CPRI MARKET UPDATE FOR JULY 2015

REPORT AND
MARKET UPDATE
CREDIT AND POLITICAL RISK INSURANCE (CPRI)
JULY 2015
ARTHUR J. GALLAGHER
AJGINTERNATIONAL.COM
LONDON CPRI MARKET UPDATE FOR JULY 2015
1
Founded by Arthur Gallagher in Chicago in 1927, Arthur J. Gallagher & Co has grown to
become one of the largest insurance brokerage and risk management companies in the
world. With significant reach internationally, the group employs over 20,000 people and
its global network provides services in more than 140 countries.
Outside the US, we use the brand name Arthur J. Gallagher.
2
LONDON CPRI MARKET UPDATE FOR JULY 2015
AJGINTERNATIONAL.COM
ARTHUR J. GALLAGHER
CONTENTS
Review2
Commercial Market Overview
4
Available Market Capacity
7
Total Capacity Available by Tenor – July 2015
8
Available Market Capacity Comparison
9
Trade Credit Insurance
10
Main Trade Credit Insurers
10
Emerging Markets Country Risk Ratings
11
Kidnap and Ransom Insurance Fact Sheet
14
Terrorism Report 2015
15
Contacts16
ARTHUR J. GALLAGHER
AJGINTERNATIONAL.COM
LONDON CPRI MARKET UPDATE FOR JULY 2015
CPRI MARKET UPDATE FOR JULY 2015
“Political risk has returned with a vengeance.”
Lionel Barber, FT Editor, 20th March 2015
The Arthur J. Gallagher Market Update for July 2015 summarises the changes in
line structure and tenors available from commercial political risk insurers since our last
report in January 2015. The summary reflects the outcome of reinsurance negotiations
where renewals have been completed in the intervening period, as well as the arrival
of any new insurers who have gained approval for their business plans and obtained
sufficient capital allocations. Additionally, any changes to credit agencies’ rating of the
insurers are detailed herein.
With few changes to Insurers’ line sizes there has
been a minor increase in market capacity since
the previous January edition. “Seven years on
from the onset of the global financial crisis, the
world is recovering, but only slowly,” (Ibid.)
Political unrest is prevalent the world over, some
of which is highlighted below.
The jihadist group ISIS has declared the
establishment of a ‘caliphate’ – an Islamic state
– stretching from Aleppo in Syria to the province
of Diyala in Iraq. Without Sunni support, the
new Iraqi government headed by Haider Abadi is
unlikely to be able to restore federal government
control over northern Iraq. In Syria, prospects
for a diplomatic solution to the war are poor.
President Bashar al-Assad’s forces have suffered
significant territorial losses to the increasingly
co-ordinated Sunni insurgents in 2015. In
addition to the on-going civil war and US and
EU sanctions somewhat restricting trade with the
Syrian government, Syria’s legal system impedes
wider flows of foreign investment.
In Libya, political stability will continue to be
undermined by oil sector disruption perpetrated
by rival armed groups fighting for control of oil
infrastructure, and general insecurity. As such
large numbers of refugees from the Middle East
and Africa have attempted to cross borders into
Europe, often with fatal consequences.
Despite Greece’s well documented, continued
failure to honour IMF loan repayments, the
Eurozone is on track to experience its best
growth in four years. Eurozone GDP growth
improved to 0.4% quarter on quarter in Q1
2015, which was the strongest performance since
the second quarter of 2011.
The extension of EU sanctions on Russia until
January 2016 is likely to escalate regulatory
blockages to business activity. One estimate
showed that Russia’s Q1 real GDP contracted by
2.2% year on year, with the most affected
2
industries being: trade, hotels and restaurants,
and real estate, indicating private consumption is
falling.
Brazil has seen hundreds of thousands of people
taking part in anti-government demonstrations,
sparked by anger over bribery scandals with the
state-run multinational energy corporation,
Petrobras, which has been penalised with a
USD 17 billion corruption fine. Brazil’s
president, Dilma Rouseff, has introduced a
five-year USD 65 billion infrastructure package
in order to combat recession.
Six months after President Obama eased
sanctions on a more than five decade long Cold
War stalemate with Cuba, American money,
travellers and business executives have entered
the island, resulting in a 36% increase in travel
between January and May.
In Venezuela expropriation risks will remain
high ahead of the pivotal December 2015
parliamentary elections that will test the
popularity of President Nicolás Maduro and his
ruling (United Socialist party of Venezuela).
Recently (23rd June 2015), oil prices have risen
by more than USD 10 from the low levels
experienced in the last six months, with the US
benchmark West Texas Intermediate (WTI)
currently priced at USD 60.11 a barrel on the
New York Mercantile Exchange.
