s lawsuit include BP Exploration and China operations. Jing Ping will be Production Inc; Anadarko Exploration London market escapes responsible for building the facultative & Production LP; Anadarko team, driving strategy and business Petroleum Corporation; MOEX Pakistan cargo crash production, and expanding Aon Benfield’s Offshore 2007 LLC; Triton Asset The Russian cargo plane IL-76 that crashed facultative footprint within the China Leasing GMBH; Transocean Holdings shortly after take-off from Karachi Jinnah market. He has spent the past two years as LLC; Transocean Offshore Deepwater International Airport in Pakistan on 28 part of the production and placement team Drilling Inc; Transocean Deepwater Inc; and November was not insured in the London of Aon Benfield Fac ¬– the facultative QBE Underwriting Ltd/Lloyd’s market. Inside FAC understands the aircraft division of Aon Benfield – based in Aon’s Syndicate 1036. is insured through Georgian insurance Singapore Broking Centre and prior to that In the complaint, the US accuses company Imedi L International, and that spent six years working for Aon Re and Aon the defendants of a “failure to take Moscow Airclaims CIS has been appointed Specialty in London. necessary precautions to secure the as the adjuster. The aircraft was carrying 31 Macondo Well prior to the 20 April tonnes of relief supplies for Khartoum, explosion; failure to utilize the safest Sudan. The eight crew were killed in the Lonmar settles costs in drilling technology to monitor the accident, with four casualties on the well’s condition; failure to maintain continuous surveillance of the well; ground. According to press reports, fire Tysers poaching case and failure to utilize and maintain erupted in the left engine before the crash, Broker Lonmar Global Risks has reached a equipment and materials that were possibly as a result of a bird strike. cash settlement with fellow London available and necessary to ensure the independent Tysers for court costs arising safety and protection of personnel, from a 12-day staff poaching trial that property, natural resources, and the Satellite antenna glitch ended with all of its claims being environment.” dismissed. The terms of the settlement The lawsuit charges companies could cost $268mn have not been disclosed. However, it is under the Oil Pollution Act (OPA) and A faulty antenna on a SkyTerra 1 mobile understood that Lonmar has agreed to Clean Water Act (CWA). communications satellite threatens to cost reimburse Tysers and other affected parties “We intend to prove that these violations caused or contributed the niche space insurance market up to an aggregate sum in excess of £1mn. to this massive oil spill,” said US $268mn, Inside FAC understands. In Lonmar was pursuing claims against attorney general Eric Holder. addition, the loss of three uninsured Tysers and a trio of former employees, QBE can only be held liable up to Russian satellites in December could delay arguing it had lost £2.5mn from their the amount of the insurance policy subsequent launches, reducing premium actions, but the claims were rejected by the overage under the OPA and is not income for the year. It is a bad end to 2010 court. being sued under the CWA. for the space insurance sector, following The insurer has not yet released a the EUR245mn ($325mn) Eutelsat W3B statement reacting to the lawsuit. In satellite loss in November. Should SkyTerra June, it reassured shareholders that it Qantas threatens legal had “significant external reinsurance 1 prove to be a loss it will put underwriters action over A380 loss protections in place for claims of this into deficit for the year. “For some it will nature” and that its $470mn YTD total mean going into the red,” confirmed a Qantas has threatened to sue Rolls Royce large risk and catastrophe claims senior space underwriter. after an engine exploded on an Airbus estimate issued on 28 April included A380 early last month. the oil spill. The airline has been granted an The re/insurance industry’s total Guy Carpenter wins injunction by the Federal Court of Australia losses are likely to range from $1bn to to allow it to take legal action against Rolls $3.5bn from the event, with the cost China license Royce if a commercial settlement cannot spread among multiple re/insurers. Guy Carpenter & Company has been be reached.

