Insurance Jottings

AXA XL reinsurance structure to undergo massive revamp; Bermuda and London platforms to merge

Re/insurer AXA XL is simplifying its reinsurance organisational structure, aligned around its key markets and intended to enhance the focus on its ‘payer to partner’ strategy. The changes, effective the 2nd January 2020, will include combining its Bermuda and London platforms, and centralising its claims and operational functions into one global unit.


The company currently has four reinsurance underwriting regions: London – led by Rob Littlemore; Bermuda – led by Jonathan Gale; North America – led by John Welch; and international – led by David Watson, all of whom report to Charles Cooper, chief executive officer of reinsurance.


As part of the restructure, Mr Littlemore, chief executive of London reinsurance, will assume leadership of a newly-created global markets business which will comprise of AXA XL’s Bermuda and London Reinsurance platforms.


Mr Littlemore has more than 28 years’ experience underwriting US casualty reinsurance classes including having served as legacy Catlin’s head of reinsurance in London and becoming XL Catlin’s underwriting director of London reinsurance in 2015.


Paul Simons, head of property – global markets, will also serve as head of Bermuda reinsurance and will report to Mr Littlemore.


David Watson, chief executive of AXA XL’s international reinsurance business and CEO of XL Re Europe SE, will retire at the end of 2019.


Following Mr Watson’s retirement, John Welch, chief executive of North America reinsurance, will assume leadership of AXA XL Reinsurance’s international markets business. He is relocating to Dublin, Ireland to assume his new role in January.


Mr Welch joined AXA XL’s reinsurance operations in 1997 holding various senior level roles. His successor to lead the North America business is yet to be announced.


Furthermore, Jonathan Gale, chief executive of Bermuda reinsurance, will assume the role of chief underwriting officer (CUO), currently held by Chris Dougherty who is assuming the role of chief executive, underwriting capital management AXA XL.


Mr Gale will be responsible for delivering underwriting excellence, underwriting portfolio management, customer relationship management, developing new business opportunities and further demonstrating AXA XL’s thought leadership capabilities. He joined legacy Catlin in 2002 and held progressively senior underwriting roles before most recently becoming CEO of Bermuda reinsurance.


In his new role, Mr Dougherty will be responsible for all AXA XL outwards reinsurance placements and will also work with AXA XL’s head of alternative capital Daniel Brookman in optimising AXA XL’s utilisation of traditional hedges as well as alternative and partnership capital.


During his 25-year career, Mr Dougherty has held a variety of senior positions in both the insurance and reinsurance sectors, including serving as executive vice president, insurance underwriting and Ceded Re.


Finally, AXA XL reinsurance chief operating officer (COO) Dawn Dinkins will lead the newly centralised claims and operational functions. Ms Dinkins has 30 years of claims experience, with 23 years spent in reinsurance claims. She assumed the reinsurance COO role at the end of 2016.


Tysers buys RFIB as London market M&A rolls on

Tysers and its owner Odyssey Partners has acquired the private equity-owned RFIB Insurance Brokers to create an independent London-focussed wholesaler with total revenues in the region of £200 million (US$260 million) and around a thousand employees.


RKH Specialty hires slew of senior executives from JLT Re, Willis to boost global marine business

RKH Specialty, part of the Hyperion Insurance Group, has made a series of senior hires from JLT Re, Willis and Ascot in Asia, and rebranded its Hong Kong-based marine insurance specialist FP Marine to further expand its capabilities in the sector globally.


Brexit Is Moving £61 Billion in London Insurance Business to Rival Financial Centres

London’s outsized role in the global insurance industry is being whittled down by Brexit.


As much as £61 billion (US$75 billion) of business is shifting to rival financial centres in the European Union as a consequence of Britain’s vote to leave the bloc. And it is happening regardless of the divorce terms.


The EU’s insurance and pensions regulator has ordered every UK-based underwriter to transfer policies held by European clients to units on the continent. While the bulk of those total liabilities — the potential pay-out of all the policies, an industry gauge of scale — has moved or is moving to Belgium, Luxembourg, Ireland and elsewhere, about £5 billion will still be in Britain if Brexit happens on the 31st October, according to the Bank of England’s Financial Stability Report in July.


Lloyd’s, the world’s biggest insurance market, stands out as a laggard: About £3 billion is in policies written there over the 25 years before it opened a Brussels subsidiary at the beginning of 2019.


If Britain leaves the EU without a comprehensive agreement, Lloyd’s would not be able to guarantee that it could legally pay claims on those European policies. The institution says they will all be transferred to the continent by the 31st October 2020.


A Lloyd’s spokeswoman said EU member states have measures in place to ensure that 90% of the policies can pay out even after a disorderly Brexit. And Lloyd’s has told its syndicates — the insurers who underwrite policies on its trading floor — to honour all claims for continental clients following a no-deal divorce.


The longer-term impact of the shift will be both practical and symbolic, and it matters because London still accounts for as much as one-tenth of the world’s insurance and reinsurance market.


Brexit has been chipping away at that role, and the decline could steepen.


A chaotic departure from the EU is looking more likely after Prime Minister Boris Johnson asked Queen Elizabeth to suspend Parliament until mid-October, making it harder for opposition politicians to block a no-deal Brexit. That prospect has convulsed the pound: The currency has weakened more than 8% against the dollar since its mid-March peak, when an accommodation with the EU seemed more likely.


European Bases

Most UK insurance companies have moved their European business to EU countries earlier this year, ready for the original Brexit date of the 29th March.

Admiral Group Plc, for example, chose Madrid: Chief Financial Officer Geraint Jones said the firm spent £4 million to £5 million transferring policies into a new unit there.


Insurance companies who have yet to move their European business from the UK need explicit permission from authorities in each of the 27 other EU countries to service clients there. Absent those approvals, the insurers cannot legally pay claims or provide other services.


A spokeswoman for the European Insurance and Occupational Pensions Authority said the regulator would provide a country-by-country update soon.


Costs and pitfalls are likely down the road. National regulators will not allow insurers to use their European subsidiaries merely as letterboxes; those offices will need to be staffed and run as substantial operations.


“There’s a tension, because a lot of the expertise in writing that business still resides in London,” Hilary Evenett, a partner at Clifford Chance LLP, said.


“Over the years, you can also anticipate that other countries are going to develop that expertise locally.” In the future, she said, “it’s not certain how much expertise will be here and how much will be on the continent.”


The UK also faces a loss of tax revenue: The government collects an insurance premium tax on every policy. Following Brexit, that revenue will go to EU countries.


As with so much to do with Brexit, uncertainty is unnerving.


“There’s a huge amount of expertise and infrastructure around the London market which one might expect to diminish in relative importance over time, but London should still remain the pre-eminent centre for insurance for the time being,” said Duncan Barber, a partner at Linklaters LLP.


Argo’s Syndicate 1200 withdraws from Asia and hull

ArgoGlobal, the Lloyd’s insurer and member of Argo Group, announced plans to exit Syndicate 1200’s underwriting operations in Asia and most of its hull underwriting business within the syndicate.


All existing policies remain valid and the company will manage claims handling through its London operation.


The Asia business accounted for less than 3% of Syndicate 1200 gross written premium in 2018.


These announcements have no impact on Argo Group’s Ariel Re Syndicate 1910 business, including its growing Hong Kong-based renewable energy business.


ArgoGlobal is the trading brand of Syndicate 1200 at Lloyd’s, managed by Argo Managing Agency Ltd. The Syndicate offers worldwide property, marine, energy, specialty and non-US liability insurance.