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Launch Party
Please click here for photos from the launch evening
Launch article
Launched on 1st October 2006 Syndicate 5555 is QBE’s new dedicated, specialist aviation syndicate. But why develop the aviation portfolio now and what are the plans for the future? 5555’s Active Underwriter, Emilio Di Silvio, explains.
Aviation is not new to QBE. For over 40 years, the group has had an operation in Australia that specialises in general aviation and, with the recent acquisition of the Nordic Aviation Pool, and Syndicate 566’s aviation reinsurance book, it is safe to say that QBE has a good foothold in the sector.
In 2005 QBE identified that broadening its interest in the specialist aviation area would complement, not only its existing book, but other portfolios too.
The creation of Syndicate 5555 represents a major step forward in all aspects of QBE’s involvement in the specialist aerospace sector. The new syndicate, with a capacity of £85m for 2007, represents a substantial element of the £780m for our umbrella syndicate 2999 and will write a book of business across three main sectors - airlines, general aviation and products.
How it began
When I moved from Cox aviation syndicate, having been in Lloyd’s for 27 years, to Allianz, in 2001, to head up their consolidated London aviation operation, I was not looking to move again so quickly. The team assembled at Allianz was excellent and we were posing a strong challenge to the existing leaders in all sectors, maintaining leads on many major accounts as well as gaining new leads as a result of the strength of our team in underwriting and particularly claims.
I had not, however, reckoned on the plans of QBE and the persuasiveness of certain people! Presented with the opportunity to set up a brand new team in London, based in Lloyds, for a highly respected agency and parent company, the temptation was too strong.
Many of the new team at QBE have worked with me previously and along with careful recruitment in some areas we now have what I and many others, brokers, clients and competitors alike regard as one of the strongest teams in the sector.
What we write
To place our venture in context, below are some key facts and figures and a brief description of our plans in the respective sectors. We specialise in three separate sectors:
Airlines - commercial jet operators with upwards of 50 passengers per aircraft
General aviation - all classes of aircraft, helicopters and airships up to a maximum of 50 seats
Products - airports and third party service providers
Airlines
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2006 Hull and Liability global gross premium estimated at US1.9bn
Immediately following 9/11 and then the SARS crisis, there were major increases in the insurance rates. Furthermore, there was a corresponding reduction in global travel, coupled with a declining loss ratio as a result of increased safety measures and the reduction in flying traffic. As a result of these unique circumstances the current rates in the market sector are under pressure.
With a number of new capacity providers in the sector we are determined not to further destabilise the rates and intend to write an entry line on carefully selected risks and then build our position over the next few years seeking to take leadership roles on key accounts where the quality of our services and claims handling will add recognised value.
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General Aviation
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2006 Estimated gross premium for hull and liability is US$3.5bn
As can be seen from the premium base of US3.5bn, there is a lot of opportunity in a wide range of risks and most importantly a market which, whilst currently dominated by the USA, is growing very quickly in the rest of the world.
We will lead most of the business we write in this sector and believe that leading the business is an essential element of achieving profit by managing the claims ourselves. Our claims team have exceptional experience in this sector and whilst adopting the QBE philosophy of looking to pay valid claims promptly, we will also ensure we minimise the carrying costs.
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Products & Third Party Service Providers
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2006 estimated gross premium income is US$1bn
This sector embraces the global aircraft and component manufacturing entities as well as the service entities required to support the operation of aircraft. These services range from air traffic control and airport operations to refuelling, catering and maintenance repair and overhaul service providers.
The claims activity in this sector tends to have a long tail and typically involves lawsuits from the first notification of loss therefore requiring very careful and professional claims management and reserving activities. The team in place at 5555 have wide experience in this sector and we are confident that with a predominant portion of the business we write being led by us we will once again be able to differentiate ourselves from competitors by our responsiveness and proactive approach to resolving claims in this sector.
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Plans for the future
Our plan in the short term is to provide very clear statements to all the brokers and hence the insureds’, that we are here for the long term and intend to operate in all sectors as a leader. We will not be irresponsible in seeking a position by challenging market rates and terms but will offer our support to the placements on a carefully selected basis with appropriate lines for the terms.
In the general aviation and products sectors we will seek to achieve leadership positions from the beginning and I am pleased to say that the brokers and clients are already responding well.
The airline sector is somewhat more complicated and it will take some time for our role as supporting market to evolve in to leadership positions.
Over the next two years, we will define and develop the services which support our insurance products. The primary purpose of the services is to add tangible additional benefits to the insurance product that the insured can recognise and attribute value to. In achieving this we hope to minimise the turnover of clients, reduce the reliance by the insured on price as the major determinate of leader selection and thereby develop strong long term relationships.
In the longer term we intend to provide the key differential services which will be primarily focussed around education, communication and a flexible approach to product innovation with the clients and their workforce.
As you will appreciate, there is a lot of work to do but we have a fantastic team and we are very excited by the opportunity and the challenges we face in the future.
Thank you.
Emilio Di Silvio
Active Underwriter, 5555
For more information, contact Emilio on 020 7105 5714
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