Supported by www.insidefac.com December 2010

IF December 2010.indb 7 20/12/2010 11:38 8 | iNSIde 2010 loss review

Death by a thousand cuts The first half of 2010 was an explosive one for direct and facultative (D&F) writers, Top 5 2010 market losses to date with the Chile earthquake dominating. Event Date Est market loss Cover But with a remarkably low insurance Chile earthquake 27 Feb $6.5bn-$12bn Significant fac losses stem from Arauco and CMPC pulp and paper mills impact from an otherwise highly active Windstorm Xynthia 26-28 Feb $1.6bn-$4.1bn Losses led by Munich Re with EUR100mn estimate hurricane season, the year has instead been New Zealand 4 Sep $1bn-$5.5bn Fac market likely to escape significant individual claims characterised by a steady stream of small to earthquake mid-sized attritional losses. Deepwater Horizon 20 Apr $1.5bn-$3.5bn $945 physical damage; potential liability losses in relation to Such activity is causing increasing Transocean, Halliburton and Cameron etc of some $2bn bloodshed in a softening market. Bangkok riots 19 May $500mn+ Losses understood to be split evenly between property market and standalone terrorism market “Attritional is anything from nought to a Total Up to $25.6bn couple of hundred million dollars,” says Source: Inside FAC Michael Pritchard, active underwriter at Beaufort’s Syndicate 318. “There are a huge high as $5.5bn. This month, the company Sigma team. Aon Benfield puts the figure number of losses around that level that raised its expected loss dramatically from even higher. Its Impact Forecasting team don’t really get the market headlines but $64mn to a range of $140mn-$160mn. estimates 314 nat cat events over the course certainly hurt the market.” Munich Re again faces the biggest burden, of the year brought an economic cost of The year’s major loss tally began with revealing an expected EUR230mn ($315mn) $252bn and insured loss of $38bn Windstorm Xynthia, estimated to cost up to hit from the magnitude 7.0 quake. (see page 4). $4.1bn, and the Chilean earthquake. Chile Hailstorms in Australia, flooding in France was a massive 8.8 magnitude quake that D eepwater disaster and the UK, US tornadoes and Atlantic struck off the coast of the Maule region on One class that may have bucked the trend hurricanes are together costing billions of 27 February. As the seventh largest quake in of a softening market is offshore energy in dollars. May rioting in Bangkok could also recorded history, the number of victims was the aftermath of the Deepwater Horizon cost property cat (re)insurers up to $1bn. low at 521 considering the magnitude. explosion and oil slick. But the spike is set Other stand-out losses are the $150mn While the epicentre avoided the main to be short-lived, according to a recent Kleen Energy factory explosion in February mining region in the north of Chile, it survey from Aon Benfield. The market and Massey Energy explosion on 5 April, caused considerable damage to local escaped a mammoth $20bn-plus loss with property cover of $50mn. industrial facilities. The largest facultative thanks to BP’s decision to self-insure, but “I don’t think there are any specific business interruption (BI) exposures are the industry continues to anticipate total headline losses,” says Pritchard. “It’s not over $100mn, according to loss adjusters losses in the region of $3.5bn once liability like 2008 where there were huge mining Crawford & Co. Two of Arauco’s paper losses are included. losses. Apart from Chile, which has its own plants were located near the epicentre of To date, upstream energy insurers issues, there’s no particular loss which is the quake: the 355,000 tonnes per year have paid out a combined $795mn on exceptionally large or exceptionally famous. unbleached kraft pulp Constitución mill in Deepwater Horizon and the sinking of the It’s just a whole number of smaller losses.” the Maule region, and the 1.03mn tonnes Aban Pearl gas platform in the Caribbean The niche space insurance market faces per year bleached softwood kraft (BSK) in May. Lloyd’s expects its net claims from a deficit for the year following the $325mn and bleached hardwood kraft (BHK) pulp Deepwater to come in at around $300mn November Eutelsat W3B satellite loss Nueva Aldea unit in the Bío Bío region. to $600mn, while Swiss Re and Munich Re and potential $268mn loss of a SkyTerra Total economic losses from the are expecting hits of around $200mn and 1 mobile communications satellite in earthquake are expected to reach $30bn $266mn respectively. Hannover Re recently December. In aviation and aerospace, and insured losses are now expected to doubled its expected losses to EUR89mn the sector is also likely to have eroded its cost as much as $8.5bn (see page 4). Lloyd’s from an earlier EUR40mn prediction. profits for the fourth year running, with the alone – which sent two delegations to the Beyond Deepwater Horizon, there were $360mn Jeddah warehouse fire and $145mn quake-struck region – anticipates a pre-tax plenty of other losses and near misses. September UPS cargo crash in Dubai. In loss of $1.4bn, while Swiss Re and Munich These include the $235mn Aban Pearl total, aviation insurers are facing losses of Re both upped their loss estimates in the sinking, a blowout off the coast of Australia up to $2bn. months following the quake, to $630mn and a gas leak in the North Sea off the coast Despite the rising loss register, and $1bn respectively. Munich said it had of Norway. Onshore, casualty underwriters competitive market forces continue to been tough to give reliable forecasts due in the US are facing claims of up to $800mn exert downward pressure. Property rates to low primary insurer retentions and the as a result of oil pipeline ruptures and a continued to soften in the third quarter, high proportion of facultatively reinsured gas explosion in California. This includes a according to Aon Benfield, with a drop production facilities and buildings, and as a spill in July that h released 819,000 gallons of around 10 percent for US cat-exposed result of ongoing business interruption (BI) into a Lake Michigan tributary, with losses accounts. “It’s quite hard to understand losses. estimated at $491mn. why that is the case other than if you take The year’s second biggest earthquake for the pure D&F book, which London is insurers was in New Zealand in September. The loss tally involved in, for most people it’s only part It was originally thought the quake was set Insured losses from catastrophes so far of their overall book and in many instances to bring $3bn to $4.5bn in insured losses, in 2010 are up 34 percent on last year at a a small part of their overall book,” says but PartnerRe has suggested they may go as total of $36bn, according to the Swiss Re Pritchard.

