AXA reports across-the-board growth for first nine months
“We grew in all five of our geographies and across all business lines.” That is the story of major insurer AXA for the first three quarters of the year.
Deputy chief executive and group chief financial officer Gérald Harlin described the nine-month performance as an illustration not only of the strength of the company’s operations but also of what he called the pertinence of AXA’s simplified operating model.
“Notably, we recorded a strong top line growth in our preferred segments with the continued dynamism of our health, protection, and P&C commercial lines businesses,” he said. “In September, we closed the XL Group acquisition, a key milestone in our transformation journey.”
The group reported a Solvency II ratio of 195%, as well as a 4% rise in total revenues to €75.8 billion.
Broken down, here are the gross revenue figures:
France – €18.9 billion, up 5% from the same period in 2017
Europe – €29 billion, up 3%
Asia – €6.6 billion, up 4%
US – €12.1 billion, up 2%
International – nearly €5 billion, up 4%
Transversal and other – €4.2 billion, up 4%
The transversal category includes the likes of AXA Assistance, AXA Investment Managers, and AXA Corporate Solutions Assurance.
In its home market, the Paris-headquartered insurer pointed to a robust showing from life & savings and health while in the US it enjoyed not only higher revenues at AB (AllianceBernstein) but also a strong recovery in the third quarter in US life & savings.
Europe’s numbers, meanwhile, received a boost from higher sales in Italy and Spain. In Asia, AXA cited growth in Hong Kong and Japan while Mexico and Turkey delivered a strong performance for the international operation, whose revenues were mainly driven by property & casualty and health.
“In the quarter, we also announced a partnership with Liverpool Football Club as their global insurance partner, and we were recognised by Interbrand as the #1 global insurance brand for the tenth consecutive year,” noted Harlin.
“I would like to thank our clients for their continued trust and am grateful to our employees, distributors, and partners for their strong drive and commitment.”[ CONTINUE READING ]
Moody’s, PwC tie up to help insurers align with IFRS 17
Moody’s Analytics and PwC have announced a collaboration to offer technology, implementation and consulting services to help insurers respond to the new International Financial Reporting Standard for Insurance (IFRS 17) contracts globally.
“Insurers face significant challenges in adopting and complying with the new standards,” said Alex Bertolotti, global insurance – IFRS 17 at PwC. “The nature of IFRS 17 will require not only greater interaction between actuarial and accounting systems and functions, it will create significant challenges related to data, processes, modelling, governance, auditability, and business integration.”
As part of the collaboration, Moody’s will provide technology that will process IFRS 17 calculations and address the data-governance and accounting requirements of IFRS 17. PwC will offer actuarial and accounting advisory services and business, functional and technical implementation consulting.
“The adoption of IFRS 17 poses a meaningful challenge for insurers in a relatively short timeframe,” said Andy Frepp, general manager of enterprise risk solutions at Moody’s. “Mishandling this challenge could materially impact how these firms’ financial results are represented. Working together, Moody’s Analytics and PwC can implement flexible solutions that deliver deep and local actuarial and accounting expertise, and help clients meet the timetable for implementation of the standard.”[ CONTINUE READING ]
QBE-BLM tandem triumphs against fraudster
Zero compensation and a two-year custodial sentence – albeit suspended for two years – are what convicted fraudster Liam Jones has received after he was found exaggerating an employers’ liability claim against a QBE policyholder.
Jones, whose camp rejected an early offer to settle, reported having trouble with stairs, being unable to work, and that he could only walk with the assistance of a crutch due to injuries sustained from a roof fall. The offer was based on QBE’s assessment of liability and the extent of injuries.
The insurer’s counterfraud unit believed Jones’s claim was out of proportion. He claimed damages to the tune of £700,000.
With evidence – among them showing Jones using ladders in his capacity as a roofer – contradicting the claimant’s assertions, QBE decided to pursue him by way of a private criminal prosecution for fraud. Law firm BLM acted for the provider and its insured in both the civil claim and private prosecution.
Jones was found guilty in Liverpool Crown Court.
“This case demonstrates how important it is to take a hard line when faced with a claim tainted by fraud or exaggeration,” noted BLM partner Stuart Furniss. “The sentence should also act as a clear deterrent to those seeking to defraud insurers and their customers and hopefully help to reduce the number of similarly fraudulent claims which continue to drive up premiums for others.”
Meanwhile QBE Business Insurance claims director Mike East commented: “Fraud, including exaggerated claims, remains a major issue in our industry and we are pleased with the sentencing of Mr Jones.
“His prosecution is another in a long line of fraud cases in which our counterfraud team has been alert to fraudulent activity and has tirelessly pursued perpetrators in defence of our customers’ interests.”[ CONTINUE READING ]
What is an MGA?
