Insurance news

Read more: “We will have work to do to prove why insurance is still relevant and important”

“Brokers now have to deal with the fact that, across most lines, even simple renewals are more challenging because capacity is being reduced and rates are hardening,” she said. “So brokers haven’t got much time for a nice chat, which we need to be sensitive to and to make sure we’re available when they are. [This means] working with them on each case, telegraphing when we’ve got issues and trying to get in contact early to give them as much information and forewarning as possible.”

Allianz’s updated broker proposition has all the traditional engagement features of its original proposition, she said, from dedicated points of contact to exceptional claims services and a strong risk management offering. However, the revamp now includes a variety of new features that are centred around having a wider impact on the market. The ‘strong partners for what’s ahead’ message is an innate part of that, Mallaby noted, as it’s about riding out any upcoming storms with the aim not just of improving the experience of brokers and customers, but also the industry as a whole and society in general.

The proposition was born on the back of conversations with brokers and through marketing research into the supports that will be most useful to them, she said. This research also highlighted a few key concerns facing brokers – they are increasingly talking to the team about environmental factors and sustainability, as well as how to heighten the resilience of their business infrastructure, particularly with regards to cyber risk.

“Another main concern that brokers, and all small businesses really, deal with is around people – talent recruitment, talent development,” she said. “From the struggle around remote working or flexible working in a small operation to HR policies and procedures, there are so many elements where insurers need to be more alive to giving consultancy and thought leadership, and providing access to experts, as and when required and requested by brokers.”

Read more: Allianz UK on how to address the mental wellbeing challenges of COVID-19

With its broker partners in mind, Allianz is launching a series of new initiatives, including a broker apprenticeship scheme to help them gain their CII qualifications, as well as on the job training. It’s early days yet, she said, but the feedback has been great so far and the team is keen to expand this going forward as the initial scheme was heavily oversubscribed. Mental health has also become a point of focus recently and so the insurer has entered into a partnership with Mind, focusing on offering mental health training.

“I actually spoke to quite a large brokerage recently, and they were saying they’ve actually been trying to do mental health training and wellbeing for years but just never found a way of doing it,” she said. “So this has been a godsend for them, and it’s such an important issue, especially with everything that’s happened over the last year.”

Another core emphasis for brokers and Allianz alike has been making sure that local communities are well-served. This is behind the insurer’s sponsorship of local sporting initiatives, and its pledge of support to previously overlooked sporting endeavours, including through its sponsorship of women’s games as well as men’s games as part of its RFU backing.

“I’m told our funding has helped put the Premier 15s, the women’s league, on the television which is massive for them and helps drive more support and engagement,” he said. “And it’s also driven their ‘Inner Warrior’ campaign which is helping them get the message out there about what a great game rugby is and how women and girls can get involved.”

Brokers are closely involved with Allianz’s sports fund, Mallaby noted, and it helps them gain reach into their local communities while driving a wider message about the role in insurance in supporting wider society and an ESG agenda. Whether it’s through the Mind partnership, or the sports fund, or any other initiatives the company supports, however, the underlying focus is always the same – supporting brokers now and into the future by growing together and working together.

“My message to our broker partners is clear,” she said. “We’re not going anywhere, we are completely committed to the broker market. You might not always like what we have to say or what we do, but we are here to support you and to make the best of whatever comes our way… We do everything we do in a considered way, and always with the best for our brokers in mind.”

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The FT has today revealed that a person familiar with the matter said the Euler Hermes policy covers Greensill Bank.

The news is the latest in an ongoing series of developments since Germany’s financial regulator, BaFin filed a criminal complaint against Greensill Bank’s management for suspected balance sheet manipulation in March. BaFin said that the bank failed “to provide evidence of the existence of receivables in its balance sheet that it had purchased from the GFG Alliance Group”, after a forensic audit by KPMG.

Bremen criminal prosecutors told the FT that five former executives of Greensill Bank are under criminal investigation and that their houses have recently been searched.