A Tripartite Free Trade Area (TFTA) agreement
was signed last week by officials of three of
Africa’s existing trade blocs - the Southern
African Development Community (SADC),
the East African Community (EAC) and the
Common Market for Eastern and Southern
Africa (COMESA) – with the intention of
reducing internal duties and to harmonise trade
regulations. The ‘unified’ market incorporating
26 of Africa’s 54 countries would comprise 600
million people and have a combined GDP of
around USD 1 trillion.
LONDON CPRI MARKET UPDATE FOR JULY 2015
AJGINTERNATIONAL.COM
ARTHUR J. GALLAGHER
In China rising debt levels and serious
overcapacity in housing and manufacturing are
likely to limit short-term economic growth. The
central bank will probably maintain a
conservative monetary policy stance, constraining
the investment financing environment. Recent
reductions in global energy prices are not
sufficient to significantly stimulate growth,
although exports should improve in 2015 due to
strong recoveries in North America and, to a
lesser extent, Western Europe.
final deal on its nuclear programme to secure
sanctions relief. However, a deal with the US
challenges the Islamic Republic’s legitimacy,
founded upon religiously motivated anti-Western
ideals. The hardline faction and the Islamic
Revolution Guards Corps (IRGC) seem to
believe that self-reliance, isolation and ideological
consistency are more important for the regime’s
survival.
Lower crude prices and existing sanctions on
Iran’s oil exports, along with unwillingness to cut
social spending, increase Iran’s incentives for a
Significant CPRI market changes are summarised
below:
ACE
ACE has opened an office in Japan, Hiroya
Takagi has joined as Manager, Political Risk &
Credit, Japan. Takagi-san has previously worked
at Euler Hermes in Japan as Commercial
Underwriting Manager.
Fidelis
Richard Brindle has started a new company
Fidelis and is joined by Richard Coulson. Line
size and tenors to be finalised.
Liberty
Liberty has strengthened its Country and Credit
Risk Management team with the recruitment of
Christian Crivari in London and Siew Choon in
Singapore.
Aspen
Carolyn Thomas has moved to Aspen’s Bermuda
office to write credit and political risk as at 1st
April 2015. The insurer is Aspen Bermuda Ltd.
Tenor, limits, sub classes and financial strength
rating mirror those of Aspen insurance UK Ltd.
She will focus on business originating in the
Americas.
XL Catlin
Joe Blenkinsopp has been appointed Chief
Underwriting Officer and Global Head of the
combined team effective 24th June 2015.
The acquisition of Catlin by XL, exceeding USD
4 billion in value, has dominated the Lloyd’s
market.
Canopius
Lijana Baubyte, a Credit Risk Analyst from
Liberty, has joined Canopius.
Chaucer
Chaucer has increased its maximum tenors by
two years and can now right up to 7 years for
CEND, CF and CR risks.
ARTHUR J. GALLAGHER
AJGINTERNATIONAL.COM
LONDON CPRI MARKET UPDATE FOR JULY 2015
3
COMMERCIAL MARKET OVERVIEW
Insurer:
Project Risks (CEN)
Trade Risks Political (CF)
Trade Risks Commercial
(CR)
‘Company Markets’
4
Rating(s)
Total max per
risk (USD)
Max
Tenor
(years)
Total max per
risk (USD)
Max
Tenor
(years)
Total max per
risk (USD)
Max
Tenor
(years)
ACE European
Group Ltd.
100,000,000
15
80,000,000
15
30,000,000
5
AA [S&P]
AIG
150,000,000
15
150,000,000
15
100,000,000
5
A+ [S&P]
Aspen
100,000,000
15
100,000,000
15
100,000,000
8
A [S&P]
Atradius
112,000,000
7
112,000,000
7
112,000,000
7
A [A.M. Best]
Axis
50,000,000
7
50,000,000
7
35,000,000
7
A+ [S&P]
C V Starr
50,000,000
10
50,000,000
0
10,000,000
1
A [A.M. Best]
Coface
70,000,000
10
70,000,000
7
70,000,000
7
AA- [Fitch]
Euler Hermes
125,000,000
8
125,000,000
8
125,000,000
8
AA- [S&P]
FCIA
25,000,000
7
80,000,000
7
80,000,000
7
A+ [S&P]
Garant
34,000,000
7
34,000,000
7
34,000,000
7
A- [Fitch and
A.M. Best]
Houston Casualty
50,000,000
7
50,000,000
7
50,000,000
5
AA [S&P/Fitch]
Ironshore
40,000,000
7
40,000,000
7
40,000,000
7
A [A.M. Best]
Lancashire Insurance
Ltd.
200,000,000
10
75,000,000
10
0
0
A-[S&P]
AWAC (LAU)
20,000,000
5
20,000,000
5
20,000,000
5
A [A.M. Best]
Liberty Mutual
Insurance Europe
Ltd.
