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Issue 88 - 10th Feb 2010
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Lockton in top shape for building move
London’s Lord Mayor performed the traditional topping out ceremony for the new office which will house broker Lockton’s London market operations. Over 300 guests from the worlds of insurance, professional services, property, construction and St Botolphs tenants Lockton International and Clyde & Co. attended the topping out ceremony - the traditional moment when the last beam is placed at the top of a building. The new building overlooks Aldgate and is on schedule and we are told on budget for completion for the business to move in on the 28 May. Lord Mayor Alderman Nick Anstee toasted the new building and commended it for its "innovative" design and "state of the art" construction. St Botolphs has been awarded a "Very Good" BREEAM rating - the world's leading and most widely used environmental assessment method for buildings. The topping out ceremony was hosted by Minerva Plc, the building's owners. Chief Executive of Lockton International Julian James was at the event along with senior members of Lockton management.
Aon Benfield joins reinsurers to drive ACORD acceptance
Aon Benfield, revealed it has forces with a group of leading reinsurers to promote the use of ACORD standards across the global marketplace. Several reinsurers including Partner Re, XL Re and Swiss Re, which are currently transacting with Aon Benfield in ACORD format in the US, have joined the intermediary in urging the industry to fully embrace the protocol which, said Aon Benfield, has significantly increased transactional efficiency among its current adopters. “In addition to accuracy of data and speed of processing, the use of ACORD (Association for Cooperative Operations Research and Development) can lead to significant internal and external cost savings,” said the firm as it announced the move. “This was highlighted in the August 2008 merger of Aon Re Global and Benfield Group Limited.” Mitch Balter, Head of Operations for Aon Benfield Americas, said: “Our primary goal in the merger was to create a new company that would offer the very best in client service. We wanted to deliver quality information to our clients and reinsurers as quickly and accurately as possible, and the use of ACORD standards has helped Aon Benfield to achieve that." Since January 2009, Aon Benfield globally has transmitted more than 1.3 million ACORD messages across North America, London and Europe. Ian Summers, Managing Director of eBusiness and Market Reform at Aon Benfield, and a member of the North American ACORD Advisory Committee, said: “In London, we saw a 50% improvement in settlement times from reinsurers to clients once we moved to ACORD’s ClaimMovements module. Meanwhile, in the paper world, there used to be an average of 30% rework required in reconciling statements to invoices due to errors. Once the TechAccounts module was introduced, the rework percentage dropped to about 1%, which is an incredible improvement.” The view has been backed by the underwriters. Urs Foley, Chief Information Officer of XL Re Global, added: “ACORD messaging has enabled us to meet our vision of setting higher business standards by facilitating that information flows accurately, speedily and consistently from our broker’s source systems, through our global administration system, all the way to our General Ledger in an efficient, effective and controlled environment.” Shawn Sylvester, Senior Vice President Claims Operations at Swiss Re, said: "This implementation is a continued step in our movement to stream line our processes and improve customer service. The ACORD standards provided us with the ability to improve the timeliness and quality of technical accounting and claims data submission to Swiss Re and the submission of electronic data from Aon Benfield provides us an additional control on the quality and timeliness of submission and settlement of accounts."
Beazley boss fears further tax exodus from London
The Chief Executive of Beazley Andrew Horton has said he fears that there will be further re-domiciling of business away from London as the taxation levels in the UK take further toll. Speaking as the underwriter reported its 2009 results Mr Horton described the benefits of Beazley’s decision to re-domicile to the Republic of Ireland in March of last year. The move will have a net profit impact of £14 million off the back of an effective tax rate in Ireland of 12% compared to the UK corporation tax of 28%, With some of its business still moved through the UK the group said it will have an effective take rate of 18% across the business. Mr Horton said: “The move was not one that was taken lightly. We had five meetings with the Treasury before the decision was made so it did not come as a shock.” He added that the underwriter also held meetings with the Irish Finance Ministry to seek assurances that the impact of the financial crisis on the country would not see the tax rate raised. “The rate has been successful in attracting business to the country so it was unlikely that there would be any change in the taxation rate,” he added. Mr Horton said the company had looked at other areas such as Switzerland and Bermuda but said Ireland as part of the European Union gave the company the ability to trade across the EU. He explained they viewed Bermuda to be closer to the United States and that the firm had to look at the future and the potential if the firm decided to move its management and staff to its domicile. “There is that fear that the central management and staff of firms which chose to re-domicile will start to move from London. It would have the added impact of not only the loss of corporation tax revenue but also the personal taxation revenue.” Mr Horton said he expected that there would be more businesses looking to move their status away from the UK. “It is a question of being able to compete,” he explained. “In the case of taxation it is not an issue where you can offset the higher rate you pay in some other way. We have to be able to compete with other markets which operate under a lower taxation rate.”
European insurers face reserve challenge says E&Y
Consultants Ernst & Young has warned European insurers have a number of challenges in the year ahead as the firm’s Global Insurance Centre issued its 2010 European Insurance Outlook. The outlook warned that while insurers wait for the world economy to slowly recover, they must work to rebuild capital, reassess risk management, integrate changing regulations and aggressively seize opportunities for growth, both via acquisition and new product development. “For both the general and life and pensions sectors, 2010 will be a challenging year for raising capital and building reserves, complicated by a changing accounting and regulatory environment and the impending implementation of Solvency II,” it added. “While insurers hope that they are through the worst of the crisis, the industry will be working hard to reassess and test the destruction to its risk management plans,” said Lex Van Overmeire, Ernst & Young’s Insurance leader for Europe, Middle East, India and Africa. “The past 18 months have taught them, however, that the impossible is possible and that they must be well-positioned for turbulence to ensure success.”
Lloyd’s issues strategy with brokers and coverholders at top of the agendaå
The long awaited publication of the Lloyd’s 2010 – 2012 Strategy arrived this week with the market saying it was looking to address issues of how brokers and coverholders can more efficiently access the capacity. With technology still a significant issue for One Lime Street the strategy document had been seen as clear statement of intent from the Lloyd’s management over the pave of change they expect in the coming three years. In a statement Lloyd’s said the strategy had been drawn up “after a detailed review of the market’s position which involved over 50 managing agents, brokers and market associations”. Lloyd’s CEO, Richard Ward, said the strategy reinforced the strong position the market is in. “This is about evolution, not revolution. We have stood up well in the face of the worst recession since the great depression, and we don’t see a huge necessity to change direction,” he explained. “The Lloyd’s subscription model backed by a layer of mutual security is serving us and our customers well, as is our location in the heart of the London insurance market. While we are in good shape, we cannot afford to be complacent. In 2010 we will be absolutely focused on underwriting and risk management and in preparing for the introduction of Solvency II.” The document states maintaining and developing the attractiveness of the Lloyd’s market is “central to the strategy”, which includes working to ensure that London remains a competitive financial services centre, continuing work to improve the current operating environment and ensuring that the evolving regulatory landscape does not damage Lloyd’s position. Other priorities for 2010 include: increasing the adoption and use of The Exchange platform; transforming the way the Lloyd’s market handles claims; and improving access to business through working with brokers and coverholders. “Lloyd’s is a broker market; they are central to the market’s ongoing success. We also need to work to improve and streamline how coverholders access the market,” Dr Ward said.
Jon Guy
Editor
Global Broker & Underwriter
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