Insurance news

SCOR reported a net income of €196 million (€176 million adjusted) for Q1 2024, driven by a robust return on invested assets and solid performance in P&C.

In P&C re/insurance, the combined ratio of 87.1% in Q1 2024 benefited from a low natural catastrophe claims ratio of 7.2%. The attritional loss and commission ratio of 78.8% reflected satisfactory underlying performance and continued reserving discipline.

In L&H reinsurance, the insurance service result was €72 million, impacted by an adverse experience variance of €-71 million due to unfavorable claims experience in the US mortality business and claims reporting effects. Onerous contracts had a positive impact on the quarter, by €20 million.

In investments, SCOR benefited from elevated reinvestment rates in Q1 2024, recording a strong regular income yield of 3.5%, up 0.7 points from Q1 2023.

The effective tax rate for Q1 2024 was 24.1%, below the 30% assumption expected over the duration of the Forward 2026 plan.

The annualized return on equity (ROE) reached 17.3% (15.5% adjusted), and the group economic value grew by 4.1% at constant economics.

SCOR’s solvency ratio was estimated at 215% at the end of Q1 2024, in the upper part of the optimal range of 185%-220%, compared to 209% at year-end 2023. This was supported by strong operating capital generation from the P&C business.

Thierry Léger, chief executive officer of SCOR, stated that for the first quarter of the Forward 2026 strategic plan, SCOR reported a strong net income.

“In P&C, we are reaping the benefits of very attractive market conditions with a combined ratio of 87.1% and we remain determined on building reserve buffers,” Léger said. “In L&H, we are impacted by an adverse experience variance, mainly driven by US mortality and claims reporting effects. In investments, SCOR benefits from elevated regular income yield and reinvestment rates. Overall, we are starting the year with a high ROE of 17.3% and an improved solvency ratio of 215% supported by strong operating capital generation driven by P&C January renewals.”

What are your thoughts on this story? Please feel free to share your comments below.

Swiss Re has announced that it is exploring options to divest its IptiQ digital platform while reserving $100 million for the March 26 Baltimore bridge disaster, a loss estimate with high uncertainty, according to its CEO Christian Mumenthaler.

Following a strategic review amid changing market conditions, Swiss Re plans to divest its digital platform and explore options for its entities, Mumenthaler said in a conference call. Swiss Re will gauge interest in IptiQ’s assets, including from primary insurers.

Mumenthaler noted that there are valuable elements in IptiQ, but he could not specify when or how the entity would be divested, emphasizing the goal of maximizing shareholder value.

In 2023, Swiss Re took a $250 million charge related to IptiQ and aims for better results this year, expecting the business to break even by the end of 2025, said CFO John Dacey.

As per AM Best, Dacey described IptiQ as a complex “collection of a number of discrete businesses across geographies” and suggested that another owner might extract more value. He also indicated that there might be restructuring charges in the coming quarters.

Mumenthaler explained that when IptiQ was created about 10 years ago, interest rates were near zero, and the market was saturated with capital seeking yields. There was concern about the future of reinsurance and a surge in insurtech investment, which was believed to disrupt the value chain.

Swiss Re invested in white-label digital insurance with IptiQ to allow clients and brokers to enter the primary market, he said.

However, the environment has changed significantly in the past year and a half, with much higher interest rates, improved rates in traditional reinsurance, and slower insurtech growth, Mumenthaler said.

Swiss Re built a valuable platform with $1 billion in premiums, but it “makes no sense to keep it as a strategic option” under current conditions, he said.

The reinsurer also increased its loss estimate by $120 million for the 2023 floods in Italy, raising its industry loss estimate for the event from $3.3 billion to $6 billion, Mumenthaler said.

Large natural catastrophe losses in the first quarter totaled $66 million, mainly from the Noto earthquake in Japan, Dacey reported.

Swiss Re experienced several other man-made losses and has increased reserves for US liability, Dacey said.

