Insurance Jottings
UK sanctions post-Brexit
The UK currently imposes sanctions via the powers contained in the European Communities Act 1972. This Act provides for the incorporation of all European Community law, and its Treaties, Regulations and Directives into UK law.
This is, however, due to change as a result of the European Union Withdrawal Act 2018 which provides for the UK’s withdrawal from the European Union (EU) on the 29th March 2019 via the repeal of the European Communities Act 1972 and the incorporation of most EU laws into UK law.
The UK’s sanction making powers will thereafter be governed by the new Sanctions and Anti-Money Laundering Act 2018. This will presumably take effect simultaneously with the UK’s withdrawal from the EU. The scope, nature and possible implications of the new UK sanctions regime has been discussed by the House of Commons in a recent briefing paper.
Imposing sanctions with EU allies
It has been commonly accepted that sanctions are more effective when imposed in conjunction with allies. With this in mind, the UK government has expressed its desire to maintain a regular dialogue with the EU on foreign, security and defence policy. However, in its briefing paper the House of Commons suggests that a formal agreement to implement EU sanctions is unlikely, and that even if sanctions targets were the same in practice, methods of enforcement are liable to differ.
There is some speculation that the UK may adopt similar measures to either Norway or Switzerland. Norway, for example, has the option to impose EU restrictive measures ‘with which Norway has aligned itself’. Switzerland too, has the discretion to align itself with EU sanctions on a case by case basis.
Sanctions or trade?
There are also concerns that the UK’s desire to enter into new trade deals in a post-Brexit environment may take priority over the enforcement of a tough sanctions policy and the resulting lack of coordination amongst leading nations may cause sanctions to appear less legitimate.
Lack of clarity
As it stands the terms of agreement on which the UK will be involved with EU foreign policy and sanctions remains unclear. For further details, the House of Commons’ briefing paper may be found on its website.
Charles Taylor Adjusting expands LatAm reach with FGR buy
International loss adjuster, Charles Taylor Adjusting (CTA) has acquired FGR group, a loss adjusting and claims programme management group, headquartered in Chile.
FGR employs around 385 people in 17 locations in Chile and Peru and has a growing presence across Latin America. It provides specialist technical loss adjusting and claims programme management services.
The loss adjusting business operates in the Property & Casualty market, with particular strength in construction, engineering, liability and catastrophe losses. The claims management business provides insurance claim settlement services to insurance companies in the Chilean market.
The business handled around 3.1 million claims during 2017.
FGR is located on the ‘Pacific Ring of Fire’, which gives it greater exposure to CAT events in the region. FGR has worked on recent major CAT events, including the 2015 Chilean floods, 2016 Ecuador earthquake and 2017 Puerto Rico hurricanes, the latter in association with Charles Taylor Adjusting.
The acquisition extends Charles Taylor’s existing office network, presence and client relationships across Latin America, and positions Charles Taylor as one of the leading international claims programme management and loss adjusting firm in Latin America. It also adds technical expertise and high value services to CTA’s loss adjusting offering in the region.
FGR will be integrated with Charles Taylor Adjusting’s other existing Latin American adjusting businesses, which are led by Felipe Ramirez, Managing Director and Regional Head, Latin America.
Sompo International Launches Global Risk Control Services Function
Sompo International, the Bermuda-based specialty provider of property and casualty insurance and reinsurance, announced it has launched a Global Risk Control Services function within its insurance business.
Under the leadership of Victor Sordillo, senior vice president, Risk Control, the team will work with the company’s insureds to deliver advanced risk management programmes as well as more traditional loss control tools.
The team now includes resources across the US and Europe, with certified experts in a broad range of safety disciplines including industrial hygiene, ergonomics, fire protection and product liability as well as professionals with extensive experience in the transportation, environmental services, real estate, hospitality, construction, manufacturing and financial services sectors.
Carlyle acquires majority stake in Sedgwick in $6.7 billion takeover
Private equity firm The Carlyle Group has agreed to acquire a majority stake in claims management group Sedgwick for US$6.7 billion.
Carlyle will buyout existing majority shareholder KKR, which will fully exit its position following the transaction.
KKR and company management paid US$2.4 billion in 2014 to buy Sedgwick. Funds managed by Stone Point Capital LLC and Caisse de dépôt et placement du Québec (CDPQ), together with Sedgwick management, will remain minority investors.
Sedgwick is a leading global provider of technology-enabled risk, benefits and integrated business solutions. The company provides a broad range of resources tailored to clients’ specific needs in casualty, property, marine, benefits and other lines.
On an annual basis, Sedgwick handles more than 3.6 million claims and has fiduciary responsibility for claim payments totalling more than US$19.5 billion.
Equity capital for the investment will come from Carlyle Partners VII, a US$18.5 billion fund which focuses on buyout transactions in the US, and Carlyle Global Financial Services Partners III, L P, a dedicated financial services buyout fund.
The deal is expected to close later this year, subject to regulatory approvals and other customary closing conditions.
CNA Hardy has confirmed its plan to exit Property Treaty, Marine Hull and CAR/EAR business on the Lloyd’s platform
CNA Hardy has confirmed its plan to exit Property Treaty, Marine Hull and CAR/EAR business on the Lloyd’s platform.
