ldoherty

Mondini de Focatiis said the group was happy with its progress against the backdrop of a more turbulent cycle than usual and amid high levels of inflation. Admiral’s profit decrease against last year was expected, she said, and the unique conditions of the pandemic years make 2019 a stronger comparison – with profit and customer numbers increasing by 19% and 35% respectively since then.

Looking at the results on a closer level, Admiral revealed an analysis of how its profit is broken down across the group:

H1 2022 Group overview

£m	30 June 2022	30 June 2021	30 June 2019	% change vs. 2021	% change vs. 2019
Analysis of profit:
UK Insurance	321.8	543.5	255.0	-41%	+26%
International Insurance	(21.6)	(0.9)	(2.7)	nm	nm
International Insurance – European Motor	0.2	4.9	3.8	nm	nm
International Insurance – US Motor	(19.8)	(4.2)	(6.2)	nm	nm
International Insurance – Other	(2.0)	(1.6)	(0.3)	nm	nm
Admiral Money	0.2	(1.9)	(4.3)	nm	nm
Other	(49.1)	(58.5)	(37.5)	+16%	-31%
Group profit before tax	251.3	482.2	210.5	-48%	+19%

_{nm = not meaningful}

Commenting on the results, Mondini de Focatiis said the group had retained its disciplined approach to pricing, adapting its rates in response to the higher inflation environment earlier than the market and maintaining a cautious approach to reserving.

“We continue to focus on good execution through the cycle,” she said. “Our strong balance sheet and focus on profitability over growth puts us on a strong footing for when conditions improve.

“It is pleasing to see the majority of our growth coming from more and more customers across all of our products and geographies choosing to stay with us. We are committed to delivering great service and to support all of our customers, including those who are experiencing financial difficulty.”

Admiral has made good progress on its diversification strategy, she said, and over half its customer growth has come from its new products and geographies, with UK household up 18% and Admiral Money loans balances up almost 70%, while the business made its first small profit (£0.2 million). Meanwhile, Admiral now serves 1.9 million customers across its international businesses.

“I would like to thank all of my colleagues across the group who make the business such a great place to work,” she said, “and whose dedication and adaptability has enabled us to meet our nine million customers’ needs during this period.”

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Argo noted: “The net loss attributable to common shareholders in the second quarter 2022 included pre-tax net realised investment and other losses of US$40.4 million, of which US$21.3 million was attributable to a loss on the sale of the company’s Malta operations, ArgoGlobal Holdings.

“In comparison, net income attributable to common shareholders in the prior year second quarter included US$24.7 million of pre-tax net realised investment and other gains.”

According to the insurance group, the loss figure in Q2 also included non-operating expenses worth US$15.6 million. This spanned non-operating advisory fees and severance expenses.

Similarly, Argo suffered a US$22.5 million net loss attributable to common shareholders in the first six months of the year. It was a different story a year ago, when Argo posted US$94.3 million in attributable net income.

Meanwhile, other Q2 results included lower gross written premiums; US$2.5 million in total catastrophe losses, which represented a decline from 2021’s US$11.1 million; a 44.4% fall in net investment income; a 19.2% decrease in underwriting income; as well as US$31 million in operating income, which shrank from US$56.1 million previously.

In H1, Argo’s operating income stood at US$74.4 million. The sum is 3.9% higher compared to the corresponding figure in the first half of 2021.

Despite the losses, Argo executive chair and chief executive Thomas A. Bradley had this to say: “The company’s second quarter results reflect our focussed approach to profitable growth as we successfully target the most attractive business lines.

“We are pleased with the success in executing on our strategic priorities, particularly, managing expenses and reducing volatility. Ongoing cost reduction efforts significantly lowered the expense ratio from the prior year second quarter, and our commitment to reducing volatility in underwriting results has driven improvement in year-over-year catastrophe losses for five consecutive quarters.”

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Stephen Smyth, managing senior underwriter at Travelers Europe, joins Insurance Business TV to examine the state of the marine insurance market, including the impact of COVID-19, where the market goes from here and how brokers have been affected.  

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Throughout 2021, PIB completed eight acquisitions, with several others completed in early 2022. PIB said that its M&A programme focuses on businesses that operate in niche segments, are “famous for something” and demonstrate dynamic and organic growth, as well as additional product specialisms.

Aside from acquisitions, PIB was also able to grow its workforce organically, with new hires bringing its headcount to 1,826, an increase of 38% from the previous year.

PIB continued its international expansion efforts with the creation of an international division, comprising retail, wholesale, reinsurance and MGAs. It is currently present in Ireland, Germany, Denmark, Poland, the Netherlands and Spain, and with other markets to follow.