50,000,000
15
50,000,000
10
50,000,000
7
A [S&P]
Markel International
Insurance Company
0
0
50,000,000
7
150,000,000
5
A [S&P/Fitch]
Montpelier Re
25,000,000
7
25,000,000
7
25,000,000
7
A- [S&P/Fitch]
Sovereign
80,000,000
15
80,000,000
15
0
0
AA [S&P/Fitch]
Swiss Re Corporate
Solution Ltd.
75,000,000
10
75,000,000
10
200,000,000
5
AA-[S&P]
XL Catlin
190,000,000
12
165,000,000
12
115,000,000
12
A+ [S&P/Fitch]
Zurich
150,000,000
15
150,000,000
15
75,000,000
5
AA- [S&P/Fitch]
Total:
‘Company Markets’
July 2015
1,696,000,000
5%
1,631,000,000
1%
1,421,000,000
1%
Total: Jan 2015
1,618,000,000
1,615,000,000
LONDON CPRI MARKET UPDATE FOR JULY 2015
1,405,000,000
AJGINTERNATIONAL.COM
ARTHUR J. GALLAGHER
COMMERCIAL MARKET OVERVIEW
Insurer:
Project Risks
Trade Risks Political
Trade Risks Commercial
‘Lloyd’s Markets’
(CEN)
(CF)
(CR)
[All Lloyd’s
Markets rated
A+ by S&P]
Total max per
risk (USD)
Max Tenor
(years)
Total max per
risk (USD)
Max Tenor
(years)
Total max per
risk (USD)
Max Tenor
(years)
Acappella
Lloyd’s Syn 2014
10,000,000
7
10,000,000
7
7,500,000
5
ACE Global
Markets
100,000,000
15
80,000,000
15
30,000,000
5
20,000,000
5
20,000,000
5
2,500,000
3
25,000,000
10
25,000,000
10
15,000,000
5
ANV
Lloyd’s Syn 1861
17,500,000
7
15,000,000
7
3,000,000
1
Argo
20,000,000
5
20,000,000
5
20,000,000
3
15,000,000
7
15,000,000
7
0
0
25,000,000
7.5
25,000,000
7.5
5,000,000
3
50,000,000
15
50,000,000
15
50,000,000
8
50,000,000
7
50,000,000
7
30,000,000
7
30,000,000
10
30,000,000
8
30,000,000
8
25,000,000
7
25,000,000
7
12,500,000
7
Channel
Lloyd’s Syn 2015
45,000,000
10
45,000,000
10
25,000,000
7
Chaucer
30,000,000
7
30,000,000
7
15,000,000
7
C V Starr
Lloyd’s Syn 1919
50,000,000
10
50,000,000
10
10,000,000
5
Hardy
15,000,000
5
15,000,000
5
10,000,000
5
25,000,000
10
25,000,000
5
25,000,000
5
15,000,000
7
15,000,000
7
15,000,000
7
60,000,000
5
40,000,000
5
40,000,000
5
Lloyd’s Syn 2488
Amlin
Lloyd’s Syn 2001
Antares
Lloyd’s Syn 1274
Lloyd’s Syn 1200
Ark
Lloyd’s Syn 4020
Ascot
Lloyd’s Syn 1414
Aspen
Lloyd’s Syn 4711
Beazley
Lloyd’s Syn
623/2623
BRIT
Lloyd’s Syn 2987
Canopius
Lloyd’s Syn 4444
Lloyd’s Syn 1084
Lloyd’s Syn 382
Hiscox
Lloyd’s Syn 33
ANV 5820
(Jubilee)
Lloyd’s Syn 5820
Kiln
Lloyd’s Syn 510
ARTHUR J. GALLAGHER
AJGINTERNATIONAL.COM
LONDON CPRI MARKET UPDATE FOR JULY 2015
5
COMMERCIAL MARKET OVERVIEW
Project Risks
Insurer:
continued
Trade Risks Political
(CEN)
‘Lloyd’s Markets’
Trade Risks Commercial
(CF)
(CR)
[All Lloyd’s
Markets rated
A+ by S&P]
Total max per
risk (USD)
Max Tenor
(years)
Total max per
risk (USD)
Max Tenor
(years)
Total max per
risk (USD)
Max Tenor
(years)
Liberty Syn
Mgmt
50,000,000
15
50,000,000
10
50,000,000
7
40,000,000
10
40,000,000
10
40,000,000
10
20,000,000
3
20,000,000
3
0
0
0
0
50,000,000
7
70,000,000
5
Montpelier Re
Lloyd’s Syn 5151
25,000,000
7
25,000,000
7
25,000,000
7
Novae
30,000,000
7
30,000,000
7
30,000,000
7
0
0
15,000,000
5
15,000,000
5
20,000,000
5
20,000,000
5
0
0
15,000,000
7
15,000,000
7
12,500,000
7
40,000,000
7
40,000,000
7
20,000,000
7
5,000,000
3
0
0
0
0
7,500,000
5
5,000,000
5
0
0
190,000,000
10
165,000,000
12
115,000,000
12
1,070,000,000
3%
1,060,000,000
2%
723,000,000
3%
Lloyd’s Syn 4472
Marketform
Lloyd’s Syn 2468
MAP
Lloyd’s Syn 2791
Markel
International
Lloyd’s Syn 3000
Lloyd’s Syn 2007
Nexus CIFS
Lloyd’s Syn
4472/2001/1955
O’Farrell
Lloyd’s Syn 1036
Pembroke
Lloyd’s Syn 4000
Talbot
Lloyd’s Syn 1183
Torus
Lloyd’s Syn 1301
WR Berkley
Lloyd’s Syn 1967
XL Catlin
Lloyd’s Syn
1209/2003
Total:
‘Lloyd’s Markets
July 2015’
