QBE European Operations plc

QBE European Operations plc Annual report 2011 15
Underwriting structure
With 2011 GWP
Marine, Energy
and Aviation
Colin O’Farrell
£644 million
Sam Harrison
Director of Underwriting
£531 million
Paul Letherbarrow*
Director of Underwriting
(Aviation)
£113 million
Marine
Tim Pembroke
£152 million
British Marine
Tim Harris
£115 million
Energy and Political
Peter Burton
£264 million
The underwriting structure is supported by Nick Menear (Operations), Gary Crowley (Claims) and Daryl Ewer (Business Development).
* Joined April 2012
Business operations
British Marine
Cover includes P&I risks, written on a worldwide
basis, for smaller, specialist vessels and yachts
that typically do not exceed 10,000 gross tons.
Premium cover includes protection for cargo,
pollution, collision and personal injury.
The portfolio also includes a dedicated hull
underwriting team that specialises in offering
cover for hull and machinery, increased value
and war risks, which are routinely written for
100% of a vessel’s value up to US$20 million.
Approximately 10% of the hull portfolio relates
to the insurance of commercial fishing vessels,
predominately in the UK, Ireland and Canada.
General Aviation
The GA team leads more than 40% of the risks
it writes. Clients include the private owners of
fixed-wing and rotor-wing aircraft, flying clubs
and all types of commercial operations. Although
the portfolio is international, the majority of
business comes from Europe and Asia and is
written through London-based brokers. Income
is also generated through branch offices in
mainland Europe, Mexico and the USA, where
we provide products through local market
agents and brokers.
Airlines
Airline risks are written, through brokers, on a
co-insurance basis in the international subscription
market. The syndicate has the capacity to
underwrite all classes of airline business
worldwide, from international, national and
regional carriers, to charter and cargo airlines.
Products and Airports
The Products and Airports portfolio consists
of an international book written predominantly
through London-based insurance brokers.
Business is spread over all sectors, including
airframe engine and component manufacturers,
airport and airport-related servicing risks and
refuelling operations.
Financial performance
The division’s trading environment was mixed
in 2011, with average rate increases of
4.8% (2010 2.1%). Significant rate increases
were observed during 2011 on renewal
of energy impacted classes of business,
particularly worldwide energy clients. Rates
in the marine, British Marine and aviation
markets remained relatively flat during the
year. Gross written premium remained stable
at £644 million. Underpinning this performance
were prior-year reserve releases from QBE
Syndicate 1036 of £10.9 million. This includes
a 2011 reserve release, reflecting a benign
hurricane season for catastrophe exposed risk
business in the US Gulf.
Market environment
The market environment was extremely
competitive across all marine, energy and aviation
product lines. While rates in the onshore and
offshore energy risk and liability sectors increased
following market losses in the former and
contraction in capacity in energy liability, there
was little or no rating progress in other classes,
in which overcapacity and commission levels
became increasingly significant issues. The
market rating environment across all classes
was particularly disappointing, despite the
increased level of catastrophe claims
throughout the 2011 calendar year.
Outlook
We assume that pressure on rates will increase
in 2012 unless capacity or market participants
contract following the high level of catastrophe
claims in 2011. The division’s historically
strong underwriting discipline, expertise and
service will be the key to profitability in 2012.
Consolidation and expansion of managed
operations overseas, combined with
co-operation with QBE European and Group
offices worldwide, will become increasingly
important as the year progresses.