Non-EEA Reinsurers Support of European (Re)Insurance Markets Bradley Kading

Transcription

1 Non-EEA Reinsurers Support of European (Re)Insurance Markets Bradley Kading September 2013

2 Summary Polish Insurance Market Growth Swiss Re Sigma Reports 5 10% Growth in 2012 Reinsurance Market Data Equivalence and Solvency II Polish Law Access to Reinsurance

3 Insurance Density and Penetration in Emerging Markets in 2012 Source: Sigma, No 3/2013

4 Total Premium Volume in USD in 2012 Source: Sigma, No 3/2013

5 The Market Case for Third Country Equivalence As Polish market grows Reinsurance will become more important Equivalence under Solvency II for Bermuda companies is beneficial for European insurers and policyholders Bermuda is committed to achieving regulatory equivalence The US and the EU are working on a special pathway for US insurers

6 Worldwide Rankings* Standard and Poor s reinsurer rankings: Bermuda 16 of the top 40 (2 in top 10) Europe 11 of the top 40; US 6 of the top 40 Premium: Europe 56%; US 19%; Bermuda 16%; Asia 9% 2012 reports; 2010 data; S & P NWP Life/P&C

7 Non-EEA Reinsurers have 51% of the Global P/C Reinsurance Market China RE 3% Partner RE 3% Transatlantic 3% Toa RE 2% General Ins. Corp. of India 2% MAPFRE RE 2% Everest RE 3% QBE 2% Korean RE 4% R+V Versicherung XL Group 2% 2% Axis 2% SCOR 4% MS&AD 1% Odyssey 1% Hannover 7% Munich Re 17% Berkshire Hathaway 8% Lloyd's 11% Swiss Re 14% Global Reinsurance Market Share by Property/Casualty Reinsurance Gross Premiums Earned (2011). Switzerland is included as a non-eea. Jurisdiction as identified by S&P Global Reinsurance Highlights Top 25 Global P/C Reinsurers listed as identified by AM Best. Source: AM Best, Best s Special Report: Global Reinsurance 2012 Market Review, September 3, Catlin 1% Caisse 1% Tokio 1% RenaissanceRe 1% Amlin 1%

8 Market Diversification Reinsurance European leaders 5X as big as largest Bermuda reinsurer Growth of Bermuda leads to market and risk diversification Bermuda carrier growth leads to market choice, less concentration Good for the European insurers and policyholders

9 Bermuda Capacity Needed We have a market that is international and that has capacity needs such as European wind exposure, so you need to have people who have an open exposure mind and this is what the Bermudians have... If they hadn t come in the community would not have been able to fulfill its function of covers 100%. - Jurgen Graber, COO Hannover Re, Reactions, October 2007

10 Global Reinsurance Non-Life Gross Premium Written by Region (2012) Note: Region determined by the domicile of ultimate parent. *Americas includes the US, Canada and Latin America. Americas also includes GPW of National Indemnity & General Re Corp. (subsidiaries of Berkshire Hathaway). Source: Best s Special Report, August 26, 2013

11 57% of Global Reinsurance Provided by Non-EEA Firms Switzerland 13% US 19% Australia 1% Bermuda 16% Other 4% Japan 4% Switzerland is included as a non-eea. Jurisdiction as identified by S&P Global Reinsurance Highlights Source: Standard and Poor s Global Reinsurance Highlights 2011, p 48 EEA 43%

12 Bermuda Single Most Important Cat Market

13 2009 Windstorm Klaus: France and Spain Worst Storm Since 1999 s Martin Non-European Reinsurers Provided 30% of Coverage for Klaus French Loss Wind speed maps of Klaus (left) and martin (right) in km/h

14 Economic Impact: Third Country (Re)Insurers Note: Based on the geographical location of the ultimate holding companies of insurers with losses arising out of the operators liabilities from the Buncefield depot explosion in December 2005*. *2005 Hertfordshire Oil Storage Terminal (Buncefield), near London, UK. The fire and explosions were the largest of their kind in peacetime Europe. 2,700 insurance claims were filed. Insured liabilities are estimated at nearly $850M US.

15 Non-EU Insurers Have 55% of 2009 Air France Crash Liability Insurer Bermuda 222 US 212 Europe Asia Other 10 Total 1000 Share of theoretical $1bn market loss ($mm) Source: Insurance Insider, September 2009

16 Non-EU Insurers have 74% of Costa Concordia (Italy) Loss Costa Concordia cruise liner sinking in Italy (2012); Estimated losses now $1.7 billion; reported losses at $931 million 0% Reported Loss Share Totals (in $m) US 14% Europe 26% Other 10% Bermuda 50% Source: Insurance Insider July 2013

17 European Floods 2013 Flooding Germany, Austria, Czech Republic Insured loss estimates E3 to E6 billion EURO ABIR members reported loss estimates: $400 million Source: AIR estimates E (US 4-7); Company Loss Reports; Insurance Insider; Net Losses. Very preliminary loss estimates.

18 Aggregated Bermuda Capital Compared with Largest Insurance Group Capital Group capital FY11 (USD mn) Berkshire Hathaway Bermuda Re Composite Europe-based capital* 86.8 Allianz SE 61.2 Munich RE 30.2 Swiss Re 31.3 Lloyd s 28.2 Ace Limited 24.5 Assicurazioni Generali 23.5 Tokio Marine 14.0 MS&AD 13.1 NKSJ Holdings 12.2 Source: Source: AM Best, Best s Special Report: Global Reinsurance 2012 Market Review, September 3, 2012; jurisdiction as identified by S&P Global Reinsurance Highlights 2011.

19 EU Equivalency/Market Access Solvency II Bermuda and Switzerland chosen for assessment on three elements of equivalency Third countries supervisory regimes require a positive regulatory equivalence decision by Commission for equal treatment of reinsurers (Article 172); group solvency (227) and groups (Article 260) EIOPA completed first round; next round 2015?

20 EEA Market Benefits EEA consumers benefit from Third Country (re)insurers: Competition and capacity Global coverage Diversification counter part risk

21 Reinsurance Directive Polish law refers to Reinsurance Directive Two part implementation: EIOPA Assessment Treaty EU and Third Country No plans to implement due to Solvency II Now delayed until 2017? What can be done to amend Poland s law to return to open reinsurance market?

22 Association of Bermuda Insurers and Reinsurers 21 Companies Highly capitalized, distinct regulation 51 ($66.4) billion gross written premiums, 73 ($95.2) billion surplus Worldwide business enterprises Principal underwriting operations in Bermuda, Europe and the United States 2012 YE Data

23 ABIR Members: 7,807 Employees in EEA 5,214 UK 852 France 542 Germany 293 Ireland 195 Italy 134 Netherlands 160 Portugal 188 Spain 88 Sweden Switzerland Source: ABIR Economic Impact Survey 2013 for Calendar Year 2012; data provided based on reporting companies.

24 ABIR Members ACE Allied World Alterra/Markel Arch Argo Group Aspen Assured Guaranty Axis Catlin Endurance Hiscox Lancashire Montpelier Re Partner Re Platinum Re Renaissance Re Third Point Re Tokio Millennium Re Torus Validus Re XL Group plc

25 ABIR Contacts Bradley Kading, President and Executive Director Leila Madeiros, Senior Vice President, Deputy Director and Corporate Secretary

26 Bradley Kading Association of Bermuda Insurers and Reinsurers