Inside December 2010 www.insidefac.com

IF December 2010.indb 8 20/12/2010 11:38 insi de profile | 9

Where East meets West Andrew Mak, Munich Re Hong Kong/Taiwan

You have been in the industry for 20 years. remain volatile. We also expect growth Munich Re recently launched a trigger What’s the biggest change you have seen in innovative solutions like renewable product to protect cooperatives and their over the last few years from a fac point of energy. Chinese companies are increasing low-income members in the Philippines view? the number of renewable energy projects, against extreme weather events. What changed are the areas of growth. encouraged by government measures. Growth is now mostly generated in Asia, To develop this market, complex-risk How big is Hong Kong’s potential as a driven by the economic development. assessment, risk management and local hub and how does it size up against These growth figures are very tempting insurance expertise is needed to secure and Shanghai and Singapore? but many insurers and reinsurers have safeguard investments. At the moment I see Hong Kong and learned the hard way that this growth is Singapore as head to head. However, Hong often not profitable. The key to success The financial crisis has led to huge Kong has a few opportunities that might is understanding the client’s situation in government stimulus packages around change the balance in the future. The green depth and offering innovative solutions and Asia – tell me about some of the projects light from the central government in Beijing services. planned or underway and the opportunities for Hong Kong to become an international for fac underwriters. Chinese currency settlement centre Tell me about catastrophe activity in the Large infrastructure risks in Hong Kong will help to increase the insurance and region in 2010 – are any events significant and mainland China are nearly all reinsurance activities and opportunities for from a facultative (re)insurance perspective? government projects. They include roads, risks carriers and intermediaries located Overall 2010 has been an expensive year for bridges, railways and port facilities. The in Hong Kong. The fact that CEPA [Closer the global insurance market. In Asia we most anticipated ones near Hong Kong Economic Partnership Arrangement] saw significant monsoon rains, flooding are the Zhuhai-Macau-Hong Kong Bridge allows Hong Kong business entities to and landslides in many countries and project and the Hong Kong-Guangzhou enter Southern China for their business super typhoon Megi hitting the Philippines. High Speed Railway. Commercial risks are expansion might also increase the fac The number and scale of weather-related usually large residential complexes and opportunities for Hong Kong-based risk natural catastrophe losses in 2010 was entertainment/resort facilities. Munich carriers. exceptionally high – however, many Re sees large potential in fac business in happened in countries with low insurance Greater China, due to the rapid growth and Why did you join the industry and what do density. Then we had two large hail storms large construction projects. you enjoy about your job? in Australia and the earthquake in New I am still fascinated by the wide variety the Zealand, which caused higher insured Could China one day become a peak zone reinsurance industry has to offer. I can’t losses. for insurers? think of a field where I get so much access These events will result in increased No doubt, the region is gaining economic to different areas from engineering to prices in claims-affected business importance at a speed many did not expect. climate change, new technologies and segments. In Asia Pacific, I do not The insurance sector is growing even faster much more. Besides this, your job is very expect the market situation to change than the economy, with over 30 percent different throughout the year. You have the significantly over the 2011 renewal. Most growth in premium income in the first very intense renewal time and then more of the insurance markets here are very nine months of 2010 alone. This enormous strategic parts. It never gets boring and is competitive and prices in many areas growth rate, plus high risk in nat cat, the truly international. are not risk adequate. We would rather value accumulation in megacities and lose market share than write unprofitable large infrastructure projects mean that its business. Nonetheless, Munich Re is importance is rising. This, however, will take Andrew Mak in brief growing in Asia. a while and up to now insurance density and penetration are still low, especially Andrew Mak is head of client portfolio What are the key issues on the agenda for cover against natural disasters. management at Munich Re Hong Kong/ the industry in the region in 2011? Risk transfer solutions are urgently Taiwan, joining the company in 2008. One of the key issues will definitely be the needed in many countries throughout Before that he was a senior member urgent need for more extensive natural Asia Pacific. Coverage will mostly come of staff at PartnerRe, handling treaty underwriting in Asia and establishing catastrophe cover to stabilise economic from traditional reinsurance solutions, the company’s Beijing representative development. This is especially important but we would also support natural office. He has also had roles at if you look at the rising concentration catastrophe pools, for example in China, Transatlantic Re in both facultative and of values in megacities. Another point that include public and private property. treaty, where he helped establish the is solvency, with primary insurers Microinsurance is another example of Shanghai Rep Office and at Chubb, as a having to balance strong growth with tackling the problem of low insurance trainee and commercial underwriter. stricter regulation while equity markets density and high risk of natural disaster.

Supported by www.insidefac.com December 2010

IF December 2010.indb 9 20/12/2010 11:38 ROF NT Y P ILE OU RY R C PR T O N F U I L