Liability reserves were raised in the first quarter as Swiss Re anticipates continued liability exposure in the market, although it has decreased slightly from last year, Mumenthaler said.

Swiss Re has also reinforced reserves in several areas, experiencing minimal catastrophe losses in the quarter, Dacey added. It reduced its casualty book over the first quarter and is pushing for better rates and terms while questioning some primary insurance pricing. Casualty accounted for about one-third of Swiss Re’s book at the January 1 and April 1 renewals, he noted.

First-quarter 2024 net income was $1.09 billion, with insurance revenue at $11.68 billion. The property/casualty combined ratio was 84.7% on May 16, 2024. Swiss Re stated that its first-quarter 2024 numbers are not comparable with the previous year due to this year’s numbers being under IFRS while those of 2023 were under US GAAP.

Mumenthaler said the transition to IFRS was complex, but the new accounting standard will make segments more comparable, especially the life/health segment.

What are your thoughts on this story? Please feel free to share your comments below.

Gen Re has released the results of the 2023 US Group Term Life Market Survey, delivering its verdict on the sector’s performance in the past year.

The annual survey covers group term life (GTL) and accidental death & dismemberment (AD&D) in-force and new sales results for the US market, representing both employer-paid and employee-paid business.

Twenty-six companies provided GTL results, while 24 companies provided AD&D results.

For 2023, total GTL and AD&D in-force premium reached $33.7 billion, with GTL representing 93% of the total. GTL in-force premium growth rates have slowed since a peak of 6% in 2021, with a 2% increase in 2023.

AD&D in-force premium continued to grow positively, rising by 6% in 2023, the highest rate since 2017. Overall, GTL and AD&D in-force premium increased by 2% year-over-year. Seven of the top 10 carriers reported positive GTL in-force premium growth in 2023.

In 2023, participating companies reported $3.2 billion in combined GTL and AD&D sales premium, with GTL accounting for 92% of the total. GTL new sales premium declined by 3% in 2023, attributed to a few carriers experiencing double-digit declines.

AD&D sales premium – how did it fare in 2023?

The top 10 companies held 84% of the market share for new sales premium, contributing approximately $2.4 billion of the total 2023 sales. AD&D sales premium remained positive over the past five years, with 11 of the 24 companies reporting positive changes in their 2023 results, and seven experiencing double-digit growth. Combined GTL and AD&D sales premium declined by 2% in 2023.

GTL new sales case counts grew by 1% in 2023, and in-force case counts also increased by 1%. For companies providing sales case size breakdown information, the 10–99 category accounted for the highest percentage of cases (56%), followed by the 1–9 grouping (25%).

Results were similar for in-force cases (52% and 30%, respectively), with less than 1% in the 5,000+ range for both sales and in-force. New sales lives increased by 5% in 2023 after a decline in 2022, and in-force lives grew by 6% year-over-year.

Average face amounts for new sales declined by 4% in 2023, while in-force average face amounts remained flat year-over-year. Monthly premium rates for new sales declined by 6%, with in-force premium rates staying level. Average premium per life declined for both new sales and in-force business. Sixty per cent (60%) of companies saw a decline in their average face amount for new sales in 2023.

A small number of companies with negative growth strongly influenced the average premium per life for new sales, although 61% of companies reported positive growth.

What are your thoughts on this story? Please feel free to share your comments below.

“We have a couple of submissions in from companies that are looking at asteroid mining,” said Joseph Ziolkowski (pictured above). “It sounds crazy but there has been a massive amount of investment into companies that are building technology to mine asteroids.”

It did sound crazy, so Insurance Business asked the Relm Insurance CEO if meant that his Bermuda-headquartered firm is currently providing insurance for space projects.

“We are, yes,” he said.

Ziolkowski said there are companies that have spent more than a decade working on space projects and have managed to raise hundreds of millions of dollars.

“What’s really interesting is that as these companies raise more capital the need for insurance is only going to become more relevant,” he said. “That’s where we come in.”

