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Peak Re Appoints Clarence Wong As Chief Economist

Peak Reinsurance Company Limited (“Peak Re”), a global reinsurer based in Hong Kong, has appointed Mr. Clarence Wong as Chief Economist effective from 16 Nov 2020, highlighting Peak Re’s commitment to strengthen its service in Asia and around the globe.

Reporting directly to Mr. Franz Josef Hahn, Chief Executive Officer of Peak Re, Mr. Wong will be responsible for delivering strategic insights on economic, insurance and emerging risk to the company and its key stakeholders. He will also oversee the development of thought-leadership content for Peak Re.

Mr. Wong has more than two decades of experience in the insurance and reinsurance market. Prior to joining Peak Re, he worked at Swiss Re since 1999, where he last served as the Chief Economist, Asia and oversaw the company’s research initiatives around the Asia-Pacific region. Before that, he spent 9 years at HSBC’s economic research department, worked with PricewaterhouseCoopers in its management consulting arm, and in the R&D department of Hutchison Trading Ltd.

Commenting on the new appointment, Mr. Hahn said, “We are delighted to welcome Clarence on board, as we look to provide stronger analysis and insights for our key stakeholders.

While Asia’s insurance landscape continues to grow and evolve, it is important for us to understand the strategic implications of economic environments in which we operate and make better decisions by understanding the impact of our choices.

I am confident that Clarence will be a significant addition to our team, particularly with his wealth of knowledge and expertise in the global reinsurance markets.”

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Majority of Life Insurance Brokers, Carriers and Vendors Anticipate Innovation Will Streamline and Speed the Issuance of Life Insurance Policies

More than half (55 percent) of life insurance brokers, carriers, and vendors expect technology innovation will speed the issuance of life insurance policies while reducing administrative tasks and paperwork typically associated with the application and approval process, according to a recent survey conducted by Munich Re, US (Life), a leading reinsurer.

Streamlining the process of obtaining and assessing policy applications is a key issue in the life insurance industry. Brokers were asked to rate the importance of nine topics to improve this process. While all of topics rated as important (average rating ranging between 3.84 to 4.02 on a five point scale), brokers indicated they would like a shortened, automated underwriting process for more policy types, policies with larger face amounts and increased issue ages. In contrast, brokers indicated shortening the complete policy issue time to two days or less, or as little as 30 minutes, is of relatively low importance.

With respect to rate classes, nearly 82 percent of brokers are satisfied with the current structure (e.g.; super preferred, select, standard, etc.). Only 18 percent indicated a desire to move to customized, non-labelled ratings similar to those used in auto insurance.

Of the life insurance carriers represented, a majority of respondents (57 percent) do not sell, or plan to sell, directly to consumers. Nearly half (47 percent) of representatives from these companies do not see direct-to-consumer as a core competency of their organizations. A substantial group (42 percent) also voiced concern over channel conflict. Of the respondents who indicated their company is interested in direct-to-consumer, 60 percent look to partner with another marketing company to deliver a digital consumer experience. The remainder state that they plan to develop their own processes in-house.

Carriers were also asked about their companies’ innovation initiatives. Of the carrier respondents, nearly a quarter indicated their company already has a dedicated innovation team. The remaining 42 percent indicated that innovation is a strategic initiative and that their company is investing in people, processes and technology to fuel innovation.

Vendor respondents were evenly divided regarding the effect that technology is likely to have on their business in 2017. 41 percent anticipate that technology will result in incremental changes, while another 41 percent see technology causing disruption that will affect carriers and consumers in the upcoming year. The remaining 20 percent indicated they did not see any effect, incremental or disruptive, caused by changing technology.

“Munich Re has significant resources developing and supporting innovation across the insurance industry,” commented Paul Myers, FSA, MAAA, vice president and actuary, reinsurance marketing. “It is natural that companies would focus first on ways to make the policy issuance process faster and easier, but we expect that technology will take us far beyond process improvement. We have our hands on the latest developments coming out of innovation hubs like Silicon Valley through our presence in the area and our sponsorship of the InsureTech and other verticals at the Plug and Play Tech Center.”

Methodology

Munich Re US (Life) conducted a survey at the National Association of Independent Life Brokerage Agencies (NAILBA) conference in Dallas, Texas from November 17-19, 2016. It is intended to represent the views of 131 attendees, representing agents, life insurance companies and vendors, who participated in the in-person interviews. Respondents answered questions based on the role they play in the industry. 

