cyber and d&o market update - amazon s3 · 2018-10-16 · st. louis underwriting marketplace....

Cyber and D&O Market UpdateOctober 2018

Insurance M&A Rules the Day

Values rises steeply for first half of 2018 per PWC

247 Announced Deals to date in 2018

Total value of $28.6 billion

Compared with 302 deals worth $10.1 billion in 2017

Carriers / Reinsurers / Brokers all targets

Private Equity is entering the mix

Strong push to diversify globally and buy vendors

Significant Transactions over the past 18 Months

ACE acquisition of Chubb closed AXA acquisition of XL Group AIG acquisition of Validus USI acquisition of Wells Fargo Commercial Insurance Marsh & McLennan acquisition of Jardine Lloyd Thompson (JLT) Carlyle Group majority stake in Sedgwick Apollo Group Management acquisition of Aspen Holdings Travelers acquisition of Zensurance The Hartford acquisition of Navigators Liberty mutual acquisition of Ironshore Centerbridge Partners acquisition of Canopius AXIS acquisition of Novae Group

Underwriters’ Movements

Management Liability Underwriters– Chubb, AIG, CNA and Travelers are only STL firms represented with dedicated Underwriters

Public Company Underwriters– There are zero public company Underwriters in St. Louis or in Missouri

Structure- Specialty continues to drive Underwriter mix with Healthcare, Financial Institutions, Reps & Warranties, Cyber & Tech and International key focus

St. Louis Underwriting Marketplace

Market Position – Varies wildly

Management Liability View:

• Dedicated Policy forms• Dedicated Vendors• Dedicated Underwriters• Set underwriting process• U.S. vs. Lloyds of London

Property & Casualty View:

• No dedicated policy form / Endorsement only

• No position on vendors• No Dedicated Underwriters• Cross over with PL and Property• Desire an all peril solution• No underwriting process• Significant limits at play

Cyber & Privacy Liability

Total Capacity $ 547,500,000

Hiscox Lloyd’s Syndicate $25,000,000

Ironshore Lloyd's Syndicate $10,000,000

Liberty Lloyd's Syndicate $15,000,000

Markel Lloyd's Syndicate $20,000,000

Munich Re - Lloyd's Syndicate $50,000,000

Navigators Lloyd's Syndicate $2,500,000

Novae Lloyd's Syndicate $40,000,000

Principia $5,000,000

Sciemus $15,000,000

SCOR $15,000,000

Swiss Re $25,000,000

Talbot Lloyd's Syndicate $10,000,000

Tarian Lloyd's Consortium $15,000,000

Tarmigan $5,000,000Tokio Marine Kiln Lloyd's Syndicate $25,000,000

AIG - Lexington $25,000,000

Amtrust Lloyd's Syndicate $10,000,000

Argo Lloyd's Syndicate $25,000,000

Ascent $10,000,000

Aspen Lloyd's Syndicate $25,000,000

AXIS Lloyd's Syndicate $10,000,000

Barbican Lloyd's Syndicate $15,000,000

Beazley Lloyd's Syndicate $50,000,000

Brit Lloyd's Syndicate $20,000,000

CFC $15,000,000

Channel Lloyd's Syndicate $15,000,000

CHUBB Lloyd's Syndicate $10,000,000

DUAL $5,000,000

EmerginRisk $25,000,000

Hannover Re/Interhannover $10,000,000

N. of Markets 30

Cyber Market Capacity in Lloyds of London

AIG $25,000,000Amtrust Lloyd's Syndicate $10,000,000

Argo Lloyd's Syndicate $10,000,000

Ascent $10,000,000

Aspen Lloyd's Syndicate $25,000,000

AXIS Lloyd's Syndicate $10,000,000

Barbican Lloyd's Syndicate $15,000,000

Beazley Lloyd's Syndicate $30,000,000

Brit Lloyd's Syndicate $10,000,000

CFC $10,000,000

Channel Lloyd's Syndicate $15,000,000

CHUBB Lloyd's Syndicate $15,000,000

EmergIn Risk $10,000,000

Hannover Re/Interhannover $5,000,000

Hiscox Lloyd's Syndicate $10,000,000

Liberty Lloyd's Syndicate $10,000,000

Markel Lloyd's Syndicate $10,000,000

Munich Re Lloyd's Syndicate $5,000,000

Novae Lloyd's Syndicate $10,000,000

Swiss Re $25,000,000

Tarian Lloyd's Syndicate $10,000,000

Tokio Marine Kiln Lloyd's Syndicate $5,000,000

London Tech E&O Capacity

Total Capacity $ 285,000,000

N. of Markets 22

Appetite:

