CPRI MARKET UPDATE FOR JULY 2015
Transcription
CPRI MARKET UPDATE FOR JULY 2015
REPORT AND MARKET UPDATE CREDIT AND POLITICAL RISK INSURANCE (CPRI) JULY 2015 ARTHUR J. GALLAGHER AJGINTERNATIONAL.COM LONDON CPRI MARKET UPDATE FOR JULY 2015 1 Founded by Arthur Gallagher in Chicago in 1927, Arthur J. Gallagher & Co has grown to become one of the largest insurance brokerage and risk management companies in the world. With significant reach internationally, the group employs over 20,000 people and its global network provides services in more than 140 countries. Outside the US, we use the brand name Arthur J. Gallagher. 2 LONDON CPRI MARKET UPDATE FOR JULY 2015 AJGINTERNATIONAL.COM ARTHUR J. GALLAGHER CONTENTS Review2 Commercial Market Overview 4 Available Market Capacity 7 Total Capacity Available by Tenor – July 2015 8 Available Market Capacity Comparison 9 Trade Credit Insurance 10 Main Trade Credit Insurers 10 Emerging Markets Country Risk Ratings 11 Kidnap and Ransom Insurance Fact Sheet 14 Terrorism Report 2015 15 Contacts16 ARTHUR J. GALLAGHER AJGINTERNATIONAL.COM LONDON CPRI MARKET UPDATE FOR JULY 2015 CPRI MARKET UPDATE FOR JULY 2015 “Political risk has returned with a vengeance.” Lionel Barber, FT Editor, 20th March 2015 The Arthur J. Gallagher Market Update for July 2015 summarises the changes in line structure and tenors available from commercial political risk insurers since our last report in January 2015. The summary reflects the outcome of reinsurance negotiations where renewals have been completed in the intervening period, as well as the arrival of any new insurers who have gained approval for their business plans and obtained sufficient capital allocations. Additionally, any changes to credit agencies’ rating of the insurers are detailed herein. With few changes to Insurers’ line sizes there has been a minor increase in market capacity since the previous January edition. “Seven years on from the onset of the global financial crisis, the world is recovering, but only slowly,” (Ibid.) Political unrest is prevalent the world over, some of which is highlighted below. The jihadist group ISIS has declared the establishment of a ‘caliphate’ – an Islamic state – stretching from Aleppo in Syria to the province of Diyala in Iraq. Without Sunni support, the new Iraqi government headed by Haider Abadi is unlikely to be able to restore federal government control over northern Iraq. In Syria, prospects for a diplomatic solution to the war are poor. President Bashar al-Assad’s forces have suffered significant territorial losses to the increasingly co-ordinated Sunni insurgents in 2015. In addition to the on-going civil war and US and EU sanctions somewhat restricting trade with the Syrian government, Syria’s legal system impedes wider flows of foreign investment. In Libya, political stability will continue to be undermined by oil sector disruption perpetrated by rival armed groups fighting for control of oil infrastructure, and general insecurity. As such large numbers of refugees from the Middle East and Africa have attempted to cross borders into Europe, often with fatal consequences. Despite Greece’s well documented, continued failure to honour IMF loan repayments, the Eurozone is on track to experience its best growth in four years. Eurozone GDP growth improved to 0.4% quarter on quarter in Q1 2015, which was the strongest performance since the second quarter of 2011. The extension of EU sanctions on Russia until January 2016 is likely to escalate regulatory blockages to business activity. One estimate showed that Russia’s Q1 real GDP contracted by 2.2% year on year, with the most affected 2 industries being: trade, hotels and restaurants, and real estate, indicating private consumption is falling. Brazil has seen hundreds of thousands of people taking part in anti-government demonstrations, sparked by anger over bribery scandals with the state-run multinational energy corporation, Petrobras, which has been penalised with a USD 17 