Business as usual… almost – Nicolas Aubert

Chartis France General Manager Nicolas Aubert says that the recently rebranded operation got off to a ‘good start’ during the 1/1 renewals as it retained some 94% of its €850m total book and added some €25m in new premiums of which €15m came from what he described as ‘major’ accounts. “This was close to last year. In 2009, we lost business that we did not want to lose but overall revenues last year were not affected. At 1/1 2010, we lost business where we wanted to push terms and conditions, some clients opted to go elsewhere to seek better terms and this has to be understood,” said Mr. Aubert. “Chartis is clearly focused on profitability and we would prefer to lose business than compromise this. In property for example we did not renew almost 10% of the book, a significant portion, because the market really needs to change. We are definitely not in agreement on terms with the vast majority of the market and I see only AXA being as serious as us,” he continued.hideMr. Aubert said that Chartis’s profit-focused strategy will ensure that the company is still there when the customers need it, when others may face some ‘issues’. An example of the group’s commitment to its client base was the decision to remain in the financial institutions insurance market when others, such as AXA, decided to exit this complex line. “We have increased pricing and deductibles in many cases but we want to continue to be a leader,” said Mr. Aubert. Mr. Aubert said that there has been ‘huge’ loss activity in the crime market among the major French listed groups that included a lot of high severity losses of between €5-7m, some total limit claims of about €15m and some that breached the limits. Opportunity Cost These losses came mainly from people in executive positions of international subsidiaries who carried out frauds because they have the position and the opportunity to do so, he explained. “These are crimes really across the board that typically last a few years and can be difficult to detect,” added Mr. Aubert. Looking ahead, Mr. Aubert said that he expects the general insurance market to turn around right away. “We have seen the early signs coming from the large general carriers that are slightly pushing the mid market. This is the beginning of the hardening, but I am surprised that terms and conditions did not harden more at the year-end. We expected to benefit from more overall price increases, but this was not the case. The market is currently flat,” he explained. Mr. Aubert said that the good news for Chartis in France is that the new operating structure that it adopted recently has already generated positive results. In the consumer segment the group signed up 10 new affinity programmes at the January 1 renewal and he says the company will take on more such new business during the year. “It is interesting and rewarding to support clients as they rebuild. The market is not so favourable currently in many respects as clients want to cut costs, brokers want to increase margins and we want to improve terms and conditions,” said Mr. Aubert. Of Chartis’s rebrand and the problems experienced by parent group AIG, Mr. Aubert said that it is “time to roll the sleeves up”. He said that the business had experienced a big change in the Autumn of 2008 after the news emerged about the huge losses incurred by the AIG financial products business. But he said that confidence in the group had returned strongly. “The vast majority of professionals in the market understand the situation, that there are no solvency problems and that the capital base is very strong. We do, however, all realise that AIG will probably remain in the news and that, at times, it can be distracting. We are not naive but the base and support is very strong,” he said. Mr. Aubert, like many other senior Chartis executives across Europe, said that he was disappointed to see the way some competition reacted to AIG’s plight with an overly aggressive strategy to try to win business. “I am very sorry about that. I love competition, I really enjoy it in all aspects but I hate a lack of professionalism. When you are an insurance company it is not to your benefit to instil doubts in the minds of customers about a leading member of the insurance industry and I am surprised that this happened,” he said. But Mr. Aubert said that this period now appears to be largely behind the Chartis group and he was delighted with the reaction at the AMRAE conference in Deauville. “We had over 30 one hour meetings that were all pre-planned. I do not think that many companies in this market would have had so many meetings with risk managers. We brought the whole team including underwriters and claims managers and there was clearly a very strong appreciation for this among the clients,” he said. Transparency was an important theme to emerge from the conversations with customers during AMRAE and Mr. Aubert believes it will remain an important matter this year. “We need total transparency regarding our objectives and I feel we really achieved this and the brokers and clients really understand the situation from a technical standpoint,” he said. International service capability remains an important theme too, according to Mr. Aubert. He said that a huge change has occurred in the international market as demand for local policies for subsidiary operations has risen. He added that it remains a complex area, often with changing regulations, where Chartis’ experience is a clear plus. “This requires a lot of focus to ensure that everyone works for the client and the appropriate products are applicable, that there is contract certainty and the proper legal and other processes are in place,” he explained. Mr. Aubert said that the international programme market is becoming more testing for insurers and brokers because stronger local insurance markets want a larger slice of the premiums and act as real direct insurers not just premium post boxes. “In other territories, such as India and China, new regulations are being devised that need to be understood and complied with, another strong differentiation for Chartis,” he said. Valid Passport To help back this up Chartis has introduced a new service that it calls Passport. This comprises a dedicated multinational team of client handlers who operate across Europe and the world. Their role will be to respond faster to client needs ‘on all fronts’ including policy and invoice issuance, transfer of premiums and client servicing, said the company when it launched the service. Terrorism is another matter that was debated at the AMRAE conference. Gerard Lancner, President of the association, seeks a more risk-based pricing structure from the GAREAT state-backed fund and has opened talks with the French insurance federation the FFSA to try and achieve this. Chartis France underwrites property and liability terror coverage and like many of the French insurers that CRE met at AMRAE this year, however, Mr. Aubert urges caution. “We are an important player in the GAREAT co/re-insurance panel and I believe the pricing was very good at the beginning and has clearly reduced over the years and the prices are not far from the underlying risks. It would be very difficult to create a much clearer base because of the nature of the risks,” he said. The Chartis story is by no means over parti-cularly as questions remain over whether the group will go for full independence or stick with its current status as an AIG operation with a different brand as Group Chief Executive Robert Benmosche now reportedly wants. But, as Mr. Aubert points out is the case in France, fears about the group’s solvency that naturally arose when news of the financial problems at group level first broke, have now receded and, to an extent, it is now business as usual for the Chartis team.

Business as usual… almost – Nicolas Aubert

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