Total:
1,035,000,000
1,035,000,000
703,000,000
Jan 2015
6
LONDON CPRI MARKET UPDATE FOR JULY 2015
AJGINTERNATIONAL.COM
ARTHUR J. GALLAGHER
AVAILABLE MARKET CAPACITY – JULY 2015
(Total possible maximum USD per risk)
Project Risks (CEN)
Trade Risks Political (CF)
Trade Risks Commercial (CR)
Company
1,696,000,000
1,631,000,000
1,421,000,000
Lloyd’s
1,070,000,000
1,060,000,000
723,000,000
Total
2,226,000,000
Total: Jan 2015
2,123,000,000
5%
2,196,000,000
2%
2,155,000,000
1,794,000,000
2%
1,758,000,000
Notes:
Totals do not ‘double count’ the Company and Lloyd’s lines of ACE, Aspen, C V Starr, Liberty, Markel, Montpelier and XL Catlin that can be
written via either their Company or Lloyd’s syndicate.
AVAILABLE MARKET CAPACITY – JULY 2015
Capacity
(Total possible maximum USD per risk)
1,800,000,000
1,600,000,000
1,400,000,000
1,200,000,000
1,000,000,000
800,000,000
600,000,000
400,000,000
200,000,000
0
1,696
Company
Lloyd’s
1,631
1,070
1,421
1,060
723
Project Risks (CEN)
Trade Risks Political (CF)
Trade Risks Commercial (CR)
Risk Type
ARTHUR J. GALLAGHER
AJGINTERNATIONAL.COM
LONDON CPRI MARKET UPDATE FOR JULY 2015
7
TOTAL CAPACITY AVAILABLE BY TENOR – JULY 2015
(Total possible maximum USD per risk)
Max Tenor (years)
Project Risks (CEN)
Trade Risks Political (CF)
Trade Risks Commercial (CR)
15
770,000,000
725,000,000
-
10
1,370,000,000
1,150,000,000
155,000,000
7
1,980,000,000
1,754,000,000
1,155,000,000
5
2,226,000,000
2,110,000,000
1,585,000,000
3
2,238,000,000
2,196,000,000
1,794,000,000
(Total possible maximum million USD per risk)
2,500
2,238
2,226
2,196
2,000
Project Risks (CEN)
Trade Risks Political (CF)
Trade Risks Commercial (CR)
2,110
1,980
1,794
Capacity
1,585
1,754
1,500
1,370
1,155
1,150
1,000
770
725
500
0
155
3
5
7
10
15
Tenor Available (Years)
8
LONDON CPRI MARKET UPDATE FOR JULY 2015
AJGINTERNATIONAL.COM
ARTHUR J. GALLAGHER
ARTHUR J. GALLAGHER
Sep
01
580
574
1,154
Sep
01
268
389
657
Sep
01
-
-
-
Project
Risks (CEN)
Company
Lloyd's
Total
Trade Risks Political
(CF)
AJGINTERNATIONAL.COM
Company
Lloyd's
Total
Trade Risks
Commercial (CR)
Company
Lloyd's
Total
LONDON CPRI MARKET UPDATE FOR JULY 2015
-
-
-
Jan
02
519
188
331
Jan
02
837
274
564
Jan
02
268
73
195
Jan
03
520
203
318
Jan
03
773
278
495
Jan
03
January 2001 to July 2015
242
87
185
Jan
04
513
195
318
Jan
04
775
280
495
Jan
04
254
79
175
Jan
05
549
239
310
Jan
05
788
318
470
Jan
05
358
103
255
Jan
06
661
256
405
Jan
06
825
335
490
Jan
06
(Total possible maximum million USD per risk)
422
167
255
Jan
07
737
297
440
Jan
07
883
368
515
Jan
07
490
190
300
Jul
07
812
332
480
Jul
07
933
388
545
Jul
07
453
855
Jul
08
478
840
Jan
09
560
870
Jul
09
593
920
Jan
10
593
795
Jul
10
633
865
Jan
11
643
985
Jul
11
Jul
12
Jan
13
Jul
13
Jan
14
Jul
14
Jan
15
Jul
15
622
743
762
778
913
938
1,035 1,070
1,015 1,233 1,285 1,324 1,493 1,608 1,618 1,696
Jan
12
543
208
335
Jan
08
877
347
530
Jan
08
381
720
Jan
09
456
750
Jul
09
502
800
Jan
10
510
745
Jul
10
560
865
Jan
11
570
948
Jul
11
Jul
12
Jan
13
Jul
13
Jan
14
Jul
14
Jan
15
Jul
15
545
675
695
703
845
952
1,035 1,060
1,085 1,195 1,247 1,291 1,360 1,515 1,615 1,631
Jan
12
653
238
445
Jul
08
641
251
420
Jan
09
727
307
450
Jul
09
731
346
500
Jan
10
731
341
505
Jul
10
768
353
550
Jan
11
865
658
658
Jul
11
998
338
820
Jan
12
455
987
Jan
13
Jan
14
Jul
14
Jan
15
Jul
15
457
544
634
703
723
1,036 1,080 1,185 1,405 1,405
Jul
13
1,158 1,177 1,228 1,379 1,559 1,758 1,794
453
955
Jul
12
1,052 1,041 1,146 1,157 1,110 1,240 1,268 1,420 1,565 1,607 1,659 1,885 2,022 2,155 2,196
