CATEX Reports March 2018

Reports

Issue 73

March 2018

In this Issue

The industry survives a series of disastrous NatCat claims

Rate increases seem to finally appear

Validus and XL are acquired by AIG and Allianz respectively
Capital keeps flowing into industry and the future is going to look very different

Quick Bytes: Shah leaves RMS; Chubb tries to disengage from Weinstein; China seizes Anbang; 266 billion GBP of UK household contents uninsured; Axis is earning fees in risk transfers; "smart luggage" and lithium batteries; broker CEO warns of gender pay gap; Calif hospital to close due to seismic risk; serious drought cripples Cape Town; NotPetya cyber virus would have severely impacted cyber market had it struck in West; Chinese restaurant delivery man relies on navigation app while riding his bike into NY's Lincoln Tunnel

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www.CATEX.com

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Princeton: +1 609-683-0888

Stephanie.Fucetola@catex.com

London: +44 (0)20 7993 5340

Jay.Patel@catex.com

Dear Colleague,

Welcome to the March issue of CATEX Reports. This is an issue we've been waiting to write for a long time. The long-awaited turn in the market may have finally arrived --we think.

The "turn" may not be so much as a reversal in direction than it is at least an end of the decreases. The normal discussion about whether rates are actually moving and in what LOB's and geographical zones has been nearly superseded by two big moves in the reinsurance M&A space.

AIG's acquisition of Validus earlier in the year was a surprise but the next move, the acquisition of XL Catlin by Allianz really made headlines.

Against a backdrop of a measure of relief about potentially increasing rates we were curious as to why two big players were taking themselves off the field.

We attended the Insurance Insider Risk vs Reward Conference in New York earlier this month. John Berger, Pat Ryan, Tom Bolt, Michael Millette and others offered their views on the state of the industry. It's been an interesting event in the past and this year was no exception.

The regular Roger Crombie column is here too. Just in time for tax season in the United States, Roger is perhaps enviously recalling the "Paradise Papers" which made news late last year.

We at CATEX have been very busy. In addition to enduring what has seemed to be a winter consisting of weekly "Nor'easter" storms, we've licensed our applications to several major new clients, ramped up our office in London, dramatically increased our staff in India and moved our New Jersey headquarters to new larger offices.

As always if you have any questions or comments about CATEX Reports , or want more information about CATEX , or our products, please feel free to contact me.

Thank you very much.

Sincerely,

Stephanie A. Fucetola

Senior Vice President/CATEX

"The market turn" and some major changes

John Berger, the new CEO of the new Ascot Reinsurance opened his remarks by saying of the reinsurance industry "It was the best of times. It was the worst of times." In addition to channeling Charles Dickens his point was well taken. In remarks at the annual New York Insurance Insider Risk vs Reward Conference, Berger noted that the industry had sustained a major year of claim losses yet "I don't think the capital position has ever been stronger, the reserve position is terrific."

For those with long memories this is a far cry from the post-Hurricane Andrew era. Berger noted that capital flowing into the industry has never been stronger and that rates seem to have, at minimum, ended their ever downward trajectory.

Berger warned that potential danger continues to exist by noting that the effects of climate change continue. US states with huge CAT exposures like Texas and Florida are affected by increasingly strong storms and rising water. This is a negative but he observed that these states are "growing like mad" and an opportunity exists for the industry to evaluate new and current risks in light of changing peril conditions.

Berger also noted the potential economic disruption that he thinks will inevitably be caused by increasing automation. A big negative for the industry for example would be the total advent of "driverless cars." Certainly safety would be improved but auto insurance premiums, which comprise 40% of total P&C premium, would dramatically decrease. The same would apply he said to automation in the workplace. As more and more jobs become automated, and the economy requires fewer workers, what are the knock-on effects on Worker's Compensation premiums?

He continued by noting that while certain current lines of business may be in less demand in the future it's certain that the cyber and technological revolution will ensure that other lines of business will skyrocket in importance.

The basic thrust of Berger's remarks is that the risk profile of the world is rapidly changing. While these changes may at first glance seem to be a negative for the industry they also offer vast opportunity to insure more risks coming from changed conditions as a result of climate change and increasing automation. Hence the worst and best of times analogy which worked well in his talk.

