Tag: Insurance

Categories
Berkshire Hathaway Specialty Insurance Insurance

Berkshire to Sell Marine Insurance in Canada

BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance (BHSI) is introducing Inland and Ocean Marine Insurance in Canada and has named Gord Rider as Senior Marine Underwriter.

“We are pleased to welcome Gord to our team of marine specialists,” said John Evans, Vice President of Marine, BHSI. “With Gord at the helm, BHSI in Canada has launched ocean marine products — including ocean cargo, stock throughput and project cargo insurance — as well as a full line of inland marine products. All of these products come with BHSI’s hallmark clarity of coverage and formidable financial strength.”

Gord joins BHSI from Chubb Insurance Company of Canada, where he was most recently Senior Marine Underwriter. Before that, he was a Marine Underwriter at Chubb and at Coast Underwriters Ltd. He received a Bachelor of Commerce degree from Dalhousie University in Halifax.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Insurance National indemnity

The Hartford Makes Major Asbestos Reinsurance Deal with Berkshire Hathaway

(BRK.A), (BRK.B)

Berkshire Hathaway’s National Indemnity Company will provide up to $1.5 billion in reinsurance coverage for insurer The Hartford to cover for asbestos liability losses.

Under the terms of the transaction, The Hartford will pay NICO a reinsurance premium of $650 million in exchange for an aggregate adverse development cover for A&E losses beyond Dec. 31, 2016, aggregate net carried reserves, up to a limit of $1.5 billion.

The reinsurance will cover adverse development on substantially all of the company’s A&E reserves, excluding those held by the company’s U.K. property and casualty run-off subsidiaries (under contract to be sold with a closing projected for the first quarter 2017), as well as other non-U.S. operations with less than $3 million in A&E reserves. NICO will provide a collateral trust account as security for NICO’s claim payment obligations to the Hartford Insurance Pool. Berkshire will guarantee certain payment and performance obligations of NICO. The Hartford will retain responsibility for claims handling and other administrative services, subject to certain conditions.

The Hartford expects to recognize an after-tax GAAP loss of $423 million in the fourth quarter of 2016 as a result of this transaction.

Over the longer term, ratings agency A.M. Best believes the reinsurance transaction is credit positive for The Hartford and its subsidiaries as it significantly reduces the uncertainty of the group’s legacy A&E liabilities and will enhance the group’s risk-adjusted capitalization. Near term, however, The Hartford’s ratings will not be affected as risk-adjusted capitalization was comfortably supportive of its ratings and the variability in performance due to the adverse development of the A&E liabilities was not viewed as a substantial negative credit factor.

Chief Financial Officer Beth Bombara of The Hartford notes the company is trying to reduce “uncertainty for investors and others about the ultimate cost of these policy liabilities.”

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Berkshire Hathaway Specialty Insurance Insurance

Berkshire Hathaway Specialty Insurance Rolls Out Civil Liability Insurance for Financial Institutions in Australia and New Zealand

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance Company (BHSI) has launched Professional First Financial Institutions Civil Liability Insurance in Australia and New Zealand.

“Many forces have shifted the risk landscape for financial institutions, from the lessons learned from the complex litigation of the global financial crisis, to the rise of new disruptive technologies and novel ways of conducting business,” said Vincent Barker, Manager, Financial Institutions, BHSI, Australia. “We’re pleased to offer a market-leading civil liability policy wording that keeps pace with these changes and provides clarity of coverage and flexibility for financial institutions.”

BHSI’s new policy expressly addresses the broad range of claims financial institutions can face as they provide diverse services to many different parties. It uses an expansive ‘professional services’ trigger not linked to a client, fee or specified service. The policy also covers bail bond costs, deprivation of assets expenses, court attendance and prosecution costs, providing peace of mind to insured professionals.

BHSI’s new Civil Liability policy also includes pre-investigation loss coverage. Contractual liability and mandatory contractual terms coverage is provided as well.

BHSI has a broad appetite for mid-size and large financial institutions of all types—from insurance companies and banks, to financial administrators, financial technology providers, and M&A/corporate advisory firms.

“Our new Civil Liability policy wording for financial institutions provides certainty for the often complex risks of the financial institutions space,” said Karen Poching, Senior Underwriter, Executive and Professional Lines, BHSI, New Zealand. “We are pleased to add this essential coverage to our growing suite of policies for financial institutions.”