For a PDF of the survey results, click here.

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Citigroup Transfers Coinsurance Agreement With Primerica To Swiss Re

Citigroup has announced that a subsidiary of Swiss Re Life & Health America Inc. (“Swiss Re”), replaced Prime Reinsurance Company, Inc. (“Prime Re”) as Primerica Life Insurance Company’s reinsurer on a coinsurance agreement covering a block of term life insurance policies that were in force on December 18, 2009. 

The transaction closed today and resulted in a reduction of approximately $2.5 billion of assets from Citi Holdings’ balance sheet. Prime Re, a subsidiary of Citigroup Inc., is reported by Citigroup as a part of Citi Holdings, which consists of businesses and portfolios of assets that Citigroup has determined are not central to its core franchise.

The coinsurance agreement represented the majority of Citigroup’s remaining reinsurance activities with Primerica, Inc. (“Primerica”) following Primerica’s initial public offering and ultimate separation from Citigroup. Following the transaction, Primerica Life Insurance Company will continue to conduct business with Prime Re and certain other Citigroup affiliated reinsurers on other reinsurance agreements executed prior to Primerica’s IPO.

Swiss Re Americas President and CEO J. Eric Smith said, “This transaction underscores Swiss Re’s continued commitment to strengthening our relationship with Primerica. We look forward to extending our business partnership with Primerica and Citigroup.”

Primerica CFO Alison Rand said, “We are delighted to expand our relationship with Swiss Re in an arrangement that affords us substantially the same or better protections and collateralization as our prior reinsurance transaction with Prime Re and Citi.”

Citi Holdings CEO Francesco Vanni d’Archirafi said, “This transaction represents another key step for Citi Holdings. We appreciate our long-standing productive relationship with Primerica and Swiss Re.”

Since its creation, Citigroup has reduced assets in Citi Holdings by more than $700 billion. As of December 31, 2015, Citi Holdings’ assets represented approximately 4 percent of total Citigroup assets, down from a peak of about 40 percent.

Citigroup’s Institutional Clients Group advised Citigroup on this transaction. Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor to Citigroup. DLA Piper LLP (US) served as legal advisor to Primerica.

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Demand For Reinsurance Finally Picking Up

Reinsurance rates have fallen for the fourth consecutive year at the April 1, 2016 renewals, according to the latest 1st View Reinsurance Renewals report from Willis Re.

However, amidst a gloomy picture of sustained pricing pressure, encouraging signs for reinsurers are starting to show.

Firstly, although insurers continue to seek improvements in pricing and terms and conditions from their reinsurance partners, overall, price reductions at April 1, 2016 were marginally less than those attained 12 months earlier. Any broadening of terms and conditions also remained largely stable.

A number of factors, such as increased limits purchased and some modest losses, including the deterioration of earlier losses, have had an impact. It is also becoming increasingly evident that although most reinsurers are accommodating client requests, many are now at the point where they are no longer prepared to grant any further concessions, irrespective of relationship considerations.

According to the report, this by no means signals a pricing floor or an end to current conditions, but for certain markets it does suggest a slowdown in pricing deterioration.

Demand for reinsurance is also finally picking up.

As observed during the January 2016 renewals, a number of larger insurers, which over the last few years were driving strategies to retain more risk on their balance sheets, have been looking to selectively reverse their thinking. This is leading to an increase in cessions to selected third party reinsurers, both on traditional risk sharing reinsurance structures as well as loss portfolio transfers and adverse development covers.

Commenting on this trend, John Cavanagh, Global CEO of Willis Re, said, "The underlying reasons for the reversal in reinsurance buying strategies are distinctive to each client. But increased regulation, which has promoted a more holistic view of risk and reward, allied with shareholder pressure to improve ROEs by reducing the equity element of the calculation, are clearly two overall drivers. Ultimately, buyers are still reaping the rewards of competitive conditions and reinsurers will need another below average loss year to produce acceptable results in the face of a tough 2016. But the apparent uptick in demand is certainly a positive sign."