377
735
Jul
08
1,083 1,228 1,238 1,350 1,348 1,223 1,293 1,333 1,382 1,646 1,688 1,742 2,016 2,216 2,123 2,226
423
660
Jan
08
AVAILABLE MARKET CAPACITY COMPARISON
9
TRADE CREDIT INSURANCE – JULY 2015
The trends identified in our last market update have continued into the first
half of 2015. The market has seen a number of large insolvencies resulting in
significant claims payment to clients against a backdrop of plentiful capacity
and softer pricing.
Even as we emerge from recession, credit insurance
has a vital role to play in helping businesses protect
their cash flow and balance sheet and this risk
mitigation role is a key driver for many companies
to purchase insurance. It is of course not the only
reason - credit insurance provides the underlying
security to extend credit to existing customers and
to help identify new companies and markets. The
role of the insurers in providing country, trade
sector and buyer credit information is vital. Credit
insurance also enables companies to open up access
to bank finance, for example by accelerating
payments against trade receivables, trade finance
and facilitating supply chain finance.
Arthur J. Gallagher recently attended the GTR UK
Trade & Export Finance Conference in
Birmingham – a forum that brings together
exporters, financiers, government representatives,
insurance companies and professional advisers like
us. A key conclusion was the need for the credit
insurance market to work more closely with the
banks and trade financiers to hit the government’s
stretching target of GBP 1 trillion of exports by
2020. This is almost a doubling of the current
value of the UK’s exports currently. A tough
challenge, but there is an increasing demand from
banks and trade financiers for credit insurance
solutions to support exporters and importers. The
credit insurers, with the help of specialist brokers,
have developed solutions in response. These
solutions not only enable banks to make funds
available to their customers by protecting them
from commercial and political credit risk, but also
enable them to achieve capital relief within the
framework of the Basel III regulations.
These solutions have been available for some time,
but the insurers and brokers continue to develop
structures and policy wordings to accommodate
almost any trade receivable funding scenario. This
is the latest stream of innovation in the credit
insurance market and one that continues on a
growth path.
MAIN TRADE CREDIT INSURERS
10
Insurer
Rating (S&P unless indicated)
Ground Up
Excess of
Loss
Single Risk
ACE
AA
-
x
x
AIG
A+
x
x
x
Atradius
A3 (Moody's)
x
x
x
CIFS
A+
x
x
-
Coface
AA- (Fitch)
x
x
x
Credimundi
AA+ (as per ONDD)
x
x
-
Equinox Global
A+ (as per Lloyd's)
x
x
-
Euler Hermes
AA-
x
x
x
FCIA
A+ (as per Great American Insurance)
x
x
x
HCC
AA
x
x
x
Ironshore
A (A.M. Best)
-
x
x
AWAC
A
-
x
x
Liberty Mutual
A-
-
-
x
Lloyd's
A+
-
x
x
Markel
A (S&P/Fitch)
-
x
x
QBE
A+
x
x
x
XL Catlin
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LONDON CPRI MARKET UPDATE FOR JULY 2015
AJGINTERNATIONAL.COM
ARTHUR J. GALLAGHER
EMERGING MARKETS COUNTRY RISK RATINGS
The following pages analyse the Country Risk Ratings, compiled by IHS
Global Insight, of various Emerging Markets. We compare the Overall Risk
Ratings and the Political Risk Ratings as at the time of publication of this
Market Report, and as at 1st July 2015. These countries have been selected
from the International Monetary Fund’s World Economic Outlook for
Emerging and Developing Economies.