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Insurance

Credit Ratings Upgraded for Berkshire Hathaway’s Insurance Companies

(BRK.A), (BRK.B)

A.M. Best has upgraded the Financial Strength Rating (FSR) to A++ (Superior) from A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to aa+ from a- of Mount Vernon Specialty Insurance Company and Radnor Specialty Insurance Company (both domiciled in Omaha, NE), strategic affiliates of United States Liability Insurance Company (USLI) (Wayne, PA) that are branded as Devon Park Specialty.

Concurrently, A.M. Best has affirmed the FSR of A++ (Superior) and the Long-Term ICRs of “aa+” of USLI and its subsidiaries: Mount Vernon Fire Insurance Company (MVF) (Wayne, PA) and U.S. Underwriters Insurance Company (USU) (Bismarck, ND). The outlook of these Credit Ratings (ratings) is stable.

According to A.M. Best, the ratings of the insurance operating companies reflect their superior risk-adjusted capital position, extended trends of underwriting and operating profitability, very strong market presence and conservative reserve positions. Additional favorable factors include a proactive claims management philosophy, exceptional diversification in their book of business as it regards limiting concentrations, commitment to customer service, and extensive employee training and retention programs that translate into a culture of success.

Furthermore, these ratings continue to benefit from implicit and explicit support provided to USLI and its subsidiaries by their ultimate parent, Berkshire Hathaway Inc.

This support, for some of the operating companies, is in the form of significant reinsurance treaties with National Indemnity Company, a Berkshire subsidiary. In addition to this agreement, Berkshire has established an extended track record of supporting its member companies.

These positive rating factors are partially offset by the above average investment leverage recorded by the group. A.M. Best also continues to monitor the organizational structure and market changes implemented at USLI as it regards the Devon Park Specialty branded companies.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Insurance

Analysts Predict 5% Annual Growth Rate for Catastrophe Insurance Market

(BRK.A), (BRK.B)

Looking for a robust growth industry? Try catastrophe insurance.

Analysts at Technavio are forecasting that the global catastrophe insurance market will grow at a compound annual growth rate (CAGR) of more than 5% through 2020, according to their latest report.

Key companies in the catastrophe insurance market includes leaders such as Berkshire Hathaway, AIG, Allianz, and Lloyds.

In their newly released report, Technavio’s analysts highlighted the following three factors that are contributing to the growth of the global catastrophe insurance market:

• Catastrophe bond pricing and valuation strategies
• Regulatory support for public-private cooperation on building resilient infrastructure and better risk governance
• Climatic changes

Catastrophe bond pricing and valuation strategies

The insurance industry is considered a cyclical industry. Therefore, insurers are formulating different strategies to earn positive yields and generate cash flows during the forecast period. Such strategies should bring in stable earnings year-over-year for players in the insurance industry. Catastrophe bonds help the investors to earn good returns that are uncorrelated with the broader financial markets. It helps the portfolio managers in making more informed decisions in allocating the capital and by understanding the attributes of the pricing trends. The insurance company makes use of catastrophe bonds so that it can transfer insurance risk to the capital markets.

Amit Sharma, a lead research analyst at Technavio, says, “In the present market scenario, catastrophe bonds have evolved into valuable risk management and investment tools where there is incorporation of different elements from both the debt capital and reinsurance markets. Catastrophe bonds provide alternative means to capitalize reinsurance transactions.”

Regulatory support for public-private cooperation on building resilient infrastructure and better risk governance

Globally huge losses are incurred due to damages caused due to natural disasters. The role of government plays a very important role wherein it requires the government to develop a comprehensive disaster management framework. One of the popular disaster management frameworks is public-private partnership (PPP) model that has become a popular way for governments to engage private sector players in strengthening infrastructure (thereby increasing the quality and providing better value for money). PPP is considered as a strategic approach to minimize the negative impacts of disasters, particularly in the developing countries.

“Top insurance firms are expected to invest more in innovative products, distribution, and service strategies. The growing size and complexity of the economy have triggered an increase in the demand for insurance against various risks. This has deepened market penetration of insurance products and may boost demand for insurance products during the forecast period,” adds Amit.

Climatic changes

Climatic changes have occurred due to the various natural and manmade disasters. Therefore, the insurance company requires not only to focus on the historical data but also to have forward projections. Climate change has brought in extreme weather events, and therefore insurance companies need to understand the change in the frequency of the extreme weather condition. Therefore, the insurance companies, reinsurance companies, capital markets, and governments are making use of various catastrophe modeling technologies.

