Markel International, a subsidiary of Markel Corp. that operates in the Lloyd’s market, has launched a new trade credit division. Ewa Rose, who joined Markel earlier this year, has been named as managing director of the new division. Senior underwriters Adrian Jones, Simon Moon and Carl Titterton will join her team.
“The team previously worked together at ACE where Ms. Rose was head of the group’s global trade credit business,” noted a bulletin on the Lloyd’s web site (www.lloyds.com).
Markel’s new trade credit division will “provide non-cancellable cover against payment default risks for a range of trade sectors. The risks covered include insolvency, default, and political risk perils, such as currency inconvertibility and import/export license cancellation.”
Rose explained that the team is “looking to work in partnership with large companies – usually with turnover in excess of £100 million [$144 million] – that have good internal credit management resources. As such the focus will be on providing excess of loss non-cancellable cover – as opposed to whole turnover cancellable credit insurance.”
“As a team we’ve always dealt with larger players who have maintained control of their credit function, rather than outsourced it to their insurer,” she told Lloyd’s. “Excess of loss coverage provides the company buying the insurance with risk transfer above an agreed self retention level.
“We’re beginning to see an increase in the kind of company that wants to maintain underwriting control, and is looking for flexible and innovative solutions, for example, by the involvement of its captive,” Rose added.
The Lloyd’s franchise will help Markel International better serve its multinational clients. “We like companies that export and so the Lloyd’s platform is very helpful because of its licensing capability. Multinational companies often want to secure coverage for an overseas entity and the extent of Lloyd’s licenses means we can write the coverage in their market,” she continued.
Markel International has a service company in Singapore for example and so it can underwrite a client’s domestic sales there.
Rose also explained that, although there are signs of economic recovery, many companies are concerned about the so-called economic double dip effect on their customers. “There is sometimes a tail of insolvencies at the end of a recession when companies are forced to make investment they have put off. The pressure on cash flows can increase just as the recession begins to lift. That effect of companies gearing up for growth at a time of uncertainty increases demand for non-cancellable excess of loss cover.
“You only have to look at the headlines to do with Greece to know that this is still a risky economic environment where anything could happen. So companies want to gear up for growth with some protection in their back pocket.”
According to the International Credit Insurance & Surety Association, insured exposures are currently around €1.8 trillion [$1.234 trillion]. Exposures dropped by some 10 percent in 2009, in line with lower trade volumes. Claims shot up in 2008 and 2009, which resulted in a claims ratio before costs for the sector of around 84 percent for 2009, compared to pre-crisis loss ratio levels of around 40 percent – 60 percent. Demand for trade credit insurance is expected to grow as economic recovery takes place and government support schemes are discontinued.
Sources, Lloyd’s of London, Markel International