billion corruption fine. Brazil’s president, Dilma Rouseff, has introduced a five-year USD 65 billion infrastructure package in order to combat recession. Six months after President Obama eased sanctions on a more than five decade long Cold War stalemate with Cuba, American money, travellers and business executives have entered the island, resulting in a 36% increase in travel between January and May. In Venezuela expropriation risks will remain high ahead of the pivotal December 2015 parliamentary elections that will test the popularity of President Nicolás Maduro and his ruling (United Socialist party of Venezuela). Recently (23rd June 2015), oil prices have risen by more than USD 10 from the low levels experienced in the last six months, with the US benchmark West Texas Intermediate (WTI) currently priced at USD 60.11 a barrel on the New York Mercantile Exchange. A Tripartite Free Trade Area (TFTA) agreement was signed last week by officials of three of Africa’s existing trade blocs - the Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA) – with the intention of reducing internal duties and to harmonise trade regulations. The ‘unified’ market incorporating 26 of Africa’s 54 countries would comprise 600 million people and have a combined GDP of around USD 1 trillion. LONDON CPRI MARKET UPDATE FOR JULY 2015 AJGINTERNATIONAL.COM ARTHUR J. GALLAGHER In China rising debt levels and serious overcapacity in housing and manufacturing are likely to limit short-term economic growth. The central bank will probably maintain a conservative monetary policy stance, constraining the investment financing environment. Recent reductions in global energy prices are not sufficient to significantly stimulate growth, although exports should improve in 2015 due to strong recoveries in North America and, to a lesser extent, Western Europe. final deal on its nuclear programme to secure sanctions relief. However, a deal with the US challenges the Islamic Republic’s legitimacy, founded upon religiously motivated anti-Western ideals. The hardline faction and the Islamic Revolution Guards Corps (IRGC) seem to believe that self-reliance, isolation and ideological consistency are more important for the regime’s survival. Lower crude prices and existing sanctions on Iran’s oil exports, along with unwillingness to cut social spending, increase Iran’s incentives for a Significant CPRI market changes are summarised below: ACE ACE has opened an office in Japan, Hiroya Takagi has joined as Manager, Political Risk & Credit, Japan. Takagi-san has previously worked at Euler Hermes in Japan as Commercial Underwriting Manager. Fidelis Richard Brindle has started a new company Fidelis and is joined by Richard Coulson. Line size and tenors to be finalised. Liberty Liberty has strengthened its Country and Credit Risk Management team with the recruitment of Christian Crivari in London and Siew Choon in Singapore. Aspen Carolyn Thomas has moved to Aspen’s Bermuda office to write credit and political risk as at 1st April 2015. The insurer is Aspen Bermuda Ltd. Tenor, limits, sub classes and financial strength rating mirror those of Aspen insurance UK Ltd. She will focus on business originating in the Americas. XL Catlin Joe Blenkinsopp has been appointed Chief Underwriting Officer and Global Head of the combined team effective 24th June 2015. The acquisition of Catlin by XL, exceeding USD 4 billion in value, has dominated the Lloyd’s market. Canopius Lijana Baubyte, a Credit Risk Analyst from Liberty, has joined Canopius. Chaucer Chaucer has increased its maximum tenors by two years and can now right up to 7 years for CEND, CF and CR risks. ARTHUR J. GALLAGHER AJGINTERNATIONAL.COM LONDON CPRI MARKET UPDATE FOR JULY 2015 3 COMMERCIAL MARKET OVERVIEW Insurer: Project Risks (CEN) Trade Risks Political (CF) Trade Risks Commercial (CR) ‘Company Markets’ 4 Rating(s) Total max per risk (USD) Max Tenor (years) Total max per risk (USD) Max Tenor (years) Total max per risk (USD) Max Tenor (years) ACE European Group Ltd. 100,000,000 15 80,000,000 15 30,000,000 5 AA [S&P] AIG 150,000,000 15 150,000,000 15 100,000,000 5 A+ [S&P] Aspen 100,000,000 15 100,000,000 15 100,000,000 8 A [S&P] Atradius 112,000,000 7 112,000,000 7 112,000,000 7 A [A.M. Best] Axis 50,000,000 7 50,000,000 7 35,000,000 7 A+ [S&P] C V Starr 50,000,000 10 50,000,000 0 10,000,000 1 A [A.M. Best] Coface 70,000,000 10 70,000,000 7 70,000,000 7 AA- [Fitch] Euler Hermes 125,000,000 8 125,000,000 8 125,000,000 8 AA- [S&P] FCIA 25,000,000 7 80,000,000 7 80,000,000 7 A+ [S&P] Garant 34,000,000 7 34,000,000 7 34,000,000 7 A- [Fitch and A.M. Best] Houston Casualty 50,000,000 7 50,000,000 7 50,000,000 5 AA [S&P/Fitch] Ironshore 40,000,000 7 40,000,000 7 40,000,000 7 A [A.M. Best] Lancashire Insurance Ltd. 200,000,000 10 75,000,000 10 0 0 A-[S&P] AWAC (LAU) 20,000,000 5 20,000,000 5 20,000,000 5 A [A.M. Best] Liberty Mutual Insurance Europe Ltd. 50,000,000 15 50,000,000 10 50,000,000 7 A [S&P] Markel International Insurance Company 0 0 50,000,000 7 150,000,000 5 A [S&P/Fitch] Montpelier Re 25,000,000 7 25,000,000 7 25,000,000 7 A- [S&P/Fitch] Sovereign 80,000,000 15 80,000,000 15 0 0 AA [S&P/Fitch] Swiss Re Corporate Solution Ltd. 75,000,000 10 75,000,000 10 200,000,000 5 AA-[S&P] XL Catlin 190,000,000 12 165,000,000 12 115,000,000 12 A+ [S&P/Fitch] Zurich 150,000,000 15 150,000,000 15 75,000,000 5 AA- [S&P/Fitch] Total: ‘Company Markets’ July 2015 1,696,000,000 5% 1,631,000,000 1% 1,421,000,000 1% Total: Jan 2015 1,618,000,000 1,615,000,000 LONDON CPRI MARKET UPDATE FOR JULY 2015 1,405,000,000 AJGINTERNATIONAL.COM ARTHUR J. GALLAGHER COMMERCIAL MARKET OVERVIEW Insurer: Project Risks Trade Risks Political Trade Risks Commercial ‘Lloyd’s Markets’ (CEN) (CF) (CR) [All Lloyd’s Markets rated A+ by S&P] Total max per risk (USD) Max Tenor (years) Total max per risk (USD) Max Tenor (years) Total max per risk (USD) Max Tenor (years) Acappella Lloyd’s Syn 2014 10,000,000 7 10,000,000 7 7,500,000 5 ACE Global Markets 100,000,000 15 80,000,000 15 30,000,000 5 20,000,000 5 20,000,000 5 2,500,000 3 25,000,000 10 25,000,000 10 15,000,000 5 ANV Lloyd’s Syn 1861 17,500,000 7 15,000,000 7 3,000,000 1 Argo 20,000,000 5 20,000,000 5 20,000,000 3 15,000,000 7 15,000,000 7 0 0 25,000,000 7.5 25,000,000 7.5 5,000,000 3 50,000,000 15 50,000,000 15 50,000,000 8 50,000,000 7 50,000,000 7 30,000,000 7 30,000,000 10 30,000,000 8 30,000,000 8 25,000,000 7 25,000,000 7 12,500,000 7 Channel Lloyd’s Syn 2015 45,000,000 10 45,000,000 10 25,000,000 7 Chaucer 30,000,000 7 30,000,000 7 15,000,000 7 C V Starr Lloyd’s Syn 1919 50,000,000 10 50,000,000 10 10,000,000 5 Hardy 15,000,000 5 15,000,000 5 10,000,000 5 25,000,000 10 25,000,000 5 25,000,000 5 15,000,000 7 15,000,000 7 15,000,000 7 60,000,000 5 40,000,000 5 40,000,000 5 Lloyd’s Syn 2488 Amlin Lloyd’s Syn 2001 Antares Lloyd’s Syn 1274 Lloyd’s Syn 1200 Ark Lloyd’s Syn 4020 Ascot Lloyd’s Syn 1414 Aspen Lloyd’s Syn 4711 Beazley Lloyd’s Syn 623/2623 BRIT Lloyd’s Syn 2987 Canopius Lloyd’s Syn 4444 Lloyd’s Syn 1084 Lloyd’s Syn 382 Hiscox Lloyd’s Syn 33 ANV 5820 (Jubilee) Lloyd’s Syn 5820 Kiln Lloyd’s Syn 510 ARTHUR J. GALLAGHER AJGINTERNATIONAL.COM LONDON CPRI MARKET UPDATE FOR JULY 2015 5 COMMERCIAL MARKET OVERVIEW Project Risks Insurer: continued Trade Risks Political (CEN) ‘Lloyd’s Markets’ Trade Risks Commercial (CF) (CR) [All Lloyd’s Markets rated A+ by S&P] Total max per risk (USD) Max Tenor (years) Total max per risk (USD) Max Tenor (years) Total max per risk (USD) Max Tenor (years) Liberty Syn Mgmt 50,000,000 15 50,000,000 10 50,000,000 7 40,000,000 10 40,000,000 10 40,000,000 10 20,000,000 3 20,000,000 3 0 0 0 0 50,000,000 7 70,000,000 5 Montpelier Re Lloyd’s Syn 5151 25,000,000 7 25,000,000 7 25,000,000 7 Novae 30,000,000 7 30,000,000 7 30,000,000 7 0 0 15,000,000 5 15,000,000 5 20,000,000 5 20,000,000 5 0 0 15,000,000 7 15,000,000 7 12,500,000 7 40,000,000 7 40,000,000 7 20,000,000 7 5,000,000 3 0 0 0 0 7,500,000 5 5,000,000 5 0 0 