This helps them in understanding the risk selection process, underwriting the process, risk mitigation strategies, portfolio optimization, risk transfer mechanisms, reinsurance decision-making, portfolio pricing, reserving and rate making, capital setting and exposure and aggregate management.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Berkshire Hathaway Specialty Insurance Insurance

Macau Latest Expansion for Berkshire Hathaway Specialty Insurance

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance Company (BHSI) has received a license to provide insurance and reinsurance in Macau, and has filled key positions in its newly established Macau office.

“It is a very interesting time in Macau, with continued diversification of the territory’s economic profile,” said Marc Breuil, President, Asia, BHSI. “We are pleased to expand our Asian footprint and bring to Macau local knowledge and expertise along with BHSI’s unique balance sheet and financial strength.”

Beginning immediately, BHSI Macau will be providing commercial property, energy, construction, terrorism, casualty, executive and professional lines, surety, accident and health, and marine insurance.

The addition of the Macau office expands BHSI’s regional presence in Asia, which already includes the insurance hubs in Hong Kong and Singapore.

The company named Yasmin Chan as Branch Manager, and Ivory Chong as Underwriting Manager, in Macau. Yasmin comes to BHSI with 20 years of experience in the Macau insurance and reinsurance market. She holds a Bachelor in Business Administration degree from the University of Macau.

Ivory joins BHSI with more than 15 years of industry experience, including more than a decade in the Macau market. She holds a Bachelor of Science degree in Economic Law from Shanghai Jiao Tong University.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
GEICO Insurance

GEICO Expands Ridesharing Coverage to 10 More States

(BRK.A), (BRK.B)

To meet the growing consumer appetite for Uber, Lyft, Split and other on-demand services, GEICO has rolled out its ridesharing product to 10 more states (Alabama, Idaho, Kansas, Delaware, Maine, Tennessee, Wisconsin, Minnesota, Missouri and North Dakota). Coverage is already available in 24 states and the District of Columbia.

“The growing demand for ridesharing services is rapidly reshaping the country’s transportation landscape,” said Othello Powell, GEICO’s director of commercial lines. “As more and more consumers latch on to its popularity, we will continue to offer on-demand drivers the best insurance product at the lowest price to address their needs.”

Not long ago, rideshare drivers didn’t have many options when it came to auto insurance. Most policies only covered the portion of the trip that drivers were signed in to a ridesharing app and offered limited coverage options to one specific transportation network company.

GEICO’s ridesharing insurance product rolled onto the market last year, addressed the specific insurance needs of on-demand drivers. GEICO combined the coverage options of two separate policies into a single policy, eliminating the coverage gap between ridesharing and personal use whether or not if the driver is logged into the transportation network company’s app. GEICO also offers drivers the flexibility to work with multiple transportation network companies.

Powell noted that GEICO is constantly looking at ways to keep pace with the evolving nature of ridesharing services. “It makes a world of difference when we receive positive feedback from drivers who say GEICO is listening and responding to their needs.”

GEICO’s ridesharing product is now offered through the company’s Commercial division at a price typically much lower than taxi and commercial rates.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Insurance

Drone Insurance Anyone?

(BRK.A), (BRK.B)

Want to deliver pizzas by drone? Well, don’t discount the risk when grandma gets hit by a flying pizza. The new world of unmanned drones has brought with it a whole new world of liability, and for Berkshire Hathaway, liability coverage.

Berkshire’s General Star Management Company is now offering CGL coverage specifically designed to protect the manufacturers, distributors and operators of unmanned aircraft systems (UAS), more commonly known as “drones.” In addition, contingent coverage for unmanned aircraft systems operations conducted on behalf of the insured is available.

Protection afforded by the Casualty Division is targeted to manufacturers, distributors and operators of hobby and commercial unmanned aircraft weighing up to 55 lbs.

Operators must operate the devices within applicable FAA regulations and guidelines. “Start-up” as well as established entities are eligible for the new offering.