On Friday, the UK’s Serious Fraud Office started an investigation into suspected fraud at GFG, including its financing arrangements with Greensill Capital. GFG denied wrongdoing and said it would “co-operate fully” with the probe.

The claim, paid by Euler Hermes last year concerning the default of NNC, was referred to by both Greensill and the company’s adviser, former UK prime minister David Cameron, in their appearances before MPs last week, as an example of insurance working properly to protect investors from losses.

However, the FT noted that insurance experts have told the publication that the string of client defaults suffered by Greensill last year, and the loss of Euler Hermes, were key moments in the lender losing the support of the trade credit insurance market.

“In April last year, Euler had the third-largest exposure to Credit Suisse’s biggest supply chain finance fund, which packaged Greensill’s loans into investments, behind Insurance Australia and Japan’s Tokio Marine, according to a document seen by the FT,” the publication stated. “At that point, Euler underwrote 12% of the credit risk in the $5 billion fund.”

Euler Hermes is one of the “big three” credit underwriters and the FT stated that people familiar with the matter have said that the other two, Coface and Atradius, never insured Greensill.

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It added that 36 insurance and financial advice companies, including Zurich, Aston Lark, Foresight Financial Planning, Willis Owen, will provide job offers to 58 youngsters in the coming weeks.

After these initial job placements have been filled, CII said it will contact its insurance and personal finance members to see whether they can accommodate additional job placements.

The government’s Kickstart Scheme provides companies with funding to create new job placements, which must be additional roles rather than already existing vacancies. The funding covers the entirety of the National Minimum Wage (or the National Living Wage depending on the age of the participant) for 25 hours per week for a total of six months.

It also includes associated employer National Insurance contributions and employer minimum automatic enrolment pension contributions.

Employers can spread the start date of the job placements up until the end of the year.

The minimum application for the Kickstart Scheme is for 30 job placements. The CII working as a gateway organisation for the scheme allows companies that cannot meet the minimum number of 30 placements to participate.

“We want to assist those who may struggle to find work due to COVID-19 access a rewarding career in the insurance and personal finance profession where everyone can help consumers with their money matters,” said Manuel Thompson-Oloko, early careers manager at CII.

“We hope these job placements will result in throwing open the doors to long-term careers for individuals who may not have previously considered the insurance and personal finance profession. This is a profession keen to attract fresh and diverse talent.”

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It has been quite the week for insurance role models between the recognition of Alex Margolin of Sioma Insurance Consultants as BIBA’s ‘Young Broker of the Year 2021’ and the posthumous honouring of Forces Insurance’s Keith Frampton with the 2021 Francis Perkins Award.

Read more: BIBA celebrates insurance stalwart with posthumous award

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It’s now the turn of specialist legal expenses insurer DAS UK Group to share how it performed last year.

The group, which is the name behind legal expenses insurance company DAS LEI and law firm DAS Law, saw a statutory loss worth £0.6 million in the year ending December 31, 2020. Gross written premium (GWP), meanwhile, stood at £109 million.

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Neil Manser, chief strategy officer, former MD of DLG’s commercial business, NIG, and former director of investor relations, has been acting CFO since January 2021. The board has resolved to appoint him as an executive director and CFO, and as a member of the investment committee, with effect from the conclusion of the AGM today.

Withdrawal of AGM resolution

As DLG’s AGM Notice has already been issued, DLG confirms that the resolution to re-elect Tim Harris as an executive director of the Company (resolution number 6) is now withdrawn. This withdrawal does not otherwise impact the validity of the Notice of Meeting, the proxy form or any proxy votes already submitted on other proposed resolutions. The numbering of all other proposed resolutions at the AGM will remain unchanged.

Board Committee chairmanship

The following changes will also take effect from the conclusion of the AGM today.

Mark Gregory, independent non-executive director, will become chair of the board risk committee, succeeding Jane Hanson, who will be stepping down from the board, as announced on 21 December 2020. Gregory will give up his chairmanship of both the remuneration committee and the investment committee but will remain a member of both committees.

