The Hartford, National Indemnity Company Hammer Out Reinsurance Agreement Covering Asbestos and Environmental Liability Reserves
The Hartford has entered into a definitive agreement effective Dec. 31, 2016 with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc., for a $1.5 billion aggregate excess of loss reinsurance agreement covering certain of The Hartford’s asbestos and environmental liability exposures. The reinsurance premium for this agreement is $650 million.
The agreement covers potential adverse development on The Hartford’s existing asbestos and environmental reserves as of Dec. 31, 2016, excluding those held by the company’s U.K. Property and Casualty (P&C) run-off subsidiaries, which the company is under contract to sell and currently expects to close in first quarter 2017. The agreement provides up to $1.5 billion of reinsurance for adverse net loss reserve development above estimated net loss reserves of $1.7 billion as of Dec. 31, 2016. The Hartford will continue to handle claims, subject to certain conditions, and will retain the risk of recoveries under third-party reinsurance contracts for these exposures.
“Our asbestos and environmental exposures have generated adverse loss reserve development over time, creating uncertainty for investors and others about the ultimate cost of these policy liabilities, most of which were underwritten prior to 1985,” said Chief Financial Officer Beth Bombara. “The agreement announced today is consistent with our stated objective of evaluating options that had favorable economics, while taking into consideration our expertise in handling these complex claims. NICO is a very strong counterparty and this agreement reduces uncertainty about potential adverse development while allowing us to continue to handle both claims and reinsurance recoveries, which we believe will enable us to achieve the best possible resolution for these long-tail exposures.”
The agreement will be accounted for in The Hartford’s fourth quarter 2016 financial statements as a retroactive reinsurance agreement, resulting in a charge of approximately $423 million, after-tax, against fourth quarter 2016 net income, or a pro forma impact of $1.10 per share to Sept. 30, 2016 book value per diluted share of $48.30. The reinsurance premium is expected to have a slightly negative impact on 2017 P&C net investment income and does not affect the company’s expectation to execute its previously announced 2017 capital management plan including equity repurchases of $1.3 billion.
Calif. Department of Insurance Approves Location, Inc. Predictive Crime Analytics for Rate Filing
Location, Inc., a provider of U.S. location-based analytics, announced last month that the California Department of Insurance (DOI) has approved its predictive Crime Analytics for rate filing. With this recent DOI approval, Location, Inc. has now been approved for rate filings in twelve states.
Location, Inc. crime analytics are unique in that it collects raw data reported from over 18,000 local law enforcement agencies across the U.S., and then uses a relational database to assign reported crimes from every agency (e.g., municipal police, campus police, port authority, transit police, county sheriff, etc.) to the localities for which the agencies have law enforcement responsibility.
Location, Inc. then uses its Ph.D. developed computer models to statistically predict the rates for every major type of crime (violent and property) with 33 foot resolution across the United States.
Over 100 U.S. carriers leverage predictive violent and property crime analytics to assess fire, liability, theft, vandalism, and other risks in programs, such as habitational/dwelling, vacant properties, open lots, vacation rental by owner and more. The hyperlocal crime data also helps carriers generate focused underwriting questions and combat fraudulent insurance claims and related losses.
Insurers can access Location, Inc.’s crime analytics directly via SecurityGauge or through a variety of underwriting platforms from Location, Inc. partners, including RiskMeter Online, SpatialKey, and Digital Matrix Systems. Location, Inc.’s comprehensive risk data includes:
• Violent Crime Scores
• Property Crime Scores
• Crime Heat Maps
• Violent & Property Crime Risk Trends & Forecasts
• And More (Sample Report PDF)
Location, Inc. crime data may be accessed via address lookup, API, bulk processing and flat file.
Olympus Insurance Company Launches New Online Policy Administration System
Florida homeowners insurer Olympus Insurance Company launched a new policy administration system, OICONNECT.
The user-friendly and intuitive processing system can be accessed at http://www.oiconnect.com, and is the first step in a multi-phased launch of innovative new technology that will benefit the company’s agency force as well as its policyholders.
For agents, the new policy system provides a more efficient policy processing platform, including tools to create quick quotes and bind new business applications. The system’s technology and offerings will get more robust as each new stage of the platform is presented for use.
For policyholders, the new policy stem’s initial phase enables homeowners to file a claim, access policy documents, locate company and agent information, review and pay bills and set up payment reminders, all online.
In 2016, Olympus relocated its headquarters to Palm Beach Gardens in a move that culminated 12 months of operational expansion and a staff increase from 19 to 75. The facility accommodates the company’s newly formed in-house departments for underwriting, claims and policy services, along with management and executive staff.