Listening to Berger, who has forgotten more about this business than we will ever know, we were mindful of the sales of two reinsurers announced recently. We were thinking of the news we read January, that AIG had purchased Validus, and the more recent news that AXA would purchase XL Catlin. We wondered whether he was going to discuss these moves. We were interested in his view as to which ledger --the best or worst of times --they fell under.

Both franchises are or were well-run. Certainly Ed Noonan at Validus and Mike McGavick at XL Catlin would be in anyone's top list of successful reinsurance executives. And, as we will examine, whatever is said about the 2017 CAT losses, it's universally agreed that, for the most part, the downward spiral of rates has ended. In some lines increases have finally been seen.

Yet even though both Validus and XL Group survived the 2017 claim torrent, and after having lived through a string of lean premium years, we're presumably on the brink of seeing an upcoming period of better rates, they decided that their best option going forward was to sell themselves. This was striking to us at first. Certainly price is a key factor but we tried to imagine the discussion at the Board levels of both Validus and XL Group.

Presumably a topic at prior board meetings over the past years concerned declining premium rates. Presumably management briefed the board on steps the companies were taking in response to falling rates. Actions such as mandating greater underwriting discipline to reduce exposure in poorly performing lines and the prudent release of reserves were no doubt part of the discussion. With the premium rate reductions and the ongoing low interest rates Boards no doubt were mindful of profitability expectations.

Lowered rates and simultaneously declining interest rates meant that management and board roles at any insurer were not for the faint of heart. It was a bumpy ride and one would think that perseverance, and a belief that the market would eventually turn, were what was needed.

Then, finally, when the "Big One" (or in this case the Big Three) finally hit, the Boards, probably fearing the worst, would learn to their relief that despite the years of lean premiums the companies would in fact be able to pay all claims and still remain adequately capitalized. The boards would also hear management cautiously predict that a time of increasing rates lay just ahead. For a board member of a reinsurer, we would think, there might have finally been some cause for optimism. Their companies had survived the worst, were still in business and well positioned for the uplift.

And yet the best decision the boards of both companies could make on behalf of their shareholders was to decide to sell the companies and exit right now.

This is of course only an initial thought that came to mind after both deals were announced. We have no doubt that the prices obtained by both Validus and XL Catlin more than justified the decisions of the boards of both companies to accept the offers from AIG and AXA. It just struck us as curious as, if anything, this seems to be a time to finally enjoy the rewards of having hung in there during the lean times.

Perhaps, and of course we have no doubt this is what happened, the sale prices were high enough to convince the Boards that the premium they would receive from the sales more than compensated for possible profits they could make in the upcoming years and it was in the best interests of shareholders to agree to the deals. As a Board member of an insurer or reinsurer one has no doubt been made aware that nothing is certain. Losses in 2018 might end up being as high or higher than 2017. Why not take the sure bet? We'd have done the same.

There are two questions here. First, why did both Validus and XL decide to head to the cashier's window to cash in their chips? Second, why did AIG and AXA decide to make these acquisitions? Remember, this comes at a time when alternative capital flow into the industry, new capital and reloading capital, has increased in anticipation of higher rates and greater numbers of insurable risks.

As we have read by now the January rate increases failed to meet the earlier optimistic hopes of reinsurers. The big increases in premium, it seems, were limited to accounts which had sustained losses, mainly in the Caribbean. Florida and Puerto Rico "will undoubtedly experience double-digit rate increases" when risks are renewed later this year. Puerto Rico, where, by the way over 8% of the population still does not have electricity, experienced the largest claims and presumably the largest increases.

So what happened? This is an industry that as recently as last summer was warning that premium rates were unsustainable, technical rate levels were in danger of being breached and underwriters were walking away from unprofitable business, Yet it could suffer an insured loss of approximately $130 billion (the third most costly loss in history) and not obtain the rate relief it expected?

We wondered about that when we saw AIG and Brian Duperreault make a successful bid for Validus which has a not inconsiderable reinsurance operation. In one of the understatements of the month Duperreault modestly stated "I've been involved in running reinsurance companies" when he underscored his belief that the future of Validus' reinsurance operation was bright.

