Insurance news

Intact Financial Corp. and its Danish insurer partner Tryg A/S have sealed a deal to sell Codan Forsikring A/S’s Danish business (Codan Denmark) to Alm. Brand A/S Group for around $2.52 billion (approx. £1.79 billion), according to the Canadian Press.

Codan Denmark was acquired by Intact and Tryg A/S through their £7.2 billion takeover of RSA Insurance Group, which was finalised last week.

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Caerphilly-headquartered brokerage Thomas Carroll Group has a new home in London.

“We have moved from our office in Tower Hill to Berkeley Square,” announced the group, which also has premises in Swansea, Pembrokeshire, Newport, and Hereford. Its new London site is on the fourth floor at 49 Berkeley Square.

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Marsh Networks joins the ranks of other networks that are now owned by consolidators, including Cobra Network (PIB), Bravo (Ardonagh) and Brokerbility (Clear Group).

The latest deal caps a recent re-alignment of the whole network model, which has led some commentators to question the long-term future for this key part of the UK’s broking landscape.

As the first finance provider to focus specifically on networks, Close Brothers Premium Finance (CBPF) is more than an interested observer in how networks will fare in the 2020s, and, despite all the changes, I believe there are good reasons to be optimistic.

It is no secret that consolidators see networks as a source of acquisitions. Consolidators have made clear their intentions to carve out better deals with insurers and bring new panel members on board as well as growing its membership base. For example, Cobra has recently hired networks veteran Les Brewin, with a brief to bring new members to the network.

For start-ups and independents in particular, networks are great at providing access to the market, giving them competitive rates, assistance with marketing training, financing for acquisitions and help with compliance.  

Networks also enable their members to access service suppliers, including software houses, giving brokers the ability to plug into the latest technology, and finance providers, such as CBPF.

The access is important, because finance is a critical element of a broker’s profitability, and as part of our ongoing relationship with network members we not only provide access to finance, but we also work closely with them to make sure they introduce finance to customers in a compliant manner.

CBPF helps enhance the network’s profitability, arranges financing deals for new members, helps set up agencies, and liaises with and troubleshoots for the members through our dedicated networks manager. In fact, premium finance forms a big part of the overall network proposition.

The wave of acquisitions in networks mirrors M&A in broking more widely, and, in truth, the networks’ acquirers are injecting fresh life into the model. Network performance has been steady if unspectacular for a number of years, but now, with new aggressive owners looking to expand, it will be interesting to see what they offer.

For brokers looking to sell their businesses, vendors have never had it so good. Networks have sharpened up their sales propositions accordingly, but the other side of the coin is that it can give those who are not interested in selling the best platform to develop their business, especially start-ups and smaller independents who might otherwise struggle to attract the attention of insurers.

Coming off the back of a sale, account executives and managers wanting to start again can also join a network, become an Appointed Representative (AR), or become part of a franchise.

These models are emerging because competition is intense, and with competition comes new ways of doing business. As consolidation shrinks the overall number of brokerages, the only way to grow is to take share from a competitor.  That drives innovation, including new propositions from Hedron, Cobra and Coversure. Software houses and finance providers play a key role in the development of these new propositions.

It is good to see the sector re-energising itself, and, of course, that eventually feeds through to customers in the form of better deals.

As the economy continues to emerge from the pandemic, we look forward to partnering with the network owners to play our own key role in tapping into that new energy in the networks sector.

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Beere is a veteran of the Lloyd’s and London markets, with 23 years’ experience, specialising in property and package business. He joins Aston Lark from JLT, later acquired by Marsh, where he spent the past 15 years, most recently as regional director for London market risks. Prior to that, he spent four years as a property insurance broker for Aon. 

The company also announced that incumbent Incepta directors Paul Smith and Clive Gilbert will leave the business in the summer. Beere will work together with James Hancock to drive the group’s London P&C business, through supporting the company’s placement requirements and expanding third-party wholesale broker distribution.

Incepta, which was acquired by Aston Lark in August 2020, specialises in providing property, casualty and professional indemnity solutions in the London Market to regional brokers.

“We are excited for Rob to be joining the Incepta team in November,” said Stuart Rootham, managing director of Aston Lark Group.

“As part of our overall growth vision, Aston Lark has significant ambitions for our London Market capability. It’s an important pillar of our offering and we will continue to hire experienced talent and seek further acquisitions to build on the expertise and strength already provided by Incepta, Brunel Professions and Protean Risks.”

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Aviva Plc has a new stakeholder in the shape of Swedish activist investor Cevian Capital AB.

Stockholm-based Cevian revealed on Tuesday that it has bought a 4.95% stake in Aviva after purchasing almost 195 million shares. This makes the investor, which describes itself as the “largest and most experienced dedicated activist” in Europe, one of Aviva’s top three shareholders.

