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INFORMING YOU WITH MARKETS AND INDUSTRY SPECIFIC INSIGHTS AND KNOWLEDGE

ENERGY REVIEW

31 July 2018

The European summer has started with a bang: Wimbledon, World Cup Football and the Tour de France have all been vying with Brexit bungling, nervous NATO, Trump tactics and Putin posturing to dominate the headlines. News of the crackdown on freedom of speech in Turkey following the re-election of President Erdogan only made the third page in a leading English newspaper.

While most international and political news seems to concentrate on uncertainty and disarray, there has been the welcome news of the rescue of the Thai children after some very worrying days. It was heart-warming to read of help coming from all corners of the world but saddening that one rescuer died.

Health and safety are paramount with all planned activities, be they recreational or commercial and industrial. For our readers it must be reassuring that during the past month, accidents and incidents in the energy sector have not led to the unfortunate number of injuries and deaths we usually come across as news of the industry filters around the globe.

The last few weeks have seen the price of oil creeping up and it recently reached US$75 for the first time since 2014. The major corporations are getting that little bit more money which encourages them to potentially invest more in exploration. However, lurking around the corner are rumours that it would not be exploration and discoveries but US sanctions which would lead to the addition of an extra US$50 to the price of oil; the reason being that inadequate investment and low spare capacity could cause a supply crunch in years to come, which is another issue which OPEC cannot influence.

While most South American countries appear to be happy with their energy industries faring well, Venezuela seems to be facing ever increasing difficulties. President Maduro’s decisions do not seem to be able to restart the economy and he is facing growing discontent from the population which the army is starting to struggle to control.

There has been quite a lot happening in the insurance markets with Neon launching its Nordic-focused marine business in Copenhagen, Advent pulling the plug on its hull and cargo book and AmTrust shuttering its Lloyd’s marine book. The surprise for many of us was the decision of Inga Beale to step down as CEO of Lloyd’s after only five years.

In another market innovation, Lloyd’s is piloting Lloyd’s Bridge in the UK, Australia and New Zealand as an online platform which matches insurance businesses with underwriters from the Lloyd’s market. Lloyd’s says the digital service will increase ease and efficiency of connecting with underwriters. Brokers will have access to the platform if they act as a coverholder or are acting on behalf of a coverholder.

We trust our readers will find our news interesting and with the holiday season closing in, everyone can get away from their daily toils and relax. In the meantime, we look forward to continuing our dialogue with readers and clients as we listen to your needs and requirements and work with you to develop successful solutions.


Energy Casualties

 

Explosion at North Carolina propane plant injures two

An explosion and fire at a propane cylinder plant in North Carolina has injured two workers.

Sampson County spokeswoman Susan Holder told news outlets emergency management received a call of multiple explosions at the Rapid Xchange facility on the afternoon of Friday 6th July.

Two workers were airlifted to a burn centre with unspecified injuries believed to be non-life-threatening.

Ms Holder says responding firefighters worked for around two hours to keep the fire away from the woods as well as two 30,000-gallon (113,559-litre) liquid propane tanks and 25,000 propane cylinders. Everyone within a one-mile radius was evacuated.

She said one firefighter was treated and released at the scene for an unspecified injury.

The North Carolina Department of Labor and the state Bureau of Investigation are working with the county fire marshal to determine the fire’s cause.

Major oil spill at the Port of Rotterdam

Oil freighter Bow Jubail punctured its hull at the Port of Rotterdam on Saturday 23rd June resulting in the loss of 220 tons of heavy fuel oil.

The Norwegian tanker crashed into the quay whilst mooring, breaching the hull adjacent to the freighter’s fuel tanks.

The spill was initially contained with shields, but several tons escaped and leaked into the harbour’s waterways.

Bow Jubail’s owner Odfjell issued an immediate statement offering their full cooperation to Dutch Authorities. “Odfjell apologises for the unfortunate event and views it as very serious. Together with Gard, Odfjell will collaborate with Dutch authorities to ensure that the necessary resources are available to limit the consequences of oil spillage.”

The company has also set up an accident commission to investigate the incident. The commission will cooperate with the Dutch authorities.

Authorities at the port launched a clean-up operation, which is expected to take days, if not weeks, according to one source. Volunteers and environmental groups also offered their assistance to help save up to 1,000 birds which had been covered in oil from the spill.

