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.