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Not content with the Herculean task that was building out a pure-play reinsurer in the thick of the COVID-19 crisis, the leadership team at Conduit Re founded the Conduit Foundation to run alongside the business as a privately funded Bermuda charity.

Among its London-listed peers, Conduit Re is unusual in that all its business operations are based in Bermuda, noted Stuart Quinlan (pictured) COO and deputy CEO of Conduit Re, and the leadership team have been very focused on the importance of establishing itself in the local Bermuda community, both within the industry and more widely.

How the Conduit Re Foundation came to life

The Conduit Foundation is part of that story, he said, and looking back on how the foundation came to life, he emphasised its mission statement – to support the Bermuda community through engagement in projects focused on the environment, diversity & inclusion initiatives, education and support for the vulnerable. Now three years into his Conduit Re journey and three years into enjoying a new pace of life in Bermuda after decades serving the London insurance market, Quinlan has first-hand experience of what it means to really get involved with the Bermuda community.

“There are only around 60,000 people across the 24-mile-long island of Bermuda, and you’re never more than a mile from seeing the sea,” he said. “You’re really never more than five minutes from seeing someone that you know, particularly as you get more established and it’s a phenomenally friendly place… And I see Bermuda as an almost microcosm of almost anywhere else in the world, but with everything closer together and a small population meaning fewer degrees of separation than elsewhere.

Assessing the wealth divide in Bermuda

In Bermuda, you’ve got examples of tremendous wealth, he said, with a sizable affluent segment of local society engaged in local and international business, while others live in real poverty, exacerbated by high housing costs and the implications of a high dependence on imports.

“For Trevor [Carvey, CEO] and for Neil [Eckert, executive chairman], they were driven about setting up a foundation if we were creating a business here,” he said. “We raised a significant amount of funds to create the organisation, and a significant portion of the initial seed fund of the foundation was donated by the banks who helped us create Conduit. So, the first year was really about establishing the protector committee and setting up all the necessary legal structures for the foundation.

“It was into 2022 that we got more active, but we determined very early on that we wanted our focus to be on Bermuda. And we have some simple goals – supporting the vulnerable, the advancement of education and supporting the health of the Bermuda community.”

In 2022, the inaugural year of donations, the Conduit Foundation donated to 14 local charities – among them the cancer care charity P.A.L.S, Meals on Wheels Bermuda, the Friends of Christchurch and the Bermuda Red Cross. These charities shared in donations of $280,000 but Quinlan noted that the support offered by the Conduit Re team goes far beyond financial considerations.

Supporting communities – why it’s about more than just money

“In some ways, it’s easy to just give out cheques to charities, but for us, it’s about the doing as well,” he said. “We’re looking to foster long-term partnerships with our chosen causes, which includes volunteering from our staff, as well as knowledge and skills sharing. Looking at Meals on Wheels, for example, we’ve taken ownership of delivery route 16 on a Friday and on our intranet, we have a relay system of volunteers who go out to learn and teach the route allowing more and more of our people to get involved.

“The impact of the financial contributions from the foundation is amplified by our staff directly engaging in volunteering with the charities. In 2022 alone, over 2,000 volunteer hours were tracked by Conduit staff. And over 70% of our employees have local roots and are embedded in various community initiatives and activities. Additionally, financial support was given to a number of other local charity groups through specific fundraising event sponsorship and through donations under the staff donation matching program.”

Quinlan highlighted that the foundation seeks to align its contributions both to its objectives and the UN Sustainable Development Goals. During 2022, he said, the organisation supported 15 of the 17 UN categories through the support given to Bermuda charities during the funding review and approval process.

Conduit Re’s ‘Gala of Giving’

While Conduit Re is not unique in supporting local causes, Quinlan noted that he was keen to cast the net more widely and had the idea of a community ‘Gala of Giving’, drawing on his experience of organising similar events in the UK.

The leadership team at Conduit Re endorsed Quinlan’s ambition and the full force of the Foundation’s power was applied raising additional funds for the 14 local Bermuda charities chosen by the Foundation in 2022 to support. Looking back on the event, which was a mammoth undertaking, bringing together people from all over the island and beyond – and linking them up with representatives from the charities being supported, he emphasised the impact having that personal example of where this funding goes made on everybody present.