General Star will entertain UAS operators including but not limited to:

• Use of unmanned aircraft for research, governmental or commercial purposes
• Real estate surveyors using unmanned aircraft for aerial surveying
• Professional photographers using unmanned aircraft for commercial purposes

Primary limits of $1M/$2M/$2M/$1M are available for manufacturers, distributors and operators. Excess limits of $2M in addition to the Primary limits are also offered. Contingent liability coverage for UAS operations conducted on behalf of the insured offers primary limits of up to $2M/$4M/$4M/$2M and $10M excess of underlying primary limits.

Coverage for aircraft collision and for privacy violations arising out of UAS operation is included for manufacturers, distributors and operators. Written on an occurrence basis, the new protection contains no or nominal deductibles.

“We are pleased to provide our wholesale clients with a policy designed to address the unique hazards and exposures associated with one of today’s top emerging trends – drones,” said Liana Tufariello, Underwriter and Project Leader for General Star. “The popularity and usage of drones for commercial purposes has exploded, and this is just the type of E&S products liability opportunity we are eager to tackle.”

Cole Palmer, Vice President and Casualty Division Manager, added, “Responding to emerging trends, and creating new offerings for our wholesale clients to sell, are examples of how we help our clients grow their business. Innovative offerings on new technology devices, or taking a second look for creative alternatives on traditional exposures, will contribute to the growth goals of both our clients and General Star. Being a ”good steward” of an existing book is no longer a sustainable model in today’s competitive environment.”

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Berkshire Hathaway Reinsurance Group Berkshire Hathaway Specialty Insurance Insurance

Berkshire Hathaway Turns Away From Reinsurance Business

(BRK.A), (BRK.B)

Berkshire Hathaway’s long term love affair with the reinsurance continues to wane. Over the past few years, Warren Buffett, Charlie Munger and Ajit Jain all have spoken about the changes in profitability in the reinsurance market.

The latest proof comes as Berkshire Hathaway has dropped to sixth in A.M. Best’s annual special report on the global reinsurance industry.

“The reinsurance business not as good as it once was and is unlikely to get better,” Charlie Munger said at the 2015 Berkshire Hathaway annual meeting. “Money has come in, not because they want to be in reinsurance, but because it’s an uncorrelated asset class. We’re in it for the long haul.”

“What we’ve seen from Berkshire Hathaway is that they recognize that reinsurance opportunities are not where they need to be from a pricing perspective,” A.M. Best Vice President Robert DeRose said. “They have pulled capacity back from that particular aspect of the market and they are building out insurance strategies.”

DeRose stated that Berkshire Hathaway is specifically building out that capacity through Berkshire Hathaway Specialty Insurance Co. Also, Berkshire Hathaway, through its General Reinsurance Corp. franchise, has entered into a five-year agreement under which Transatlantic Reinsurance Co. will serve as its exclusive underwriter for U.S. and Canadian property/casualty treaty reinsurance business.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
GEICO Insurance

GEICO Ridesharing Coverage Now in Half of the U.S.

(BRK.A), (BRK.B)

Building on successful launches all across the country, GEICO now offers its low-cost ridesharing product in 24 states. The product delivers comprehensive coverage to serve Uber, Lyft, Split and other on-demand service drivers.

The list of states include: Colorado, Illinois, Iowa, Indiana, Louisiana, Mississippi, Nebraska, New Mexico, Oklahoma, Oregon, South Dakota, Arizona, Iowa, Vermont, Wyoming, South Carolina, Georgia, Virginia, Maryland, District of Columbia, Texas, Connecticut, Pennsylvania and Ohio.

Bridging the coverage gap, GEICO’s ridesharing product combines coverage options into a single policy that protects drivers during both ridesharing and personal use when the rideshare app is on or off, with or without passengers in the vehicle. The policy addresses the needs of on-demand service drivers and eliminates the cost and confusion of having two separate policies.

“Since its first introduction to the market last year, GEICO’s ridesharing insurance solution has consistently received positive feedback from policyholders on its affordable pricing and hassle-free service,” said Othello Powell, director of commercial lines. “As we continue to monitor the unique needs of ridesharing drivers, we’re even more determined to grow our ridesharing product to serve many more drivers in many more states.”

Powell noted that many policies may limit coverage options to one specific transportation network company and may only cover a portion of the trip.

“With GEICO’s ridesharing insurance, drivers are covered regardless if they are logged into the transportation network company’s app. They also have the flexibility to work with multiple companies.”

GEICO’s ridesharing product is offered through the company’s Commercial division at a price similar to personal auto insurance.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.