A managing general agent (MGA) or a managing general underwriter (MGU) is a specialised type of insurance agent or broker that has been granted underwriting authority by an insurer, according to the International Risk Management Institute (IRMA), and can administer programs and negotiate contracts for an insurer. An MGA’s functions can include binding coverage, underwriting and pricing, settling claims, and appointing retail agents in a certain region, all of which are typically carried out by insurers. At its core, the MGA manages all or part of the insurance business of an insurer and acts as an insurance agent or broker for the insurer, while working as the intermediary between insurers and agents, and/or insureds.
How MGAs fit into the distribution channel
Wholesale brokers act as an intermediary between a retail broker and an insurer, and work with insurers to attain specialised coverage for clients while having no contact with the insured. An MGA is one type of wholesale broker, and operates on the insurer’s behalf while also working closely with clients to attend to their needs. The other type of wholesaler is a surplus lines broker who works with a retail agent and an insurer to obtain coverage for the insured. What makes MGAs unique is their binding authority from the insurer.
An MGA will deliver and service a insurer’s product to both insurance agencies and clients. MGAs can work with several insurers to formulate a specific mix of products to deliver to agents/brokers or directly to insureds.
How MGAs benefit insurers and agents
Working with MGAs is beneficial to insurers because they possess expertise that insurers may not have in their head or regional offices, and which can be costly to develop in-house, according to IRMA. Working with an MGA, companies can pass time-consuming and complicated tasks to an outside entity that already has the knowledge to address them.
MGAs tend to deal in lines of coverage such as professional liability, employee benefits or surplus lines where specialised expertise is needed to underwrite policies, though they can be active in any line of insurance, and work with all types of insurers. If an insurer wants to explore a specialty line of business, but does not want to take on the risks or uncertainty of doing so, they can turn to an MGA to offer up that expertise, and give the MGA the authority to underwrite and issue specialty policies because they are already familiar with the risks.
MGAs can also write business in geographically isolated areas where insurers do not want to open an office. A small town or rural region might not warrant the opening of a branch for an insurer, but working with an MGA in that area provides the company with access to new customers without spending money on staff or rent.
Similar to insurers, agents can get expertise about a particular product or more competitive pricing by working with an MGA. They can likewise gain entry to markets and insurers that could be difficult to access on their own, and because of the often-smaller size of the MGA business, there are fewer barriers to communication for a broker. MGAs also bring technology to the table, such as online platforms that integrate with wholesale channels or products that speed up the quoting process, that help independent agents provide better services to their clients. Agents can realise higher commissions by working with an MGA that has a diverse network of insurers, allowing agents to review the commission structure and have the option to sell insurers’ products that offer the best rates.
MGAs around the world
Many MGA models were created during the 1990s and 2000s, though the role of the wholesale broker, a category that MGAs fall into, dates back to the 19th century. Associations that represent MGAs in specific regions today include:
Managing General Agents’ Association (MGAA) in the UK, which was formed in 2011
American Association of Managing General Agents (AAMGA), which was established in 1926 and has since merged with the National Association of Professional Surplus Lines Offices (NAPSLO) to form the Wholesale & Specialty Insurance Association (WSIA)
Canadian Managing General Agents (CAMGA), a relatively new association formed in 2017
Underwriting Agencies Council, based in Australia and formed in 1998
In Australia and New Zealand, MGAs are referred to as underwriting agencies, though they have the same functions as managing general agencies. EY revealed that these agencies made up 13% of the broker market in Australia in 2016.
In the UK, the term ‘MGA’ has been adopted by the market to refer to what was once known as a ‘coverholder.’ Today, more than 300 MGAs underwrite over 10% of the UK’s £47 billion general insurance market premiums, according to the MGAA.
Worldwide, MGAs fall into one of the fastest-growing segments of the insurance industry. Global investment firm Conning reported that MGA and program market growth continues to outpace the growth of the property and casualty market, with direct premium growth of 7% higher than the previous year compared to the 5% seen in P/C market growth. The analysis also showed that 21 of the top 25 P/C insurers have relationships with MGAs.
The role of the MGA today
With technology bridging the gap between insurers and clients today, some insurers are moving away from relying on MGAs, which has thrown the identity and future of the MGA into question.
“By virtue, MGUs and MGAs, program administrators, are the middlemen,” said Rekha Schipper, president of Tangram Insurance Services. “How can we make sure we stay ahead, make sure that we take advantage, and make sure that we continue to be relevant and meaningful to a broker, to a insurer, to a tech investor, to say, this entity still belongs in the middle of all of this?”