Tagged: Price Softening Continues But Uptick In Demand At April 1 Reinsurance Renewals

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Munich Re Acquires Additional Shares Of Apollo Munich Health Insurance

Munich Re will acquire an additional 23.27% of shares of Apollo Munich Health Insurance Co. Ltd., from its joint venture partner, the Apollo Hospitals Group, India and increase its shareholdings from 25.5% to 48.75%. Representatives of both companies signed a share purchase agreement today. The parties agreed on a purchase price of INR 163.5cr (€22.3m).

With the share acquisition, Munich Re will strengthen the presence of its Munich Health field of business in India – one of its key markets – and continue to pursue its profitable growth strategy.

Apollo Munich Health Insurance, one of the largest private sector health insurance companies, offers comprehensive health insurance plans for individuals, families, senior citizens and corporates. The wide array of products cover health insurance, travel insurance and personal accident insurance plans. The company has approximately 8% of the retail health insurance market. Apollo Munich Health Insurance covers over 4 million members. It distributes its products through agents, bancassurance, corporate agents, strategic partners, sales associates and direct channels. The company has 100 offices across the country. In the financial year 2015, gross written premium income stood at INR 860cr (€120m) and a profit before tax of INR 0.7cr (€0.1m).

Upon completion of the transaction, the share ownership in Apollo Munich Health Insurance of Munich Re and Apollo Hospitals Group will be 48.75% and 51.1% respectively, with the balance held by employees. The purchase price refers to a total value of INR 703 cr (€96m) of the company.

Doris Höpke, member of the Munich Re Board of Management responsible for Munich Health, said: “India’s population structure, increased life expectancy and positive economic development will usher in a steep rise in medium-term healthcare spending. Since its start in 2007, Apollo Munich Health Insurance has shown exceptional, often above-market growth rates. With the increased stakeholding, we are strengthening our position for sustainable and profitable growth in this region. Apollo Munich Health Insurance is committed to making quality healthcare easy and accessible.”

The opportunity for Munich Re to increase its shareholdings in Apollo Munich Health Insurance resulted from a decision by the Indian government in March 2015 to increase the foreign direct investment cap in the insurance sector from 26% to 49%.

Completion of the transaction is subject to regulatory approval, which is expected at the end of the second quarter of 2016.

Munich Health was established in 2009. It is one of three business segments within Munich Re, alongside primary insurance and reinsurance. Its purpose is to pool Munich Re’s global health expertise in reinsurance, primary insurance and risk-management. Munich Health serves insurance companies in more than 40 countries, and primary insurance clients in over 100 countries. In the financial year 2014, Munich Health achieved a profit of €109m on premium income of over €5.3bn.

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Singapore HNWI Wealth To Reach US$1.1 Trillion By 2019

Singapore Wealth Report 2015 market research says number of Singaporean HNWIs is forecast to grow by over 18%, to reach under 188,000 in 2019, while HNWI wealth is projected to grow by less than 28%, to reach over US$1 trillion by the same year.

There were 154,189 HNWIs in Singapore in 2014. These HNWIs held US$806.3 billion in wealth. The volume of Singaporean HNWIs rose by 2.1% in 2014, following an increase of 2.3% in 2013. Growth in HNWI wealth and numbers is expected to improve over the forecast period. The number of Singaporean HNWIs is forecast to grow by 18.3%, to reach 187,975 in 2019, while HNWI wealth is projected to grow by 27.6%, to reach US$1.1 trillion by the same year.

Companies featured in the Singapore wealth report 2015 include UBS Wealth Management, Citi, Credit Suisse, HSBC Private Bank, Deutsche Asset and Wealth Management, Julius Baer, JP Morgan Wealth Management and Morgan Stanley Wealth Management. 

 

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UnipolSai And Willis Confirm Completion Of Industry-First Catastrophe Bond, Azzurro Re

UnipolSai Assicurazioni S.p.A. together with Willis Capital Markets & Advisory have confirmed the completion of the re/insurance industry’s first indemnity-trigger catastrophe bond primarily for Italian earthquake risk, Azzurro Re I Limited (“Azzurro Re”).

Sponsored by UnipolSai, Azzurro Re was structured and placed by WCMA in collaboration with Willis Group’s reinsurance division, Willis Re. It provides UnipolSai, one of the largest buyers of Italian earthquake cover, with €200 million of fully collateralized protection against earthquake risk and ensuing perils in Italy and neighbouring countries for three-and-a half years. The structure features an indemnity trigger on a per occurrence basis and mirrors the traditional reinsurance terms to ensure integration within the overall property catastrophe reinsurance program of UnipolSai.

