Insurance news

Minneapolis-based financial services firm Ameriprise Financial may soon leverage a significant reinsurance deal to reduce its exposure to risks associated with life insurance and annuities, a new report has revealed.

A Think Advisor report suggested the development was hinted at by Walter Berman, the company’s chief financial officer, at a recent conference call with securities analysts.

During the call, an analyst inquired about Ameriprise’s progress in securing a reinsurance agreement for its Retirement and Protection Solutions Division, which deals in life insurance and annuities. This query arises in the context of several life insurers in recent years having successfully reinsured blocks of in-force life and annuity policies, consequently freeing up substantial amounts of cash.

Berman acknowledged the company’s awareness of these trends. He pointed out that the current environment of relatively high-interest rates is narrowing the gap between what Ameriprise is willing to pay for reinsurance and the rates sought by reinsurers. This convergence, according to Berman, presents a potential opportunity for the company.

This potential move by Ameriprise reflects a broader industry trend where insurers are increasingly shifting towards selling life insurance policies and annuities that offer limited benefit guarantees.

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The renewals have resulted in a more balanced market, presenting challenges for new entities aiming to enter under favorable conditions. The equilibrium achieved between the supply of reinsurance cover and buyer demand contrasts with the previous year’s imbalance caused by reinsurers reducing exposure to riskier areas.

According to Russell Merrett, chief underwriting officer at Lloyd’s insurer Inigo, the current market dynamics make it difficult for newcomers to introduce new capacity without significant price concessions. He noted that new entrants need to offer more than just additional capacity to build a viable book of business.

Despite large price increases and coverage reductions secured by reinsurers in 2023, leading to improved profitability, the rate of price rise in the recent renewal period was lower, especially in property-catastrophe reinsurance.

This sector saw an average 3% increase, compared to a 37% hike in the previous year, as per a Howden report. Reinsurers, having avoided substantial catastrophe losses last year, showed confidence in expanding capacity to buyers at the start of 2024.

Mike Van Slooten, head of business intelligence at Aon’s reinsurance solutions division, observed that reinsurers were keen to grow their catastrophe books at prevailing terms during the renewals. The strength in capacity supply was particularly notable in the upper layers of property-catastrophe reinsurance programs, which demand larger losses for payouts.

Global reinsurer capital increased significantly in 2023, reaching $635 billion in the first nine months, up from $590 billion for the full year 2022. This robust capital position, however, does not necessarily indicate a need for new market entrants, as per David Govrin, chief underwriting officer of SiriusPoint.

“I don’t personally see an influx of a lot of capital into new operating companies,” Govrin said.

S&P noted that the industry is still waiting on reinsurers’ full-year 2023 earnings for further insights into the market’s progress. The geopolitical landscape, including regional conflicts and numerous global elections, adds to the uncertainty and potential for rapid market changes, highlighting the need for caution and adaptability among startups in the reinsurance sector.

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Pacific Life Re has announced a significant restructuring of its organizational framework, aimed at enhancing client support and facilitating the company’s growth objectives.

Transitioning from a geographical-based structure, Pacific Life Re will now operate under a product-based management system, focusing on two principal lines of business: protection and savings & retirement.

The restructured approach is designed to enable Pacific Life Re to expand its reinsurance portfolio by addressing client needs across various markets. The global protection business will now be under the leadership of Andrew Gill, an existing member of the executive committee. Gill previously served as EVP for Asia and Australia.

The savings and retirement division, which encompasses the company’s existing work in longevity and global funded solutions (GFS), will be managed by Phill Beach. Beach, known for his role in the development of the GFS business, will join the executive committee as part of this new alignment.

Dave Howell, CEO of Pacific Life Re, commented on the organizational changes, emphasizing their importance and potential impact.

“We have grown tremendously over the years thanks to the strong relationships with our clients. However, we also recognize that the insurance market is constantly evolving, and we need to adapt to meet growing demands,” Howell said.

Howell further elaborated that the new structure would enable Pacific Life Re to utilize its global expertise and best practices more effectively within each business line. Additionally, the restructuring is anticipated to create more career development opportunities within Pacific Life Re, benefiting its workforce.

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US-based home insurance group Hippo has announced the completion of its 2024 reinsurance program.

As part of the program, Hippo has purchased significantly less proportional reinsurance in 2024.

The decision to retain more premium from the Hippo Home Insurance Program and associated non-catastrophe attritional losses on its balance sheet is based on the expectation of continued improvement in the attritional loss ratio and Hippo’s measures to reduce volatility, the company said.

Hippo has expanded its purchase of non-proportional Excess-of-Loss (XOL) reinsurance. The company has increased its per-occurrence XOL limit by 11% and broadened its reinsurer base from 14 to 19 participants.

“Our reinsurance partners have affirmed their confidence in our business with improved terms for the second year in a row,” Hippo CEO and president Rick McCathron said. “Our efforts to reduce exposure to weather-related volatility in our business, combined with our proactive approach to home protection, has continued to drive significant improvements in loss ratio, making the Hippo Home Insurance Program attractive to reinsurers, many of whom have been with us for multiple years.”

