jlt re - aviation the hurdles and challenges of placing reinsurance for russian aviation insurers...
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JLT Re - Aviation
The Hurdles and Challenges of Placing Reinsurance for Russian AviationInsurers
Presented by
Paul D. Smith
Partner – JLT Re
RAASI XV Aviation and SpaceInsurance Conference
JLT Re - Aviation Reinsurance TeamMark Thurgood
Global Aviation Reinsurance Practice Leader
Paul Smith
Broking Client Support Client Services
Chris Peddy
Bill Morritt
Andy Poulton
Consultancy Services
Nigel Baker
Paul Dixon
Technical Support
Gary Morton
Stephanie Grace
Trevor Knights
Claims Support
Grant Sanders
Chris Eaton Mark Pitts
Mike Grout
Barry Keegan
Francesca Hearfield
Ian Cutting
Steve Watts
Financial Support
Alan Jelley
Michele SmithDominic Riley
Jonathan Harris
Colin Dipple
JLT Reinsurance Brokers LimitedJLT Reinsurance Brokers Limited
One America SquareOne America SquareLondon EC3N 2JLLondon EC3N 2JL
TelephoneTelephone 020 7466 1300 020 7466 1300Facsimile Facsimile 020 7466 1469 020 7466 1469
WebsiteWebsite www.jltre.com www.jltre.com
A Selection of JLT Re Clients
Agenda
Previous Hurdles and Challenges Current Hurdles and Challenges
– The Russian Market– Reinsurance– Sanctioned Business
Summary
Previous Hurdles and Challenges Millennium Clauses in 1999 / 2000
– Man power resource / intellectual capital
11th September 2001– War policies cancelled
– XS AV52 write backs removed from Excess of Loss
– Losses Occurring During cover only available
– Massive increase in pricing
– Markets bankrupt or withdraw
– Industry changing event
Hurricane Katrina– US$ 80bn + event
– Affected aviation pricing
– Industry changing event
Current Hurdles and Challenges
The Russian Market Reinsurance Sanctioned Business
The Russian Market A reducing client base, due to:-
– The Global Financial Crisis – European legislation– Leasing companies– European minimum limits– Russian Air Code– Retrocessional arrangements with domestic
markets
Reinsurance
Proportional Treaty Excess of Loss Risk Excess
Proportional Treaty
Hull Quota Share Treaties Poor hull loss record in Russian Market Reinsurers reluctant to provide capacity for old
Russian hulls Quality of hull fleet improving Leasing companies will not accept due to part order Quota Share means paying away lots of income in
an improving hull environment
Excess of Loss Reinsurance
Cheaper than proportional – retained income Reinsurers prefer Excess of Loss as they miss
attritional losses Hull capacity available Cost of capital
The Cost of Capital
Defined as:-
“Minimum return that investors expect for providing capital to the Company”
OR
‘The rate of return that capital could be expected to earn in an alternative investment of equivalent risk’
Risk Excess
Hull Risk Excess – capacity Liability Risk Excess – capacity
Sanctioned Business
Not a new subject Recent USA and EU Iranian Sanctions Reinsurance market reaction
Summary
There are always new challenges Massive opportunity for all Profitable business Consolidation of Airlines and Insurers Improved airport infrastructure General Aviation opportunities Inflation Competition