MARKET NEWS, DATAAND INSIGHT ALL DAY,EVERYDAY WEDNESDAY20AUGUST2014 ISSUE 4,172 Marine insurers wary of Arctic shipping routes: Marsh Dmytro Pylypenko/shutterstock.com p3 QBE to HDI-Gerling opens raise $750m underwriting unit in São Paolo equity and sell off non-core assets Filipe Frazao/shutterstock.com p3 p3 Technology Focus Risk Foresight Big Interview The internet of trees is not Complications of foreign Esdaile and Aspinall on BPL’s such a ridiculous concept p4 intervention in Iraq p5 changing of the guard p6-7 2 www.insuranceday.com| Wednesday 20 August 2014 NEWS Marketnews,dataandinsightallday,everyday InsuranceDay istheworld’sonlydailynewspaperforthe internationalinsuranceandreinsuranceandriskindustries. ItsprimaryfocusisontheLondonmarketandwhataffectsit, concentratingonthekeyareasofcatastrophe,propertyand marine,aviationandtransportation.Itisavailableinprint,PDF, mobileandonlineversionsandisreadbymorethan10,000people inmorethan70countriesworldwide. Political events Firstpublishedin1995,InsuranceDay hasbecomethefavourite in Ukraine publicationfortheLondonmarket,whichreliesonitsmixof and ensuing news,analysisanddatatokeepintouchwiththisfast-moving sanctions on andvitallyimportantsector.Itsexperiencedandhighlyskilled Russia have put insurancewritersarewellknownandrespectedinthemarketand theirinsightisbothcompellingandvaluable. the political risk and trade credit InsuranceDay alsoproducesanumberofmust-attendannual insurance eventstocomplementitsdailyoutput.TheLondonandBermuda market under summitsareexclusivenetworkingconferencesforsenior enormous executives;meanwhile,theLondonMarketAwardsrecognise andcelebratetheverybestintheindustry.ThenewInsurance pressure TechnologyCongressprovidesauniquefocusonhowITishelping © 2014 Evgeniy totransformtheLondonmarket. Maloletka/AP FormoredetailonInsuranceDayandhowtosubscribeor attenditsevents,gotosubscribe.insuranceday.com Insurance Day, Christchurch Court, 10-15 Newgate Street, London EC1A 7HD Russia exposure likely to Editor: Michael Faulkner +44 (0)20 7017 7084 [email protected] lead to more diversified Editor, news services: Scott Vincent +44 (0)20 7017 4131 [email protected] political risk market Deputy editor: Sophie Roberts +44 (0)20 7551 9906 [email protected] “Of perhaps more immediate concern vate political risk and export credit mar- Global markets editor: Graham Village Rasaad Jamie is the fact many players in the market – ket(whichhasbeenprofitableforallbut +44 (0)20 7017 4020 Global markets editor both underwriters and brokers – have one of those years) has increased its [email protected] made significant amounts of income overallunderwritingcapacitybyslightly Global markets editor: Rasaad Jamie from Russia-related business over the morethan50%. +44 (0)20 7017 4103 past five years. Esdaile expects the market to double or [email protected] olitical risk underwriters and “As such, a potential combination of treble over the next few years. There are brokers, for whom Russia has clientsreducingactivitythereandunder- two reasons for this he explained: Reporter: Alexis Burris been a significant source of writers remaining cautious in taking on “Firstly, within the context of the cur- +44 (0)20 7017 4252 income over the past five new exposure would force the market to rent soft general insurance market, our [email protected] Pyears, will have to look at new territories look elsewhere to replace lost income,” class of business is growing by virtue of and sectors to replace that income, an he continued. an inflow of capital into it as a specialist Publisher: Karen Beynon +44 (0)20 8447 6953 Sales director: Mark Windsor +44 (0)20 8447 5266 industry expert has said. Although the private political risk area of the market with higher returns,” Advertising director: Andrew Stone +44 (0)20 7017 4027 While speaking to Insurance Day, market has been cautious in extending he said. Sponsorship manager: Benali Hamdache +44 (0)20 7017 7999 James Esdaile, a director at political risk cover to Russia in recent months, the “The second thing to say is that the Marketing manager: Randeep Panesar +44 (0)20 3377 3809 Subscriptionskeyaccountmanager:CarlJosey+44(0)2070177952 and specialist credit insurance broker exposure remains considerable as the range of activities and sectors currently Head of production: Liz Lewis +44 (0)20 7017 7389 BPL Global (BPL), said political events in vastbulkofthemarket’sexistingcommit- covered by our market – such as the Production editor: Toby Huntington +44 (0)20 7017 5705 Ukraine and the subsequent imposition ment to the country is through medium- banks, the capital goods exporters and Subeditor: Jessica Sewell +44 (0)20 7017 5161 Production executive: Claire Banks +44 (0)20 7017 5821 of economic sanctions on Russia have