190,000,000 10 165,000,000 12 115,000,000 12 1,070,000,000 3% 1,060,000,000 2% 723,000,000 3% Lloyd’s Syn 4472 Marketform Lloyd’s Syn 2468 MAP Lloyd’s Syn 2791 Markel International Lloyd’s Syn 3000 Lloyd’s Syn 2007 Nexus CIFS Lloyd’s Syn 4472/2001/1955 O’Farrell Lloyd’s Syn 1036 Pembroke Lloyd’s Syn 4000 Talbot Lloyd’s Syn 1183 Torus Lloyd’s Syn 1301 WR Berkley Lloyd’s Syn 1967 XL Catlin Lloyd’s Syn 1209/2003 Total: ‘Lloyd’s Markets July 2015’ Total: 1,035,000,000 1,035,000,000 703,000,000 Jan 2015 6 LONDON CPRI MARKET UPDATE FOR JULY 2015 AJGINTERNATIONAL.COM ARTHUR J. GALLAGHER AVAILABLE MARKET CAPACITY – JULY 2015 (Total possible maximum USD per risk) Project Risks (CEN) Trade Risks Political (CF) Trade Risks Commercial (CR) Company 1,696,000,000 1,631,000,000 1,421,000,000 Lloyd’s 1,070,000,000 1,060,000,000 723,000,000 Total 2,226,000,000 Total: Jan 2015 2,123,000,000 5% 2,196,000,000 2% 2,155,000,000 1,794,000,000 2% 1,758,000,000 Notes: Totals do not ‘double count’ the Company and Lloyd’s lines of ACE, Aspen, C V Starr, Liberty, Markel, Montpelier and XL Catlin that can be written via either their Company or Lloyd’s syndicate. AVAILABLE MARKET CAPACITY – JULY 2015 Capacity (Total possible maximum USD per risk) 1,800,000,000 1,600,000,000 1,400,000,000 1,200,000,000 1,000,000,000 800,000,000 600,000,000 400,000,000 200,000,000 0 1,696 Company Lloyd’s 1,631 1,070 1,421 1,060 723 Project Risks (CEN) Trade Risks Political (CF) Trade Risks Commercial (CR) Risk Type ARTHUR J. GALLAGHER AJGINTERNATIONAL.COM LONDON CPRI MARKET UPDATE FOR JULY 2015 7 TOTAL CAPACITY AVAILABLE BY TENOR – JULY 2015 (Total possible maximum USD per risk) Max Tenor (years) Project Risks (CEN) Trade Risks Political (CF) Trade Risks Commercial (CR) 15 770,000,000 725,000,000 - 10 1,370,000,000 1,150,000,000 155,000,000 7 1,980,000,000 1,754,000,000 1,155,000,000 5 2,226,000,000 2,110,000,000 1,585,000,000 3 2,238,000,000 2,196,000,000 1,794,000,000 (Total possible maximum million USD per risk) 2,500 2,238 2,226 2,196 2,000 Project Risks (CEN) Trade Risks Political (CF) Trade Risks Commercial (CR) 2,110 1,980 1,794 Capacity 1,585 1,754 1,500 1,370 1,155 1,150 1,000 770 725 500 0 155 3 5 7 10 15 Tenor Available (Years) 8 LONDON CPRI MARKET UPDATE FOR JULY 2015 AJGINTERNATIONAL.COM ARTHUR J. GALLAGHER ARTHUR J. GALLAGHER Sep 01 580 574 1,154 Sep 01 268 389 657 Sep 01 - - - Project Risks (CEN) Company Lloyd's Total Trade Risks Political (CF) AJGINTERNATIONAL.COM Company Lloyd's Total Trade Risks Commercial (CR) Company Lloyd's Total LONDON CPRI MARKET UPDATE FOR JULY 2015 - - - Jan 02 519 188 331 Jan 02 837 274 564 Jan 02 268 73 195 Jan 03 520 203 318 Jan 03 773 278 495 Jan 03 January 2001 to July 2015 242 87 185 Jan 04 513 195 318 Jan 04 775 280 495 Jan 04 254 79 175 Jan 05 549 239 310 Jan 05 788 318 470 Jan 05 358 103 255 Jan 06 661 256 405 Jan 06 825 335 490 Jan 06 (Total possible maximum million USD per risk) 422 167 255 Jan 07 737 297 440 Jan 07 883 368 515 Jan 07 490 190 300 Jul 07 812 332 480 Jul 07 933 388 545 Jul 07 453 855 Jul 08 478 840 Jan 09 560 870 Jul 09 593 920 Jan 10 593 795 Jul 10 633 865 Jan 11 643 985 Jul 11 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 622 743 762 778 913 938 1,035 1,070 1,015 1,233 1,285 1,324 1,493 1,608 1,618 1,696 Jan 12 543 208 335 Jan 08 877 347 530 Jan 08 381 720 Jan 09 456 750 Jul 09 502 800 Jan 10 510 745 Jul 10 560 865 Jan 11 570 948 Jul 11 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 545 675 695 703 845 952 1,035 1,060 1,085 1,195 1,247 1,291 1,360 1,515 1,615 1,631 Jan 12 653 238 445 Jul 08 641 251 420 Jan 09 727 307 450 Jul 09 731 346 500 Jan 10 731 341 505 Jul 10 768 353 550 Jan 11 865 658 658 Jul 11 998 338 820 Jan 12 455 987 Jan 13 Jan 14 Jul 14 Jan 15 Jul 15 457 544 634 703 723 1,036 1,080 1,185 1,405 1,405 Jul 13 1,158 1,177 1,228 1,379 1,559 1,758 1,794 453 955 Jul 12 1,052 1,041 1,146 1,157 1,110 1,240 1,268 1,420 1,565 1,607 1,659 1,885 2,022 2,155 2,196 377 735 Jul 08 1,083 1,228 1,238 1,350 