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The study, which the broking giant claims is the most comprehensive on IFRS 17 to date, polled 312 insurers across 50 global markets. With total costs estimated at US$15 billion to US$20 billion, costs per insurer will vary significantly by company size. For the 24 largest multinational firms, the study estimates costs of US$175 million to US$200 million each. Meanwhile, the remaining 288 insurers will have an average cost of US$20 million.

“For many, significant improvements will also be required in business processes and finance operations to deliver IFRS 17 efficiently and link with other metrics,” said Foroughi. “With smart investment and the right people, an insurer’s IFRS 17 programme has the potential to help deliver long-term annual savings to show against the daunting up-front costs.”

The data showed that over 10,000 full time equivalent employees will be needed to implement IFRS 17. According to WTW, this will present major challenges for insurers’ recruitment and retention strategies.

Furthermore, there are still issues regarding perception and knowledge of the reporting standard. Only 52% of survey respondents said that they expect IFRS 17 earnings/equity to be more helpful than current GAAP earnings/equity. Meanwhile, 54% believe that the need for non-GAAP reporting will either slightly or significantly increase. Understanding of the business implications of IFRS 17 remained low at 6% in 2020 and 17% in 2021.

Large multinational firms are ahead of their smaller counterparts, with an average progress of 3.5 (on a five-point scale) versus 2.6. Progress is highest in the EMEA region, with an average of 2.9, while it is lowest in Asia-Pacific at 2.4.

Many companies, especially from mature markets, believe that IFRS 17’s impact on KPIs may not be commensurate to the costs.

Willis Towers Watson noted an improvement in areas such as data and IT workstreams since its previous edition of the survey in June 2020. However, setting up a robust process designed to comply with tight reporting schedules remains a challenge. There is also little progress in terms of dry runs, disclosures and automation. Amid the lack of qualified resources, Willis Towers Watson predicts that process automation will be crucial in successfully implementing IFRS 17.

“If insurers are to unlock value from IFRS 17 they should be aiming for significant business process improvements including automation, efficiency and auditability ‘out of the box’,” said Foroughi. “This will save time and money, allowing experts to be deployed on higher value tasks and enabling insurers’ reporting functions to do more, faster and with less. Regulation can be a spur to drive performance, if the conditions are right.”

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Read more: Chief executives discuss the future of insurance broking

This recipe for success has worked well for Atlanta, which, even just since the start of 2021 has made a series of high-profile acquisitions, striking deals with the likes of telematics broker Marmalade and Be Wiser. That cultural piece is the key behind each of these purchases, he said, and an essential metric of the due diligence that the group carries out on each potential acquisition. Donaldson stated he has no hesitancy in turning down opportunities if their values don’t align because, while balance sheets and business costs can be transformed, culture is more deep-rooted.

“This goes both ways,” he said, “and I always say to people, due diligence me just like I’m doing with you. When we went to Crispin Moger and his team at Marmalade, I understood what they were about to go through. So, I told them they should due diligence us and speak to Tim [Hutton] from Lloyd Latchford, speak to the people from Carole Nash, the people from Swinton and all of those we’ve worked with for so long, and ask them whether we’ve done what we said we’d do.

“And Crispin came back and said that he’d found out what I’d been saying was true, that Marmalade was really going to be part of the Atlanta family and that we here to help grow your business, grow your aspirations. Because when we bought you, we bought your brand, your telemetry knowledge, your systems… so, you’re going to make us better too. It’s really an aligned approach that’s needed.”

Read more: Atlanta accelerates growth trajectory with acquisition of Be Wiser assets

It was a similar case with Be Wiser, he said, when the opportunity came up to acquire certain assets of the brokerage including customers, staff and the brand. That Be Wiser uses the same system platform as Atlanta was a significant positive, as was the clear expertise of its staff around motor and home, and its work with telemetry. After exploring how the business could be integrated and what it would bring to Atlanta, it made real sense to the group – and brings another great brand under the Atlanta umbrella.

“We’ll build on it and we’ll use it and we’ll grow it just like we have all the brands that we brought in,” he said. “It’s really exciting, and I’ve not been able to go down there yet but I can’t wait. I’ve met with people around the business at a certain level, but I always pride myself in speaking to every member of staff as soon as I possibly can. I was actually on a full call with almost 100 of the Marmalade staff the other day and it was great to see them and have a bit of banter, and let them get to know me as a new CEO.”

Looking at what the future holds for Atlanta, Donaldson highlighted that all future growth, whether organic or acquisition-led, across the group, will be underpinned by his personal tagline of being “relentless in the pursuit of excellence.” Looking at where you’re going inevitably means also taking stock of where you’ve been and few brokerages can boast of a trajectory like the one seen by Atlanta, which started as Autonet Insurance in a rented apartment in Newcastle in 1998.