Duperreault has put together a group of some of the best people in the industry right now with Peter Zaffino, Tom Bolt, and Charlie Fry all in place at AIG. When we saw AIG's acquisition of Validus we started to pull at that thread. If AIG was spending $5.6 billion in cash to buy Validus, despite the reduced expectation of sharply higher reinsurance premiums, we were curious.

At the end of the day it seemed that it all boiled down to underwriting. Yes, the losses were big but cedent buying patterns had shifted over recent years as many cedents sought to retain more premium instead of transferring it to reinsurers. Markets closest to the risk were determined to keep as much of that precious premium as possible before hitting internal retention levels beyond which they could not prudently go.

Of the $130 billion or so in CAT losses cedents ended up with a good sized share, much of this from hurricane and earthquake losses that would have typically been the bread and butter of the reinsurance sector. The breakdown, and it still is inexact, of percentage of losses as estimated by A.M Best, is that some $45 billion of the losses from Harvey, Irma and Maria plus the Mexican earthquake would rest with the primary insurance market. Another $20-$25 billion would be assigned to the reinsurance market and the final $20-$25 billion would end up the responsibility of the alternative capital markets.

For comparison, in 1992, Hurricane Andrew caused approximately $27.4 billion of damage in 2016 dollars. About $16 billion of that loss was insured loss or in 2017 dollars approximately $27 billion in insured loss value today. The lnsured losses were enough that nine insurers with heavy exposure in Florida went out of business and CAT coverage for Florida was hard to find. The resulting capacity shortage in part led to the formation of mono-line CAT reinsurers in Bermuda.

It's hard to find a reliable estimate for reinsurance losses from Andrew. Most of the losses were incurred at the primary level where the now well-known gaps in understanding about construction codes and an absence of risk modeling perhaps had led many insurers to charge inadequate rates. But we do know that many reinsurers dramatically cut back writing in Florida after Andrew but it wasn't only due to Andrew-related losses.

See this from an article published in the October 1999 issue of Swiss Re Canada's Review: " Andrew proved to be the topper of four straight years of huge losses for U.S. and international reinsurers. Not only did the reinsurers have to deal with Andrew's $15.5 billion in losses, but they also had to contend with Hawaii's Hurricane Iniki. The year before saw Typhoon Mireille hit Japan and Hurricane Bob hit the U.S. The annum prior, 1990, saw four costly winter storms hit Europe. And then there was 1989, the year of Hurricane Hugo, Piper Alpha, Exxon Valdez and the Loma Prieta earthquake. Between 1989 and 1992, the five biggest losses totaled almost $30 billion. The result of these four ruthless years was a major reduction in capacity provided by many of the world's property reinsurers."

Now compare this to the $25 billion in losses A.M. Best estimates was sustained by the reinsurance industry from the natural cats in 2017. Back to our inflation calculator again and we see that it comes to approximately $14 billion in 1992 dollars. $14 billion in 1992 dollars is still a big number but unlike in 1992, when Andrew struck, the reinsurance industry has not suffered "four straight years of huge losses."

Indeed, as Guy Carpenter noted earlier this year, "While reinsurers exercised greater caution in deploying capital at January 1, there was no indication markets' support of the sector was diminished." Translation: there has been no major reduction in capacity.

Reinsurers seem unwilling to fight tooth and nail for increases. Nor can they point to a major reduction in capacity as after Andrew. The real question is whether they actually need to. W e remembered this quote from Michael Wacek, Chief Risk Officer at Odyssey Re when in reference to the reinsurance industry of today he said "The industry can readily handle a $25 billion to $30 billion event. We would not anticipate it would result in any significant shift in the market dynamics at the next (contract) renewal."

As it turns out Wacek's comments was prescient. The reinsurance industry did suffer an estimated $25 billion event and generally there has not been any significant shift in the market dynamics at the January 1 renewals. So what all that hype about last autumn when, following Harvey, Irma and Maria trade press articles breathlessly announced that "the turn" had indeed arrived?

First, in some ways "the turn" did indeed arrive. For the most parts rates have finally stopped declining. With the exception of loss free accounts in Asia, we've not seen reports of continued rate decreases at the January 1 renewals. And the Florida CAT renewals are coming up at the end of June. If accounts in Puerto Rico that had sustained major losses experienced up rate increases at January 1, it could indicate rate increases for wind renewals this summer.