“It was a great experience to coordinate the organisation of the event, with the active participation of the Bermuda business community” he said, which, thanks to ticket sales and donated auction items, raised in excess of $310,000 which will be split equally to the beneficiary charities of the 2023 event. More than 30 Bermuda businesses contributed to the auction and 340 guests were welcomed on the evening which shows the integral link between business and community – which is so celebrated by Conduit Re. 

Understanding the link between insurance and the communities it serves

“I 100% believe it’s important to support the community you serve and the community you live in,” he said. “I feel very privileged to be living here now. Especially having had 30 years of commuting on trains and tubes! To come in and help build and create a business from scratch, to get involved in the community and have the chance to really impact it, and make a difference, it’s such a special experience.

“I also believe that being able to talk about the Conduit Foundation’s impact on the community, perhaps also encourages people to think about our industry as being a good industry to come into. One amazing thing about Bermuda for me, is that nowhere else in the world do you really have children growing up thinking they want to join the insurance and reinsurance industry. We’re so relevant as an industry here, and where we can give back some of our time and money, then we should do that with open arms.”

Utah-based SILAC Insurance Company (SILAC) has had its outlook adjusted from stable to negative by AM Best.

The shift to a negative outlook is primarily due to a decline in the quality of SILAC’s reinsurance counterparties and a decrease in risk-adjusted capital, as measured by Best’s Capital Adequacy Ratio (BCAR). This is attributed to increased reinsurance leverage following several agreements with unrated reinsurers and a strategy of maintaining high reinsurance leverage to manage capital strain.

Despite this change, AM Best has affirmed SILAC’s Financial Strength Rating at B+ (Good) and its Long-Term Issuer Credit Rating at “bbb-” (Good). The ratings reflect SILAC’s adequate balance sheet strength and operating performance, along with its neutral business profile and marginal enterprise risk management (ERM).

Although SILAC’s capital and surplus have grown over the past year, bolstered by retained earnings and investor capital contributions, its risk-adjusted capitalization remains weak. AM Best has also expressed concerns regarding SILAC’s limited financial flexibility for potential capital requirements to support new growth or offset investment impairments or recapture of ceded business.

SILAC has maintained a favorable operating performance, reporting net income of $41 million as of the third quarter of 2023. The company’s earnings are largely derived from investment spreads on its fixed-indexed annuity (FIA) products.

SILAC’s strategy of reducing sales to manage capital levels has also not significantly impacted its strong earnings. The company’s business profile is supported by its position in annuity sales and geographic diversification, offering a range of FIA and multiyear guaranteed annuity products.

The assessment of SILAC’s ERM is influenced by the deteriorating quality of its reinsurance relationships and a heavy dependence on reinsurance to manage capital strain. While SILAC has identified key risk categories and established risk appetite and tolerance levels for each, its reliance on reinsurance remains a concern. AM Best will continue to monitor SILAC’s efforts to develop and enhance its ERM program.

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White Mountains subsidiary Ark Insurance Holdings Limited, specializing in property and casualty reinsurance and insurance, has renewed its agreement with reinsurance sidecar Outrigger Re for the 2024 calendar year. The terms of the renewal are reportedly similar to those of the previous year.

Outrigger will continue its partnership with Ark through a quota share arrangement. This agreement is set to provide collateralized reinsurance protection for a segment of Ark Bermuda’s global property catastrophe portfolio, starting January 1, 2024.

For the renewal, Outrigger secured $250 million in total investor capital as of January 1, including a $130 million contribution from White Mountains. The remaining funding was sourced from both new and existing third-party investors.

“We are pleased to continue supporting Outrigger Re and the underwriting team at Ark. We view new investor interest as recognition of Ark’s strong execution in the on-going hard market,” White Mountains CEO Manning Rountree said.

“Outrigger remains an important strategic capability for Ark in the current market. We are pleased to see expanded investor interest in supporting Outrigger including White Mountains’s ongoing lead commitment,” Ark CEO Ian Beaton said.

