O INSURTECH IN SPECIALTY INSURANCE o ALI ASGHAR, CHIEF OPERATING OFFICER, ELSECO - Global Reinsurance
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o INSURTECH IN SPECIALTY INSURANCE o ALI ASGHAR, CHIEF OPERATING OFFICER, ELSECO
elseco
INSURTECH IN SPECIALTY INSURANCE
Investing in innovation, talent and
technology
2Specialty Insurance: Current Market
Specialty lines of insurance Insurance Groups
3Market challenges
• Plentiful supply of capital
Deteriorating • Continued pressure on acquisition costs and operating expenses
performance
• Insurer’s market remains fragmented
Increasing power • Creating the capability to access global business locally tends to be expensive
of distribution
• Insureds and brokers require lead relevant lines
Lack of scale/ • Challenging to increase line size in current rating environment
relevance
Technology • Growing complexity of risks require greater analysis
• Need for investment in technology and increase in information flow
investment to
harness data
• Brokers and insurers variable expenses are constantly increasing
High expense • Increasing fixed costs of compliance and technology
ratio
4elseco: Insurtech to address the insurance market challenges
• Critical mass and relevance to
distribution
• Shared costs of best in class Pooling
teams and cutting edge capacity
technology Use technology to improve
• Members’ networks to get performance
closer to clients Inform underwriting decision
Technology making
Business model attracts Reduce frictional cost with
Entrepreneurial, best in class single open platform
talent addressing underwriting,
Best in class regulatory and compliance
Innovative thinkers who can Technology
expertise needs
harness distribution and
technology to improve Service global client base
underwriting result without expense of global
office network
Team minded players with a
focus on collective success
elseco provides access to superior underwriting results at lower cost
5Pooling
Pooling
Improving performance with pooled capacity Capacity
Capacity
Sharing
expense Access Access Flexibility to
Tec
better multi- exit without hnol
systems disciplinary costs ogy
while teams of
avoiding experts
fixed cost
Relevance Relevance
Proximity to the over terms over claims
customer and product handling Differentiation
Relevance
and
influence
6Best in
Expertise
Improving underwriting result with best in class talent class
expertise
The entrepreneurial nature of elseco, the
strong culture and business model
attracts underwriters who are
disillusioned within the confines of large
companies
elseco has proven it can
attract best in class expertise
who are able to maximize The ability to create wealth through
performance using technology profit related remuneration attracts
expertise that is competent,
confident and with stand-out track
records
Access to tools and technology, far
superior than competitors, that allows
talent to maximise underwriting margin at
a lower cost
7Technolo
Technology – In-house developed platform Technology
gy
In-house Scalability ecommerce Plug in with members
system Allows elseco to move from Ability to get closer to the source Members can have real time
developed in thousands of transactions to of business and reduce the costs access to their portfolio, providing
millions of transactions per of the supply chain. simplified performance analysis
partnership year, opening up new lines of Reduce the costs associated with and an ability to manage their
with SAP business double entries income at a lower cost
Big Data & Data
Compliance
sourcing
Financial and underwriting
control are imbedded into the A level of information at
solution and reduce the burden underwriters finger tip, surpassing
of reporting and associated that of the competition allowing for
costs. Opens up platform for advanced pricing and risk
franchising to third party teams selection. Proactive data
collection disrupting the current
data dependence of insurers
8Specialty Insurance: elseco Optimized
elseco
Specialty lines of insurance Insurance Groups
9elseco to date
3 successful lines
01 World wide leader in Space.
Rapidly growing presence in
Aviation and Energy
Underwriting Profit
USD 250m of underwriting profit has
been generated since elseco’s
02
inception
11 years
03 Long term relationships have been
developed and fostered over the last
11 years.
Local offices, global footprint
Physical offices in Dubai, London,
Washington, and Paris, but platform
allows for local servicing and access 04
across the globe 60 members
Key relationships include
05
23% YoY growth
elseco’s growth has been funded
solely through reinvestment of prior 06
year profits
10elseco performance – Net Written Premiums (USD)
USD 140,000,000
USD 120,000,000
USD 100,000,000
USD 80,000,000
USD 60,000,000
USD 40,000,000
USD 20,000,000
USD 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Net Written Premium (to date) End of the Year
11elseco business model – challenging insurance market dynamics
Deteriorating Specialty lines
performance Insurers hesitate to enter very specialized lines where technicality
and need of expertise creates high barriers of entry
Arms Race for Talent
Market Hiring the best talent puts further pressure on expenses and
Challenges therefore margin
Placing Broker Control
With no single market controlling the placement, the broker
controls the dynamics to the capacity providers detriment
Pooling Capacity Expertise Technology
Relevance to obtain best terms available Product expertise and innovative Harness data to more accurately select
on the placements approach, supported by insight analytics to risk, optimizing chances to over perform
improve the quality of the risk. the market
Line size to maximise share on
placements where significant margin is
available
12elseco business model – challenging insurance market dynamics
Broker channels
Increasing Increased acquisition costs as brokers utilize facilities, wholesale,
power of and retail outlets to bolster hold over business
distribution
Distance from customer
Market Accessing the direct customer is becoming more difficult, as
Challenges carriers continually fail to differentiate
Globalization of the supply chain
Risks are originated all over the globe, making it harder to service
at a local level without investment
Pooling Capacity Expertise Technology
Proximity to the client achieved through Ability to offer a complete service covering Ability to service directly retail brokers
relevance of the pooled line, and ability to all the elements of the value chain. worldwide without significant investment in
lead; use of the members’ local presence local offices.