Dutch authorities have started an investigation into the cause of the incident and have said that they will hold Odfjell, the owner of the freighter, responsible for the damages incurred at the port. They also warned that marinas in the port area would be cordoned off to prevent the oil spill from spreading further, whilst beaches near Rotterdam were at risk of contamination.

Libya’s NOC reports damage to oil storage

Libya’s National Oil Corporation (NOC) confirmed the loss of two storage tanks at Ras Lanuf port terminal.

NOC had declared force majeure on crude oil loadings from Ras Lanuf and Es Sider port terminals starting on the 14th June.

An armed militia attacked both terminals. NOC said the militia was led by Ibrahim Jadhran.

NOC evacuated all employees as a precautionary measure. One employee was shot during the incursion, NOC said, adding that other NOC employees were “robbed by African armed mercenaries fighting alongside the Jadhran militia.”

Blockades led by Jadhran have cost the Libyan state tens of billions of dollars, NOC said.

Crews respond to pipeline explosion near Hesston, Kansas

Authorities say a natural gas pipeline has exploded in a rural area in central Kansas, sending flames shooting more than 75 feet (23 metres) into the air.

A Harvey County dispatcher says the explosion was reported at around 07:30 a.m. on the 15th June near the town of Hesston, which is about 30 miles (50 kilometres) north of Wichita. No injuries have been reported.

The gas line belongs to Southern Star Central Gas Pipeline. Company spokesman Rob Southard said the gas supply was shut off and that the fire had burned itself out by late morning. He said crews were assessing the damage but would not begin making repairs until the area cooled off.

He said the cause was under investigation. There was no excavation work being done in the area beforehand.

Acid release at Louisiana Exxon plant sends two to hospital

A sulphuric acid release sent two contractors at an ExxonMobil chemical plant in Louisiana to the hospital.

Louisiana Department of Environmental Quality spokesman Greg Langley said the agency was not immediately sure what caused the release on the 11th June at the Baton Rouge plant.

The Advocate reports that, in a brief statement Exxon said three people were treated by first responders, two of whom were taken to a hospital “for further evaluation.”

No problems were reported outside of the plant facility. Mr Langley said the acid released was a small amount, which was contained onsite. He expected any investigation to be performed by the Occupational Safety and Health Administration.


Insurance News

 

Lloyd’s launches digital distribution platform called ‘Lloyd’s Bridge’

Lloyd’s has launched a digital distribution platform – Lloyd’s Bridge – designed quickly, easily and efficiently to connect insurance businesses and entrepreneurs with Lloyd’s underwriters.

Lloyd’s Bridge is an online platform which matches insurance businesses with underwriters from the Lloyd’s market, enabling these businesses to underwrite certain policies on behalf of Lloyd’s as Lloyd’s coverholders.

The pilot programme will initially be available in the UK, Australia and New Zealand. Access will be extended to more markets throughout 2019 as part of a global roll out, Lloyd’s said.

Lloyd’s said it is committed to continuing to grow through the broker distribution channel, with brokers having access to the platform if they act as a coverholder or are acting on behalf of a coverholder.

“All over the world Lloyd’s has an enviable reputation as the leading insurance marketplace and it remains the most sought after destination for insurance solutions,” said Lloyd’s Chairman Bruce Carnegie-Brown.

“In an age of digital disruption, however, our partners in both established and fast growth markets are increasingly looking for new ways to access our market,” he added.

“Lloyd’s Bridge offers the ideal platform to do this quickly, easily and efficiently. It will enable coverholders in different parts of the world to benefit from easier access to Lloyd’s expertise, underwriting talent, significant capacity and financial security,” Mr Carnegie-Brown continued.

Lloyd’s Bridge is the latest in a series of moves which use technology to provide better customer service, enhance underwriting decisions and make operations more efficient, said Lloyd’s.

Already this year Lloyd’s has decided to mandate the use of electronic placement with 80% of business to be placed electronically by the end of next year. Lloyd’s also announced the establishment of a new innovation accelerator, the Lloyd’s Lab, and launched a global recruitment drive for top tech talent.

Lloyd’s also has plans to launch a new underwriting portal which will enable coverholders to quote, underwrite risks and issue policies on behalf of Lloyd’s syndicates. More details will be confirmed on this initiative in due course.