put to long-term contracts. the commodity traders – is actually a very Events manager: Natalia Kay +44 (0)20 7017 5173 the political risk and trade credit insur- However, the length of those contracts tiny proportion of overall global trade ance market under enormous pressure. – uncomfortable as they may be for the and investment activity.” Editorial fax: +44 (0)20 7017 4554 Display/classified advertising fax: +44 (0)20 7017 4554 “Of course, it is far too early to take a market at the moment – is also a sign of He continued: “As a result, there is a Subscriptions fax: +44 (0)20 7017 4097 firm view on this eventuality, but it’s its growing sense of confidence and the huge opportunity for other industrial or fair to say underwriters with existing expansion of its underwriting capacity service sectors to become comfortable All staff email: [email protected] exposure are not taking on new expo- after its highly successful negotiation of with our products.” Insurance Day is an editorially independent newspaper and sure, while new players are unlikely to the global financial crisis. opinions expressed are not necessarily those of Informa UK want to put Russia exposure on their Over the past five years, according to A changing of the guard at BPL: Ltd. Informa UK Ltd does not guarantee the accuracy of the information contained in Insurance Day, nor does it accept books at the present time,” Esdaile said. the most conservative estimates, the pri- Big Interview, p6-7 responsibility for errors or omissions or their consequences. ISSN 1461-5541. Registered as a newspaper at the Post Office. Published in London by Informa UK Ltd, Mortimer House, 37/41 Mortimer Street, London, W1T 3JH IAG reports 59% increase in net profit after tax Printed by St Clement’s Press, Unit 16, Bow Industrial Park, Carpenters Road, London E15 2DZ Insurance Australia Group (IAG) has periodinthe2012/13financialyear.IAG performance from the Equity Red Star announced a net profit after tax of said it had been boosted by an business it sold in April 2013. In the © Informa UK Ltd 2014. A$1.2bn ($1.1bn) for the financial year improved investment performance, previous financial year, this had contrib- No part of this publication may be reproduced, stored in a ended on June 30, writes Scott Vincent. which saw investment income grow uted a loss of A$287m. retrieval system, or transmitted in any form or by any means This represents a 59% year-on- 14%toA$396m. Gross written premium was up 3% to electronic,mechanical, photographic, recorded or otherwise year increase compared with a profit The Australian insurer was also A$9.8bn, while net earned premium rose without the written permission of the publisher ofInsurance Day. of $776m for the corresponding assisted by a lack of a drag on its by 3.9% to A$8.6bn. www.insuranceday.com| Wednesday 20 August 2014 3 NEWS HDI-Gerling Marine insurers opens underwriting wary of Arctic unit in São Paolo shipping routes: Talanx subsidiary HDI-Gerling has expanded its sales office in São Paolo to include an under- writing unit serving Brazil, Marsh writes Scott Vincent. HDI-Gerling Seguros Indus- triais SA has been launched as a subsidiary company to offer business lines including prop- erty, liability, marine and engi- neering in the country. Guillermo León has been appointed managing director of the unit, which will work closely with Talanx’s existing offices in Brazil: Hannover Re (reinsur- ance) and Seguros SA (retail). kldy/shutterstock.com Christian Hinsch, deputy chairman of the Talanx board of thisregion,thereport, entitledArc- could lead to unprecedented minds of marine underwriters, P&I management and chairman of Alexis Burris tic Shipping: Navigating the Risks marine losses, particularly for insurers are approaching these the board of management of Reporter and Opportunities, has found. protection and indemnity (P&I) classes with increased caution. HDI-Gerling, said: “Brazil’s “While marine insurers are insurers in terms of wreck According to Baker, insurers are economy has undergone signifi- largely supportive of the develop- removalandpollution. likely to require detailed planning cant growth over the past ment of Arctic shipping routes, The remoteness and inhospita- documentation and an extensive decade. Many up-and-coming s Arctic shipping routes they are extremely wary about ble environment presents signifi- survey of the vessel. It is also likely companiesinthiscountryhavea become more commer- incurring large, high-profile losses cant challenges for salvage, due to deductibles for ice-related damage bigrequirementforhigh-quality cially viable, marine while the market is still in its the difficulty and danger of survey- are considerably increased. industrial insurance. insurers