However, an MGA is a natural outlet for technology solutions to plug into because of its established distribution channels. These agencies can also react to market changes quicker than typical insurance companies because they are smaller businesses that are acting on behalf of larger insurers.
“We can bring programs to the market faster. We can get out to more brokers because they can get on our platform. We can reduce our expenses as an MGU because now we’re automating a lot of things,” explained Schipper, adding that there’s “an unprecedented opportunity” for partnerships between technology vendors and MGUs.
During hard market periods, MGAs can be used by insurers to decrease costs and increase profitability. The MGA model is also flexible. Following the 2008 financial crisis, Ironshore, a Liberty Mutual company, established its managing general underwriting agency as its commercial clients were facing heightened risk since the viability of some insurance insurers that offered high coverage limits across many lines of business for major companies was uncertain. Brokers were meanwhile also under pressure to find alternative coverage solutions. The Ironshore MGU model involved underwriting as well as claims management, the latter of which made it unique from a traditional MGA, which can have limited authority on claims management and payment.[ CONTINUE READING ]
Bollington Wilson is hiring as new office opens
A huge “recruiting now!” banner is what will greet you when you visit the website of Bollington Wilson Group – the product of the merge between Bollington Insurance Brokers and Wilsons Insurance Brokers – as the firm finds itself in a new location amid further growth.
The combined group, which employs over 400 people, has unveiled its new office in Sale. A report by TheBusinessDesk.com said Clipper House will be the base for more than 200 of the current workforce, with a further 100 to be hired as part of the expansion.
“Bollington has had several years of solid growth expanding on our core areas of corporate insurance, motor trade, and care insurance, into a specialist niche and affinity insurance broker,” the report quoted Bollington Wilson Group chief executive Paul Moors as saying. “Building on this we wanted to expand our offering and increase our market share, which resulted in the merged operations with Wilsons Insurance Group.
“We are now in an enviable position of having a diverse, successful base from where we can grow organically and through acquisition. To accommodate this, we have had to reassess our office spaces, and Clipper House was an ideal new additional location for us.”
Citing a unified vision for the group, Moors said sales teams across all product lines will now operate from the new site.[ CONTINUE READING ]
Legal & General announces tie-up with Asda
Legal & General has a new partner in the form of Asda Money.
Unleashing its first ever pet insurance affinity, Legal & General said it has entered into a three-year commercial agreement that will see the financial services firm offer its pet insurance product range for dogs and cats to Asda Money’s clientele. Distribution channels include phone, the Asda Money website, and price comparison portals.
“We are delighted that Asda has chosen Legal & General to partner with them on pet insurance,” commented Cheryl Agius, chief executive of Legal & General’s insurance division. “The strength of Asda’s customer base coupled with the broad range of products and digital capabilities from Legal & General provides a solid foundation to continue to grow Asda’s pet insurance customer base.”
The deal, which comes amid Legal & General’s 60% year-on-year growth in its pet insurance business, is also part of the company’s wider strategy to offer coverage via distribution channels and partnerships.
“Legal & General’s Petonomics report, which looks at how the pet market contributes to the wider UK economy, has found that the typical dog owner spends £198 every year on their pet’s medical expenses, with cat owners paying on average £97 a year,” explained the insurer.
“There is therefore a significant opportunity for further growth to be achieved by combining Asda’s distribution expertise with Legal & General’s digital and insurance expertise to offer a wide range of products to customers.”
Asda, which has been offering pet insurance for more than a decade, believes its new ally is a like-minded organisation whose decision-making puts the customer at the forefront.
“Legal & General has the necessary expertise to support our customers in their time of need,” noted Alistair Ball, head of insurance at Asda Money. “Our pets are part of the family, so it is vital insurance for them is backed by a name you can trust.”[ CONTINUE READING ]
Sedgwick expands footprint with swoop
It was only in April that claims management giant Sedgwick named a new chief executive in Ireland… now the firm has snapped up one of the country’s longest established independent specialist liability loss adjusting practices.
“Sproule Graham will add considerable experience, expertise, and a strategic geographic footprint to our market-leading casualty loss adjusting operations,” noted Sedgwick Ireland CEO Malcolm Hughes.
The swoop, according to Sedgwick, will not only support the expansion of its range of services but also strengthen its extensive coverage across the entire western seaboard of Ireland. It is in line with the company’s growth strategy.
“I am excited to welcome our new colleagues Glenn Sproule, Tom Graham, Colm Kelly, Nigel Barlow, Aisling Griffin, and Caroline Bradley to the Sedgwick family,” commented Hughes. “We look forward to working together on developing the business and meeting the needs of our growing customer base.”
Meanwhile Sproule Graham proprietors consider the deal “a unique opportunity” to continue to provide, grow, and develop their services for the benefit of clients, their customers, and colleagues.