The group secured a majority investment from funds advised by Apax Partners, alongside a minority reinvestment by The Carlyle Group. With the support of several lenders, both existing and new, it refinanced its original term loan facility and raised an additional committed acquisition facility taking its total potential borrowings to over £1.103 billion.

“The increasing diversification of our business across both distribution channels and geographies, along with our entrepreneurial model, is enabling us to attract high-quality individuals, who are attracted by the opportunity to be empowered to build their careers and a business together,” said Ryan Brown (pictured above), PIB Group chief financial officer. “It is this continued ability to attract, develop and empower talent, as well as a constant focus on specialist products and capabilities, and our investment in technology and data that is the real driving force of our results, and the bedrock of our long-term organic performance demonstrated by organic growth of 12% in 2021.

“As a group, we remain laser-focused on our ambition to create one of Europe’s leading independent diversified specialist insurance intermediaries. I remain confident that the ever-increasing strength of our infrastructure and platforms, along with the exceptional expertise and commitment of our people, the strength of relationships with insurer partners and incredible support from our capital providers, will ensure that we are able to support our clients, adapt to changing market dynamics and remain capable of driving significant growth both this year and into the future.”

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Evans, whose time in the product recall space started with AIG in 1999 before it took him to Catlin and Talbot Underwriting, had just stepped down from the latter to relocate to France with his family when his former AIG colleague and CEO of NuVenture Andy Colbran reached out. Early in the discussion, Evans noted that he was quite clear he didn’t particularly want to get involved with an MGA after spending so long working with large corporate entities.

However, as the discussion wore on, he said, he quickly realised that what he wanted most of all was a role that allowed him to focus on what he’s best at – underwriting and building a book of business. Whether it’s with a small or a large team, that underwriting piece is what interests him and so the proposition of the MGA route became very attractive.

“And having been in the market for so long,” he said, “and having built [such strong market] relationships definitely helped in taking the business plan from a Word document into the reality of having carriers saying, ‘we’ll back you’, because of my reputation in the market. So, that has been really good.”

Evans soon found that building an MGA from the ground up is a very different matter to building out a product offering within a large corporation like Talbot or Catlin. With so many considerations to keep in mind, he said, he has been very grateful for the expertise of NuVenture and the support of its legal, data and actuarial teams who have made bringing BluNiche to life possible.

Read more: NuVenture launches new managing general agent

“It’s interesting because the bit that attracted me to NuVenture was the tech side of it,” he said when touching on how BluNiche will differentiate itself from other market offerings. “The brokers that bring us the submissions will see that we should be able to service risks very quickly, as the tech we have in-house will mean we have to do far less admin and we can focus far more time on underwriting.”

Product recall insurance has traditionally had a very slow quote or feedback turnaround compared with other business lines such as terrorism insurance. So, he said, having an admin system that reduces the team’s workload even on simple tasks such as removing the need to rekey core data into multiple systems, is going to make a substantial difference. And as BluNiche expands across the market, it will generate substantial, high-quality data to translate into actionable insights on what’s working and what isn’t – and will be in a position to relay this feedback to the carriers.

The product recall space has come under increasing scrutiny in recent years, led in no small part by the media attention around manufacturing errors. On the insurance side of the equation, Evans has also seen growing attention to and understanding of the market.

“I can remember the days when I first started in AIG on product recall and the brokers would want underwriters to go with them to meet clients to explain the coverage because some of the brokers didn’t really understand the detail of the policy coverage,” he said. “But skip to where we are now and brokers are far more knowledgeable than they were 20 years ago and are key to driving the business and its growth.

“We 100% rely on the brokers to bring their submissions in and many of these guys have specialist recall teams, just solely focusing on this. Aon, WTW, Marsh, Lockton, and Howden all have teams just focused solely on product recall. So, it’s a combination of those guys stepping up and really expanding their expertise, with the underwriting side developing and growing at the same time. At the time I started at Catlin, in London there were four or five markets writing product recall and you look now and there are 10 or 12 markets, so you can see how it has developed in that period.”

Read more: What are the current trends in product recall in the automotive space?

It’s a market full of both challenges and opportunities, Evans said, and one of the biggest challenges the product recall space continues to face is self-insurance. There’s a perception among some clients that product recall is covered under the casualty section of their coverage, which it isn’t. That coverage protects them from a liability standpoint but it doesn’t reimburse them for the often significant losses involved in handling the recall.

Raising awareness of what product recall insurance is and how it can protect a business is a key priority for Evans and the BluNiche team, and he highlighted that while the market is experiencing some growing pains, they are a result of the growth that’s happening. Touching on the new MGA’s key ambitions, he emphasised that BluNiche is not coming into the market to be a disruptor but rather to become a respected pillar of this established market.