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AM Best has reaffirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating (Long-Term ICR) of “a-” (Excellent) for Harrington Re Ltd. (Harrington). In addition, the long-term ICR of “bbb-” (Good) for Harrington Reinsurance Holdings Limited was also affirmed.

Both companies, headquartered in Bermuda, have been given a stable outlook for these ratings.

The ratings are based on Harrington’s robust balance sheet strength, which AM Best categorizes as very strong. Other factors contributing to the ratings include Harrington’s adequate operating performance, its neutral business profile, and effective enterprise risk management strategies.

Potential factors for a negative rating action include significant adverse reserve development affecting Harrington’s capitalization, substantial negative fluctuations in investment performance, or a material decline in its risk-adjusted capitalization. While not anticipated in the near future, positive rating action could result from a consistent trend of favorable reserve development.

Founded in 2016, Harrington is backed by AXIS Capital Holdings Limited (AXIS) and The Blackstone Group Inc. The company’s risk-adjusted capitalization, evaluated using Best’s Capital Adequacy Ratio (BCAR), aligns with the highest level of assessment. AM Best anticipates that Harrington’s BCAR scores will continue to support a very strong assessment of its overall balance sheet strength in the future.

Harrington employs an alternative asset strategy that has positively impacted its net income historically. The company is also developing a diversified, multiline reinsurance portfolio, with a focus on medium to longer-tailed casualty lines.

Business for Harrington is primarily sourced through cessions from AXIS, as it does not directly engage the market. The company benefits from a well-established risk management function and draws on the expertise and systems of its sponsors.

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Philippine Rating Services Corporation (PhilRatings) has assigned the National Reinsurance Corporation of the Philippines (Nat Re), the nation’s sole professional reinsurer, a financial strength rating of PRS A with a stable outlook, signifying that Nat Re possesses strong financial security characteristics, though it may be more susceptible to adverse business conditions than insurers with higher ratings.

Nat Re’s stable outlook indicates the likelihood of this rating remaining consistent over the next 12 months. This rating and outlook reflect several factors, including Nat Re’s established market presence, reputable shareholders, experienced management team, sound investment portfolio, and robust capitalization.

As of the end of 2022, Nat Re’s total investment assets were valued at PHP9.2 billion, increasing to PHP9.7 billion by the end of June 2023. The company’s investment portfolio is predominantly low-risk, with 92.4% allocated to fixed income investments and 7.6% to equities as of end-June 2023. Government securities form most of the fixed income portfolio, followed by corporate bonds. For equity investments, companies listed on the Philippine Stock Exchange (PSE) comprise 94%.

With an equity of PHP5.8 billion as of end-September 2023, Nat Re comfortably exceeds the minimum net worth requirement of P3.0 billion set by the Insurance Commission (IC). The company’s risk-based capital (RBC) ratio also significantly surpasses the IC’s minimum requirement of 100%. Nat Re anticipates maintaining compliance with regulatory capitalization standards in the future.

Nat Re is unique in the Philippine insurance market as it is the only domestic professional reinsurance firm. Legislatively, it has the advantage of being entitled to a minimum of 10% of all outward reinsurance business from domestic insurance companies.

This privilege also provides Nat Re with significant access to local reinsurance business and insight into the reinsurance needs of domestic insurers.

The state-owned Government Service Insurance System (GSIS) is the largest shareholder in Nat Re, holding a 25.8% stake. The Yuchengco Group’s Mico Equities, Inc. (MEI) and the Bank of the Philippine Islands (BPI) are other major shareholders, with ownership interests of 12.9% and 13.7%, respectively.

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Chicago-based insurance company Ryan Specialty is acquiring London-headquartered managing general underwriter platform Castel Underwriting Agencies for an undisclosed sum. A definitive agreement has been signed to snap up Castel from Arch Financial Holdings (UK) Limited and minority shareholders, according to an emailed release.

Set up in 2014, Castel consists of 13 niche MGUs that specialise in areas like marine and construction. Outside the UK, it has offices in Belgium and the Netherlands. For the 12 months ended November 30, Castel generated approximately £35 million of operating revenue. 

“Castel is a first-class organisation with a history of exceptional performance on all metrics, including underwriting profit and growth,” Ryan Specialty founder, chair, and chief executive Patrick G. Ryan said.