When Donaldson and his then business partner Glyn Keeling first set up the business, he said, no phones were ringing and there were no safe bets to be had but, fast-forward to 2021, and by the end of this year, the group will have achieved over a billion in GWP and will champion the needs of nearly three million customers.

“There are so many opportunities out there at the moment, for different reasons,” he said. “Some [businesses] are struggling a bit after the pandemic and we can come in to help them grow. Other opportunities will allow us to change our footprint a little bit, as with the Marmalade acquisition… We’re probably going to announce at least another acquisition by the end of the year. And of course, The Ardonagh Group as a whole is very acquisitive.

“We’re in conversations with many different businesses and the great thing is that our values and culture and ethos is becoming well known in the marketplace. People who are thinking of selling are thinking of us. And some people who want to grow their business and take it to the next level aren’t just going down the private equity or [lending] route but are actually coming to us and saying, ‘I think I can go faster with someone like you… while still being part of my business.’ So, if we can keep the reputation that we have as an acquirer going, then that should hold us in really good stead.”

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The Mesoamerican Barrier Reef System is listed as critically endangered by the International Union for Conservation of Nature’s Red List of Ecosystems. The reef system is home to 65 species of coral and more than 500 species of fish along with many other protected species. Coastal wetlands, mangrove forests and seagrass beds also protect against storms and coastal erosion.

Thanks to the effects of climate change and other stressors, the risk of hurricane impact leading to irreversible coral degradation and mortality has grown.

“Early action to clean up the reef and jump-start regeneration and recovery is critical to reducing the overall impact of lost ecosystem services – in both social and economic terms,” WTW said. “However, the restoration of natural ecosystems is often not a priority in the aftermath of extreme events, as resources are focused mainly on grey infrastructure and property.”

The new project is being co-funded and implemented by WTW and the Mesoamerican Reef Fund, the regional financing system for large-scale maintenance, conservation and restoration of the reef system. MAR Fund will be the policyholder for the programme.

“In 2018, we launched the Global Ecosystem Resilience Facility at the World Ocean Summit in Cancun,” said John Haley, CEO of Willis Towers Watson. “We are delighted to be back in Central America, partnering with the MAR Fund and supported by the InsuResilience Solutions Fund, to build resilience of the Mesoamerican Reef and its communities.

“Marine ecosystems may be ‘free’ public goods, but their active maintenance is essential in sustaining their health and value. This programme helps us learn how insurance can provide a unique shared governance framework to manage reefs and other valuable natural ecosystems.”

“This collaboration is a great opportunity for the MAR region,” said María José González, executive director of MAR Fund. “We see the insurance model as a risk management tool that will provide immediate funds for reef restoration, thereby contributing to strengthening coastal resilience, and to the recovery of the MAR and the environmental services it provides. MAR Fund will be the policyholder and will manage the payouts. We will work closely with national governments and other partners and stakeholders to build the needed capacities for emergency response and preparedness.”

The InsuResilience Solutions Fund (ISF) has signed the grant funding agreement for the programme.

“This partnership combines the expertise of local partners and the insurance sector, ensuring that products are developed according to the needs of the vulnerable population,” said Annette Detken, director of the ISF. “Our grant will co-fund the development and implementation of this innovative insurance product insuring coastal ecosystems that provide much-needed services for local communities. We believe this insurance solution could serve as a model for other countries seeking to protect important natural resources like coral reefs.”

Payouts under the programme will be triggered by the intensity of a hurricane, converted to an estimate of the extent of damage to the reef. A group policy will cover the pilot reef sites, with a tailored payout structure reflecting the cost of response at each site at different damage levels.

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Remember the Central Bank of Ireland’s probe into two former directors of under-administration Quinn Insurance Limited (QIL)? It’s now been revealed just how much was spent on the investigation, which spanned half a decade.

According to the regulator’s 231-page annual report and annual performance statement, the probe – which was commenced in 2015 and concluded last year – involved total costs amounting to €1,896,303. Of the sum, €954,562 was incurred for document management and stenography services; €725,539 for legal professional fees; and €216,202 for fees and expenses of inquiry members.

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AXIS Insurance, the specialty insurance business segment of AXIS Capital Holdings, has announced the promotion of Keith Trivitt to head of commercial and strategic partnerships in its international division.

In the newly created role, Trivitt will be responsible for maximising commercial initiatives and developing profitable opportunities for strategic growth. He will be based in London and will report to Edward Ashby, global head of distribution for AXIS Insurance, and Mark Gregory, CEO of AXIS Insurance’s international division.

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