With immediate effect, CNA Hardy will cease to write Property Treaty, Marine Hull and CAR/EAR at Lloyd’s. These lines have struggled to deliver consistent profitability even in light of improving market conditions. Together they represent a small component of the firm’s business.
Patrick Gage, Chief Underwriting Officer has chosen to leave the company. He will stay with the company until the end of the year to ensure stability and a smooth transfer of responsibilities. Lloyd Tunnicliffe, Head of Property, will also be leaving the company at the end of the year. Both Patrick and Lloyd have made significant contributions to the business over the past several years and will be missed.
Going forward, CNA Hardy will move from four to three business units. The remaining Property business lines will merge with Marine and Energy creating a new Property, Marine and Energy business unit under the leadership of Carl Day who will work closely with Lloyd Tunnicliffe through to the end of the year to ensure minimum disruption for staff, brokers and customers.
Specialty, led by Rhonda Buege and Casualty led by Craig Bennett remain unchanged.
As Brexit Day Nears, 630 UK Financial Services Jobs Have Shifted to EU, Reuters Finds
As few as 630 UK-based finance jobs have been shifted or created overseas with just six months to go before Brexit, a far lower total than banks said could move after Britain’s surprise vote to leave the European Union, according to a new Reuters survey.
Many bankers and politicians predicted after the June 2016 referendum that leaving the EU would prompt a mass exodus of jobs and business and deal a crippling blow to London’s position in global finance.
But as Brexit Day nears, the number of jobs that UK-based financial institutions say they expect to move in the event of a “hard” Brexit was around 5,800, just 500 more than the last survey in March, and with more firms responding. That compares to around 10,000 in the first survey in September 2017.
The results are based on answers from 134 of the biggest or most internationally-focused banks, insurers, asset managers, private equity firms and exchanges to a survey conducted by between the 1st August and the 15th September.
Nearly all of those surveyed said they are moving as few people as possible, hoping for a last-minute political deal which protects access to the EU’s US$19.7 trillion-a-year economy after Britain leaves the bloc.
The likelihood of a “hard” or “no-deal” Brexit has increased substantially since Prime Minister Theresa May’s plan for maintaining ties with the EU has been rejected by Brussels as well as by many politicians in her own Conservative Party.
Many business chiefs fear Britain could be heading for a chaotic split which would spook financial markets and dislocate trade flows across Europe and beyond. Some politicians on both sides put the odds of talks collapsing at more than 50 percent.
The survey findings suggest London, which has been a critical artery for the flow of money around the world for centuries, is likely to remain the world’s largest centre of international finance. While New York is by some measures bigger, it is more centred on American markets, while London focuses on international trade.
Extreme forecasts for UK job losses in a hard Brexit scenario have ranged from about 30,000 roles, estimated by the Brussels-based Bruegel research group in February 2017, to as many as 232,000 by the London Stock Exchange in January 2017.
Iain Anderson, the executive chairman of Cicero, a public affairs company, which represents many finance companies, agreed with the survey findings that the impact of Brexit is likely to be much more modest than initially predicted.
Mr Anderson said early estimates were made by executives in a period of unprecedented emotional turmoil following the vote. “They have now moved through the five stages of grief,” he told Reuters.
Bankers Bluff?
Ninety-seven of the companies which responded said they would have to move staff or restructure their businesses because of Brexit, although only 63 specified numbers. The rest said it would have no impact, that they were still deciding what to do or they declined to comment.
HSBC, which has publicly said up to 1,000 jobs could move to Paris, has so far not moved any staff, a source at the bank told Reuters as part of the survey. Royal Bank of Scotland, which expects to move 150 to Amsterdam, also has not moved any employees, an RBS source said.
Many other large international banks said in the survey that although they have moved or hired a small number of staff in European cities, they are aiming to shift as few jobs as possible and will take decisions about staff redeployment over several years.
Goldman Sachs, which has taken a new office in Frankfurt and plans to move 500 people to Europe, has only moved or hired about 100 so far. JPMorgan, which has publicly said up to 4,000 jobs could move, said recently in a staff memorandum it has only asked “several dozen” staff to move.
The 134 firms who responded to Reuters for this survey – against 119 who responded in March and 123 in September 2017 – employ the bulk of UK-based workers in international finance.
The respondents included the 20 investment banks that earned the most fees from investment banking in Europe, the Middle East and Africa in 2016, according to Thomson Reuters’ data.
Some companies predicted the number of job moves will increase significantly over the next few months. For example, Bank of America plans to move more than 100 staff to Paris early next year.
Many companies said they hoped to use a transition agreement already agreed in principle between the EU and Britain which would maintain the current level of access to the EU until the end of 2020.
Over the longer term, they were counting on an internationally accepted banking mechanism to allow them to conduct trades in the EU through their existing bases in Britain.
Richard Small, a financial regulation lawyer at Addleshaw Goddard, said companies probably exaggerated at first and lowered estimates on more careful consideration.
Companies are now focusing on ensuring they have the right infrastructure in place, including licences and real estate, so that they can ramp up their operations if they have to.
“They’ve got themselves in a place that they will be nimble and can scale up and down more quickly,” Mr Small said.
Bankers said it is still too early to say what the long-term results of Brexit will be. “The truth is no one wants to move anyone and it all depends on what happens with the negotiations,” said one executive at a US bank.
“It could be lower. It could be higher. If you can tell me what will happen with the negotiations then I will be able to give you an accurate estimate of how many jobs will move.”