“Bringing Castel into Ryan Specialty expands our UK and European footprint in delegated authority, and the lines of business underwritten by these MGUs are both complementary and accretive to our firm. We are very much looking forward to further expanding with this very talented team.”

Meanwhile Castel CEO Mark Birrell had this to say: “We have built Castel around attracting and retaining the industry’s best underwriters, and providing those underwriters with tools and resources to reach extraordinary levels of performance.

“Ryan Specialty shares the same philosophy, and we could not be more excited to be joining forces with this great firm. I am confident that as part of Ryan Specialty we are positioning our MGUs for continued success and our underwriters to further accelerate their careers.” 

The transaction is expected to be completed in the first half of next year.

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“2023/24 appears set to be another record tax-take for Insurance Premium Tax with receipts 11% up on the same point last year.”

Those were the words of OAC insurance consulting head Cara Spinks when the actuarial consultancy revealed that, based on HM Revenue & Customs receipts, the Treasury has collected £6.03 billion in IPT for the first eight months of the 2023-24 financial year that started on April 6.

In a statement sent to Insurance Business, Spinks said: “Rising insurance cost across most sectors have driven increased premiums which have hit households, adding to budget concerns amid the cost-of-living squeeze.

“We have also seen other drivers emerge such as growing demand for private health insurance as employers and individuals look for alternatives to the overburdened public health service.

“With the Treasury eyeing up tax cuts ahead of General Election in 2024, minimising IPT increases could create a two-pronged economic boost in both easing the pressure on household finances and reducing economic inactivity.”   

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The Chartered Insurance Institute (CII) Group’s charity, the Education and Training Trust, is set to transfer its assets of around £2 million to The Worshipful Company of Insurers (WCI) Charitable Trust.

This move aims to bolster resources available to the WCI, supporting various initiatives within the insurance sector and beyond.

For the past five decades, the CII’s Education and Training Trust has played a crucial role in supporting the educational and training endeavours of insurance and allied professionals, often working collaboratively with the WCI.

The assets transfer, which will create a combined asset pool estimated at £4.4 million, was proposed by the Education and Training Trust’s board of trustees and endorsed by the CII Group.

According to an emailed news release, two trustees from the Education and Training Trust will join the board of the WCI Charitable Trust for continuity purposes.

The completion of the fund transfer is anticipated in the first quarter of 2024, after which the CII Group will systematically wind-up the Education and Training Trust.

“Benefiting even more people in the insurance profession”

Simon White, chair of the trustees of the Education and Training Trust, highlighted the collective potential of the transfer.

“Combining our undertakings with the Worshipful Company of Insurers Charitable Trust will enable us to continue collectively to greatest effect, benefiting even more people in the insurance profession for many years to come,” he said.

Dr Helen Phillips, CII Group chair, expressed gratitude and assurance regarding the move.

“The legacy and objectives of the CII’s charitable aims will be preserved through this move, ensuring that those in need will continue to have an opportunity to find the support that will enable them to pursue their career in the insurance profession,” she said.

Meanwhile WCI Charitable Trust chair Katie Wade welcomed the transfer.

“We are delighted to accept the transfer of funds from the CII’s Education and Training Trust and the responsibility to provide for future generations of insurance professionals,” Wade said.

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2023 – it has been a year in which geopolitical turbulence and economic disruption have dominated headlines, and granted the insurance market multiple opportunities to display its inherent resilience. Now, with 2024 looming on the horizon, what better time could there be to take stock of all that 2023 brought to and for the insurance industry?

Touching on some of the economic considerations at play Stephen Bramall, credit director for Allianz Trade UK & Ireland, highlighted that 2023 was a year that saw credit risk return to our markets. The government support measures that were in place through the COVID period are running off, he said, inflation has been high and the effects of the raising of interest rates have started to affect demand.

This has resulted in a sharp rise in business insolvencies, Bramall said. From Allianz Trade’s internal data, it is seeing higher levels of payment issues and disputes and he expects to see this continue into 2024. Meanwhile, on the supply chain side, the market has seen significant disruption as a result of several conflicts between key countries.