Lloyd’s has doubled in size since 2000, said Vincent Vandendael, Lloyd’s Chief Commercial Officer, who explained that more business is being placed locally.

“Currently, around 30% of Lloyd’s premium is placed through coverholders – local insurance business writing policies on behalf of Lloyd’s – and we are keen to continue to invest in this way of doing business,” he added.

“As we continue to grow and expand our international business we are committed to enhancing the service and access we provide to our customers’ changing needs. By providing coverholders with quick and easy access to our market, Lloyd’s Bridge will transform how we do business at Lloyd’s,” he said.

Catlin brand to remain in Lloyd’s after AXA-XL deal completes

The XL Catlin brand will continue to hang over the syndicate’s box at Lloyd’s in the wake of AXA’s US$15.3 billion deal to buy its parent.

Forecasters now see below-average activity for rest of hurricane season

Scientists at Colorado State University’s Tropical Meteorology Project have decreased their forecast and now believe that the 2018 hurricane season will have below-average activity.

According to the forecasters, the tropical and subtropical Atlantic is currently much colder than normal, and the odds of a weak El Niño developing in the next several months have increased.

With the decrease in the forecast, the probability for major hurricanes making landfall along the United States coastline and in the Caribbean has decreased as well, report Philip Klotzbach and Michael Bell.

The Colorado team now estimates that the rest of 2018 will see an additional four hurricanes (median is 6.5), ten named storms (median is 12.0), 41.50 named storm days (median is 60.1), 15 hurricane days (median is 21.3), one major (Category 3-4-5) hurricane (median is 2.0) and two major hurricane days (median is 3.9).

The forecast cites a 22% probability of a direct hit to the eastern United States; the average is 31%.

This revised prediction is a decrease from the group’s prior seasonal forecasts issued in April and June and there remains some uncertainty with this forecast. This forecast is based on an extended-range early July statistical prediction scheme that was developed utilising 36 years of past data.

In explaining the changed forecast, they note that the tropical Atlantic is much colder than normal. “A colder than normal tropical Atlantic provides less fuel for developing tropical cyclones but also tends to be associated with higher pressure and a more stable atmosphere,” the forecasters note. “These conditions tend to suppress Atlantic hurricane activity.”

Also, the odds of a weak El Niño for the peak of the Atlantic hurricane season in 2018 have increased somewhat. If El Niño were to develop, it would tend to lead to “more vertical wind shear in the Caribbean extending into the tropical Atlantic, tearing apart hurricanes as they are trying to develop and intensify.”

At the start of the hurricane season in June, the National Oceanic and Atmospheric Administration estimated a total of ten to 16 named storms, tropical-strength or stronger, would likely affect the US, Mexico and the Caribbean. NOAA predicted that one to four of them become major hurricanes might.

Neon launches Nordic-focused marine business in Copenhagen

Specialist Lloyd’s insurer Neon has launched Orca Insurance Agency, a Lloyd’s approved coverholder which will underwrite on behalf of Neon Syndicate 2468.

Headquartered in Copenhagen and led by CEO Lars Hendriksen, Orca will focus on the Nordic markets, offering comprehensive marine risk solutions. This includes offering insurance products, as well as risk consultancy and engineering services for the shipping industry.

Mr Hendriksen has over three decades of experience in the marine industry. He has held a number of senior management roles within the sector including at Codan Marine RSA Scandinavia and the Survey Association.

Additionally, Henrik Pilegaard has been appointed Chief Underwriting Officer of Orca. He has 16 years of marine insurance experience. Throughout his career, he has held senior roles in underwriting, risk management and claims.

Neon said risk engineering capability and technical expertise will sit at the core of Orca’s offering and it will offer clients dedicated in-house claims handling.

Advent pulls the plug on hull and cargo book

Fairfax-owned Lloyd’s syndicate Advent has become the latest carrier to pull out of marine classes, after it stopped writing hull and cargo lines at the end of June.

It is understood that Syndicate 780 will continue to write some marine business, however.

International Underwriting Association publishes Brexit Contract Continuity Clause

A Brexit clause has been published by the International Underwriting Association (IUA) to help companies manage insurance contracts as the UK leaves the European Union (EU).

The Brexit Contract Continuation Clause aims to clarify how firms will continue to pay claims despite any business disruption caused by a situation in which adequate transitional arrangements are not agreed.

