Marsh Q1 growth slows as GC accelerates…Allianz Worldwide Partners USA sees 30% revenue spike.. Willis predicts power drain in reinsurance market.. Working adults short of critical insurance coverage: Study


Marsh Q1 growth slows as GC accelerates

Compiled by insurance24

HARARE, Marsh & McLennan Companies’ (MMC) primary broking business reported slowing underlying revenue growth in the first quarter within a set of group results which exceeded expectations.

The pace of underlying growth at Marsh declined to 2 percent for the first quarter, slowing from a growth rate of 5 percent in the same period last year.

Marsh achieved a 3 percent uptick in underlying revenue at its US and Canadian division. But first-quarter revenue in the Emea region declined by 2 percent.

Overall revenue at the international operations, which also include Latin America and Asia Pacific, was flat. Total revenue at Marsh was $1.69bn.

Meanwhile, reinsurance business Guy Carpenter reported a 7 percent jump in underlying revenue to $637mn, accelerating from a pace of 4 percent growth in the first quarter last year.

The overall risk and insurance services division recorded a 26 percent increase in operating income, which rose to $716mn for the period.

The earnings contributed to above-forecast 23 percent growth in MMC’s earnings per share (EPS) to $1.34.

The group’s EPS compared with a consensus estimate of $1.30 per share.

Operating profit at MMC reached $908mn, an increase of 21 percent on the prior year.

Meanwhile, group revenue jumped by 14 percent year on year to $4bn.

Operating profit at the group’s consultancy division increased by 10 percent to $247mn.

MMC president and CEO Dan Glaser said the year had got off to a good start and that MMC was well positioned to deliver organic revenue growth of between 3 percent and 5 percent in 2018.

He also promised margin expansion and “strong growth in earnings per share in 2018”.

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Willis predicts power drain in reinsurance market

HARARE, There will be a “true syndication” of risk that reduces the power of leading market carriers in the reinsurance sector after the cat bond market has reached its highest volumes ever, according to the head of ILS for Willis Towers Watson Securities.

William Dubinsky highlighted the trend in the broker’s latest ILS update, which noted that the reinsurance market’s traditional pricing cycle will be put on “life support” as ILS capacity remains abundant, said Willis Towers Watson Securities in its latest ILS market update.

The firm explained that traditional reinsurance placements do not exert the same pressure on pricing as a bond syndication, because the “implied renewal rights” of lead markets gave them enormous market power to increase rates and squeeze out competition.

“In an ILS placement, the market speaks without the ability for one or two large players to dictate price or be in a position to hold up a deal,” it added.

As the ILS market has proven its claims-paying ability, rate-on-line will become the main determinant of a reinsurer’s competitiveness, it argued.

Meanwhile, ILS investors had fully reloaded following last year’s losses and were already putting capital to work in the run-up to the Florida June renewals, the firm added.

“Without a true surprise loss, like an ice-storm in Miami, end-investors will continue to allocate capacity to ILS,” he said.

Any increase in risk-free rates may also help the ILS market, as any increase to US Treasury yields will boost returns from collateral investments.

“In contrast a prolonged, not just a cyclical, change in fundamental credit risk would potentially shift demand toward or away from ILS, albeit slowly,” it added.

The report also included an interview with Covéa Group’s general manager for reinsurance Pierre Michel, who worked on the mutual insurer’s Hexagon Re cat bond last year.

Michel said that the firm decided to approach the ILS market after observing that terms had come closer and closer to those of traditional reinsurance.

The placement process was demanding in terms of wording, documentation and formalities, he added, but it had the positive impact of making reinsurance teams collaborate with other legal, finance and claims executives at the company.

“The roadshow gave us an opportunity to meet the market face to face, to start building relationships that, I hope, will be as long-lasting as those we have with our traditional partners”, Michel added.

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Allianz Worldwide Partners USA sees 30% revenue spike 

HARARE,  Allianz Worldwide Partners USA saw a 30% year-over-year revenue increase in 2017, the company has announced.

Allianz Worldwide Partners USA posted $954 million in revenue for the year. The US business unit of AllianzPartners provided insurance to 35 million customers in 2017 through travel insurance, event ticket, registration protection, tuition insurance and other specialty products.

The company also won 18 industry awards last year, including Travel Weekly’s Reader’s Choice Award for best insurance provider. The company also redesigned its TravelSmart mobile app and debuted a new ancillary revenue platform, Fusion CORE, for its partners.

“We’re proud of the achievements of our associates to deliver these outstanding results in 2017,” said Mike Nelson, global CEO of travel insurance, regional CEO for the Americas, and member of the board at Allianz Partners. “In addition to our outstanding revenue growth, we’re very pleased with the advances we’ve made in creating exceptional products and customer experiences while providing even more value to our partners.”

The Allianz Worldwide Partners Americas region also saw rapid growth during the year, the company said.

“In 2017 we experienced tremendous growth in the Americas region, achieving revenue of 1.452 billion euros, which was 25% higher than the prior year,” Nelson said. “Beyond our strong numbers, we continued to deliver great value, innovation and quality of service to our partners’ valued customers across the board.”

Globally, Allianz Partners announced 8.461 billion euros in total revenue and an operating profit of more than 406 million euros for 2017.

“Our 2017 growth confirms the importance of our innovation-driven strategy and our capability to rejuvenate ourselves in this competitive market by creating comprehensive offers,” said Rémi Grenier, president of Allianz Partners. “Once again, our capacity to deliver on a large scale and our customer reach in assistance, travel, international health and automotive has paid off.

At AllianzPartners, we are undertaking a profound transformation which will enable us to better anticipate the constantly evolving needs of our customers and to understand the next generation’s solutions in a transversal organization. This year’s results validate our ambition to build an agile, fast and efficient partnership with our clients.”


Working adults short of critical insurance coverage: Study

Working adults are short of insurance coverage to meet their needs if critical illness occurs, according to a study.

It found that people here have policies that would meet just 20 per cent or so of their needs if illnesses occur.

The Life Insurance Association (LIA) said people need coverage to provide for family needs during the assumed recovery period of five years for a critical illness or until the insured person can return to
work or adjust his lifestyle .

But its study found that Singaporeans have only met a fraction of this.  A working adult here has critical illness cover of just $60,000, well under the LIA recommendation of about $316,000, which translates to about 3.9 times the average annual pay of $81,663.

Critical illness coverage generally comes in whole of life policies or riders on top of other life insurance policies.

This is the first time the LIA survey has included an analysis of the critical illness protection gap.

It told a briefing yesterday that it added it to its protection gap study because of the increasing likelihood of people surviving and recovering from chronic conditions and living longer but with more years in poor health.

LIA deputy president James Tan said yesterday: “Individuals in Singapore are living with an average of eight out of 82 years spent in ill health, and this is coupled with a relatively low take-up of critical illness protection policies that help cushion the financial impact.”

LIA president Patrick Teow said it is planning to implement targeted solutions to help consumers better allocate resources to ensure protection for themselves and their loved ones.

Besides continuing education efforts, plans are underway to introduce an industry-wide digital calculator to empower Singaporeans to take more responsibility for health and protection needs