High profile aviation losses will cause rate hikes


Recent high profile aviation and political risk losses are likely to reinforce the crucial role that insurance plays, driving an improvement in aviation rates.

That is the opinion of Charles Franks, CEO of R J Kiln & Co – part of the Tokio Marine Group.

The comments come as R J Kiln & Co, which will rebrand as Tokio Marine Kiln at the end of the year, released updated forecasts for the 2012 and 2013 years of account for its three non-aligned syndicates.

“Recent high profile insurance losses within the aviation and political risk sectors have once again reinforced the critical role insurance plays in an uncertain and increasingly connected world,” says Franks.

“Although the traditional market cycle has not responded to large losses in other areas, these events are likely to contribute towards an improvement in ratings in the aviation sector which has been in decline in recent years due to oversupply of capital and an improving safety record. In this environment, professional underwriting, with the needs of customers at its core, remains critical.”

Syndicates 510 and 557 are forecast to deliver profits for the 2012 and 2013 years of account, with the former expected to reach £1,062 million of capacity with an increased forecast range of 3.7-8.7, up from the predicted 2.7 to 7.7. And the latter £56 million, with an increased forecast of 2.2-7.2 compared with 2-7.

The previous forecasts, which were announced in May 2014, have been rebased to the same exchange rates ($1.71 and C$1.82) and show that syndicates 510 and 557 are stable and in line with the prior quarter.

A large loss during the quarter together with a reduction in expected premium income has resulted in Syndicate 308 now forecasting to make a loss on the 2013 year of account, reaching £23 million of capacity.

aviation, political risk, rates, Charles Franks, Tokio Marine, R J Kiln & Co

Bermuda Re