With a workforce of 400 people based in eight regional service centres in Ireland, Sedgwick is the largest independent specialist loss adjuster and third-party professional services provider operating in the Irish market.[ CONTINUE READING ]
Allianz UK unveils results and latest on LV= transfer
It’s been a manic couple of years for global insurers in the UK, what with all the uncertainty surrounding the country’s departure from the European Union, but it looks like major player Allianz is meeting the challenges head-on as its British unit reports better financial results.
From £84.6 million in July-September 2017, Allianz UK posted a higher operating profit of £113.6 million in the third quarter of 2018. Its combined operating ratio (COR) for the period also saw a positive shift, from 98.5% previously to 96%.
“Profits are up 34.3% over the same period in 2017 and the combined operating ratio has improved by 2.5% compared to this time last year,” noted Allianz UK chief executive Jon Dye. “The revenue position reflects the transfer of Allianz’s personal home and motor business to LV= with all the retained business lines continuing to perform well.”
Gross written premium (GWP) in the third quarter, excluding income from engineering inspection and special services, reached £1.5 billion. Commercial lines GWP, in particular, rose 4.1% to £856.1 million while COR was at 95.8%.
“Achieving rate strength at levels required to maintain a consistent approach to customers relies heavily on the relationship between broker and insurer where trust and respect for each other’s challenges is crucial,” explained the UK unit when it released its latest numbers. “Relevant to this is the issue of claims inflation which is trending at an adverse level.
“The increasing cost of repairing motor vehicles and the rise in the cost of labour for repairing damage to property are two examples where costs have risen sharply. The uncertain pre-Brexit environment means these are pressures that are unlikely to diminish in the near term and may well continue beyond the point the UK leaves the EU.”
Meanwhile Dye is happy with the ongoing LV= transition.
“I recently visited our Maidstone office, which is the home of the team coordinating the commercial transfers from LV=, and I am pleased to report that several months of careful preparation is paying off,” said the CEO. “The mapping of the e-traded products on to our own product suite is working well, the new taxi and truck products are also performing well in the market, and the conversion of cases is good.
“A determination to make the process as smooth as possible for brokers has helped significantly in the way we have gone about the transfer of business. We have another 10 months of case by case trading with brokers for previous LV= commercial business but we are undoubtedly off to an encouraging start.”
As for personal lines, GWP amounted to £678 million while COR stood at 97.2%. The insurer noted that moving its home and motor personal lines business to LV= is having an effect on the top line.
Overall, and with the help of brokers, the year is expected to be a positive one for Allianz UK.
“As we enter the last trading quarter we are well positioned to post a good financial performance in 2018, and the continued support of the broker community is important if we are to achieve this goal,” stated Dye.[ CONTINUE READING ]
Helios boosts capacity with Advantage swoop
It looks like Helios Underwriting Plc is wasting no time in increasing its underwriting capacity as the Lloyd’s of London market participant snaps up limited liability member Advantage DCP Limited.
Advantage’s 2018 underwriting capacity is £2.3 million while that of Helios, prior to the acquisition, stands at £43 million.
Subject to consent for change of control from Lloyd’s, the deal will see the acquiring firm pay £450,000 in cash at completion plus the balance in tranches in 2019 and 2020. Helios said the consideration is between £1.66 million and £1.91 million, dependent on no deterioration from the current 2017 year of account midpoint forecast of Advantage and the final result of that year.
Meanwhile, aside from this latest transaction, the Lloyd’s market participant is continuing to pursue a number of further swoops in line with its growth strategy.
Earlier this week it was announced that the weighted average prices of the syndicates comprising the Helios Capacity Fund traded in 2018 rose 28% year-on-year following the conclusion of the Lloyd’s capacity auctions.[ CONTINUE READING ]
Co-op bids to save jobs as part of insurance deal – reports
Earlier this month it was reported that a deal to offload its general insurance unit could be in the offing for the Co-op Group, amid supposed advanced talks with a likely buyer. Now here’s the latest on the potential swoop, according to Sky News sources.
A report by the British news network said a jobs commitment from Markerstudy Group is being sought to ease concerns that many of the Co-op’s insurance staff will be let go as part of an estimated £300 million transaction.
Retaining the mutual’s insurance base in Manchester, to preserve at least 800 posts, is said to be part of the terms being negotiated.
The up-for-sale division employs about 1,200 people. According to the report, which cited sources close to the discussions, the commitment to the workforce’s majority would be informal and not legally binding.
The Co-op, whose chief financial officer Ian Ellis is retiring in May 2019, sold its life insurance business to fellow mutual Royal London about five years ago.[ CONTINUE READING ]