Realm also provides covers for the equipment on space stations.

“There is a company that is working on manufacturing technology or equipment that will function on a space station and for that particular company we are providing them with product liability insurance,” said Ziolkowski

IB asked if these space projects are predominantly United States-based.

“It’s definitely not just a US initiative,” he said. “Especially now that space is really becoming privatised so you’re seeing activity that is certainly more global.”

Space projects, digital assets and alternative therapeutics

According to its website, Relm Insurance is a specialty insurer serving emerging industries, including the space economy, digital assets and Web3, artificial intelligence (AI), fintech “and beyond.”

“We really wanted to be able to launch Relm in support of companies doing really innovative things,” said Ziolkowski.

The company, he said, launched in 2019 and has 50 employees.

“We’re building out our core team in Bermuda but we also have employees in other jurisdictions in various capacities in the US, London, one in Europe, and now two in Dubai,” said the CEO.

Ziolkowski said his firm’s underwriting focus areas are digital assets and alternative therapeutics.

“We’ve now extended coverage to companies operating in these sectors in more than 37 countries around the world,” he said.

Human innovation: a source of  hope for the future?

IB suggested that the world is currently experiencing gloomy times: climate change and conflict are threatening to destroy life as we know it. Does Ziolkowski work with cutting edge industries to risk manage and find insurance coverages for them give him hope for the future?

“It does,” he said. “But I don’t want to overstate the significance of what we’re doing against things like climate change.”

However, he said his firm’s vision is to make innovation resilient.

“Our mission is to really put our capacity to work to help solve complex risks in innovative industries,” said Ziolkowski. “When I look at the promise of companies building products and services and solutions, utilizing blockchain technology, I see accessibility, cost reductions, transparency and improvements in different aspects of really important industries like financial services, logistics, real estate and healthcare – that don’t exist today.”

He said what he sees in these industries is promising.

“When I look at what’s happening in alternative therapeutics, I see clear roadmaps and solutions to use important psychedelic compounds to treat things that really aren’t well treated today,” said Ziolkowski.

Other innovative industries, he said, have the potential to make “big impacts” on the way we live, trade and travel.

“You look at what’s happening in the space economy,” said Ziolkowski. “There are companies exploring space tourism, mining in space, agriculture, manufacturing in space, defense propositions and strategies in space.”

He said governments around the world are looking at new international regulatory frameworks in anticipation of these developments.

“This whole privatized space economy is about to really come to this kind of crescendo and unfold,” said Ziolkowski. “Who knows where it’s ultimately going to go? But it’s going to yield rapid advancements and changes in the way that we perceive the boundaries of our capabilities on a planet like Earth.”

New risks and opportunities are coming

He said all of these projects need to raise capital, find insurance covers and enter into contracts with traditional manufacturing and technology companies.

“There’s going to be cyber risks that have never really had to be contemplated, there’s going to be property exposure to, for example, new forms of wind storms that just hasn’t really had to be contemplated on planet Earth,” said Ziolkowski.

He said risk management, mitigation and transfer are going to be “a foundational component in the way that these sectors scale.”

“I think it’s a really exciting opportunity for us to really start putting our capacity behind these companies,” said Ziolkowski.

Are you an insurance professional involved in cutting-edge, innovative projects? Please tell us about them below.

Employees who feel confident in their job search saw a decline in the second quarter of 2024 as employers grow “increasingly strategic” in hiring, according to a new report.

The second quarterly Vaco Talent Pulse Report of 2024 found that only 67% of employees are extremely or somewhat confident in their ability to get and hold a job.

This is much lower than the 73% recorded in the first quarter, where 43% of employees were “extremely” confident in finding new work.

Source: Vaco Talent Pulse Report of 2024

Kyle Allen, Vaco Executive Vice President of Sales & Recruiting, said the job market’s “complex landscape” is having a direct impact on employees’ and jobseekers’ mindsets.