O E C 10 | iNSIde russia

The Eastern challenge With Lloyd’s opening a representative office in Moscow and the country selected to host the 2018 World Cup, attention is once again focusing on the latent potential of the Great Bear. Inside FAC investigates Russia continues to fascinate and frustrate Credit rating agencies like Coface believe concentration at the top end of the market, in equal measure. The potential is clearly Russia is back to the levels it was operating reflected by the fact that 54 percent of all there for the fac market, underscored by the at before the financial crisis. It says the gross written premium is written by the recent decision to award the country the country has recovered its “B” rating after top ten companies. “At the top end many 2018 World Cup – a prospect that will have being downgraded during the crisis, as it of the companies are well run, reasonably construction and contingency underwriters recorded the worst recession among the profitable and have good personnel – there salivating. Yet in so many ways Russia G20 countries in 2009. Renewed private are perhaps 30 or so firms in this category,” remains hugely problematic for the market. consumption is now driving growth says Schymyck. Not least, of course, because the transition and, according to Coface, the payment He warns that many of the remainder are from the old style communism has been behaviour of Russian companies has thinly capitalised and the market is ripe for far from easy and political tensions remain, consolidation, as the government changes with commentators pointing to the poor the rules on capitalisation requirements. official response to the summer heatwave At the moment, the minimum capital this year as a prominent example of the requirement for setting up an continuing inefficiency insurer is $1mn but the of the governmental government is apparatus. The heatwave set to raise that resulted in droughts figure to $4mn. that severely curtailed This may well agricultural output, as spark mergers and well as wildfires that acquisitions, as well as led to a shutdown of causing some firms to quit factories. the market altogether. Yet with such large losses Promoting the value of come possibilities. Last insurance – both retail and month Lloyd’s announced improved significantly after seriously commercial – is an uphill battle. Most it will open a representative deteriorating during the downturn. Russian businesses buy some protection office in Russia in the middle of next year, Nonetheless, Russia’s rating is still but programmes are limited. As Schymyck subject to regulatory approval. However, two notches lower than the other BRIC puts it: “You may well sell property cover to it will take a “slowly, slowly” approach. countries, notably because of a continuing a business, but it is unlikely you’ll convince The representative office will not be an lack of transparency in company them of the need for business interruption underwriting base, but for exploring information available. “The crisis brought or financial institutions cover too.” opportunities in the market. to light a reorganisation among the In a hangover from the USSR, the “Now is the right time to develop a small emerging countries,” Yves Zlotowski, chief government continues to concentrate presence in Moscow,” says Jose Ribeiro, economist at Coface, explains. “All of them, its efforts on large-scale businesses and director of international markets at Lloyd’s. without exception, were affected by the Schymyck believes that many small to “The new Russia country manager will be crisis. But some, such as Russia, which got medium-sized enterprises (SMEs) are well placed to make informed decisions over the shock quickly, have returned to neglected as a result. “In Western Europe, on behalf of the Lloyd’s market as well their pre-crisis levels.” much of the development in these as promoting and explaining it to local industries has come from entrepreneurs insurers and brokers.” Worthwhile investment and SMEs, which has provided a certain Lloyd’s has reason to be optimistic. The Nick Schymyck, head of research & dynamism. In Russia, the state is trying to Corporation’s premium income from development at RJ Kiln & Co Limited, take control and so it is difficult to be as Russia has increased from $108.4mn recently went on a fact-finding mission dynamic as the Western model.” in 2007 to $167.5mn in 2009, ranking it to Russia. He came back optimistic for But there is change afoot. Back in July second among the “BRIC” (Brazil, Russia, the medium to long term and thinks President Medvedev signed an order India, China) economies, behind Brazil. investment is worthwhile. Overall, he says, establishing a working group on creating Although the Russian insurance market Russia remains heavily dependent on an international financial centre in Russia. did contract in 2009 and insurance energy and in many ways the (re)insurance Among its responsibilities, the group is penetration is still low, Lloyd’s is confident market mirrors what happens to energy “tasked with co-ordinating government that as the economy stabilises there prices. “The Russian economy tends to activities related to international will be opportunities for growth. On the move in step with energy prices and the integration, such as developing trade and reinsurance front, the major classes of insurance market then moves in step economic relations, facilitating economic business written in Russia are energy with the expansion and contraction of the integration between Russia and the CIS ($58mn), aviation ($54mn) and marine economy.” countries.” ($33mn). Property accounts for about 14 Currently, there are some 700 Outsiders say they are still waiting to see percent of the business written. (re)insurers operating in Russia. There is a what materialises from Medvedev’s latest

Inside December 2010 www.insidefac.com

IF December 2010.indb 10 20/12/2010 11:38 ROF NT Y P ILE OU RY R C PR T O N F U I L

O E insi de russiaC | 11

initiative and are not anticipating any major coming to terms with the new rules and in developments to occur quickly. However, Russia voluntary insurance finding insurance solutions,” he explains. it is clear is that the Russian government “It does affect a significant number of recognises the importance of the financial GWP by type of voluntary insurance businesses and insurers are working on

markets, including (re)insurance, and 1% 3% new products.” also that Moscow is the place to be. Most Compulsory (re)insurance is also being 2% insurance business stems from the capital 6% Autotransport extended from aviation carriers to all those and even the other cities remain small fry Personal involved in transport, such as bus and train (other than life) by comparison. 30% Other property operators. Legislation is working its way

In terms of growth areas for insurers, the Other transport through parliament at the moment and is 29% key markets are property, aviation, motor Liability likely to come into force by spring next year. and construction. Third-party liability Business risks However, the government is sending