when available Market leading knowledge is highly valued
and can add to broker’s offering Provides brokers with low cost solution to
quote and bind less complex business
13elseco business model – challenging insurance market dynamics
Syndication
Capacity is not significant enough to be relevant in pricing and
terms
High fixed costs
Market High costs of underwriting team, compliance and technology
Challenges versus income
Lack of
scale / Challenge to increase line size
relevance Carriers find it difficult to increase line size and utilize it effectively
whilst maintaining portfolio balance
Pooling Capacity Expertise Technology
Ability to influence placements while Ability to be a market lead, working closely Pooled capacity allows for costs of cutting
sharing the costs associated with being a with clients attracts the best talent. edge technology to be shared
lead market. Natural spread of the risk Scale allows to build larger teams of
reducing the dependence on reinsurance. underwriters with diversified expertise
14elseco business model – challenging insurance market dynamics
Increasing number of data sources
Risks are becoming more complex and more accurate pricing
requires harnessing of data from multiple sources
Expense burden of legacy systems
Market Compounding the pressure on expenses is the heavy investment
Challenges required to update legacy systems and improve efficiency
Big data
Technology Many companies struggle with “small data”, so the move towards
investment to harnessing big data is a big challenge
harness data
Pooling Capacity Expertise Technology
Access better technology by sharing the elseco attracts teams with product line Significant investment on technology
cost of the investment. expertise and entrepreneurial outlook to infrastructure since day 1. Major upgrade
understand how to optimise the investment to open the system and be prepared to
in technology and big data scale up the platform and the volume of
data analysed
15elseco business model – challenging insurance market dynamics
High fixed costs
Costs of being a follow market can be disproportionately high
High Talent
Market High costs of attracting talent to underwrite business
expense
Challenges
ratios
Technology
Technology to support underwriting and compliance is high and
replicated many times over in a syndicated market
Pooling Capacity Expertise Technology
Costs are maintained to the minimum due Access the best talent for a fraction of the Automate back office functions to gain in
to rigorous discipline and shared between cost operational expenses.
the members. Manage high volumes of transactions at
Alignment of interest through PC based low incremental cost
compensation schemes
16Multi-factorial market over-performance
Net Incurred Results
elseco’s better informed and 120%
Net Incurred Loss Ratio
Member disciplined underwriting
results 21% teams have outperformed the 100%
market by 21% through risk
improvement 80%
selection
60%
> 27%
40%
elseco low cost structure has 20%
6% allowed members to operate at a 0%
cost structure which is 6
percentage points better than
elseco LR Industry LR
their internal expense levels
Sources: Marsh Space Insurance Market Review and Future Outlook,
Lloyd’s audit code data at 31/12/2016 and Willis Re projected aviation
market result
50% To date, elseco members have received a
50% return on accounted premiums
17Going forward
• Development of market share in Space, Aviation and Energy
• Launch of new products in these lines via the electronic platform
• Launch of at least 3 other lines of business with expertise and/or data
driven barriers of entry
• Development of geographic footprint through innovative partnerships
18Disclaimer
This presentation and the accompanying slides (hereinafter called the “Presentation”) have been prepared by elseco solely for
information purposes. References to the “Presentation” include any information which has been or may be supplied in writing or orally in
connection with the Presentation or in connection with any further inquiries in respect of the Presentation. It does not constitute any offer
or recommendation and shall not form the basis of any contract or binding commitment for elseco. This presentation may not be copied
or disseminated, in whole or in part, and in any manner. The information contained in this presentation is subject to change without
notice and past performance is not indicative of future results.
The information and data that were used to prepare this Presentation are considered as reliable, but the company makes no
representation or warranty, express or implied, and no reliance shall be placed on the accuracy, completeness, fairness and
reasonableness of the contents of this Presentation. Any liability in respect of the contents of, or any omission from, this Presentation is
expressly excluded.
Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity and business
prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future
performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict.
The distribution of this document in certain jurisdictions may be restricted by law and persons into whose possession this presentation
comes should inform themselves about and observe any such restrictions.
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