Further details regarding the reinsurance placement will be disclosed in Hippo’s fourth-quarter 2023 earnings report scheduled for March 6, 2024, and in the company’s 2023 annual report.

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CHL, the parent company of Conduit Re, has provided a trading update for the January 1, 2024 renewal season, highlighting an increase in business with estimated ultimate premiums written rising by 38% year-on-year.

The company reported that estimated ultimate premiums written for the January renewals amounted to $582.4 million, a surge from the $421.2 million recorded in the same period in 2023. This growth is attributed to strong renewal business with key partners and the addition of high-quality new business.

Conduit Re also observed an increased focus on property and specialty segments, leading to a higher weighting in these areas. Despite this shift, the company maintained a selective approach to casualty lines to ensure stable combined ratio expectations year-over-year. A 3% risk-adjusted rate change, net of inflation, was also reported, indicating a further hardening of the portfolio rate.

The company also announced that it secured its outwards retrocession program, with no significant changes in net Probable Maximum Losses (PMLs) on January 1. In terms of underwriting activities, the breakdown of estimated ultimate premiums written by class of business was as follows:

• Property: $311.0 million (54% of the total, up 58% year-on-year)
• Casualty: $101.4 million (17% of the total, down 10% year-on-year)
• Specialty: $170.0 million (29% of the total, up 52% year-on-year)
• Total: $582.4 million (100% of the total, up 38% year-on-year)

The renewal business January 1 showed an overall risk-adjusted rate change, net of inflation, of 3%. The property segment experienced a 5% rate change, the casualty segment saw a -2% change, and the specialty segment had a 2% change.

Gregory Roberts, chief underwriting officer at Conduit Re, noted the 2024 renewals season was marked by high renewing business levels and positive rates in the property and specialty books.

“We continue to see high submission levels of attractive business and, being selective around lines, rates and structure, we continue to grow the portfolio significantly without sacrificing quality. We saw more attractive risk versus reward in the property and specialty segments and therefore we focused growth in these classes over casualty,” Roberts said.

Conduit Re is set to announce its 2023 year-end financial results on February 21, 2024.

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Chaucer Insurance Company DAC and Chaucer Syndicates have filed a motion in the United States Bankruptcy Court for the District of Delaware, connected to the Chapter 11 bankruptcy proceedings of Vesttoo and its affiliates.

This legal action revolves around Chaucer’s request for permission to submit a late objection to certain claims against Vesttoo Bay XXIV Limited Partnership (“Bay XXIV Debtor”), which are argued to be unenforceable for voting purposes on the bankruptcy plan.

Chaucer has sought to recoup $257 million from Vesttoo.

In filed documents, Chaucer pointed out that it had an exclusive relationship with the Bay XXIV Debtor and alleged that other claims filed against it often lacked a direct relationship or justification for being enforceable.

Aon, Markel, and Clear Blue are among businesses that have sought to claim against the Bay XXIV Debtor, according to filings.

Chaucer argues some claims against Vesttoo Bay XXIV are unrelated and unenforceable

Chaucer’s argument centered on the disallowance of what it said were unrelated claims against the Bay XXIV Debtor, emphasizing the importance of maintaining the integrity of the voting process for the chapter 11 plan.

The motion set out what Chaucer alleged was the unique and segregated nature of the Bay XXIV Debtor’s business and assets, with the insurance company arguing against the inclusion of claims that could be deemed to have direct linkage or were unenforceable.

The request made by Chaucer included several reliefs, such as the authorization to file its objection late, additional time for claimants to file motions if necessary, and procedural accommodations to ensure a fair and equitable resolution of claims in relation to the bankruptcy case of the Bay XXIV Debtor.

Claims against Vesttoo Bay XXIV debtor

Claims against the Vesttoo Bay XXIV debtor, according to the motion filing, include:

• Chaucer filed Claims No. 50821 and 50823 against the Bay XXIV Debtor. These claims relate to damages and liabilities arising from reinsurance transactions, reinsurance contracts, and premium payments
• JPL filed Claim No. 49 against the Bay XXIV Debtor. The stated amount was $3,174,724,832.00, covering advances and reinsurance amounts across all segregated cells.
• Numerous Aon Claims were filed against the Bay XXIV Debtor.
• Proventus filed Claim No. 20159 against the Bay XXIV Debtor. The stated amount was $655,055,007.41, representing Proventus’s aggregate claim against the Debtors collectively.
• Porch Group Inc. and Porch.com, Inc. filed Claim Nos. 50730 and 50794 against the Bay XXIV Debtor. The stated amount was $400,000,000.00 collectively.
• Markel filed Claim No. 20092 against the Bay XXIV Debtor. The stated amount was $146,986,118.42.
• United Automobile filed Claim No. 20240 against the Bay XXIV Debtor. The stated amount was $29,544,211.00.
• Clear Blue Specialty Insurance Company, Clear Blue Insurance Company, Rock Ridge Insurance Company, and Highlander Specialty Insurance Company filed undetermined claims (Claim Nos. 50514, 50563, 50667, and 50746) against the Bay XXIV Debtor.
• Confidential claimants filed undetermined claims (Claim Nos. 20249, 20278, 20282, and 50855) against the Bay XXIV Debtor.