• Manufacturing• Healthcare• Financial Institutions• Credit Unions• Utilities • Media• Technology

Top 5 Lloyd’s Key Markets

Beazley – Gross Written Premium 2016: GBP 2.195b

Lloyd's Credit Ratings:

• A (Excellent), A.M. Best• A+ (Strong), Standard & Poor’s

Brit - Gross Written Premium 2016: GBP 1.912.2bn


• A (Excellent), A.M. Best • AA- (Very Strong), Fitch• A+ (Strong), Standard & Poor’s

Appetite:

• Retail• Manufacturing• Mining• Professional Services• Healthcare• Utilities • Hospitality• Technology Firms


Liberty – Gross Written Premium 2016: GBP 1.830.6bn


• A (Excellent), A.M. Best• AA- (Very Strong), Fitch• A+ (Strong), Standard & Poor’s

Appetite:

• Retail• Manufacturing• Financial Institutions• Utilities • Technology


Tokio Marine Kiln – Gross Written Premium 2016: GBP 1.296bn



Appetite:

• Retail• Manufacturing• Mining• Professional Services• Healthcare• Utilities • Rep Harm• IP


Appetite:

• Retail• Financial Institutions• Manufacturing• Media Companies• Utilities • Hospitality• Technology


Aspen – Gross Written Premium 2016: GBP 404m



The following punch list of items should be key considerations by all policyholders relative to the scope of coverage:

• Removal of any sub-limits (full limits available now in the U.S.)• Focus on vendors (approved and/or required)• Business Interruption & Contingent Business Interruption• Social engineering fraud / computer theft • Bricking as a peril• “Other Insurance” / “Primary Insurance” considerations• Reputational Harm coverage• Cross coverage considerations / concerns

Insured points of Focus on Coverage

Directors & Officers Liability Update

• Policyholder surplus, year-end 2016-2017

Securities Filings• 2017 saw unprecedented levels of filings• 412 new securities class action filing lawsuits filed• 52% more than 2016 (193)

• Court merger objections continue to drive paid claims –primary only

• California’s newest D&O law: Woman on every Board

Underwriting:• Primary Insurers AIG, Chubb and Travelers seeking rate• Merger objection retentions are continued focus• Excess pricing is starting to become stable after significant premium

reductions from 2016 and 2017• Loss ratios offset by substantial portfolio investment income• Property losses not affecting Carrier position in financial lines of coverage

Public Company D&O Update

Market capacity has never been stronger Pricing continues to slowly fall Highest rate of private company buying coverage Nearly 70% of D&O purchasers are also buying Side A DIC D&O Bankruptcy claims trends have worked through the system Policyholder confidence in claims handling and experience has dropped Antitrust allegations are driving higher cost actions Carrier form enhancements has levelled off Cross EPL claims are still largest point of activity for most Carriers Potential impact for #MeToo era claims Impact of Cannabis in industry

Private Company D&O Update

Market capacity has never been stronger

Pricing remains steady

Take-up rate of buyers is now over 85%

Nearly 70% of D&O purchasers are also buying Side A DIC D&O

M&A Claims are constant and driving losses

Policyholder confidence in claims handling and experience has dropped

Antitrust allegations / Stark Violations have taken off

Regulatory Billing Actions (RAC / ZPIC) continue “horrific trend”

Jumbo verdicts impacting financial performance and Officer involvement

Market position on opioid exclusions

Healthcare D&O Update

Impact of Brexit on global market

Increase in privacy legislation including EU GDPR

Woodruff-Sawyer findings of 54% received premium reductions and 16% flat

Investigation coverage (corporation only)

M&A boom is starting tail claims and successor of interest concerns

Qui Tam (whistle-blower actions) on the rise with both EPL and D&O claims

Per Woodruff-Sawyer, 88.5% of all D&O Underwriters see risk increasing

Regulatory wording / antitrust wording is significant

Hammer Clause settlement amounts now as high as 90/10

Choice of Forum is playing a role in claims and settlements

International claims, local coverage D&O requirements

D&O Trends on the Horizon

Questions

cyber and d&o market update - amazon s3 · 2018-10-16 · st. louis underwriting marketplace....

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