cover for motor is already compulsory, 29% Life mixed messages. It is tightening the rules, but in the wake of the summer fires the encouraging people and companies to buy government is pressing ahead with plans more insurance, while also introducing to make household insurance compulsory Source: Federal Insurance Supervision Service more stringent regulations for insurers too. Legislation could come into force early themselves. There is a danger, says Zubarev, next year. Leonid Zubarev, a partner at law firm that the new rules will take the system back On the reinsurance front, about 65 CMS, Russia, predicts legal changes five or six years to a time when insurers percent of the ceded business goes to will fuel growth in both domestic and needed to get a licence for each and every foreign-owned companies, including the commercial lines. On the commercial side product sold – slowing down their ability big names such as Munich Re and Swiss new rules that came into force in July for to respond to market demand. For the Re. Some of this reflects the country’s owners of hazardous objects such as power time being, it seems, the growth of the fac poor sovereign rating, but also Russians’ plants mean they now need to have cover market in Russia is likely to be far from general unease at sharing intimate details for damage to third parties. “People are still smooth. of their business with other Russian-owned entities, says Schymyck. Edgar Bruch, client manager for Russia Wildfires and agricultural risk and other CIS markets at Munich Re, says that “from the reinsurer’s perspective This summer, wildfires swept across farmers about their fears for the future. [Russia] is a very competitive market, Russia causing a huge amount of Their worst nightmare, they said, was especially for industrial risk insurance, be it damage to the agricultural sector and drought and the financial consequences in terms of scope of cover or pricing”. beyond. Fires in Central Russia, the Volga it had for their livelihoods. “Recent region, Chukotka, and Dagestan spread weather events have turned these fears L arge losses over about 200,000 hectares, damaging into bitter reality,” says Swiss Re. “The Bruch continues: “On the other hand, there more than 1,800 homes and leaving time has now come to think about how has been a sharp increase in the number more than 2,200 people homeless, innovative insurance solutions can help of large losses over the last couple of years. according to figures from Standard & soften such blows in the future.” Poor’s. Wheat prices, already at a 22-month Whilst these losses show how important the The resulting heavy smog that sat high in the wake of drought and wildfires role of insurance and reinsurance is, they over Moscow for two weeks forced the in Russia, were sent steeply upward also indicate a trend towards deteriorating authorities to close airports for a number again after Prime Minister Vladimir Putin quality of even the largest risks. A lot of of days, while the death rate in the city announced a temporary ban on exports work still has to be done to further improve reportedly doubled from a median of of grain and other agricultural products. risk management and the technical quality 360-380 people a day to 700 people a day “Russian farmers whose cereal crops of risks.” in August. The ratings agency warned have been destroyed in the heat are in “Looking ahead, we are pleased about that in a developed insurance market, the desperate straits and consumers face the initiatives coming from legislators, fires and their impact could have been the prospect of rising prices for all flour- the insurance supervisory authority and enough to “undermine insurers’ financial related foodstuffs,” the Swiss Re report stability”. continues. the insurance association to strengthen According to Munich Re’s Edgar Bruch: “Even though the Russian government enterprise risk management and develop “The dramatic drought and wildfires this has stepped in to help with subsidies and new insurance products – initiatives which summer have shown that the country low-cost loans, the losses have plunged we support,” he continues. is significantly exposed to a variety of many farmers into serious financial “As economic recovery quickly moves natural catastrophes, but that insurance difficulties, especially since most of them forward in the country and large-scale cover for farmers and private property is did not have insurance protection.” projects like those connected with the not yet fully in line with clients’ needs. Swiss Re’s Reto Schneider, head of 2014 Winter Olympics and 2018 World Moreover, market penetration and agriculture for Europe and Africa, adds: Cup contribute to a positive climate, we awareness of insurance products is still “This disaster underscores the need very low.” for a concerted strategy on the part are convinced that the insurance sector In a report on Russian agriculture of the state, the insurance industry, will also advance in terms of both market published just weeks before the fires loan providers and the farming sector penetration of the various products and (Sowing the seeds for record harvests: to improve insurance penetration the creation of new customer-focused risk reduction a must for Russian significantly to deal with the financial products. Reinsurance will play a key role agriculture), Swiss Re asked the country’s consequences of such events.” in this environment.”

Supported by www.insidefac.com December 2010

IF December 2010.indb 11 20/12/2010 11:38 12 | iNSIde comment

Quick, quick, slow

Michael Graham, Sequel

Decisions about changing the technologies extremely good for the industry. But for them the clock is ticking. Their that underpinning the insurance business Examples of this good practice can be systems and processes have, by and large, have, until relatively recently, been almost found in those carriers and brokers with a been left untouched – so they don’t have once-in-a-generation phenomena. They culture of innovation and improvement. the business and technology skillsets were made pretty much along the same You can see evidence of this in their to prepare them for the challenges and lines as those taken when building power business processes: using technology requirements of the new economic stations: it was often long, complex and as a business tool for advancement is landscape. Slow change is no option for involved. Folk memories of drawn out constantly on their business agenda. So them either – it will never happen. They processes and extremely large investments they are not phased by developments need to get their business decision making live on in the insurance industry’s in the marketplace – they just evaluate into gear and they need to make a start. collective consciousness. them and deal with them speedily, where My advice for these companies is Against this backdrop, almost unnoticed necessary, without missing a beat. straightforward: take action now – your in the marketplace, technological Improved market processes can also change has to be business, not technology, “generations” have been shortening. led. This is no time for distractions. Careful The promise of increasingly sophisticated key performance indicator planning and powerful software and hardware has “Let’s face it, even in the – dates, decisions, deliverables – will only recently been acknowledged by this early days of IT, large, help avoid costly and time consuming sceptical business culture that has been diversions. slow to adapt. And now economic and slow moving projects regulatory developments have altered the L earning from others insurance landscape forever. never really worked very Also, don’t reinvent the wheel – see Let’s face it, even in the early days of IT, what successful larger organisations large, slow moving projects never really well – and relatively recent have done and learn from them. Even worked very well – and relatively recent history shows many that these organisations use outside experts history shows many that didn’t get to work strategically to make technological change at all. Any implementation taking longer didn’t get to work at all” happen fast for their benefit. You can save than 12 months attracts “project fatigue” – time and money by partnering with experts loss of direction and impetus – as well as take a bow. Changes to, and technological with the right kind of industry knowledge. problems caused by key staff changes. improvements in, claims handling in These kind of partners specialise all So we should be looking at examples the London market offer an example of day, every day in getting this kind of of faster, better ways of implementing appropriate action being taken at the right technological change right for businesses innovative technology to boost a time overall. They have been simple, were like yours. company’s business. introduced relatively quickly and proved Finally, insist on having your programme an easy to understand process for all broken down into small, short projects Taking action stakeholders. that can be tested and brought quickly on Improved methods are particularly When it comes to pure speed and line to benefit your business – three to six welcome with this softer market. What with effective deployment, shining examples month projects are ideal. They certainly fewer start-ups, Solvency II and the trend can be found of new entrants coming into should not take any longer. And some towards greater consolidation, every part an extremely tough marketplace. Going tough decisions might have to be made, of the (re)insurance industry is waking slowly is not an option for them. especially if legacy systems have to be up to the fact that action has to be taken. To stand any chance at all, they have to dealt with. But that’s another story… And a significant part of this has to include be up and running successfully in a matter Those who can adapt quickly and a rapid technological response to the of days rather than weeks. They pull this appropriately to this brave new challenges faced. Making no change is no off, seemingly effortlessly, because they marketplace will be the winners – and the longer an option and slow change is never have the right kind of business planning good news is, there is still time to make going to give the right answer. However, supported by the right software and a start. And the advice, as always, has to speedy technology responses must be hardware. come with a health warning; speed alone business led. However, there are organisations in is not enough. It has to be for the right Forward thinking (re)insurance insurance that, quite understandably, see reasons. organisations have been developing technological change as something to be Of course, it has to be rapidly expertise internally or bringing in outside faced “only when we have to face it”. They implemented – but in this case, technology experts to improve their ability to react to are experts, of course, in managing their has to be the means of, not the motive for, market requirements quickly – and this is insurance and reinsurance business. the change process.