“With higher insolvencies and tighter financial conditions we have seen supply chains come under pressure,” he added. “When we speak to businesses, disruptions in the supply chain remain one of the key risks faced. We expect these issues to continue moving into 2024.”

What 2023 brought for the insurance market

Offering his insights into what he has seen dictate discussions this year, Jon Walker, commercial CEO at AXA UK, noted that 2023 was a challenging year for the insurance sector with claims inflation and supply chain issues dominating.

“However, it also provided opportunities such as the introduction of Consumer Duty that reinforced our commitment to deliver exceptional service to our customers,” he said. “We ensured and will continue to ensure our teams were and are equipped to meet or exceed the standards it sets, many of which were already in place.”   

Walker added that claims inflation impacted both motor and property insurance throughout 2023. Across the industry, he said, supply chain challenges caused issues with motor claims and increases in the cost of building materials and labour contributing to property claims costs rising.

Underinsurance remains a challenge that the insurance industry must face, he said, to ensure that customers are well informed and experience no unexpected issues should claims arise. Proactive communication has been and will continue to be crucial to keep customers informed and help them understand the macroeconomic issues impacting some services. 

“Our ambitious programme of business transformation continued at pace throughout 2023 and was central to all our discussions,” he said. “By continuing to introduce automation and enriching our data, as well as losing unnecessary admin and simplifying complex processes, we aim to deliver our ambition of giving businesses the confidence to thrive, today and tomorrow.” 

For Rich Tomlinson, MD of Percayso Inform, real time data and the ability to predict customer behaviour were two critical areas this year. Since the firm acquired Cazana at the beginning of the year and created Percayso Vehicle Intelligence, he said, it has experienced significant engagement not just from existing customers but new brokers and insurance providers.

“The partnership we formed with Close Brothers has led to a lot of conversations about how brokers can benefit from a cancellation model that predicts those consumers who are likely to cancel their insurance early or mid-term,” he said. “Brokers want to understand what makes their customers tick and being able to pin down their likelihood to buy, cancel, in essence, their lifetime value is vital to maintaining profit margins, reducing fraud and pivoting business models as the economic environment changes.”

What did the industry do well in 2023?

Despite the challenging external environment, good news was in no short supply during 2023 and Walker spotlighted the further improvement seen across all AXA Commercial’s business performance metrics in 2023, and the step change in its market visibility between appearances at BIBA, the MGAA Conference, and brand, broker and partner events.

“Our people are keen to get out in the marketplace and promote our products and services,” he said. “We’re also incredibly proud to have received the Investor in Customers gold award this year, the highest standard awarded by ICC to businesses, demonstrating that our commitment to service is being recognised and appreciated.

“But it’s not only customers who have voiced their approval. AXA’s eNPS score has seen a significant improvement, highlighting our employees’ increased job satisfaction and likelihood to recommend us to others as an employer.” 

Across the sector, he said, business optimism is slowly returning despite the ongoing challenges presented by COVID-19, the cost-of-living crisis, adverse weather and geopolitical events, and his team are starting to see more customers expanding their operations. This is especially positive considering that fundamental economic stability and business optimism are the lifeblood of the UK insurance sector.                

Looking to some of the key successes enjoyed by Percayso this year, Tomlinson paid credit to the whole team who have worked so hard to help the business achieve its aim for 2023, but said two achievements stand out most for him. The first is Percayso’s second successful investment round led by the former chairman of Hastings, Neil Utley, and its existing VC, Praetura, as well as other industry heavyweights such as Andy Homer and David Rasche.

In what is a challenging environment for many when it comes to raising funds, he said, the fact that Percayso was able to secure their interest is a huge testament not only to the value that the business is delivering to insurance providers but also its commitment to generating positive outcomes for clients.

“Secondly, we recently achieved ISO 27001 certification,” he said. “I appreciate this may not sound that exciting but as a business that manages literally millions of different bits of data every day, achieving this global standard for effective information management demonstrates to our customers, partners and investors that we are doing all we can to protect the data we hold and manage.

“Both of these achievements involved massive team efforts and both are hugely important to the future direction of our business. I couldn’t be prouder of everyone involved.”