In fact, from what we've read most renewals saw modest increases with reinsurance price increases for property catastrophe programs in the US averaging between 5-10% for loss hit accounts according to Willis Re. JLT said that rates in the US were up by 10-20% for loss-affected business and flat to up to 5% for loss-free programs. If you can manage to exclude the hyped-up expectations these are pretty decent increases. At least, finally, the decreases have ceased. No more discussion of "close to nearing the bottom on premium reductions". The bottom has been hit and is slowly bouncing back.

It took a large loss to finally produce this result but as we've outlined the industry was ready for it and historically speaking it came at a good time --it was fairly isolated although the series of events last fall, earthquakes, Harvey, Irma and Maria didn't seem that way at least they were packed into one chronological period.

From AIG's perspective the opportunity to acquire the Validus reinsurance book may have seemed quite attractive as rate decreases seem to have ended. And of course the Validus insurance operations are said to fit nicely within the AIG coverage offering.

So where does all this put XL Catlin? The company had clawed its way into a top fifteen reinsurer in terms of size and seemed well positioned to reap premium increases and increased market share. But it may be that this is one of those cases, frustrating for conspiracy theorists, of simply not looking beyond the public pronouncements of both AXA and XL Catlin. It may be precisely because of the opportunity that may now exist in the reinsurance sector that XL decided to avail itself of one of the biggest balance sheets in the industry and AXA decided to take advantage of it.

At the most basic level both AIG and AXA are primarily insurers. Both have acquired reinsurers at a time when reinsurance premiums are expected to increase. From AXA's perspective, with its large life and health insurance business, the XL Catlin opportunity was similar to what many of us may currently be doing as we rebalance our individual asset portfolios fearing that the stock market rally simply cannot continue. AXA indicated that the diversification it obtained from the XL Catlin property and casualty book was too good to pass up.

From AXA's perspective the assets supporting its massive life insurance books are particularly prone to expected upcoming interest rate hikes. Those assets, by regulation, are conservatively invested. Once interest rate increases are seen the market value of those assets will decline in value --perhaps significantly. The opportunity to acquire a more flexible, largely annually reset, premium flow from XL Catlin, largely dependent on P&C, was too good to pass up.

The XL Catlin shareholders, who have experienced lean years in terms of premiums, have not voiced any public complaints at being taken off the field at a time when rates have finally stabilized. It is the AXA shareholders who have grumbled as the company moved away from the life business toward commercial P&C.

Interestingly, XL has notified its brokers that they should expect continuity after the acquisition. According to XL "given that AXA does not currently operate in Reinsurance we don't expect any significant changes to our Reinsurance business." Importantly, XL continued, "we will have the support of a bigger balance sheet to provide greater security and solutions for emerging and evolving risks. In fact, we will have one of the largest market caps of companies in our industry."

It may be as simple as that. A heady acquisition price, combined with expectations of rising reinsurance rates, that creates an entity supported by a much larger balance sheet and which can offer an expansion of reinsurance capacity, is a compelling narrative.

Just in case, the AXA CEO Thomas Buberl indicated that he expects that the new entity will be a significant reinsurance purchaser and will not expose the new company to the possible natural catastrophe claim spikes that the industry has just experienced. He may have read the news that Scor's Denis Kessler, across town in Paris, had successfully maneuvered the French reinsurer through the 2017 CAT claims by use of its retrocession program.

Scor said that retro has been an area of the business that has always had a significant focus "as the company leverages it to protect its balance sheet and shareholders." In 2017, Scor said, its retro program "worked as planned." Buberi no doubt intends to do the same.

Pat Ryan's view of "Diversified Multiple Capital Platforms"

One reason for AXA's acquisition of XL that has almost been overlooked is AXA's interest in obtaining XL's access to the capital markets. Part of XL's portfolio includes the ILS manager New Ocean Capital with $600 million in ILS assets under management.

At the Insider's Risk vs Reward Conference Pat Ryan, of Ryan Specialty Group (Yes, he does indeed have a few other things on his CV) noted the emergence of "diversified multiple capital platforms" as the possible new model for insurance and reinsurance.

Ryan noted he views the industry to be adopting a quote attributed to former hockey star Wayne Gretzky who said "I skate to where the puck is going to be" so that Gretzky, and in our case the insurance industry, can arrive there too.