Inside December 2010 www.insidefac.com

IF December 2010.indb 12 20/12/2010 11:38 SECTOR SECTOR insida de e th and disgraceANALYSIS | 13 ANALYSIS

The Tiger effect Tiger Woods’ well-documented fall unforgivable transgression is one thing, Ashley Cole have also had their reputations attempting to assess and compensate for tarnished in 2010, with Terry losing the from grace has driven up demand for the damage to company sales or its share England captaincy and up to £5mn in niche death, disability and disgrace price is another. For instance, determining sponsorship deals, for example. But it is less cover, as Inside FAC discovers whether the $5bn-$12bn drop in the value apparent whether their extra-marital affairs of Tiger Woods endorsed stocks is a direct would prove a sufficient trigger for their Two US academics have estimated that result of his reputational damage or whether sponsors’ disgrace policies. golf star Tiger Woods’ infidelities and break other factors – such as the recession – are According to one insider, sponsors would from golf while he attended a sex addiction behind the loss, is a very grey area. only be able to claim if such behaviour clinic earlier this year has cost his sponsors Robert Barron, a member of the accident, was defined as “disgraceful” when the between $5bn and $12bn. They based the health and sports contingency team at policy was taken out. An infidelity clause calculations on an analysis of the share Lockton, is not convinced loss of income is might be appropriate for a star with an price of his top sponsors around the time an insurable risk. “Wayne Rooney was going untarnished image, whereas bad behaviour of the scandal. His top five sponsors – to be the face of a major consumer soft might be more acceptable from a more Accenture, Nike, Gillette, Electronic Arts drink brand and they pulled him on that risqué personality – and is potentially (EA) and Gatorade – lost at least 2 to 3 contract when the [infidelity] revelations even something that could be considered percent of their aggregate market value, broke. The brand’s death, disgrace and in a positive light if it boosted sales: with the key sports-related brands EA, “Ordinarily, infidelity would not be a trigger Nike and PepsiCo (Gatorade) losing over 4 for a claim, but this depends entirely on percent. “An infidelity clause might the circumstances, and on the image of When news broke that Woods had be appropriate for a star the brand and its choice of celebrity. The been prolifically cheating on his wife, reputation of a celebrity and how they are some sponsors promptly dropped him with an untarnished image, portrayed in a promotional campaign are from fronting their brands, losing him an key considerations when underwriting this estimated $20mn in endorsements. They whereas bad behaviour form of business.” included Accenture, Tag Heuer, Gillette, AT&T and Gatorade, which sacrificed multi- might be more acceptable Bad behaviour million dollar advertising campaigns along from a more risqué Nevertheless, bad behaviour is leading to the way. cancelled endorsements and claims under personality” D&D policies, with brokers noting a rise Extra demand in companies claiming under the disgrace For fac-ers, one of the more interesting disablement policy would have responded clause. To a certain extent this could be a consequences of the Woods scandal has to rebrand that particular campaign – that’s reflection of the fame-hungry world we live been a boost in demand in 2010 for death, what the cover is designed to do. It’s not in and the price of being a young sports disgrace and disablement (D&D) insurance there to pay the brand a sum of money as star. “Disgrace is one element of the cover – written as part of the contingency market. damages.” on offer as part of this product and it’s the While the cover has historically been “If the brand were damaged to the disgrace element that everyone is interested used to cover the cost of re-launching point where its share price was dropping, in at the moment,” says Barron. advertising campaigns (typically television they’ve probably got a civil action against “Footballers – certainly Premiership commercials), sponsors have been keeping the individual who caused the negative stars – are all young men that are paid a a close eye on the Tiger Woods story. They publicity, but it would be difficult to insure phenomenal amount of money and because are now increasingly asking insurers to against that,” he continues. of that, it must be quite difficult for them provide cover for lost revenue, which is a to deal with the attention fame and fortune highly subjective matter. L urid headlines brings,” he continues. With revelations of “There are companies that have aligned Woods’ affairs prompted numerous stories what some individuals have done recently, themselves with a particular individual in the mainstream media outlining the they may have been a bit naive and they and they are now looking not only to cover benefits of taking out “disgrace” insurance. need to learn that their actions can have their costs incurred as part of commercial While his story is not unique – the tabloids huge consequences for their sponsors.” productions, but also potential loss of contain stories about stars’ transgressions Despite the increased interest in D&D revenue – which is a departure from what on a daily basis – his role model status and cover, rates on line in the sector have we’re used to writing,” says Chris Rackliffe, squeaky clean image meant his fall from remained flat over the course of the year, contingency underwriter at Beazley. grace was all the more startling. Whether with ample capacity and competition “Companies that are associated with it was a significant loss for the market is exerting downward pressure. “Although this high profile celebrities recognise there another thing. “I do not know if any of the area of business is growing steadily, it’s not is a potential exposure here. But trying companies associated with Tiger Woods going up in leaps and bounds exponentially. to quantify that has been a challenge for were insured,” says Rackliffe. “Certainly we In addition, the rating for this cover has us and that’s certainly something we’re weren’t involved in it, but it did highlight remained fairly static,” says Rackliffe. “But working on.” that there is a potential exposure for there have certainly been far more people Paying for a new advertising campaign brands.” enquiring about the cover this year than in should the fronting star commit an Footballers John Terry, Peter Crouch and my memory going back 15-16 years.”