Azzurro Re is the first catastrophe bond for UnipolSai. It also marks the first catastrophe bond exposed to European risk issued in 2015. 

Investors welcomed the transaction. More than twenty supported the transaction, which was oversubscribed and upsized from the initial €150 million. The notes pay an annual risk spread of 2.15%, a record low for a first time European primary insurance catastrophe bond sponsor of first event indemnity-trigger principal-at-risk notes. 

Commenting on the deal, Carlo Cimbri, CEO of UnipolSai, said “Azzurro Re is an important transaction for UnipolSai and supports our long-term development strategy across the international markets as well as in Italy. We are also proud to have sponsored Azzurro Re as an industry-first transaction for the catastrophe bond market."

Marco Sordoni, Head of Reinsurance of UnipolSai, said “UnipolSai is establishing relationships with investors as part of our long-term strategy to access the spectrum of global capital markets should our future reinsurance capacity needs increase. With the current low penetration rate of earthquake insurance in Italy and wider international markets, we have proactively sponsored this transaction in anticipation of our potential growth in exposure.

“We value the reduction in post-event counterparty risk from the fully collateralized cover and we continue to work on other innovative risk transfer solutions as we to look to develop our international capabilities.”

Tony Melia, CEO of Willis Re International, said “Azzurro Re demonstrates UnipolSai’s leadership in the international reinsurance market as well as Willis’s leadership position in structuring complex and advanced risk transfer solution for our international clients. We are delighted to have supported UnipolSai in its effort to engage successfully with insurance-linked securities investors as part of their long-term development strategy. 

“Azzurro Re is a clear demonstration of the continued trend for diversified reinsurance buying, with buyers restructuring their reinsurance programs to better integrate ILS capacity, ultimately to improve performance and efficiency gains for the benefit of policyholders as well as shareholders. We look forward to delivering future results alongside WCMA across new risks and territories.”

William Dubinsky, Managing Director and Head of ILS, WCMA, said “This transaction demonstrates the continued investor appetite for catastrophe risk and highlights the strong interest for investment in diversifying perils. Alongside Willis Re we look forward to continue broadening the scope of products available to investors and also look forward to bringing the buyers of reinsurance more choice to diversify their sources of reinsurance capacity.”

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Preliminary Sigma Estimates For First-Half 2015: Global Catastrophes Cause Economic Losses Of USD 37 Billion; Number Of Victims Rises

According to preliminary sigma estimates, total economic losses from natural catastrophes and man-made disasters reached USD 37 billion in the first half of 2015. The global insurance industry covered nearly 45% (USD 16.5 billion) of these losses, which is higher than the previous 10-year average cover of 27%. Around 18 000 people lost their lives in disaster events in H1 2015, up from more than 4 800 in the first half of last year. The earthquakes in Nepal, and a heatwave in India and Pakistan, claimed the highest number of victims.

Natural catastrophes caused total economic losses of USD 33 billion in the first half of the year, well below the USD 54 billion in H1 2014 and also the average first-half year loss over the previous 10 years (USD 99 billion). Of the overall insured losses, USD 12.9 billion came from natural disasters, down from nearly USD 20 billion in H1 2014 and again below the average first-half year loss of the previous 10 years (USD 25 billion). The costliest natural catastrophes for the insurance industry resulted from severe winter weather and thunderstorms in the US and Europe. In February, a winter storm in the northeastern US caused insurance losses of USD 1.8 billion, the highest loss of any event so far this year. Man-made disasters, meanwhile, triggered an additional USD 3.6 billion in overall insurance losses in H1 2015.

Earthquakes and soaring temperatures claim thousands of lives
Disaster events claimed many lives in the first six months of 2015. In all, around 18 000 people lost their lives. There were more than 9 000 fatalities in the earthquakes that struck Nepal in close succession in April and May, the largest loss of life due to any natural catastrophes so far this year. The quakes also left many people homeless. The economic losses in Nepal are estimated to be more than USD 5 billion. Of those, only around USD 160 million were insured losses.[1]

"The tragic events in Nepal are a reminder of the utility of insurance," says Kurt Karl, Chief Economist at Swiss Re. "Insurance cover does not lessen the emotional trauma that natural catastrophes inflict, but it can help people better manage the financial fallout from disasters so they can start to rebuild their lives".