Insurers currently relying on the EU financial services passport to conduct cross-border business between the UK and continental Europe may not be licensed to continue providing cover, or pay claims, on existing contracts after March 2019, the IUA explained.

The new clause, therefore, allows a risk to be placed with both a UK-domiciled insurer and a ‘contingent’ EU-based insurer. In the event of any Brexit difficulties, this contingent insurer will step in and fulfil any policy obligations that the original carrier is no longer able to cover.

“The Brexit process continues to be quite uncertain in the nature of its final outcome and the future trading relationship trading relationship between the UK and remaining EU states,” said Chris Jones, the IUA’s Director of Market and Legal Services.

“A number of other market clauses have already attempted to address the issue of contract continuity, but it has proved difficult drafting a solution which covers all political eventualities. Another problem has been catering for the many different corporate structures, both currently present in the London market and planned by firms as part of their Brexit contingency responses,” Mr Jones continued.

“Consequently, a key concern of the IUA’s new clause has been to ensure that the legal principles underpinning the contingent insurer approach are sound and that the terminology and intent of the wording is as clear as possible,” he said.

The IUA Brexit Contract Continuity Clause (reference IUA 09-077) has been drafted by the association’s Clauses Committee at the request of its Brexit Working Group. It is published alongside an accompanying commentary which outlines in detail circumstances in which it may be of use. Whilst the clause is primarily intended for insurance business, it could also, in principle, be used for reinsurance risks.

The clause will be freely available from the IUA clauses website. Its use is not compulsory and firms are free to adopt and adapt its provisions as they see fit.

Managing agents prefer Lloyd’s Brussels

Managing agencies slightly favour the use of the Lloyd’s Brussels subsidiary (57%) over the creation of their own EU subsidiary (43%), according to a survey with Lloyd’s market chief operating officers commissioned by the Lloyd’s Market Association (LMA).

Lloyd’s has started hiring staff for its Brussels subsidiary which will involve positions in finance, operations, compliance, HR and underwriting.

Lloyd’s had decided to create an insurance company in Brussels to ensure it can continue to serve the European Economic Area (EEA) after the UK leaves the European Union. In May Lloyd’s received licence approval from the National Bank of Belgium for its EU subsidiary Lloyd’s Insurance Company.

Lloyd’s Brussels will be able to write all non-life risks from the EEA to ensure its partners can continue to have seamless access to the specialist policies of the Lloyd’s market.

Brexit is seen as an internal and market-level priority issue for 2018 by a majority of COOs, according to the LMA survey.

The research also shows that within market modernisation initiatives, delegated authority transformation has the highest priority, and 93% of COOs believe straight-through processing is a viable option for delegated authority relationships.

All respondents are planning systems upgrades in 2018. Almost 77% plan to upgrade coverholder reporting systems and processes.

AmTrust shutters its Lloyd’s marine book

AmTrust has jettisoned its Lloyd’s marine business – which is thought to be worth up to £30 million (US$39.9 million) – in a shock decision.

It is understood that the cargo, hull and marine liability lines of business have all been axed.

Markel gets licence to underwrite reinsurance on Lloyd’s India platform

Markel International, the specialist insurer, has been granted a licence by the Insurance Regulatory and Development Authority of India to write reinsurance business in the country.

Capacity will be provided by Markel’s Syndicate 3000 at Lloyd’s and written through the Lloyd’s India platform.

Markel India will provide treaty and facultative reinsurance to local Indian insurers, in a broad range of commercial classes. It will initially focus on marine, energy, contingency and professional and financial risks.

Markel India is being led by Deepika Mathur, who has had some 20 years’ experience in the Indian insurance industry, most recently as Executive Vice President at HDFC Ergo, the Indian/German joint venture general insurance company, with responsibility for the casualty and financial lines business.


People on the Move

 

Price Forbes and Bishopsgate launch combined speciality energy group

Price Forbes & Partners Ltd. and Bishopsgate Insurance Brokers Ltd. are pleased to announce the launch of a combined specialist energy group under the leadership of Gordon Newman. The main objective of the group will be to coordinate production activity across both brands.

James Masterton CEO Price Forbes commented: “I am delighted Gordon leads this unique opportunity in bringing together a world class group of energy expertise for the benefit of the industry.”

Gordon Newman Chairman of Bishopsgate also commented: “This group will service clients across the full spectrum of energy business on a worldwide basis.”