Supported by www.insidefac.com December 2010

IF December 2010.indb 13 20/12/2010 11:38 Data supplied by: 14 | iNSIde index

Heavy metals pricing sinks once more Aon Benfield Global Fac Index: Deep mining Metals, mining and smelting, plus 50% global property overview 40% Mining Mining hasn’t really been in the news 30% like this since 2008 when freak rainfall in Queensland, Australia, contributed to a series of flooding incidents that 20% damaged mines and halted production in the Bowen Basin. Back then, natural 10% resource giant BHP Billiton took the 0% heaviest hit, with significant disruption Q1 08A Q2 08A Q3 08A Q4 08A Q1 09A Q2 09A Q3 09A Q4 09A Q1 10A Q2 10A Q3 10A Q4 10A from two events – on 18-20 January and 9-15 February – in mines owned -10% in joint ventures with Japanese firms Mitsubishi and Mitsui. -20% BHP Billiton losses were compounded in February 2008 with -30% an estimated $500mn loss following the continued failure of a SAG (semi-autogenous grinder) mill at Metal slippage the Antamina copper-zinc mine in 50% the mountains of Peru, which it joint 40% owned with Xstrata, Teck Cominco and Metals Mitsubishi. Initial estimates of the total loss 30% to the company were placed as 20% high as $1.5bn, as a result of the significant business interruption 10% components of the claims linked to soaring commodity prices at the time. 0% However, mining sources have since Q1 08A Q2 08A Q3 08A Q4 08A Q1 09A Q2 09A Q3 09A Q4 09A Q1 10A Q2 10A Q3 10A Q4 10A

suggested that the figure now appears -10% to be on the high side.

More recently, of course, the Pike -20% River Coal incident has brought

mining-related (re)insurance losses to -30% the fore once again. At first, significant property-related costs were not anticipated from the disaster, which has claimed the lives of 29 miners. Waning minerals

Beazley is understood to lead the 50% property programme for Pike River Coal. Earlier this month Pike River 40% chairman John Dow said the company Minerals has $100mn of material damage and business interruption insurance cover, 30% and the firm has started to prepare a claim that will be lodged soon. Others 20% on the Pike River Coal programme are understood to include CV Starr, 10% Munich Re, Swiss Re and Zurich. Despite the understandable media 0% Q1 08A Q2 08A Q3 08A Q4 08A Q1 09A Q2 09A Q3 09A Q4 09A Q1 10A Q2 10A Q3 10A Q4 10A coverage that the Pike River incident has generated, from the market’s -10% point of view even a loss as high as $100mn is unlikely to put a halt to the -20% steady deterioration in rating that has

occurred in recent months. -30%

Inside December 2010 www.insidefac.com

IF December 2010.indb 14 20/12/2010 11:38 Data supplied by: insid de in ex | 15

Global property rates Actually, as our latest exclusive Latin leakage analysis from Aon Benfield shows, rating decreases for mining-related 130 property risks in 2010 have not actually been as severe as for other 120 Latin America facultative industrial sectors. Indeed, decreases on the rate on line actually 110 lessened during the first half of this 100 year. However, that trend came to a halt during the third quarter and 90 the expectation is that in the fourth 80 quarter of 2010 programmes coming up for renewal will secure rating 70 decreases of some 5 percent. It will 60 be interesting to see whether this prediction will be impacted to any 50 significant extent by the Pike River 2005 2006 2007 2008 2009 2010F loss. Closely connected to mining, other heavy industrial sectors are also experiencing a softening. The metals sector has witnessed consistent rate Asian falls reductions of some 5 percent during 130 the first three quarters of the year, and the expectation is that the rate 120 Asia Pacic of reduction will actually accelerate 110 during the fourth quarter and going into 2011. 100 Also closely related to mining and metals, the minerals sector had 90 actually been holding up relatively 80 well during the course of the year, with the rating relatively flat during 70 the third quarter. Yet even this sub-sector is now finally falling in 60 line with the general softening for 50 industrial risks, with the rate on line 2005 2006 2007 2008 2009 2010F also showing a 5 percent fall during Q4 2010. And there is no sign of any significant change to come as we move into 2011.

Stateside slide Property overview As we approach the beginning of a 130 new year, it’s always a good time to look back on what has gone before. 120 North America And from what our analysis reveals, 110 although the market is soft, across all regions the scale of softening has not 100 been as severe as might have been expected 12 months ago. Compared 90 to the 92.5 benchmark of 2009, by 80 the fourth quarter of the year global property fac rates had declined to 70 90.19. Of course, what this analysis fails to show is how far rates have 60 fallen off in recent years. Given that 50 the 100 benchmark dates from 2005, it 2005 2006 2007 2008 2009 2010F is clear that premiums are some way off rates of old.