1,348 1,223 1,293 1,333 1,382 1,646 1,688 1,742 2,016 2,216 2,123 2,226 423 660 Jan 08 AVAILABLE MARKET CAPACITY COMPARISON 9 TRADE CREDIT INSURANCE – JULY 2015 The trends identified in our last market update have continued into the first half of 2015. The market has seen a number of large insolvencies resulting in significant claims payment to clients against a backdrop of plentiful capacity and softer pricing. Even as we emerge from recession, credit insurance has a vital role to play in helping businesses protect their cash flow and balance sheet and this risk mitigation role is a key driver for many companies to purchase insurance. It is of course not the only reason - credit insurance provides the underlying security to extend credit to existing customers and to help identify new companies and markets. The role of the insurers in providing country, trade sector and buyer credit information is vital. Credit insurance also enables companies to open up access to bank finance, for example by accelerating payments against trade receivables, trade finance and facilitating supply chain finance. Arthur J. Gallagher recently attended the GTR UK Trade & Export Finance Conference in Birmingham – a forum that brings together exporters, financiers, government representatives, insurance companies and professional advisers like us. A key conclusion was the need for the credit insurance market to work more closely with the banks and trade financiers to hit the government’s stretching target of GBP 1 trillion of exports by 2020. This is almost a doubling of the current value of the UK’s exports currently. A tough challenge, but there is an increasing demand from banks and trade financiers for credit insurance solutions to support exporters and importers. The credit insurers, with the help of specialist brokers, have developed solutions in response. These solutions not only enable banks to make funds available to their customers by protecting them from commercial and political credit risk, but also enable them to achieve capital relief within the framework of the Basel III regulations. These solutions have been available for some time, but the insurers and brokers continue to develop structures and policy wordings to accommodate almost any trade receivable funding scenario. This is the latest stream of innovation in the credit insurance market and one that continues on a growth path. MAIN TRADE CREDIT INSURERS 10 Insurer Rating (S&P unless indicated) Ground Up Excess of Loss Single Risk ACE AA - x x AIG A+ x x x Atradius A3 (Moody's) x x x CIFS A+ x x - Coface AA- (Fitch) x x x Credimundi AA+ (as per ONDD) x x - Equinox Global A+ (as per Lloyd's) x x - Euler Hermes AA- x x x FCIA A+ (as per Great American Insurance) x x x HCC AA x x x Ironshore A (A.M. Best) - x x AWAC A - x x Liberty Mutual A- - - x Lloyd's A+ - x x Markel A (S&P/Fitch) - x x QBE A+ x x x XL Catlin A+ - x x Zurich AA- x x x LONDON CPRI MARKET UPDATE FOR JULY 2015 AJGINTERNATIONAL.COM ARTHUR J. GALLAGHER EMERGING MARKETS COUNTRY RISK RATINGS The following pages analyse the Country Risk Ratings, compiled by IHS Global Insight, of various Emerging Markets. We compare the Overall Risk Ratings and the Political Risk Ratings as at the time of publication of this Market Report, and as at 1st July 2015. These countries have been selected from the International Monetary Fund’s World Economic Outlook for Emerging and Developing Economies. Risk Rating Risk Description 0.75 – 1.24 Insignificant 1.25 – 1.74 Negligible 1.75 – 1.99 Low 2.00 – 2.49 Moderate 2.50 – 2.99 Medium 3.00 – 3.49 Significant 3.50 – 3.99 High 4.00 – 4.49 Very High 4.50 – 6.99 Extreme 7.00 – 10.00 Very Extreme Overall Risk Ratings take into account six components: Political, Economic, Legal, Tax, Operational and Security. These ratings are principally measuring stability. Political Risk Ratings analyse four factors: • Institutional performance • Representation of the population and organised interests • Internal political