Ryan noted that the AIG acquisition of Validus provided AIG with operations in Bermuda and London. AIG also obtained new lines of business in addition to the new underwriting talent brought to the mix by the Validus team.

Ryan opined that with XL and AXA, the French carrier which had last been in the US in the 1990s, would obtain the XL US property CAT book as well as its specialty and reinsurance books. AXA obtains the XL Catlin underwriting talent too.

Ryan's view of the world is one where success for carriers won't just be governed by scope and geography but by the successful acquisition of talent. By acquiring new lines of business the new entity can better match that exposure to the cost of the capital deployed to support it. Obtaining more sources of capital allows the new entity to more effectively mix and match capital with greater numbers of risks based on the cost of capital.

The whole key, observed Ryan, is going to where the business is going to be. If you can improve your ability to manage your capital by adding different capital sources you can deploy it more broadly by supporting businesses like reinsurance, facultative, fronting and distribution through a 50-state license. He noted that with XL acquisition, AXA has joined Allianz and Tokio Marine as entities with big balance sheets that have recently returned to the United States. In each case Ryan said the management of the three decided to grow rather than returning capital to shareholders.

Getting to where the business is going to be is certainly one challenge. Being prepared to insure that business when you get there is just as difficult.

Given the continued advance of non-traditional capital into the insurance and reinsurance industry it's no wonder Ryan's view is that the successful insurer of the future will be a diversified multiple platform entity. Ryan isn't the only one thinking this way. Swiss Re CEO Christian Mumenthaler thinks that it is precisely because of the diversification of an entity like Swiss Re that the breadth of its underwriting expertise can closely link to the various sources of capital deployed by the reinsurer.

Mumenthaler notes that, absent this diversification, an alternative capital investor in an ILS security needs to look for his total return on a per instrument or per investment basis. This thinking, of course, could lead one to the conclusion that since ILS investors, on a per instrument basis at least, are dependent upon premium rates to make a profit, then ILS may actually be exerting a hidden upward push on premiums. This notion would be contrary to the popular notion that the burgeoning alternative capital capacity has served to lower rates.

This is the first time we have seen this hint that ILS activity could be propping up rates, if not increasing them, when compared to what a "diversified multiple capital platform", like a Swiss Re, would be offering.

The future: breadth, low expenses, technology and legacy transfers

Other observations from the Insider event in New York included TigerRisk's Tony Ursano saying that "For the most part, insurers of the future will need to be big." Ursano noted that companies will have to be both insurers and reinsurers with the ability to manage and diversify pools of capital while also having the scale to absorb the volatility of their reinsurance arms.

Tony Ursano spoke in the morning at the conference and Pat Ryan spoke after lunch yet, aside from differences in the wording of their expected "insurers of the future", it was clear they were both speaking of the same ideal.

Ursano backed up his belief by showing a list of risk bearers, noting that 18 of them have ceased to exist because of takeovers in recent years. He noted that in almost every case, the board and management of the acquired company felt that its future would be in better hands with the buyer.

"The writing is on the wall," Ursano said -- more consolidation is to come as carriers move toward more diversification via acquisition.

Ursano also noted that it was his belief that the insurer of the future would need to have an expense ratio below 25%. Through scale and technology, Ursano said, "the insurer of the future has to be more efficient". He also predicted that legacy transfers will become more common as carriers shed portfolios after having risks on their books for a while harvesting early term premium and then laying it off to free up capacity.

Clearly the run-off carriers are better placed to reduce expenses and can make a profit even on the back end of scheduled premium payments and any premium transfer from the seller. But by shedding the legacy risk the insurers will take a major step toward " more stable, consistent earnings and be more active users of capital", he predicted.

The belief that legacy transfers will proliferate in the future was raised later in the day by Michael Millette of Hudson Structured Capital Management. Millette said that legacy loss portfolios will become part of the active capital management of carriers who will ultimately "keep risks on their books, seasoning it, and then laying it off" to make way for new capacity.

The observations of both Ursano and Millette couldn't apply to small, niche carriers. They would seem to be fated to access narrower pools of capital; have less opportunity to benefit from economies of scale to reduce expenses; and perhaps less willingness to sacrifice the premium streams (future or premium transfer) involved with legacy transfers.