Meanwhile, Richard Ward, senior independent director, will become chair of the remuneration committee while Fiona McBain, independent non-executive director, will become chair of the investment committee.

Commenting on the changes, Danuta Gray, chair, said: “On behalf of the DLG board and all our colleagues, I would like to thank Tim Harris for the exceptional contribution he has made as CFO since 2019 and to wish him and his family the very best. The board warmly welcomes Neil Manser as our new CFO. Not only has Neil proven himself to be extremely capable while acting as CFO during Tim’s leave of absence but he has also held a number of senior roles across the business, giving him a deep understanding of capital markets, strategy and the culture of the group.”

Neil Manser, CFO-designate, noted that having held a number of leadership positions within DLG, he has seen first-hand the quality of DLG’s business model and the dedication of its talented people.

He said: “I am proud and excited to be taking over from Tim as CFO at a time when we are grasping the opportunities made possible by our significant investment in capability.”

This announcement is made in compliance with the Company’s obligations under Listing Rule 9.6.11.

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The acquired operations include certain Willis Re treaty and facultative reinsurance brokerage operations, as well as some UK specialty, European and North American brokerage operations. Combined, these operations generated US$1.3 billion of estimated pro forma revenue and US$357 million of estimated pro forma EBITDAC, in each case for the year ended December 31, 2020. 

“This acquisition will accelerate our long-term strategy by significantly expanding our global value proposition in reinsurance, broadening our retail brokerage footprint and strengthening key niches and specialty brokerage offerings,” said J. Patrick Gallagher, Jr., Chairman, President and CEO.

“The powerful combination of expertise, geographic reach and scale that this acquisition presents will greatly enhance our offerings to clients and prospects, while also providing significant value for our colleagues, carrier partners and shareholders.  Most importantly, I look forward to welcoming more than 6,000 new colleagues to our growing Gallagher family of professionals.”

Gallagher has listed several expected benefits of the acquisition, including:

• Expanded global value proposition within reinsurance brokerage
• Broadened global footprint in retail property, casualty and health & benefits brokerage
• Increased depth in key niches and specialty operations such as energy, construction, cyber, space, and aerospace products
• A comprehensive suite of analytics capabilities including catastrophe modelling, dynamic financial analysis, rating agency analysis and capital modelling
• Stronger relationships with major insurance carriers and new relationships with middle market and large account retail clients
• Added platforms for future tuck-in acquisitions

The brokerage giant said it expects to finance the US$3.57 billion transaction using a combination of long-term debt, short-term borrowings, free cash and common equity. Integration of the new operations is expected to take around three years with total non-recurring integration costs estimated to be approximately US$350 million. 

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Fortunately for the MD of Burns & Wilcox UK, Stuart Kilpatrick (pictured), navigating new opportunities during a time of crisis is nothing new. He highlighted how his first foray into insurance broking after years in underwriting occurred just after 9/11, an experience that offered significant insight into how to deal with uncertainty. This has proven to be worth its weight in gold as the ink was barely dry on the deal to join the Kaufman group when remote working came into play.

Now over a year later, the MGA is ramping up its ambitions, with Kilpatrick driving a strategic growth plan that will oversee Burns & Wilcox UK building significant scale. There is no fixation on exactly what that growth has to look like, he said, but the aim is to grow the business four or five times, over the next three to five years.

“That’s going to be done in a few different ways,” he said. “We’re looking to attract new talent to come into the business, we’re potentially looking at new classes of business, and at teams and subsets of what we’ve got. And then potentially, also mergers and acquisitions. These will be dependent upon the type of opportunity that arises, but [Kaufman Group] has got lofty ambitions for us and is absolutely willing and able to invest in what we’re trying to do here in the UK.”

