Pina Albo: my vision for the future of risk

16-07-2018

Pina Albo: my vision for the future of risk

Taking on the vision and legacy of an industry legend in the form of Brian Duperreault might seem daunting to some, but after 25 years with Munich Re Pina Albo has what it takes to fulfil the original vision of Hamilton Insurance Group and lead the way in writing the future of risk, as she tells Bermuda:Re+ILS.

“These opportunities do not come along very often. We all understand the potential power of data and many understand that this could well shape the way that risk is managed in the future.

“That is what Hamilton is doing now. We have teamed up with a player that has already done this in the investment space. Now Two Sigma is applying the same tools to risk and that is exciting. It is about writing the future of risk.”

That is how Pina Albo, the chief executive of Hamilton Insurance Group, explains why she took the decision to leave an already very successful career for a new challenge. During 25 years with the world’s biggest reinsurer, Munich Re, she achieved considerable success, most recently reaching the position of a member of the board of executive management where her responsibilities have included P&C business and operations in Europe and Latin America.

Many executives would be happy to have ended their careers within such a successful and iconic player in the reinsurance space. But not Albo. After being approached by Hamilton’s search committee following the departure of Brian Duperreault to AIG, she became increasingly intrigued by the new challenge on offer.

And while she admits having big shoes to fill, she was enthused rather than overawed by the challenge. In part, this was because of Hamilton’s partnership with Two Sigma, the technology company that has based its investment management success on its ability to leverage data science and analytics to make better decisions, and Albo saw an opportunity to apply the same principle to insurance.

“For me, the most exciting thing was the partnership with Two Sigma,” she says. “There are many similarities between investments and risk and they had already succeeded in applying this approach to the investment space.

“Everyone knows this is a nut that needs cracking in the re/insurance world, and what better chance of achieving that than with a company that has done it before?”

Albo says she also spoke to Duperreault before making the move. “I had interacted with him for many years and I spoke to him about what Hamilton was trying to achieve; he was inspirational, the vision aspirational.

“Hamilton’s entire strategy is about embracing the power of data science and technology to leverage both sides of the balance sheet. Our hiring also reflects this. Yes, we have actuaries and underwriters but we also have our own very technical people who allow us to build our own proprietary software alongside Two Sigma,” she says.

Forward strategy

At the time of writing Albo had been in the job just four months but she says her purpose is clear, based on the company’s mission statement.

This has now been crystallised in its Strategy 2025 and involves leveraging what it sees as its three main strategic levers: technology, leveraging data science alongside Two Sigma; talent, building a diversified and multi-generational workforce that embraces risk professionals and data scientists; and scale, seeking growth but in a disciplined manner across the business.

These three levers will be applied to four areas of focus: insurance, reinsurance, capital markets (a new initiative for Hamilton) and Lloyd’s.

On the insurance side, Albo notes that the company’s Lloyd’s book plays an important part in this. Its book of business comprises about 80 percent speciality insurance business and 20 percent specialist reinsurance business. This year, she says, the Lloyd’s business is on track to write some $200 million of gross written premiums, with further growth expected in the future.

Hamilton entered the Lloyd’s market through its acquisition of Sportscover in 2015. It took the distressed syndicate and transformed it into a very different platform.

“Lloyd’s is and remains a formidable market thanks to its global licences and strong rating. When this company was first launched one of its early objectives was to have a Lloyd’s syndicate and I must credit the team at Lloyd’s for rebuilding and repurposing the syndicate. It has doubled its stamp capacity since its inception and now writes many of the key specialty lines of business at Lloyd’s,” she says.

The company has plans beyond Lloyd’s in Europe which include a new underwriting platform in continental Europe, which will allow the business to access a new segment of business, something that could become especially important when the UK leaves the EU.

“We are looking for the right platform that also allows us to leverage our technical expertise,” she says.

On the insurance side in the US, Albo is enthused about the potential of Attune, the joint venture it established with Two Sigma and AIG. Attune is essentially a digital managing general agency that allows agents and brokers to write small commercial business in a much more efficient way—“at the click of a button”, as she puts it.

She stresses the potential growth of this market. “There is $150 billion worth of small commercial business in the US and, on the whole, it is a very inefficient market and very costly for customers. Attune changes all that and is the best example of what is possible through the use of technology,” she says.

Attune was formed in 2016 through a joint venture between Hamilton Insurance Group, AIG and affiliates of Two Sigma Investments. It is described by the founders as a technology-enabled platform that uses advanced technology to remove the cumbersome inefficiencies that are often resident in traditional underwriting processes for SMEs.

“The work being done at Attune is phenomenal,” she says.