Ex-Lloyd’s CEO Richard Ward joins Ardonagh

The Ardonagh Group has appointed Richard Ward as Executive Chairman of Specialty & International and MGA.

Mr Ward, who was CEO of Lloyd’s of London between 2006 and 2013, takes on the newly-created role on the 10th September this year.

Ardonagh detailed that its speciality and international segment is comprised of Bishopsgate and Price Forbes, adding that the MGA segment includes the entire firm’s managing general agent activities.

An Ardonagh spokesperson explained that MGA leader Paul Dilley; Ardonagh wholesale leader and Bishopsgate chairman Gordon Newman; Price Forbes CEO James Masterton and Bishopsgate Managing Director Neil Pearce will be reporting in to Mr Ward.

After leaving Lloyd’s in 2013 Mr Ward has worked at Brit Insurance, Cunningham Lindsey and Sedgwick.

He currently sits on the board of Direct Line Group as a Non-Executive Director.

Inga Beale to leave Lloyd’s

Inga Beale is to leave Lloyd’s in 2019 after five years as Chief Executive Officer, the global insurance and reinsurance market has confirmed.

Lloyd’s did not give a precise leaving date saying it would be announced in “due course” nor name a replacement.

Ms Beale joined Lloyd’s in January 2014 moving from group chief executive of Canopius as successor to Richard Ward.

Lloyd’s noted that since then Ms Beale had led significant cultural change and the adoption of new technology which it stated had accelerated the market’s modernisation and digitalisation.

It listed that she founded the Inclusion@Lloyd’s initiative in 2013. It is celebrated via the annual Dive In festival and has sought to embed diversity and inclusion as a business imperative across the global insurance sector.

Honour
Ms Beale said, “The decision to leave has been a tough one and when the time comes I will miss the energy, innovative spirit and expertise which I come across every working day.

“Leading Lloyd’s is an honour and I am proud to have played a part in ensuring that it remains relevant and fit for purpose for the future. The world trusts Lloyd’s to be there when it matters the most and I believe it is well placed for the next 330 years.”

Chubb replaces executive vice president of global energy

Property/casualty insurer Chubb has appointed Matthew Hardy as Executive Vice President of Global Energy, Chubb Overseas General. He replaces Roger Giddingswho will leave Chubb later in the year.

Mr Hardy will report to Timothy O’Donnell, the newly-appointed Division President of Commercial Property & Casualty, Chubb Overseas General.

Mr Hardy was previously product head – energy for Chubb Global Markets and head of international energy for Chubb Overseas General, where he led Chubb’s efforts to develop and deliver innovative solutions for its energy clients’ complex international risk management needs.

In a further change to the team, Riaz Thanduparakkal has been promoted to the role of Product Head, Chubb Global Markets Energy. Thanduparakkal will report to Matthew Shaw, Division President for Chubb Global Markets and Hardy.

Mr Thanduparakkal was previously energy senior underwriter.

Ark taps MS Amlin’s marine underwriter Lurcott

Lloyd’s (re)insurer Ark has hired marine market expert Richard Lurcott.

MS Amlin strengthens European war business with Aon hire

Re/insurer MS Amlin has hired senior Aon executive Brecht van Hoorebeke to develop and grow its war business across continental Europe.

AXIS’ marine head jumps ship for Tokio Marine HCC

Darren Carr, the Unit Head of Marine at AXIS, has left the carrier for Tokio Marine HCC.

Hamilton taps Chubb exec for Lloyd’s operations

Hamilton Underwriting, the managing agency of Syndicate 3334 and the Lloyd’s operations of Hamilton Insurance Group, has appointed Neil Lee-Amies as Head of Treaty.

Mr Lee-Amies joins Hamilton Underwriting from Chubb Insurance Company where he has most recently served as head of marine and energy treaty for Chubb Tempest Re following the takeover of Chubb by ACE.

At Hamilton, Lee-Amies will report to active underwriter Miles Osorio. Mr Osorio and Adrian Daws succeeded Trevor Carvey as active underwriter following Mr Carvey’s resignation in February.

Barbican swoops for Chubb cyber specialist

Barbican Insurance Group has appointed Lauren Webb as a class underwriter for cyber within Lloyd’s Syndicate 1955. She joins from Chubb. 

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