Don't remind your accountant of this during tax season

Roger Crombie

A few months back, selected details contained in the so-called Paradise Papers were made public. Appleby, the offshore law firm whose papers were purloined and published, have announced that the firm intends to sue at least some of those who published part of the stolen documents.

What the Papers revealed was stunning, but not in the way that those who stole the documents, or the news outlets who published their content, had hoped. Quite the reverse: the biggest revelation is the moral bankruptcy of the media.

In case you missed it, the Paradise Papers are millions of documents stolen by computer hacking from the offshore services provider Appleby, plus other documents similarly sourced. The Papers were obtained by a German newspaper, which also published the contents of the "Panama Papers" last year, stolen from a Panama law firm.

Süddeutsche Zeitung shared the material with the International Consortium of Investigative Journalists (ICIJ), a US-based organization that coordinated the global collaboration. The Zeitung has refused to discuss how it came by the documents, presumably because of the illegality involved.

Disclosure is necessary: I lived offshore for most of my adult life. Appleby was a client (of mine, rather than vice versa). I wrote an authorized biography of Bill Kempe (a founder of Appleby, Spurling & Kempe, later renamed Appleby), unpublished because Mr. Kempe died before the work could be completed. I believe in the absolute freedom of the press, providing it remains within the limits of the law, and feel the same way about investors.

But enough about me. In case you have to dash off, here is an executive summary: the stolen documents reveal that wealthy people use offshore jurisdictions to best arrange their financial affairs. It seems likely that any bad apples who may have abused offshore facilities and broken laws will not be called to account.

The documents are part of an ongoing abuse of process by media organizations with a left-wing bias. In Britain: the Guardian newspaper, which is actively campaigning for the election of a Marxist government, and the BBC, a publicly funded and supposedly independent news outlet that denies a platform to anyone who opposes its views. The New York Times is among the American media partners; it has railed against the offshore community for decades.

In all, 96 media partners around the world are involved in the project. Some 381 journalists from 67 countries have been analysing the material for a year. All that effort has confirmed what everyone already knew: that offshore financial facilities are used by the wealthy to make themselves wealthier. This is roughly on a par with discovering that the Pope is Catholic.

Carried out correctly, offshore financial activity is entirely legal. Indeed, the ICIJ requires those wanting access to details in the Papers to confirm the following: "There are legitimate uses for offshore companies and trusts. We do not intend to suggest or imply that any people, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly."

In other words, even the journalists acknowledge that there is no story here.

In an editorial, The Guardian wrote: "[The Papers] show the world's super rich employing legions of accountants to legally avoid paying the tax they owe to the country where they live. And all over the world, jaws have dropped in astonishment."

There's a typo in that last sentence. It should read: "And all over the newsrooms of the 96 media outlets, jaws have dropped in astonishment."

Here's the proof of concept of what I'm saying. The details of some of the documents published so far suggest that a few people might not have obeyed the strict rules that apply to offshore financial activity, and may therefore have committed tax avoidance. Governments cannot prosecute based on newspaper stories. The British Government, therefore, has asked for a copy of the Papers so that it may pursue malfeasants.

The Guardian and the BBC, committed as they supposedly are to accountability, transparency and the rule of law, have refused point blank to pass on copies of the Papers to the British Government. In effect, the newspapers are shielding the guilty from criminal prosecution, while smearing the innocent.

I had an e-mail conversation with Mark Sangster, Vice President and Industry Security Strategist at cyber security company eSentire. He wrote: " I have no direct visibility into the ICIJ decision to withhold a copy of the papers from the UK Government. The documents themselves were obtained by allegedly illegal (or at least unauthorized) means, and this act itself should indeed be investigated for the public good."

He continued: "A subsequent law enforcement investigation would help shed light on this event. Understanding the mechanics of the breach offers invaluable insight into protecting against similar, future acts.

"Perhaps more importantly, it might expose the motivations of the attackers. For example, was their motivation 'ethical hacking', exposing what they deem unethical financial conduct of Appleby's clients, or was it financial - were they contracted to conduct a bespoke attack on behalf of another party who wished to expose Appleby clients?

"Or, was this a political attack by a party or government seeking to destabilize a geopolitical opponent by causing controversy and sowing doubt amongst the political constituency?"

