o INSURTECH IN SPECIALTY INSURANCE o ALI ASGHAR, CHIEF OPERATING OFFICER, ELSECO
elseco INSURTECH IN SPECIALTY INSURANCE Investing in innovation, talent and technology 2
Specialty Insurance: Current Market Insurance Groups Specialty lines of insurance 3
Market 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 4
elseco: Insurtech to address the insurance market challenges • Critical mass and relevance to distribution • Pooling Shared costs of best in class capacity teams and cutting edge technology Use technology to improve • Members’ networks to get performance closer to clients Inform underwriting decision Technology making Reduce frictional cost with Business model attracts single open platform Entrepreneurial, best in class addressing underwriting, talent Best in class regulatory and compliance Innovative thinkers who can Technology expertise needs harness distribution and Service global client base technology to improve without expense of global underwriting result office network Team minded players with a focus on collective success elseco provides access to superior underwriting results at lower cost 5
Pooling Pooling Improving performance with pooled capacity Capacity Capacity Sharing Tec expense Access Flexibility to Access hnol better exit without multi- systems costs disciplinary ogy while teams of avoiding experts fixed cost Relevance Relevance Proximity to the over terms over claims Relevance customer and product handling Differentiation and influence 6
Best in Improving underwriting result with best in class talent Expertise 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 The ability to create wealth through who are able to maximize profit related remuneration attracts performance using technology 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 7
Technolo 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 A level of information at control are imbedded into the underwriters finger tip, surpassing solution and reduce the burden that of the competition allowing for of reporting and associated advanced pricing and risk costs. Opens up platform for selection. Proactive data franchising to third party teams collection disrupting the current data dependence of insurers 8
Specialty Insurance: elseco Optimized elseco Insurance Groups Specialty lines of insurance 9
elseco to date 3 successful lines 01 World wide leader in Space. Rapidly growing presence in Aviation and Energy Underwriting Profit 02 USD 250m of underwriting profit has been generated since elseco’s 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, 04 Washington, and Paris, but platform allows for local servicing and access across the globe 60 members Key relationships include 05 23% YoY growth elseco’s growth has been funded 06 solely through reinvestment of prior year profits 10
elseco 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 11
elseco 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 12
elseco 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 13
elseco 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 14
elseco 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 15
elseco 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 16
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