Risk Rating
Risk Description
0.75 – 1.24
Insignificant
1.25 – 1.74
Negligible
1.75 – 1.99
Low
2.00 – 2.49
Moderate
2.50 – 2.99
Medium
3.00 – 3.49
Significant
3.50 – 3.99
High
4.00 – 4.49
Very High
4.50 – 6.99
Extreme
7.00 – 10.00
Very Extreme
Overall Risk Ratings take into account six components:
Political, Economic, Legal, Tax, Operational and Security.
These ratings are principally measuring stability.
Political Risk Ratings analyse four factors:
• Institutional performance
• Representation of the population and organised
interests
• Internal political consensus
• External political consensus
Sub-Sahara Africa
Overall Risk
at 01 Jan 2015
Overall Risk
at 01 July 2015
Political Risk
at 01 Jan 2015
Political Risk
at 01 July 2015
Burkina Faso
3.53
High
3.00
Significant
3.75
High
2.90
Medium
Côte d’Ivoire
3.87
High
2.50
Medium
4.00
Very High
2.10
Moderate
Democratic
Republic
of Congo
4.33
Very High
3.90
High
4.25
Very High
3.50
High
Ghana
Kenya
2.82
3.39
Medium
Significant
2.60
2.70
Medium
Medium
2.75
3.75
Medium
High
2.50
2.30
Medium
Moderate
Liberia
3.80
High
3.30
Significant
3.75
High
3.00
Significant
Nigeria
4.07
Very High
3.60
High
4.50
Extreme
2.90
Medium
Sierra Leone
3.69
High
2.90
Medium
3.50
High
2.60
Medium
South Africa
2.57
Medium
2.30
Moderate
2.50
Medium
1.90
Low
Tanzania
3.32
Significant
2.80
Medium
3.00
Significant
1.60
Negligible
ARTHUR J. GALLAGHER
AJGINTERNATIONAL.COM
LONDON CPRI MARKET UPDATE FOR JULY 2015
11
EMERGING MARKETS COUNTRY RISK RATINGS
Asia Pacific
Overall Risk
at 01 Jan 2015
Overall Risk
at 01 July 2015
Political Risk
at 01 Jan 2015
Political Risk
at 01 July 2015
Cambodia
3.19
Significant
2.20
Moderate
3.00
Significant
1.40
Negligible
China
2.90
Medium
2.00
Moderate
2.50
Medium
1.40
Low
India
2.86
Medium
2.50
Medium
3.00
Significant
2.30
Moderate
Indonesia
2.82
Medium
2.20
Moderate
2.75
Medium
1.70
Negligible
Laos
3.06
Significant
2.20
Moderate
3.00
Significant
1.40
Negligible
Pakistan
3.96
Very High
2.90
Medium
4.50
Extreme
2.80
Medium
Papua New
Guinea
3.39
Significant
2.50
Medium
3.39
Significant
2.30
Moderate
Philippines
2.68
Medium
2.10
Moderate
2.50
Medium
1.20
Insignificant
Thailand
2.94
Medium
2.00
Moderate
3.50
High
1.80
Low
Vietnam
2.97
Medium
1.90
Low
3.25
Significant
1.00
Insignificant
Europe and CIS
12
Overall Risk
at 01 Jan 2015
Overall Risk
at 01 July 2015
Political Risk
at 01 Jan 2015
Political Risk
at 01 July 2015
Belarus
3.51
High
2.50
Medium
3.50
High
2.70
Medium
Czech
Republic
2.04
Moderate
1.30
Negligible
2.25
Moderate
1.50
Negligible
Greece
2.79
Medium
2.40
Moderate
2.75
Medium
2.80
Medium
Kazakhstan
3.03
Significant
2.30
Moderate
2.75
Medium
1.80
Low
Kyrgyzstan
3.58
High
3.50
High
3.75
High
3.20
Significant
Poland
1.96
Low
1.40
Negligible
2.00
Moderate
1.40
Negligible
Romania
2.53
Medium
2.00
Moderate
2.25
Medium
2.30
Moderate
Russia
3.07
Significant
2.80
Medium
3.00
Significant
2.30
Moderate
Slovakia
1.88
Low
1.30
Negligible
2.00
Moderate
1.20
Insignificant
Ukraine
3.65
High
3.70
High
4.00
Very High
3.60
High
LONDON CPRI MARKET UPDATE FOR JULY 2015
AJGINTERNATIONAL.COM
ARTHUR J. GALLAGHER
EMERGING MARKETS COUNTRY RISK RATINGS
Latin America and Caribbean
Overall Risk
at 01 Jan 2015
Overall Risk
at 01 July 2015
Political Risk
at 01 Jan 2015
Political Risk
at 01 July 2015
Argentina
3.44
Significant
3.30
Significant
3.25
Significant
2.60
Medium
Bolivia
3.39
Significant
3.20
Significant
3.25
Significant
2.80
Medium
Brazil
2.66
Medium
2.00
Moderate
2.50
Medium
1.60
Negligible
Colombia
2.77
Medium
2.20
Moderate
2.50
Medium
2.30
Moderate
Dominican
Republic
2.85
Medium
2.00
Moderate
3.25
Significant
2.10
Moderate
Ecuador
3.50
High
3.10
Significant
3.25
High
2.50
Medium
Guatemala
3.31
Significant
2.60
Medium
3.50
High
3.50
High
Nicaragua
3.42
Significant
2.60
Medium
3.50
High
2.20
Moderate
Peru
2.86
Medium
2.10
Moderate
3.25
Significant
2.30
Moderate
Venezuela
3.98
High
4.40
Very High
4.00
Significant
3.90
High
Middle East and North Africa
Overall Risk
at 01 Jan 2015
Overall Risk
at 01 July 2015
Political Risk
at 01 Jan 2015
Political Risk
at 01 July 2015
Algeria
3.14
Significant
3.20
Significant
3.50
Significant
2.90
Medium
Bahrain
