Energy Insurance The Road Ahead
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Transcript of Energy Insurance The Road Ahead
![Page 1: Energy Insurance The Road Ahead](https://reader036.fdocuments.us/reader036/viewer/2022062722/568138eb550346895da09e5d/html5/thumbnails/1.jpg)
Energy Insurance The Road Ahead
Dominick Hoare
![Page 2: Energy Insurance The Road Ahead](https://reader036.fdocuments.us/reader036/viewer/2022062722/568138eb550346895da09e5d/html5/thumbnails/2.jpg)
The Loss/Profit Equation
• Inherent Business Dilemma• Demands of Capital• Stable Profit Environment• Sustainable Business Concept
![Page 3: Energy Insurance The Road Ahead](https://reader036.fdocuments.us/reader036/viewer/2022062722/568138eb550346895da09e5d/html5/thumbnails/3.jpg)
Current Environment
• Volatility• Premium Increases• Severe Loss Frequency• Long Term Uncertainty
![Page 4: Energy Insurance The Road Ahead](https://reader036.fdocuments.us/reader036/viewer/2022062722/568138eb550346895da09e5d/html5/thumbnails/4.jpg)
Toulouse
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Toulouse
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Toulouse
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Toulouse
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Toulouse
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Toulouse
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P36
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P36
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P36
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P36
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P36
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P36
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P36
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P36
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P36
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P36
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P36
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P36
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Gulf of Mexico Blowout
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Gulf of Mexico Blowout
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Gulf of Mexico Blowout
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Gulf of Mexico Blowout
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Gulf of Mexico Blowout
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Willis Loss Database
Years No. of Incidents Total US$ Loss
1991 - 1996 1417 16,881,924,551
1997 – 2001 1808 19,323,966,884
All Years 3225 36,205,891,439
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Lloyd’s Energy Statistics
0%
50%
100%
150%
200%
250%
1996 1997 1998 1999 2000
Offshore Physical Damage - Incurred Loss Ratio
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Lloyd’s Energy Statistics
0%
50%
100%
150%
200%
250%
1996 1997 1998 1999 2000
Control of Well - Incurred Loss Ratio
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Lloyd’s Energy Statistics
0%
50%
100%
150%
200%
250%
300%
350%
400%
1996 1997 1998 1999 2000
Onshore Physical Damage - Incurred Loss Ratio
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Lloyd’s Energy Statistics
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
1996 1997 1998 1999 2000
Energy Liability - Incurred Loss Ratio
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Lloyd’s Energy Statistics
0%
50%
100%
150%
200%
250%
1996 1997 1998 1999 2000
All Classes - Incurred Loss Ratio
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Lloyd’s Peer Group
100
140
180
220
260
Com
bine
d R
atio
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Rating Index
0%
20%
40%
60%
80%
100%
120%
140%
160%
1993 1994 1995 1996 1997 1998 1999 2000 2001
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Equity Markets
9/11
P36 - March
Toulouse - September
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Situation
• Capital Intolerance• Flawed Business Model• Short Term Solutions vs. Long Term
Business
![Page 37: Energy Insurance The Road Ahead](https://reader036.fdocuments.us/reader036/viewer/2022062722/568138eb550346895da09e5d/html5/thumbnails/37.jpg)
Solution
• Mutual and Constructive• Reduce Volatility• Renewed Confidence• Stable Capital
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Fundamental Restructuring of Business
• Return on Capital• Higher and Consistent Premium Levels• Transparent Risk Transfer
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Insured's Charter
• Higher Quality Product• New Standard Levels• Commitment and Continuity
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Lloyd’s
• Flexible and Innovative Product• Expertise and Professionalism• Unique Talent Pool
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Lloyd’s
• Chairman’s Strategy Group/Franchise Concept
• Proactive and Supportive• Entrepreneurial Spirit• Strong Corporate Governance
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Lloyd’s
• 9/11• Trading Continuity• Funding Obligations• 2000 Gross Income – £ 10.2bn• 2001 Gross Income – £ 11.6bn• 2002 Gross Income – £ 12.8bn
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Regulatory Environment
• Risk Focused Management• LMP Reforms• Product Centered• Market Leadership from Lloyd’s
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Re-Definition of Insurance Business Model
• Structural Change – Mutually Driven• Product of Highest Quality and Integrity• Sustainable and Profitable• Is Failure an Option?
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Energy Insurance The Road Ahead
Dominick Hoare