consensus • External political consensus Sub-Sahara Africa Overall Risk at 01 Jan 2015 Overall Risk at 01 July 2015 Political Risk at 01 Jan 2015 Political Risk at 01 July 2015 Burkina Faso 3.53 High 3.00 Significant 3.75 High 2.90 Medium Côte d’Ivoire 3.87 High 2.50 Medium 4.00 Very High 2.10 Moderate Democratic Republic of Congo 4.33 Very High 3.90 High 4.25 Very High 3.50 High Ghana Kenya 2.82 3.39 Medium Significant 2.60 2.70 Medium Medium 2.75 3.75 Medium High 2.50 2.30 Medium Moderate Liberia 3.80 High 3.30 Significant 3.75 High 3.00 Significant Nigeria 4.07 Very High 3.60 High 4.50 Extreme 2.90 Medium Sierra Leone 3.69 High 2.90 Medium 3.50 High 2.60 Medium South Africa 2.57 Medium 2.30 Moderate 2.50 Medium 1.90 Low Tanzania 3.32 Significant 2.80 Medium 3.00 Significant 1.60 Negligible ARTHUR J. GALLAGHER AJGINTERNATIONAL.COM LONDON CPRI MARKET UPDATE FOR JULY 2015 11 EMERGING MARKETS COUNTRY RISK RATINGS Asia Pacific Overall Risk at 01 Jan 2015 Overall Risk at 01 July 2015 Political Risk at 01 Jan 2015 Political Risk at 01 July 2015 Cambodia 3.19 Significant 2.20 Moderate 3.00 Significant 1.40 Negligible China 2.90 Medium 2.00 Moderate 2.50 Medium 1.40 Low India 2.86 Medium 2.50 Medium 3.00 Significant 2.30 Moderate Indonesia 2.82 Medium 2.20 Moderate 2.75 Medium 1.70 Negligible Laos 3.06 Significant 2.20 Moderate 3.00 Significant 1.40 Negligible Pakistan 3.96 Very High 2.90 Medium 4.50 Extreme 2.80 Medium Papua New Guinea 3.39 Significant 2.50 Medium 3.39 Significant 2.30 Moderate Philippines 2.68 Medium 2.10 Moderate 2.50 Medium 1.20 Insignificant Thailand 2.94 Medium 2.00 Moderate 3.50 High 1.80 Low Vietnam 2.97 Medium 1.90 Low 3.25 Significant 1.00 Insignificant Europe and CIS 12 Overall Risk at 01 Jan 2015 Overall Risk at 01 July 2015 Political Risk at 01 Jan 2015 Political Risk at 01 July 2015 Belarus 3.51 High 2.50 Medium 3.50 High 2.70 Medium Czech Republic 2.04 Moderate 1.30 Negligible 2.25 Moderate 1.50 Negligible Greece 2.79 Medium 2.40 Moderate 2.75 Medium 2.80 Medium Kazakhstan 3.03 Significant 2.30 Moderate 2.75 Medium 1.80 Low Kyrgyzstan 3.58 High 3.50 High 3.75 High 3.20 Significant Poland 1.96 Low 1.40 Negligible 2.00 Moderate 1.40 Negligible Romania 2.53 Medium 2.00 Moderate 2.25 Medium 2.30 Moderate Russia 3.07 Significant 2.80 Medium 3.00 Significant 2.30 Moderate Slovakia 1.88 Low 1.30 Negligible 2.00 Moderate 1.20 Insignificant Ukraine 3.65 High 3.70 High 4.00 Very High 3.60 High LONDON CPRI MARKET UPDATE FOR JULY 2015 AJGINTERNATIONAL.COM ARTHUR J. GALLAGHER EMERGING MARKETS COUNTRY RISK RATINGS Latin America and Caribbean Overall Risk at 01 Jan 2015 Overall Risk at 01 July 2015 Political Risk at 01 Jan 2015 Political Risk at 01 July 2015 Argentina 3.44 Significant 3.30 Significant 3.25 Significant 2.60 Medium Bolivia 3.39 Significant 3.20 Significant 3.25 Significant 2.80 Medium Brazil 2.66 Medium 2.00 Moderate 2.50 Medium 1.60 Negligible Colombia 2.77 Medium 2.20 Moderate 2.50 Medium 2.30 Moderate Dominican Republic 2.85 Medium 2.00 Moderate 3.25 Significant 2.10 Moderate Ecuador 3.50 High 3.10 Significant 3.25 High 2.50 Medium Guatemala 3.31 Significant 2.60 Medium 3.50 High 3.50 High Nicaragua 3.42 Significant 2.60 Medium 3.50 High 2.20 Moderate Peru 2.86 Medium 2.10 Moderate 3.25 Significant 2.30 Moderate Venezuela 3.98 High 4.40 Very High 4.00 Significant 3.90 High Middle East and North Africa Overall Risk at 01 Jan 2015 Overall Risk at 01 July 2015 Political Risk at 01 Jan 2015 Political Risk at 01 July 2015 Algeria 3.14 Significant 3.20 Significant 3.50 Significant 2.90 Medium Bahrain 2.59 Medium 2.10 Moderate 3.00 Significant 2.00 Moderate Egypt 3.47 Significant 3.40 Significant 3.75 High 3.00 Significant Kuwait 2.62 Medium 2.10 Moderate 3.25 Significant 2.10 Moderate Lebanon 3.30 Significant 3.20 Significant 3.75 High 3.20 Significant Libya 4.09 Very High 5.70 Extreme 4.25 Very High 7.00 Extreme Saudi Arabia 2.47 Moderate 2.20 Moderate 2.75 Medium 2.00 Moderate Tunisia 2.83 Medium 2.30 Moderate 