2.59
Medium
2.10
Moderate
3.00
Significant
2.00
Moderate
Egypt
3.47
Significant
3.40
Significant
3.75
High
3.00
Significant
Kuwait
2.62
Medium
2.10
Moderate
3.25
Significant
2.10
Moderate
Lebanon
3.30
Significant
3.20
Significant
3.75
High
3.20
Significant
Libya
4.09
Very High
5.70
Extreme
4.25
Very High
7.00
Extreme
Saudi Arabia
2.47
Moderate
2.20
Moderate
2.75
Medium
2.00
Moderate
Tunisia
2.83
Medium
2.30
Moderate
3.00
Significant
2.40
Moderate
United Arab
Emirates
2.13
Moderate
1.30
Negligible
2.00
Moderate
0.90
Insignificant
Yemen
4.10
Very High
5.60
Extreme
4.25
Very High
6.30
Extreme
ARTHUR J. GALLAGHER
AJGINTERNATIONAL.COM
LONDON CPRI MARKET UPDATE FOR JULY 2015
13
KIDNAP AND RANSOM INSURANCE FACT SHEET
Special Contingency Insurance
Whilst these policies are known for providing cover for Kidnap and Ransom
situations, the cover is far wider and can include Extortion; Products and
Extortion; Cyber Extortion Business Interruption; Emergency Political
Repatriation; Hijack; Wrongful Detention; Threat; Disappearance; Express
Kidnap; Child Abduction; Business Interruption following an incident;
Assault and Hostage Crisis.
During the incident the Insured will have
access to the Insurer’s response team and,
unlike a PA + Travel Policy which is usually
capped at USD 50,000, this is for an
unlimited amount.
Following an incident Insurers will
reimburse financial costs incurred by the
insured, including:
Legal Liability; personal accident, including
a capital sum for loss of life or limb by the
victim; travel and accommodation costs
related to the incident; salaries of the victim;
medical costs, including psychological
counselling; rest and rehabilitation costs.
Further to the previous report the increase in
the illegal detention of people by terrorists
has shown no sign of easing. Continued
political polarisation and criminal activity in
Colombia has kept the level of nontraditional incidents such as virtual and
express kidnaps at an unusually high level.
Likewise, Boko Haram continues to drive
the rate of kidnaps in Nigeria. A similar
incident to that in Sydney has been seen in
Paris, again highlighting the erratic
geographical spread of kidnappings.
retail companies. The significant decline in
the oil price has encouraged long queues and
a shortage of essential goods.
The government is keen to avoid criticism of
failing economic policy; they have recently
accused several private retail sector
employees of developing a black market,
according to the Superintendency of Fair
Prices. In the run up to parliamentary
elections the government will only intensify
its focus on private sector employees, which
could further increase the number of
detentions.
For more information, please contact
Pamela Fox or Jack Taylor.
(Contact information on page 16).
More specifically, Venezuela’s current
economic situation has stimulated a risk of
detention to employees of private-sector
14
LONDON CPRI MARKET UPDATE FOR JULY 2015
AJGINTERNATIONAL.COM
ARTHUR J. GALLAGHER
TERRORISM REPORT 2015
Is the current threat from ISIS outside the Middle East real?
In the last month the Islamic State has
claimed to have a significant presence in 15
states across the US, ready to carry out
attacks. Despite this being of concern, it is
believed that ISIS is more concerned with
consolidating its actions in Iraq and Syria,
whilst simultaneously spreading its
operations to Yemen and Libya.
Nevertheless, the emergence of ISIS as one
of the most capable jihadi groups across the
Middle East and North Africa has prompted
the US and UK Governments to express
their fears that citizens returning with the
necessary training with ISIS will conduct
similar attacks on their home soil. Despite
the uncertainty surrounding numbers, only a
handful have made the journey, of which the
majority are known to the intelligence
services.
In the case of the Lindt Café siege in Sydney,
prior to the attack Man Haron Monis had
been reported to the authorities for a string
of offences that did not fit the typical jihadi
model. It was only shortly before the attack
that he became self-radicalised, highlighting
the complexities of early detection.