Mr. Sangster concluded: "Such political meddling through these sorts of cyberattacks remained [until recently] in the pages of James Bond or Jason Bourne adventures. I think the authors [of these cyberattacks] would be hard pressed to keep up with the clever and maniacal practices of the cyber cabals and masterminds behind this new generation of cyber political exposés."

Former Minister of Finance of Bermuda Bob Richards summed it up: "It's not our responsibility to collect taxes for other countries," he said. Darned tooting. The 96 media outlets would do better to investigate the policies of governments that drive people into the arms of the offshore world in the first place.

**************************

Roger Crombie is an American Society of Business Publication Editors national award winner. An English chartered accountant who lives in Eastbourne, on England's South Coast, he writes and broadcasts news and opinion in the US, UK, Bermuda and the Caribbean, in print and online. His main beat is insurance and financial services, with 30-year sidelines in music and humour. All views expressed in Roger's columns are exclusively his own. Contact Roger at roger.crombie@catex.com.

March 26, 2018

Quick Bytes

Hemant Shah has stepped down from his CEO role at the CAT modeling firm RMS. Shah was one of the co-founders of RMS in 1989. Ex-Oracle executive Karen White is replacing Shah as CEO...Chubb is claiming that it can end its obligations to Harvey Weinstein where his legal defense costs are concerned. Weinstein, the former CEO of the eponymous movie production company, has been accused of sexual assault and harassment by over 100 women. Chubb, which has insured Weinstein for decades, asked a NY court for a declaratory judgment that would free it from legal burdens under 80 policies issued to Weinstein and his family members. Chubb claims policy exclusions include intentional acts as well as damages arising from a "willful, malicious, fraudulent or dishonest act" or actions that intentionally cause personal injury...The Chinese insurance regulator, CIRC, has seized control of Anbang Insurance Group and revealed that the company's former chairman, Wu Xiaohui, is being prosecuted for "economic crime." The move had been expected since June when the CIRC sent regulators into the insurer to conduct an investigation. The insurer's asset portfolio includes the Waldorf Astoria Hotel in New York...The Association of British Insurers says that a quarter of UK households do not have contents insurance leaving over 266 billion GBP worth of items uninsured. The ABI noted that the proliferation of costly, "must have" electrical gadgets has contributed to skyrocketing content value increases...AXIS Capital earned $36 million in ceding commission while ceding $489 million in premium to third party capital providers. The business model of obtaining fee income for originating, structuring and passing on reinsurance risk will be an increasingly important source of fee income for AXIS said CEO Albert Benchimol...We'd been wondering when we would see this story. US television has commercials featuring travelers using so-called "smart luggage" as power sources for mobile devices. Images of harried travelers plugging in laptops to power sources contained in their rolling luggage while waiting at airports prompted thoughts of two words: lithium-ion batteries. You will recall the Boeing 787 issue with the same...CEO of the London-based broker Ed, Steve Hearn, has predicted that the London insurance market will "disgrace itself" when UK companies with more than 250 staff have to release data on their gender pay gap next month. Hearn said that of the insurance industry "I predict that the brokers will be the worst of the bunch"...The Community Medical Center in Long Beach, CA which has 208 beds is expected to close its 94 year old facility this year because a report revealed that the hospital sits on an active earthquake fault and will be unable to meet California seismic regulations that become effective in June...One real example of changing climate conditions is being experienced in the Cape Town, South Africa metro area. Over 3.7 million people are suffering through the worst drought since records began and the population has been living on 50 liters of water a day --"enough for one daily toilet flush and a 10 liter shower"...Brad Gow, head of Sompo International's global cyber product group said that if last year's NotPetya ransomware attack had been centered on Western economies rather than in Eastern Europe it would have "turned the cyber insurance market on its head"...Finally, 19 year-old Bruce Lee (yes, his real name) was stopped earlier this month near the Manhattan entrance of the Lincoln Tunnel. Mr. Lee, who was a food delivery employee for a local Chinese restaurant, was on a bicycle. His Waze navigation application, he claimed, directed him to ride his bike into the Lincoln Tunnel and he had pedaled part of the way through before he was stopped. For the record, bikes, pedestrians and horses are not allowed into the Lincoln Tunnel...