“Companies are being increasingly strategic about their hiring which, in some cases, includes outsourcing roles and departments,” Allen said in a statement. “This is resulting in people having a harder time finding jobs and is undoubtedly impacting confidence levels.”

Confidence in financial situation, career progression

The report, which surveyed more than 8,000 respondents in the United States and Canada, also revealed that fewer employees feel confident in their ability to improve their financial situation and advance in their career.

According to the report, only 74% of employees are extremely or somewhat confident that they can improve their financial state in the next six months, either through a raise or by getting a new job.

This is down from the 77% at the beginning of the year, the report said.

In terms of career advancement, only 75% of employees are extremely or somewhat confident in their ability to progress their career in the next year. This is lower than the 80% in the quarter prior.

“It is impacting the psyche of workers and creating exhaustion and a sense of nervousness around their growth and stability,” Turpin said.

According to Turpin, it is important that employees develop mental resilience and not let exhaustion drag them down.

“Showing resilience and positivity is something organisations significantly value and often, those are the workers that end up having the most confidence and success throughout their careers,” he said.

In a notable shift from its financial trajectory last year, Maiden Holdings revealed a net income of $1.5 million for the first quarter ending March 31. This represented a reversal from the $11.3 million net loss reported in the corresponding quarter of 2023.

The company recorded a significant rise in net premiums written, totaling $8.3 million compared to just $0.8 million in the first quarter of 2023. Further financial improvements were observed across various metrics, including net investment income, adjusted book value, net premiums earned, and total revenues.

In an ongoing strategic overhaul of its International Insurance Services (IIS) business, Maiden executed a renewal rights transaction with AmTrust Nordic AB, a Swedish subsidiary of AmTrust Financial Services, Inc., primarily affecting its operations in Nordic countries. Similar agreements are expected to be secured for the company’s business in the United Kingdom and Ireland.

Maiden CEO Patrick J. Haveron highlighted the positive outcomes of the company’s investments and the stabilizing impact of a specific loss portfolio transfer/adverse development cover (LPT/ADC) agreement.

“The effects of our continued positive investment results and the stabilising effects of our agreement led to an increase in our adjusted book value, which we believe represents Maiden’s true economic value, to $3.24 per share as of March 31, 2024,” Haveron said.

The LPT/ADC agreement with Cavello Bay Reinsurance Ltd played a crucial role in this progress. Haveron mentioned that the improved investment performance was primarily due to higher net investment gains on the company’s alternative asset portfolio, particularly in the private equity sector. The portfolio yielded a 3.4% return in the first quarter, surpassing the annualized cost of debt capital.

“As these results continue to increasingly demonstrate, we believe our alternative investment portfolio remains well positioned to achieve its targeted longer-term returns,” Haveron said.

Maiden continues to refine its strategies to enhance revenue and profit consistency while leveraging its expertise in the insurance and reinsurance markets. These efforts include exploring fee-based and distribution channels within the industry. For example, the recent IIS transaction with AmTrust is expected to simplify Maiden’s balance sheet and potentially reduce operating expenses by up to $6 million over the next one to two years.

“As we evaluate these options and move forward, we have limited our commitments to new alternative investment opportunities,” Haveron said.

Although there are ongoing challenges in the GAAP income statement due to adverse loss development, the company expects much of this volatility to be temporary. Nearly 76% of the reported prior year loss development is anticipated to be covered by the LPT/ADC agreement, with expected recoveries to commence later in 2024.

Maiden’s adjusted book value remains a crucial metric, incorporating a $75.9 million deferred gain currently on the balance sheet. Additionally, the company holds significant net operating loss carryforwards, with a substantial portion having no expiry date. Despite delays in recognizing certain assets due to adverse reserve developments, strategic initiatives continue to build, aiming to optimize future recognition of these tax assets.

In the first and second quarters of 2024, Maiden pursued its long-term capital management strategy, repurchasing 590,995 common shares at an average price of $2.01 per share under its share repurchase plan.