The Boston Marathon Trial again raises the
issue of the relevance of TRIA/TRIPRA. The
surviving perpetrator was successfully tried
for terrorism and is currently awaiting the
date of his execution, whilst the US
Government still have not declared the
incident as ‘Certified’ under the Act.
For more information, please contact
Pamela Fox or Jack Taylor.
(Contact information on page 16).
The primary risk ultimately stems from
small scale, ‘lone wolf ’, jihadists who do not
have a formal connection to an established
group. Their anonymity is central to their
profile as they bypass early detection.
However, it is their poor training which
often finds them in the hands of the
authorities as they attempt attacks that are
beyond their limited capabilities. Often the
targets are chosen in close proximity to the
attacker’s home and targets include
embassies or military bases. However, the
Boston Marathon Bombing 2013, the last
serious terrorist attack on US soil, illustrates
a successful attempt that avoided detection
on a ‘soft’ target. Likewise the May 2015
shooting opposing an anti-Islamic event
outside Dallas, Texas, further demonstrates
the prevalence of lone wolves favouring soft
targets.
ARTHUR J. GALLAGHER
AJGINTERNATIONAL.COM
LONDON CPRI MARKET UPDATE FOR JULY 2015
15
CONTACTS
London
Mark Gubbins
Managing Director
T +44 (0)20 3425 3194
E mark_gubbins@ajg.com
Political and Project Risks
David Maule
David Evans
Rupert Morgan
Matthew Solley
Executive Director
T +44 (0)20 7204 6157
E david_maule@ajg.com
Executive Director
T +44 (0)20 7204 6156
E david_evans@ajg.com
Executive Director
T +44 (0)20 3425 3199
E rupert_morgan@ajg.com
Executive Director
T +44 (0)20 7204 6175
E matthew_solley@ajg.com
Trade Credit and Surety
Rupert Murray
Shaun Purrington
Nicola Redway
Executive Director
T +44 (0)20 7204 8560
E rupert_murray@ajg.com
Executive Director
T +44 (0) 20 7204 8561
E shaun_purrington@ajg.com
Associate Director
T +44 (0)20 7204 8564
E nicola_redway@ajg.com
Terrorism and Political Violence
Pamela Fox
Jack Taylor
Divisional Director
T +44 (0)20 3425 3192
E pamela_fox@ajg.com
Broker
T +44 (0)20 3425 3144
E jack_taylor@ajg.com
Singapore
Sarah Gulston
Joie Tay
Dawn Seow
Divisional Director
T +65 6422 7439
E sarah_gulston@ajg.com
Assistant Manager
T +65 6422 7442
E joie_tay@ajg.com
Senior Account Manager
T +65 6438 1771
E dawn_seow@ajg.com
Michael Woodward
Ewan Berkemeier
Gary McNally
National Practice Leader Trade Credit
T +61 2 9242 2003
E michael_woodward@ajg.com
Surety and Financial Products
Manager - Trade Credit
T +61 2 9242 2045
E ewan_berkemeier@ajg.com
Credit and Political Risks
Division
T +61 2 9242 2087
E gary_mcnally@ajg.com
Sydney
New York
Don Harkey
Gabe Mansky
Managing Director
North American Trade Credit
and Political Risks
T +1 212 994 7027
E don_harkey@ajg.com
Area Executive Vice President
North American Trade Credit
and Political Risks
T +1 212 994 7068
E gabe_mansky@ajg.com
16
LONDON CPRI MARKET UPDATE FOR JULY 2015
AJGINTERNATIONAL.COM
ARTHUR J. GALLAGHER
Arthur J. Gallagher
Walbrook Office
The Walbrook Building
25 Walbrook
London
EC4N 8AW
Tel: Fax:
+44 (0) 20 7204 6000
+44 (0) 20 7204 6001
www.ajginternational.com
The information contained in this CPRI Report and Market Update has been compiled by Arthur J. Gallagher
(Specialty) from information provided by each insurer. The figures expressed reflect the theoretical maximum
possible lines available which are dependent upon many underwriting factors including the nature of the risk,
the country of risk and available country capacity at the time which may reduce the amount of capacity actually
available and is subject to change without notice.
CPRI Report and Market Update does not purport to be comprehensive or to give legal advice. While every effort
has been made to ensure accuracy, Arthur J. Gallagher (Specialty) cannot be held liable for any errors, omissions
or inaccuracies contained within the document. Readers should not act upon (or refrain from acting upon)
information in this document without first taking further specialist or professional advice.
Arthur J. Gallagher (UK) Limited is authorised and regulated by the Financial Conduct Authority. Registered
Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales.
Company Number: 1193013. www.ajginternational.com
18
LONDON CPRI MARKET UPDATE FOR JULY 2015
AJGINTERNATIONAL.COM
ARTHUR J. GALLAGHER