In the same region, India and Pakistan were hit by a severe heat wave in May and June. Temperatures soared to 48°C, the highest recorded since 1995. It is estimated that more than 2 500 people died in India and 1 500 in Pakistan as a result of the extreme heat.

Another factor in the high number of victims of disaster events in the first half of this year is the number of migrants who have died attempting to reach Europe from conflict zones in northern Africa, often in unseaworthy vessels. In search of a better life, sadly these people have instead lost their lives as the boats capsized while carrying them across the Mediterranean.

[1] The insured loss estimate for the Nepal earthquakes is subject to change.

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Lloyd's Receives Approval To Open Representative Office In Colombia

Lloyd’s have announced that it has received approval from the Colombian authorities to open a representative office in Bogotá. Under the new Lloyd’s representative office licence, Lloyd’s syndicates are able to provide onshore reinsurance.

Juan Carlos Realphe G. has been appointed as Lloyd’s first General Representative responsible for market development and liaising with regulatory authorities and Lloyd’s business partners to enhance Lloyd’s presence in Colombia.

Juan Carlos joined Lloyd’s in early 2015 and brings 28 years’ experience in the Colombian insurance and reinsurance market. He joined Lloyd’s from Willis Colombia where he was Placement Leader, Vice President and Interim CEO. He started his career with Allianz (previously Colseguros) in 1988 holding various roles before moving to Mapfre in 2001 where he led the Non-Life Business as the Non-Life Vice President.

Lloyd’s Colombia in Bogotá will house local representatives of Lloyd’s insurers and the Lloyd’s General Representative Office. Colombia is a fast-growing hub for facultative reinsurance and Lloyd’s is already a well-established provider of energy, property and aviation cover.

Juan Carlos Realphe said, “I am delighted to be appointed as Lloyd’s first representative in Colombia and I look forward to establishing Lloyd’s presence in Bogotá. Lloyd’s will bring valuable capacity and specialist expertise to the Colombian market and there are strong growth opportunities for Lloyd’s, particularly in property and liability lines.”

Daniel Revilla, Lloyd’s Head of Operations & Strategy, Global Markets said, “Lloyd’s is strengthening its presence and offering in Latin America. We recently received approval for our Representative office in Mexico and will now move to establish a presence in Colombia giving local clients increased access to Lloyd’s expert underwriters and tailored risk solutions. I look forward to working with Juan Carlos to support Lloyd’s development in Colombia.”

Vincent Vandendael, Lloyd’s Director, Global Markets said, “Lloyd’s has delivered on the market’s desire for a presence in Colombia as part of our Vision 2025 strategy to increase our support to the world’s fastest growing economies. It gives me great pleasure to welcome Juan Carlos as our first Colombian representative and see the next phase in Lloyd’s Latin American growth strategy fall into place.”

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Swiss Re To Offer New Digital Platform For Insurers To Sell Protection Products Online

Swiss Re has partnered with Backbase to develop a new digital platform for selling and servicing life and health products online. The solution includes Swiss Re's know-how and Backbase's technical and customer experience expertise.  The new platform will broaden Swiss Re's client capabilities in the life and health insurance market, which already includes Swiss Re's market-leading automated underwriting system, Magnum; an insurance carrier iptiQ; and proposition development capabilities.

The digital platform will be available to Swiss Re's European insurance partners, and will enable online delivery of simple protections products, such as critical illness or term-life products.

"It has long been part of the reinsurer's role to support the industry in evolving and adapting to new consumer needs. Swiss Re is ready to take this forward by helping our clients set themselves up to serve a new generation of life insurance consumer. This helps to close society's protection gaps and meet the needs of the self-service generation," says Paul Hately, Head of Swiss Re Protection Partners, and Board Member at iptiQ. "We chose Backbase because of their ability to easily deliver great customer experiences in the digital world."

Backbase is specialist in developing digital channels for financial services companies. It was selected to begin developing the digital platform because of its strong focus on delivering a superior customer experience, and its proven track-record in the insurance industry.

"We are very excited that Swiss Re has selected Backbase as the platform to deliver its digital services to its many insurance partners," says Frank Uittenbogaard, Regional Director of Backbase. "Swiss Re has a strong vision and they realise digital in an omni-channel world is essential. Backbase CXP will bring Swiss Re all the capabilities to quickly on-board new partners, combined with the ability to completely tailor and customise the user experience."

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