Insurance Market Update. Prepared for the AGA Risk Management Committee July 25, 2016

Transcription

1 Insurance Market Update Prepared for the AGA Risk Management Committee July 25, 2016

2 agenda Market Review Casualty Market Property Market Emerging Risk Forecast

3 Construction Risk Partners Established in 2006, Construction Risk Partners is privately held by 11 partners with a singular focus on serving the insurance and surety needs of the construction & energy industries. We have vast experience with many of our partners having worked together for more than 30 years. Recently ranked one of the top specialty brokers in the North America

4 great year! COMPANY STOCK PRICE JULY 1, 2015 STOCK PRICE JULY 5, 2016 % INCREASE AGL Resources % Alliant Energy % Atmos Energy Corporation % Avista Corporation % Bracewell LLP CenterPoint Energy % Dominion Resources Services, Inc % EQT Corporation % Eversource Energy % National Grid % New Jersey Resources % NiSource Inc %

5 great year! (continued) COMPANY STOCK PRICE JULY 1, 2015 STOCK PRICE JULY 5, 2016 % INCREASE Northwest Natural Gas Company % ONE Gas, Inc % Philadelphia Gas Works Piedmont Natural Gas % Questar Corporation % SEMCO Energy Gas Company Sempra Energy % South Jersey Industries % Southwest Gas Corporation % Washington Gas Light Company WEC Energy Group % Xcel Energy %

6 by the numbers Companies Represented Today: 24 Stock Increase Year/Year: +27% Market Cap Year/Year: +75B

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14 Primary Casualty In general, the market is very competitive and capacity remains aggressively priced for well managed risk. Workers Compensation has finally stabilized and the industry will again become competitive. Pricing has reflected medical cost inflation and now has rebalanced. Still state specific Auto remains a problematic. Increase in commercial auto claims industry wide due to increased vehicle use and lack of skilled drivers is increasing claim activity. Severity driven.

15 Primary Casualty Industry Mutuals (Aegis and EIM) remain strong players in the power and utility space. Zurich, Starr, Liberty, AIG, Swiss Re Providing competitive pricing and coverage terms Aegis continues to provide some of the most robust and comprehensive coverage available with an extremely high client retention rate. Surplus exceed $1.2bn for 2015 and with reserves of almost $3bn Aegis continues to maintain rate with mostly flat renewals

16 Property/Casualty/Excess Markets Aegis AIG Berkshire Hathaway Chubb (Ace) Everest (Aegis Alliance) FM Global Ironshore Liberty Lloyds Munich Re Starr Swiss Re XL Zurich EIM (follow market) Scor (follow market)

17 Excess Liability EIM maintains a large share of the first layer excess of Aegis. Surplus now exceeds $1bn 98% client retention rate $100M Liability limit to sit excess of Aegis Rating remains generally flat Strong competition from Zurich, Chubb (Ace), Munich Re, Starr, Lloyds and Bermuda

18 Excess Liability Bermuda remains the dominant market supplying capacity excess of EIM. Capacity available exceeds $600M A focus on pipeline integrity and vegetation management remains. Pipeline exposures with significant pipeline integrity plans receive preferential capacity. High Concentration Areas HCA s continue to require focus. Bermuda markets renewals typically incur 5% rate decreases.

19 utilities sector Companies engaged in the generation, transmission and distribution of electricity including the transmission or distribution of gas.

20 oil & gas sector Companies engaged in exploration, production, refining, processing, marketing and distribution of natural gas, oil, liquids and derived products, including contract drilling and other oilfield products and services.

21 Property The market continues to soften throughout the globe. Attritional Losses continue to rise, with more capacity entering the marketplace. With a mild natural catastrophe experience in 2015, losses still approached $2.0bn is shaping up to exceed last years losses with the recent hailstorms & wildfires (Alberta).

22 Property Berkshire Hathaway and other new market entrants continue to compete for property risk in the United States. Zurich, Aspen, Aig, Chubb (Ace), FM Global, Ironshore, XL, Lloyds are all Aegis has increased their capacity to $350M via larger consortium support. With rates decreasing, insurers continue to seek capacity increases to compete for premium dollars Major insurers also look to cut cost and restructure in the US. Global Capacity now easily exceeds $4.2bn

23 Forecasts Property - rate decreases in 2016/2017 of 5%-10% will be considered average as long as there is not major natural catastrophe or other large insurable event. Casualty rate stabilization in 2016/2017. This is loss dependent over a 5 year period per risk but aggressive pricing and coverage terms & conditions still exist if marketed. Auto Liability is the problematic line especially with risks with large fleets. Excess Liability rate decreases of 0-5% should be expected due to the competitiveness of this market driven by the new capacity. Large losses still create uncertainty but the overall profitability of the Insurance and reinsurance business will drive these decisions. Markets will look to retain key accounts

24 Joseph J Kent, Partner Joe has over 20 years of experience working within the Construction and Energy Industries in various risk management capacities. Starting as a risk manager for Marker, a steel erection company near State College, PA, in the late 1980 s and then moving back to Philadelphia to work for two Insurance Brokers Willis and Aon, Joe s has been responsible for all facets of risk management solutions with a specialty in complex insurance placements. From his early years managing claims, environmental and safety solutions for Marker, Joe was promoted to Risk Manager which gave him the unique experience of designing a risk management program for a contractor in an extremely high hazard industry. From there Joe joined the Insurance Brokerage Community in 1995 working for both Aon and Willis. He held various roles during his years at the two national brokers with the last being Executive Vice President and Managing Director of Construction focusing on large account management. jkent@constructionriskpartners.com (o) (c)

25 thank you