“It asks customers a minimal number of questions but supplements these with public information that can be found to arrive at the best underwriting decision possible. That is such a great example of the power of data and technology in the risk space.”

Meanwhile, Hamilton Re, under the guidance of its CEO Kathleen Reardon, has also been diversifying. Since its addition of a property D&F insurance team in 2016 and its acquisition of the renewal rights of Sompo Canopius Bermuda’s excess casualty insurance business in 2017, some 15 percent of Hamilton Re’s book of business is now represented by excess casualty and speciality insurance.

On the reinsurance side of the business, Albo stresses that although Hamilton Re is a relatively new player in the scheme of things, she notes how well respected it is in the industry—drawing on her own experiences of dealing with the company when she worked for Munich Re.

“While at Munich Re I would often see Hamilton Re on placements and it was always a very positive experience,” she says. “Every broker I spoke to was very positive as well—the consensus was that Hamilton Re punches above its weight.

“That is testament to Kathleen’s work. She is a passionate and driven individual. She has built a new kind of tier 1 reinsurer, which is nimble, efficient, and responsive and which deploys data and technology to make better decisions.

“It is very much a reinsurer of the moment and what a lot of the incumbent players would like to be if they could start again.”

Albo notes that despite Hamilton Re’s being founded in a soft market, it has been profitable every year since it was launched—with the exception of 2017, due to the high levels of catastrophe losses triggered by the multiple hurricanes that hit the US.

“Even then the portfolio performed a lot better than the industry average,” Albo says.

Part of this performance can be attributed to Hamilon Re’s commitment to technology and the potential of harnessing data to help it make better decisions. Central to this is Hamilton Analytics and Risk Platform (HARP), a platform it has developed to help it better underwrite, assess and monitor its risk management portfolio.

“We supplement the vendor’s models with our proprietary software to make informed decisions on our inwards and outwards purchasing decisions in real time,” Albo explains.

She admits that rate increases since then have been lower than she would have hoped for but stresses that the days of very pronounced cycles are likely behind the industry anyway.

“Yes, the reinsurance market remains very challenging but if you are disciplined, close to your clients and leveraging technology, it is possible to write profitable business,” she says.

“We are certainly seeing a flattening of the market cycles driven by levels of capacity so it’s clear that underwriting discipline will become even more important than ever going forward.”

Capital markets

Hamilton is also investing in building up its expertise in and understanding of the capital markets. It launched its first sidecar in the form of Turing Re in 2017, which was launched with $65 million of capacity, and it has plans to ramp up this part of the business. It recently hired Brent Slade, chief operating officer of Horseshoe Re to run its capital markets unit and Albo is empowering him to grow this segment of the business.

“One opportunity we recognise is that of managing capital for third parties,” she says. “We already had a sidecar but we have hired Brent to oversee an expansion of that part of the business. In addition to our strategic relationship with AIG, this could allow us to evaluate and work with more strategic partners and sources of capital on this side of things. This is an exciting and important development for us.

“We will also partner with other insurtech players where
needed to ensure we remain at the cutting edge of what is possible in this space.”

“It is actually the first time I have worked in Bermuda and I have to say it is a fascinating place—there is a great balance between maturity and innovation, which is so important given what we are trying to achieve.

“We are able to have an excellent relationship with the Bermuda government, and the Bermuda Monetary Authority is a world-class regulator. It is very forward-looking in the way it embraces new technologies such as blockchain and wants Bermuda to become a hub for insurtech innovation.

“When you add in the base of intellectual capital you have here, I believe Bermuda continues to be a true leader in risk transfer and it’s certainly here to stay,” she concludes.


Meet Pina Albo

Pina Albo began her career as a lawyer in Toronto, Canada. After practising in real estate, corporate finance and M&A, she accepted a position at Munich Re as a claims expert. During her 25-year career at the company, she held increasingly senior positions which included head of casualty unit, North America/UK and international D&O/EPL; head of casualty operations at Munich Reinsurance Company of Canada and Temple Insurance Company; executive head of department UK and Ireland; president, National Clients Division, Munich Re America; and president, reinsurance division, Munich Reinsurance America.

Her most recent position at Munich Re was member of the board of executive management where her responsibilities have included P&C business and operations in Europe and Latin America.

Albo currently sits on the board of directors for the IFG Companies, Blue Marble Microinsurance and Attune Insurance. She also serves as an ambassador for the Insurance Supper Club, an international organisation that aims to improve networking opportunities for women across the finance and insurance industries.

Albo has been a member of many industry boards including the board of the Insurance Information Institute, the board of the Reinsurance Association of America and the national board of the Insurance Industry Charitable Foundation.

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