After six years of incredible growth, I am still amazed by how iCAN continues to flourish, disrupt and challenge today’s market.  I want to use my last column of 2023 to review the progress iCAN has made and to hopefully entice more of my colleagues in the market to join iCAN’s ever-expanding network.

Sponsor and Partner organisations

iCAN’s growth in 2023 was underscored by the significant expansion in sponsorships, with over 30+ organisations (both brokers and carriers) across the UK market committing to iCAN’s mission of helping those from multicultural and international backgrounds to advance their careers in the market.

I believe together we can make a real change at all career levels by creating a more diverse insurance market which is reflective of today’s society and prevailing attitudes.  Through establishing a robust network of sponsors and supporters representing the entire spectrum of the insurance industry, iCAN’s primary objective is to promote a culture of inclusivity for all of those working in today’s market.

Our sponsors and partners are not just passive donors, they genuinely push us to deliver bigger and better results and, in return, we help them shape their corporate diversity strategies to attract and retain the best talent in today’s insurance market.

The launch of iCAN’s Birmingham and Manchester Regional iCAN Hubs

The Spring of 2023 saw iCAN take a significant step in membership growth from 3,500 to 7,000 members across the market, as well as furthering our strategy to increase our visibility on a national level by launching Regional Hubs in both Birmingham and Manchester. 

The iCAN team successfully ran four amazing events in Birmingham, ranging from panel discussions and workshops to speed networking events, catered exclusively for our members in the Midlands.  These events not only provided valuable insights and networking opportunities but also showcased iCAN’s ability to expand regionally. 

In December, we successfully launched iCAN’s Manchester hub encouraging colleagues from the north of the country to connect. The expansion into new regions signifies iCAN’s commitment to reaching and positively impacting diverse communities throughout the UK,  thereby fostering a culture of inclusion which is no longer just London-centric.

iCAN’s Elevate Gen Z Career Conference

Friday 8 September 2023 was a pinnacle moment for iCAN as we held our first-ever careers conference tailored specifically for those in the early stages of their careers in insurance. 

The iCAN Elevate Career Conference saw over 300 insurance colleagues from the ages of 18 – 25 attend an all-day career conference where 12 keynote speakers discussed a range of topics such as how to use your inner creativity to boost your personal and professional life, key skills for successful networking and how to confidently ask for a pay rise. 

The feedback from attendees was overwhelmingly positive as many of our ‘Gen Z’ members were grateful for the spotlight to be placed firmly on them and signified iCAN’s commitment to supporting a demographic of people who felt they were being overlooked by today’s market. 

This milestone publication, launched in celebration of our 6th anniversary, featured inspiring stories of 60 transformative figures shaping the insurance industry today.

“60 Role Models for 6 Years” is part of iCAN’s ongoing commitment to inspiring the younger generation by showcasing the wealth of talent and opportunities that abound in the insurance sector.

By sharing these unique stories, we hope to energise emerging industry professionals and encourage them to envision and realise their potential in this exciting field. And we got to celebrate some very special individuals in doing so.

iCAN’s ESEA Community (iCAN’s East Asian and South East Asian community group)

The start of 2023 heralded a ground-breaking moment for the UK insurance industry as iCAN hosted its first traditional Lion Dance, welcoming the Year of the Rabbit in grand style.

This event not only marked a cultural milestone but also inspired the launch of iCAN’s first dedicated community for people of East and Southeast Asian heritage.  We did not stop there either, in September the Mid-Autumn Festival (celebrated in many parts of East Asia) organised by iCAN was a major highlight, featuring stand-up comedy, networking opportunities and chef-made mooncakes!

This event became the talk of the town, emphasising iCAN’s commitment to championing and celebrating diverse cultural traditions.

iCAN’s expansion across the UK, its commitment to several diverse events (55 in 2023) and increased support from sponsors and members demonstrate its growing influence and effectiveness in promoting diversity, equity and inclusion in the insurance industry.

2024 will see iCAN continuing to focus on its three core programmes: INspire – our initiatives all about mentoring and training, iCAN Apply – our recruitment initiative and jobs board and iCAN Connect – our work with corporate firms, including our network of Employee Resource Groups (ERGs). These are all programmes that I would encourage you and your other colleagues to get involved in!