“I want to be doing this in 10 years’ time,” he said. “And the only way I do that is by maintaining a profitable book and the backing of carriers. Without the carriers, I can’t do anything. For me, it’s not about changing what I’ve done over the last 20 years but focusing solely on the underwriting side rather than having to worry about corporate pressures. […] And a lot of this is going to be me relying on my reputation of being consistent and being fair to brokers and clients.”

It can be tempting to think of BluNiche’s launch as a finish-line of sorts but really it’s just the starting line, he said, and the real hard work begins now. The MGA has received Lloyd’s approval but there’s still internal work to be done. For now, BluNiche is squarely in position to start communicating its proposition to brokers, and he’s looking forward to digging into those conversations.

As for what a great first year looks like, Evans highlighted that BluNiche has certain financial targets it’s looking to hit but its real metric of success is overall profitability.

“Because without that profitability, we’re not going to have the support of carriers,” he said. “So, if we can write enough risks that we feel we’ve done well, and it’s profitable, then I’m going to be happy.”

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Insurance giant Allianz has published its latest set of earnings results – and, while some key numbers are lower compared to 2021, group boss Oliver Bäte sees the profitable second quarter as a sign of “robust” financial performance.

Here’s how the global insurer fared in the three- and six-month periods ended June 30:

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London-headquartered RSA Insurance Group, whose Middle East operation was sold in July, has published its interim management report.

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Crescens: [00:00:26] Yes. Yeah, I think compared to previous years, we are attracting more young people into the sector. But the most important question to ask is are we creating meaningful opportunities for them? If that’s the question, then I think we can do far better and more as a sector to add value to young people, nurture their personal growth, and in return, enhance our sector. So there’s more to be done on that front. So it’s twofold. I think we need to provide them a pathway not just to to a job, but to a meaningful career to be built in the financial services sector. And when you take the outlook of building a strong career, it needs a good development, pathway, training and development. So we need to create long term, strategically focused, robust development program. So you bring a college leaver, show them what they can achieve over the next three or four years if it’s a high qualifications or a degree in insurance is what we need to lay down. But what really we need to focus on, once you are on board them, you need to provide them with emotional intelligence, the coaching, to understand the work ethics. Because if you look at the insurance sector, majority of the people are over 50. And when you bring young people in, there’s bound to be that generational gap and the differences. So I think in my personal opinion, young people need to be educated more on the emotional intelligence side of things. They bring technology, they bring other commercial acumen, but they struggle when they interact with their senior colleagues on those certain ethics and core work values. And if you provide some coaching and support on that, we will bring the best out for them. 

Crescens: [00:02:35] And that narrative that insurance is not as sexy or as not as appealing. It’s something that we have actually brought out as people who work within the sector. If you look at it, it’s you know, the entire world will come to a standstill if there was no insurance, the all the aeroplanes, all the cargo ships that we see. Nothing would move. Forget about all that. You know, even the vaccine that we rolled out two years ago, that wouldn’t have happened if insurance was not there. Somebody had to take that risk at the stage of clinical trial to say, go ahead and if anything happens, we are there to back that. So that is a very critical sector, and I think we should be proud of that. And that’s the message we should take out to schools and colleges. So I think as an industry, we should come together, form some kind of a program collectively to take to schools, start creating the awareness at that level, give it a bit more of a focus at college level, and then when they leave college, have something robust and structure so they can take an alternative pathway rather than going to university and start working and earning at the same time. Then we need to really if we are really innovative and a bit more strategically focused, we can lure the high caliber college leavers who was otherwise destined to go to university. We can even attract people who went to private schools to come and start a career in the financial services sector. If you look at the graduate programs that we hear run by insurance companies, we actually only get the leftovers. The top tier graduates are taken by the big consulting firms that like the Deloittes and KPMG’s, and we just get the leftovers. So I think we should be one step ahead before they even leave college. We go and attract them into the insurance world. 

Crescens: [00:04:43] Yes. So I think we should attack this twofold. One, reach out to schools, colleges, universities, and tell them about the opportunities. But equally, we need to create more awareness amongst parents, teachers, careers, advisors at schools, because they do have a subtle influence in what the young people actually end up doing. So we need to really put a campaign focus purely for the parents or the parents or figures that will have an influence on young people. 

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“As a result of the risk of implementation of the new structure, AM Best is of the opinion that Fidelis’ business profile may be affected by the separation of key management personnel into a separate legal entity,” stated AM Best.

“As a result, the ratings of Fidelis Insurance Holdings Limited and the members of this rating unit have been placed under review with negative implications. AM Best will continue to monitor the separation, implementation, and execution of the new strategy and structure.”

