Lars Henneberg

Having a Skin in the Game
Establishing Maersk Insurance A/S
By Lars Henneberg, Vice President
Head of Risk & Insurance, A.P. Moller-Maersk A/S
Our philosophy
In the A.P. Moller –
Maersk Group we are
committed to manage
risks in a manner,
where the downside of
risks is carefully
assessed and balanced
against the upside
potential
APMM at a glance
Shipping
Oil & Gas
Maersk Line
Maersk Oil
APM Terminals
Oil Services
Damco
Svitzer
FPSO
DFDS
Dansk
Supermarked
Tankers
HÖEGH
Autoliners
Asset heavy risk management
- 1000 owned vessel
- 500 chartered vessels
- 60 terminals
- 26 rigs
- 626,000 boepd in 6 countries
- Exploration in 11 countries
- 108.000 employees
- Active in 130 countries
Where did we come from?
- Decentralised organization
- Budget hedging mindset
- Limited transparency
- Substantial premium spend
- Benign claims experience
- Recent claims experience
Question asked:
- Why are we insuring?
Our theory of value creation
*
*
*
To continuously reduce the Group's total cost of risk
by 15% p.a.
Through insurance procurement, retention
management, loss prevention, claims management,
insurance governance and insurance advice
Being cost effective, fast, competent, transparent
and accessible while fully leveraging the Group's
position
*
*
*
What did we want to achieve?
Drive down our cost of risk by
- utilising our risk bearing
capacity and risk appetite
- simplifying our programme
structures
- avoiding dollar swapping
- reducing our exposure to
market volatility
- drive mindset towards loss
prevention
Moving from "budget hedging" to
active risk management
- Leverage Group
position
- Retention
management
- Loss prevention
- Strategic relation
to insurers
How did we get there?
Presentation
for the
Executive
Board
APMM Project
Team and
Plan
established
(1) Captive
capitalization
FSA approval
Submission of
FSA
application
(2) Executive
Board
approval
Meetings with FSA
2011
Q1
Captive
feasibility
study
presented to
Executive
Board in which
proposal to
launch a
captive project
was approved
2012
Q2
(1)
Data
collection
and
validation
(2)
Actuarial
modelling
(3)
Design of
captive
programme
(4)
QIS 5
calculations
9
Q3
Q4
Q1
Presentation
to APMM
Board
(1) Initial
meetings
with
potential
lead partner
markets
(2) Broker
selection
(1) Approach of
lead markets
(2) Programme
marketing
Programme inception
1 January
Finalise terms,
documentation
The new programme structure
$2bn
Risks in MIAS:
- General: Physical damage and business interruption
- Energy: Rigs, platforms, pipelines, wells and FPSOs
- Marine: Vessels
- Property: Terminals
Insurance Market
$500m
Insurance Market
$150m
Insurance Market
Captive
Market
Coinsurance
Captive
Market
Coinsurance
Captive
BU deductibles
BU deductibles
Energy
Property Damage
Control of Well (OEE)
Business Interruption
Third party liability
Marine
Hull & Machinery
Third Party Liability
BU deductibles
Property
Property Damage
Business Interruption
Market
Coinsurance
The business case for MIAS
- Substantial annual savings due to

programme consolidation

optimized risk retention

loss prevention
- Capitalization of USD 90 mio
- 3 staff and outsourcing
- Why a captive?
Working with MIAS
EXCESS INSURANCE
REINSURANCE
Captive
Fronter
Group Finance & Risk Management
(Risk & Insurance)
Risk
Insurance
GFRM/Risk & Insurance
BU
Supporting loss prevention
-Quarterly reports
-Annual meeting
Review of
Safety
Performance
Loss
Prevention
Programme
Review of
Losses
-Analyze incidents
-Establish Total Cost of Risk
Review of
Processes and
Assets
-Asset surveys
-Process interviews
Developing MIAS as a strategic
risk management tool
- 3 year strategy plan
- Financial drivers
- Growth drivers
- Business drivers
- Operational drivers
The lessons learned
 Project planning and execution are key
 Importance of stakeholder involvement
 Availability and quality of data is key
 Value of actuarial work
 Be clear on your theory of value creation
 Recognize and respect programme drivers
 Work around sub-optimization
 Importance of transparency
 Importance of loss prevention