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The global insurance group Howden has acquired Laurie Ross, a Scotland-based personal and commercial lines broker.

Laurie Ross, established in 1973, operates from seven branches in and around Glasgow, focusing on providing insurance services for cars, homes, taxis, vans, and businesses in key business areas.

The acquisition aligns with Howden’s goal of advancing its high street reach and supporting the growth of Howden UK & Ireland in Scotland.

Changes following acquisition

The acquisition will enable Howden’s high street branches to see a significant boost, reaching a total of 117, with an extensive network spanning over 200 centres across the UK.

Kelly Ogley, CEO of Howden consumer and local commercial, welcomed Laurie Ross managing director June Lynch and her team to the Howden team.

“Laurie Ross is a fantastic business and, culturally, it’s a perfect fit as we’re both committed to providing a local advised service that delights our clients, as well as working with and supporting our local communities,” Ogley said.

Lynch commented: “I am delighted that Laurie Ross is now part of Howden providing us with an even greater opportunity to enhance our capabilities and reach. Joining a well-known UK branch network, with values that mirror our own excellent reputation for unwavering commitment to client satisfaction, it’s exactly the sort of partnership we were looking for.”

Zurich-based organization PERILS has released its latest assessment of industry losses stemming from the floods and storms induced by low-pressure systems Babet (Viktor) and Aline (Wolfgang) across the British Isles and northwestern Europe from October 18 to 22, 2023.

According to a Press release, the updated estimate now stands at €683 million, a notable increase from the initial evaluation of EUR 509 million announced on December 4, 2023, approximately six weeks after the end of the weather events. The primary impact was felt in the United Kingdom, predominantly attributed to flood-related incidents.

PERILS gathered information from affected insurance markets including Ireland, the United Kingdom, Germany, Denmark, and Norway. The majority of losses, totaling £467 million, occurred in the UK and were primarily associated with flooding.

Flooding resulting in industry losses

The extended period of severe weather, caused by the interaction of low-pressure systems Babet and Aline, led to incessant rain and high winds in the region. A stationary weather pattern resulted from a high-pressure system over Scandinavia blocking the low-pressure systems, causing prolonged heavy rains and high winds. This situation overwhelmed river and drainage capacities in Ireland, Scotland, northern England, and Wales, resulting in flash and river flooding.

While flood losses dominated the insurance industry impact in the UK and Ireland, wind damage played a lesser role. By contrast, Germany, Denmark, and Norway experienced wind damage as the primary contributor to insurance losses. Notably, storm surge damages along the Baltic coast in Germany and Denmark were significant. However, these losses are not extensively covered in Germany, and Denmark relies on the government scheme “Naturskaderådet” rather than private insurance for such events.

An updated market loss estimate for the Babet-Aline Floods and Storms is anticipated on April 22, 2024, marking six months after the conclusion of the weather events.

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Marine insurer West P&I Club has announced the launch of its new product, West Piracy Protection, designed to assist shipowners in navigating the increased risks of piracy in areas such as the Gulf of Aden and the Gulf of Guinea.

The product specifically targets situations where vessels enter designated war and piracy “breach” areas, which are known for heightened piracy risks. West Piracy Protection aims to fill gaps in traditional war policy coverage, which may not fully address the nuances of piracy incidents in these regions, including cases where ships are held for short periods.

Key features of West Piracy Protection include indemnities for ransoms and related expenses, such as loss during ransom transit, fees for response consultants, legal experts, and costs associated with reputational risk.

The policy also provides support for employees directly affected by piracy incidents. It offers additional coverage options, including loss of hire for a maximum of 14 days post-vessel release, addressing the aftermath of a seizure.

This insurance product is a collaborative effort between West P&I Club and the Hamilton Global Specialty underwriting platform, underwritten by Syndicate 4000 at Lloyd’s. It also integrates expertise from Crisis24, known for its crisis response capabilities, and the global law firm HFW, which specialises in piracy response.

West Piracy Protection is available as an addition to the West War policy or as a standalone product. It is also accessible to non-West clients. The launch of this product complements West’s existing portfolio, which includes West Hull (H&M) and West War, both introduced in 2023.

Richard Turner, head of product development at West, highlighted the unique aspects of the product, noting its relevance to the changing patterns of piracy incidents.

“Our new product will stand out from the market, not just for the extended coverage but also the embedded expertise we can offer with Crisis24 and HFW. Through this new offering, we look forward to providing West Members and other shipowners with the support to manage the ever-present threat of piracy,” Turner said.

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