Supported by www.insidefac.com December 2010

IF December 2010.indb 15 20/12/2010 11:38 CARELESS WHISPERS Inside FAC’s THE FAC DOOR sideways look at the market

Careless ARRIVALS AND DEPARTURES

It’s been a busy period in the arrivals Fairfield are former HCC Global executives whisp rs and departures hall of Facultative Airport that left the group earlier this year in International during the run-up to the expectation that Fairfield would be Clash of the Titans Christmas. Brokers have been especially joining Pat Ryan’s London start-up, which We’ve seen some classic rugby encounters busy. At Willis, Duncan Stockley will be is now centred around former Beazley over the years so it’s good to learn that joining to boost its fac team in the Asia underwriter Johnny Rowell. These Lloyd’s Rugby Club, founded in the 1920s Pacific region. He has spent over 18 include Adam Barker, former underwriting to play an international match against the years with Marsh, working in London, counsel at HCCG, who became co-lead London Stock Exchange, is now gracing Sydney and Tokyo. During that time he of Ryan Specialty’s European operations the world stage with some spectacular has been heavily involved in large retail with ex-HCCG chief underwriting officer performances. Most recently it embarked placements, wholesale and facultative Malcolm Nightingale in February. Careless reinsurance. Most recently he has been At Lloyd’s, property underwriter David on a gruelling tour of Bermuda, where the working for Bowring Marsh out of Sydney Leathem will join Tom Corfield’s Lloyd’s itinerary includes an international match but with a close link to Japan. Initially, he team next year as it launches a £75mn against the territory and ... well, that’s it, will be predominantly based out of the syndicate for Scor. Leathem was Allied actually. Still, the result was a 13-7 victory Willis office in Japan. World Europe’s international property to Lloyd’s. We hear a key whispmember of the rs Aon Benfield Fac has hired Terry Cowley, senior vice president until he resigned team who surprised everybody with not who previously had a senior role with ahead of its Syndicate 2232’s mid-year only his knowledge of the game but his GCFac in Australia. Cowley will join Aon acceptance into Lloyd’s. stunning athleticism was Andy Coleman Benfield’s London business, working with At the Corporation, Lloyd’s has appointed of Antares, the oldest squad member by Matthew Barnes on international retro David Lang, former chairman of the business. Barnes himself defected to Aon market’s Claims Service Review Board, as some length. There’s no substitute for Benfield from RK Harrison over two years the new head of claims. Lang will replace experience. ago. Cowley was previously vice president Kent Chaplin, who is moving to Singapore at GCFac Sydney with a senior producing to become the new head of Lloyd’s Asia Snouts in troughs? role. It is the latest raid by Aon Benfield Pacific operations. He joins from Ernst & We all love a chocolate or two, (or maybe on its rival this year as the battle for fac Young, where he was a director within three at this time of year) so it’s good to broking talent continues. It follows the the insurance sector. Prior to that he held learn we’re in august company. Richard September hire of Stephen Kite, the head a number of executive positions at QBE Ward, the chief executive of Lloyd’s, is, we of aviation facultative at Guy Carpenter. where he was the managing director of understand, a particular fan of a sweet Meanwhile, Cooper Gay has appointed the Lloyd’s division from 2004 to 2007 and treat to ease his intellectual labours, so professional indemnity specialist Frank the European operations director from Milton to develop business opportunities 2007 to 2008. much that he has a drawer devoted to the within the financial institutions sector. There was another recent festive move sweet known as “Percy Pig”, introduced Milton, previously a divisional director at at Torus Executive Risks (TER), the in 1995 and produced under licence in HSBC Insurance Brokers, will be based joint venture between global specialty Germany for the UK retailer Marks & in London and report to Dan Barton, insurer Torus and Nexus Underwriting Spencer. And not just the one type of managing director of Professional Risks. Management, which has appointed Percy, we hear. Aside from the traditional The appointment follows the restructure Michael Kofi-Sikah as senior financial lines raspberry flavour, he also has cola, grape of its London-based marine and energy underwriter. Kofi-Sikah joins TER from and lemon flavours, as well as the more Liberty Mutual Insurance Europe where reinsurance team following the departure exclusive “Percy Piglets” and even the now of Jim Summers, CEO of Cooper Gay’s he was most recently senior financial lines UK business, to Guy Carpenter as underwriter, writing commercial D&O and discontinued “Penny Pigs” range. global head of marine and energy. The financial institutions products. internal review sees Steven Herbert At the top, Kiln, the Lloyd’s subsidiary of made head of LMX, Phil Fox head of UK insurance giant Tokio Marine, confirmed Wishing you a & Europe and Jim Hamilton-Grant head last week that Edward Creasy is to step merry Christmas of International, within the marine and down as chairman after 11 years at the energy reinsurance team. They will report firm. Kiln Group chairman Ian Brimecome from Inside FAC to Andrew Hitchings, managing director of will replace Creasy from 1 January 2011. reinsurance. Paul Hewitt replaces Creasy as chairman Other recent moves involve Matt Fairfield of managing agent RJ Kiln and Co. Creasy – the former CEO of HCC Global Financial joined the UK outsourcing company Capita Products – who has begun to lure industry as a non-executive director in June 2009. figures as he prepares to launch a new Since he joined, Capita has achieved its global managing general agency-based ambition of becoming a live managing professional indemnity operation that agent in the Lloyd’s market. It manages News to share? will begin underwriting in 2011. Joining Allied World’s Syndicate 2232. email: [email protected]

Inside December 2010 www.insidefac.com

IF December 2010.indb 16 20/12/2010 11:38