“We expect to continue a disciplined and prudent approach to share repurchases as part of this programme, particularly in periods of share weakness relative to our book value,” Haveron said.

Swiss Re has highlighted the increasing importance of advanced analytics and artificial intelligence (AI) in enhancing customer engagement and boosting sales within the insurance industry.

Recent research from the company has shown that “customers identify artificial intelligence as a key driver of better experience,” signifying the pivotal role of AI in not only boosting sales but also in shaping consumer expectations.

Daniel Levy, principal risk consultant at Swiss Re, pointed to AI’s potential in personalizing customer interactions in his latest discussion. This approach not only retains customers but also enhances the quality of interactions. Traditional propensity models are now seen as insufficient when not paired with other strategies. According to Levy, “Propensity is not perfect,” and a more diversified approach is necessary to realize greater returns on investment, particularly when customer interactions are low-cost and involve a large segment of the customer base.

He advocates for the use of multiple AI tools to achieve better returns on investment, particularly in scenarios involving inbound inquiries or broad customer bases. The company underscores the limitations of single-solution reliance and promotes diversified AI application.

In addition, Levy pointed out the effectiveness of behavioral segmentation models, which categorize customers based on behavioral patterns rather than demographic data. Such models have proven superior in engaging customers, as they provide insights into customer motivations and enable tailored communications. For instance, one client saw a 33-fold increase in customer action from those identified as highly active compared to those with lower activity levels.

Behavioral insights also help in understanding nuanced customer motivations, which can differ significantly even within similar demographic groups. Recognizing these differences allows for more effective and personalized customer outreach.

Levy also touched on the ethical considerations of AI usage, emphasizing the importance of transparency and responsible application. The company suggested that without proper oversight, the use of AI in crafting personalized messages could lead to ethical concerns, especially if the rationale behind certain communications is not clear.

“That said, these models raise possible ethical issues which need to be factored into any responsible company’s strategy. Unlike with behavioural segmentation, it is not always clear why a propensity model chooses a particular message, and the difficulty of explaining results can raise questions. For this reason their usage needs to be monitored carefully,” Levy said.

Howden Re, Howden Group’s reinsurance and risk advisory arm, has released a report on the landscape of cyber reinsurance.

In its ‘Re-framing cyber risk: navigating threats and embracing opportunities’ report, the firm found that the rewards that are offered were usually underestimated relative to the exposure to a natural catastrophe.

“Cyber risks consistently top the rankings of risk managers’ concerns. To stay relevant to those buyers of insurance, as an industry it is imperative that we embrace this class of business,” said global head of cyber at Howden Re, Luke Foord-Kelcey.

“This report identifies how carriers may assess their appetite for the cyber class of business to ensure they recognise the extent of the opportunities within the context of a more thorough understanding of the risks.”

The report found that larger carriers had an amount of natural catastrophe risk that was disproportionate in comparison to cyber risk. Cedents that have a smaller balance sheet were more exposed to cyber as a percentage of business mix.

“The maturing of the cyber market necessitates a thoughtful recalibration of how cyber risks are underwritten. A transition is necessary: from viewing cyber threats through a catastrophic lens, and instead recognising the competitive advantage that can be gained through more nuanced and informed risk analysis,” said head of industry analysis and strategic advisory at Howden Re, David Flandro.

Through the report, Howden Re concluded that reinsurers will be able to have a more favourable and diversified risk-return profile from cyber reinsurance underwriting should there be a continuous investment in expertise, modeling, and analytics.

“Investing in cyber-specific expertise and leveraging refined risk models are key to navigating the complexities of cyber threats effectively,” said Foord-Kelcey.

 “This approach will not only transform perceived vulnerabilities into competitive advantages, but also enable our clients to capitalize fully on the burgeoning opportunities in today’s digital landscape.” 

What do you think about this story? Share your thoughts in the comments below.