With the first virtual BIBA conference literally just around the corner, Kilpatrick and his team are looking forward to the opportunity to catch up with friends and peers, both old and new. Broker partnerships are at the very heart of the Burns & Wilcox proposition, he said, and working with brokers through the COVID-19 crisis has given him a keen insight into the key ways that COVID is impacting the insurance profession.

Read more: How will 2021 change the insurance industry?

While its impact on claims goes without saying, he said, other aspects such as how significantly the pandemic has compounded the hardening of the market remain to be seen. The market was already getting tougher but now the question is whether that hardening will last longer due to the impact of COVID. It’s a factor that is being widely debated at the moment because the overall impact on reinsurance has not yet become clear.

“Also, our industry was under the spotlight for quite a lot of last year, and quite a lot of that was in a negative way,” he said. “So, I think we’ve got to learn some of the lessons from that. That’s not to say that cover is [automatically] there and that insurance is a blank cheque to be written on but rather it’s about making sure that clients understand what they’re buying and that we understand what we’re selling. In the event that something like this happens again… we’ve all got to be in a better position.”

COVID-19 created an opportunity for the insurance profession to rethink how it does things, Kilpatrick said, and the Burns & Wilcox team are seizing that opportunity. When the pandemic struck and businesses closed down, the value of being able to offer cover on a monthly or quarterly basis, or to strip cover back to the bare necessities became clear. Showcasing that adaptability got him reconsidering whether certain elements of the insurance proposition are only done the way they are because they’ve always been done that way.

“I think we need to adapt,” he said, “and hopefully, one of the legacies of the COVID issue is going to be that we are prepared to do that and don’t just go back to doing what we’ve done.”

Read more: Burns & Wilcox UK names underwriting director

Certainly, Kilpatrick has no intention of wasting the lessons of the COVID experience and, looking to the future, he is preparing the business to enter its next phase of growth, and inviting brokers along for the ride. For instance, Burns & Wilcox UK will be looking into areas such as real estate that it didn’t traditionally operate in, he said, as well as building on its already significant penetration into the hospitality and leisure markets.

“My message to brokers is that we’re really keen to grow and to look at new opportunities. Just because you’ve never thought of us in that way before doesn’t mean you shouldn’t think of us in that way now,” he said. “Our [growth trajectory] is different to when we were at Barbican Protect, where we were more focused just on organic growth, now as Burns & Wilcox, we want to scale the business. And that doesn’t mean that we’ll do everything, but we’re happy to sit and have a conversation about opportunities, wherever or whatever they may be.”

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Talanx Group, the parent company of insurance brands HDI and Hannover Re, is “off to a good start” in 2021.

That was how the German business described its performance when Talanx released the group’s financial results for the first quarter of the year. Here’s how Talanx fared in the period:

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The test is not a pass/fail exercise but has a mainly microprudential approach, allowing EIOPA to make recommendations to the industry and enables supervisors to ask insurance undertakings to take remedial actions, where required, to improve their resilience. Participants are requested to estimate their position under two assumptions:

1. Fixed balance sheet;
2. Constrained balance sheet.

The 2021 exercise targets European (re)insurance groups and its selection process is mainly based on size, EU wide market coverage, business lines conducted (life and non-life business) and the number of represented jurisdictions.

EIOPA has consulted relevant stakeholders and participants during the preparation stage of the stress test package. Technical discussions with stakeholders occurred between mid-January to end-March. From mid-April to mid-May EIOPA carried out consultations with participants in the form of Q&As to provide clarifications and improve the stress test package. 

Participants can submit requests for clarification on the Stress Test exercise to their National Supervisors by May 10, 2021.

The test is now, from the launch of the exercise today to the deadline for results submission (August 10, 2021) in the calculation phase, where participants are requested to calculate the results and indicators according to the prescribed scenarios.

The next phase is the validation phase from mid-August to end-October where quality assurance of the results is split into local quality assurance and central quality assurance. During the validation period, participants might be requested to provide clarifications or resubmit part of the results.

The final stage is results analysis and the drafting of the report which will occur in November and December.

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