Allianz Global Corporate & Specialty (AGCS) has announced it is enhancing capabilities and resources of its Alternative Risk Transfer (ART) line of businesses to respond to what it says is growing customer interest in tailored solutions that complement traditional property & casualty products.
ART will target growth opportunities in two 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.
Dedicated investments include growing the current 90-strong ART team by 20 new positions to strengthen ART delivery across all areas from modelling and underwriting to legal expertise and claims.
Shanil Williams, Chief Underwriting Officer Corporate of AGCS, said: “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.”
He added: “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 realise the most suitable solution for each customer with one or the other or a combination of both.”
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 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.
Structured Solutions – multi-year and multi-line coverages with the insured retaining an element of the risk – is another area of future growth for the AGCS ART team.
This coverages, AGCS explained, 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.
Additionally, 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. AGCS’ ART team can also help transfer risk into the capital markets through catastrophe bonds or other forms of insurance-linked securities.
Grant Maxwell, Global Head of ART, AGCS, commented: ”Many organizations are currently reviewing their options and decide to retain more risk in various ways. Our ART tools and mechanisms can be used to reduce balance sheet volatility both for traditional insurable risk such as cyber or Director’s and Officer’s liability, but also to deal with other strategically important business concerns, which are not traditionally insurable. We have strong expertise and capabilities across all these areas and are committed to provide more services and capacity to our existing and new clients.
“While ART is not always suitable for all clients and every risk scenario, companies with an advanced risk management strategy can likely benefit and should explore this alternative way of managing risks.”