3.00 Significant 2.40 Moderate United Arab Emirates 2.13 Moderate 1.30 Negligible 2.00 Moderate 0.90 Insignificant Yemen 4.10 Very High 5.60 Extreme 4.25 Very High 6.30 Extreme ARTHUR J. GALLAGHER AJGINTERNATIONAL.COM LONDON CPRI MARKET UPDATE FOR JULY 2015 13 KIDNAP AND RANSOM INSURANCE FACT SHEET Special Contingency Insurance Whilst these policies are known for providing cover for Kidnap and Ransom situations, the cover is far wider and can include Extortion; Products and Extortion; Cyber Extortion Business Interruption; Emergency Political Repatriation; Hijack; Wrongful Detention; Threat; Disappearance; Express Kidnap; Child Abduction; Business Interruption following an incident; Assault and Hostage Crisis. During the incident the Insured will have access to the Insurer’s response team and, unlike a PA + Travel Policy which is usually capped at USD 50,000, this is for an unlimited amount. Following an incident Insurers will reimburse financial costs incurred by the insured, including: Legal Liability; personal accident, including a capital sum for loss of life or limb by the victim; travel and accommodation costs related to the incident; salaries of the victim; medical costs, including psychological counselling; rest and rehabilitation costs. Further to the previous report the increase in the illegal detention of people by terrorists has shown no sign of easing. Continued political polarisation and criminal activity in Colombia has kept the level of nontraditional incidents such as virtual and express kidnaps at an unusually high level. Likewise, Boko Haram continues to drive the rate of kidnaps in Nigeria. A similar incident to that in Sydney has been seen in Paris, again highlighting the erratic geographical spread of kidnappings. retail companies. The significant decline in the oil price has encouraged long queues and a shortage of essential goods. The government is keen to avoid criticism of failing economic policy; they have recently accused several private retail sector employees of developing a black market, according to the Superintendency of Fair Prices. In the run up to parliamentary elections the government will only intensify its focus on private sector employees, which could further increase the number of detentions. For more information, please contact Pamela Fox or Jack Taylor. (Contact information on page 16). More specifically, Venezuela’s current economic situation has stimulated a risk of detention to employees of private-sector 14 LONDON CPRI MARKET UPDATE FOR JULY 2015 AJGINTERNATIONAL.COM ARTHUR J. GALLAGHER TERRORISM REPORT 2015 Is the current threat from ISIS outside the Middle East real? In the last month the Islamic State has claimed to have a significant presence in 15 states across the US, ready to carry out attacks. Despite this being of concern, it is believed that ISIS is more concerned with consolidating its actions in Iraq and Syria, whilst simultaneously spreading its operations to Yemen and Libya. Nevertheless, the emergence of ISIS as one of the most capable jihadi groups across the Middle East and North Africa has prompted the US and UK Governments to express their fears that citizens returning with the necessary training with ISIS will conduct similar attacks on their home soil. Despite the uncertainty surrounding numbers, only a handful have made the journey, of which the majority are known to the intelligence services. In the case of the Lindt Café siege in Sydney, prior to the attack Man Haron Monis had been reported to the authorities for a string of offences that did not fit the typical jihadi model. It was only shortly before the attack that he became self-radicalised, highlighting the complexities of early detection. The Boston Marathon Trial again raises the issue of the relevance of TRIA/TRIPRA. The surviving perpetrator was successfully tried for terrorism and is currently awaiting the date of his execution, whilst the US Government still have not declared the incident as ‘Certified’ under the Act. For more information, please contact Pamela Fox or Jack Taylor. (Contact information on page 16). The primary risk ultimately stems from small scale, ‘lone wolf ’, jihadists who do not have a formal connection to an established group. Their anonymity is central to their profile as they bypass early detection. However, it is their poor training which often finds them in the hands of the authorities as they attempt attacks that are beyond their limited capabilities. Often the targets are chosen in close proximity to the attacker’s home and targets include embassies or military bases. However, the Boston Marathon Bombing 2013, the last serious terrorist attack on US soil, illustrates a successful attempt that avoided detection on a ‘soft’ target. Likewise the May 2015 shooting opposing an anti-Islamic event outside Dallas, Texas, further demonstrates the prevalence of lone wolves favouring soft targets. ARTHUR J. GALLAGHER AJGINTERNATIONAL.COM LONDON CPRI MARKET UPDATE FOR JULY 2015 15 CONTACTS London Mark Gubbins Managing Director T +44 (0)20 3425 3194 E [email protected] Political and Project Risks David Maule David Evans Rupert Morgan Matthew Solley Executive Director T +44 (0)20 7204 6157 E [email protected] Executive Director T +44 (0)20 7204 6156 E [email protected] Executive Director T +44 (0)20 3425 3199 E [email protected] Executive Director T +44 (0)20 7204 6175 E [email protected] Trade Credit and Surety Rupert Murray Shaun Purrington Nicola Redway Executive Director T +44 (0)20 7204 8560 E [email protected] Executive Director T +44 (0) 20 7204 8561 E [email protected] Associate Director T +44 (0)20 7204 8564 E [email protected] Terrorism and Political Violence Pamela Fox Jack Taylor Divisional Director T +44 (0)20 3425 3192 E [email protected] Broker T +44 (0)20 3425 3144 E [email protected] Singapore Sarah Gulston Joie Tay Dawn Seow Divisional Director T +65 6422 7439 E [email protected] Assistant Manager T +65 6422 7442 E [email protected] Senior Account Manager T +65 6438 1771 E [email protected] Michael Woodward Ewan Berkemeier Gary McNally National Practice Leader Trade Credit T +61 2 9242 2003 E [email protected] Surety and Financial Products Manager - Trade Credit T +61 2 9242 2045 E [email protected] Credit and Political Risks Division T +61 2 9242 2087 E [email protected] Sydney New York Don Harkey Gabe Mansky Managing Director North American Trade Credit and Political Risks T +1 212 994 7027 E [email protected] Area Executive Vice President North American Trade Credit and Political Risks T +1 212 994 7068 E [email protected] 16 LONDON CPRI MARKET UPDATE FOR JULY 2015 AJGINTERNATIONAL.COM ARTHUR J. GALLAGHER Arthur J. Gallagher Walbrook Office The Walbrook Building 25 Walbrook London EC4N 8AW Tel: Fax: +44 (0) 20 7204 6000 +44 (0) 20 7204 6001 www.ajginternational.com The information contained in this CPRI Report and Market Update has been compiled by Arthur J. Gallagher (Specialty) from information provided by each insurer. The figures expressed reflect the theoretical maximum possible lines available which are dependent upon many underwriting factors including the nature of the risk, the country of risk and available country capacity at the time which may reduce the amount of capacity actually available and is subject to change without notice. CPRI Report and Market Update does not purport to be comprehensive or to give legal advice. While every effort has been made to ensure accuracy, Arthur J. Gallagher (Specialty) cannot be held liable for any errors, omissions or inaccuracies contained within the document. Readers should not act upon (or refrain from acting upon) information in this document without first taking further specialist or professional advice. Arthur J. Gallagher (UK) Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 1193013. www.ajginternational.com 18 LONDON CPRI MARKET UPDATE FOR JULY 2015 AJGINTERNATIONAL.COM ARTHUR J. GALLAGHER
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