Under review with negative implications include the long-term issuer credit ratings (ICR) of “bbb” of the ultimate holding company, as well as the financial strength rating of A and the long-term ICR of “a” of Fidelis Insurance Bermuda Limited, Fidelis Underwriting Limited in the UK, and Fidelis Insurance Ireland Designated Activity Company.

AM Best added: “The ‘under review’ status is expected to be resolved when the separation is fully executed, which includes appropriate regulatory approvals, and AM Best can assess, among other items, the market acceptance of the new structure, which will be apparent by analysing business volumes and quality.”

The new MGU plans to originate and underwrite more than $3 billion of gross written premium, with Blackstone leading the debt financing.     

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Tom: [00:00:26] Yeah. So our five year ambition is to be a billion sterling GWP business by 2025. How did it come about? Well, back in 2020, when I took over the role of CEO of Pen Underwriting, we’d spent five years being very inward looking, pulling together 14 different businesses from various acquisitions that our parent Gallagher had made across the UK. And at a time to come step back, look outwards, think about looking after our brokers, looking after their customers. And we said, Let’s be bold, let’s be ambitious, let’s go from a £600 million GWP to a billion GWP. And how are we going to do that? Well, number one, look after our existing customers and their brokers. Grow that business organically, do some M&A. And we’ve been very successful. We brought Manchester Underwriting into the business in October last year and also do some strategic hires. So new people, new products, new opportunities, new solutions for our brokers. How’s it going? So far, so good. We’re on track for the billion, so pleased to say so. That’s good. We’ve got a great team pulling together, making that happen, and we’re well on track for exactly where we want to be at this point in the journey. 

Tom: [00:01:44] So I think the challenge is it’s the same challenge really. It’s about looking after loss ratios and capacity. I said every day impaired underwriting, I’ll say it every day to the market. If we look after our loss ratios, we look after our capacity, then we look after our business, we look after our brokers and our cover holders and we look after their customers. It’s really simple as that. That’s what we do. That’s what our ambition is to do. Do we have some headwinds? Of course, every business is some headwinds. And the other challenge I’d say is, is the war for talent. You know, there’s a lot of great people in our in the sector. What is it in there? You know, there’s a lot of talent that’s hidden within the businesses and people are seeing that now. So as I said, our secret sauce is our people. But that secret sauce is also very tasty to a few others, and they’ll come in nipping at our heels and trying to acquire, bring in the talent that we have in the sector. So that’s what I would say is the challenges, but lots of opportunities out there. I see people, new forms of capital enter into the market, new carriers being attracted into the market. You look at the cloud and co survey from September 2021 after 18 months of pandemic lockdown, they’re saying over 66% of MGA’s is we’re expecting new carriers to enter and we’ve seen that that’s happened. And the best report, they were saying in March this year, more products being delivered. And that is so true. And that’s what we want to do. It’s about creating an environment where entrepreneurial, dynamic driven people want to work in a business that gives them something that they can work and bring solutions, not stifled. They can be. Agile, get. Do things that they normally couldn’t do in a structure that we have in Pen and lots of other engineers have as well, which is good quality governance, real strong infrastructure. So, you know, MGA’s is in vote. It’s exciting, it’s dynamic. It’s something there that can really, I think, flourish and is continuing to flourish over the past two or three years, both in the UK and globally as well. 

Tom: [00:03:58] I love that word. I love that word. Happy. That to me is I try to wake up every morning being happy and all my colleagues in Pen are happy. We have success. How do we do it? Just being by an open and inclusive and empowering people. And trusting our people to do great things. Rewarding them. Looking after them. Do we have some people who will be attracted to other people? Of course they will. That happens. But equally, we have some people who’ve come home. As we said, they’ve come home back to Pen. They’ve left. They’ve got some experience in another company and another sector indeed. And come back and added value to our business. So we love it because they see what we have and see the business that we have. Over the past 24 months, we’ve done over 10% of our people have had promotions. That’s fantastic and that’s real talent. We can’t have opportunities for everybody. Respect that. Some people want to move on. I’ve moved on in my career, so that’s fine. But we want to be a place for talent. Comes, grows, develops, grows. My job. Is to grow the future. I’m not the future man. It’s all the people in the future. 

Tom: [00:05:15] So we’re continuing focus on our strategy. Really clear 1 billion GWP by 2025. That’s really simple, really clear. All of our people understand that and they’re really behind that. Everybody’s focused on that. So that’s about acquisitions. We’ve got a healthy pipeline bringing new talent in, and that new talent is also to bring new product, whether that’s marine aviation, energy sectors that we’re not in. So we have a broader solution for our brokers and their customers. So it’s just continuing to build out, focusing on the strategy, executing it. That’s what we want to do. 

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