Allianz Global Corporate & Specialty (AGCS) has indicated that it is enhancing the capabilities and resources of its Alternative Risk Transfer (ART) line of businesses to respond to growing customer interest in tailored solutions that complement traditional Property & Casualty products.
According to one of the global leading insurance firms- Allianz, with a realigned risk appetite and underwriting strategy, ART will target growth opportunities in two major areas: first, captive solutions including captive fronting, and second in the area of structured solutions, which are multi-year, multi-line coverages, including parametric coverage.
Mr Shanil Williams, Chief Underwriting Officer Corporate of AGCS, noted that dedicated investments include growing the current 90-strong ART team by 20 new positions to strengthen ART delivery across all areas from modeling and underwriting to legal expertise and claims.
“With its strong expertise and special offering, our ART team can support businesses in the current environment of enormous uncertainty. Many of our clients seek bespoke solutions for an increasing array of risk scenarios from traditional to non-traditional such as supply chain or sustainability-related risks.
“With our ART line of business, we have a strong track record and market share in alternative risk transfer and aim to further grow our capabilities and footprint in this sophisticated segment. From our perspective, alternative and traditional risk transfer are very much complementary and we aim to realize the most suitable solution for each customer with one or the other or a combination of both.”
Mr Shanil Williams
Mr Shanil Williams indicated that a core offering today, Structured Solutions are a future growth area for the AGCS ART team. According to him, these are essentially multi-year and multi-line coverages with the insured retaining an element of the risk. To him, they protect a company from being over-exposed to multiple catastrophic events or unforeseen high attritional losses, but usually also incorporate a significant profit share agreement or ‘swing’ metrics which align the interest of insured and insurer and reward good claims performance.
“A good example illustrating the power of these solutions is a structured cover we’ve developed for the North American commercial auto market. US trucking firms were struggling with strong premium increases from a market that was changing rapidly, leading to unsustainable auto liability programs. We combined various excess placements with structured multi-year features linked to the actual loss performance. This allowed firms who were confident in their loss performance to share in the benefits and be able to purchase higher liability limits.”
Mr Shanil Williams
Meanwhile, Mr. Shanil said ART can also provide parametric cover which is not indemnity-based but where coverage and claims payment are triggered by any measurable index, for example, climate or weather indexes. In addition, AGCS’ ART team can also help transfer risk into the capital markets through catastrophe bonds or other forms of insurance-linked securities.
Supporting the Growing Number of Captives
Another strategic focus of the ART line of business are captive solutions with a strong focus on captive fronting. The well-established AGCS Captive Solutions team, led by Brian McNamara, has been integrated into the AGCS’ Multinational business to serve multinational companies with their own in-house insurer with a broad range of solutions powered by the strong global network of Allianz Group in more than 200 countries and territories. On top of captive fronting (issuing local policies in numerous countries around the globe, managing premium payments and handling claims on behalf of the captive) AGCS also provides a wide range of ‘unbundled’ standalone solutions for captives such as reinsurance, stop-loss mechanisms to protect the captive retention or supporting a captive with additional structured solutions for specific risks.
AGCS saw a strong new business production from the ART line of business in 2021 which contributed about 5% to the companies’ global net premium volume; now the corporate insurance carrier is investing in new resources needed to support profitable portfolio growth and will provide more capacity in the ART segment to harvest market opportunities.
The underwriting process and governance structure are essential to the success of ART: At its center are multi-disciplinary deal teams with specialized underwriters and global function such as: modellers, actuaries, accountants, and legal specialists– working closely together when designing a customized ART solution for a company. “Our cross-functional deal teams leverage diverse skills, and together we are looking at risks from a fundamentally different perspective”, says Grant Maxwell, Global Head of ART, AGCS.
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