Underwriting Review
Tokio Marine HCC - Credit Group
Date: 28 April 2022
Authors: Mark Reynolds and Jerome Swinscoe
Executive Summary – Q1 2022
- QTD/YTD Results across all issuing companies:
o Q1 GWP totalled $25.5.M, a 20% increase from Q1 2021.
o Our Q1 combined ratio is 88.4% and PTOI is $2.8M, compared to 70.8% and $6.4M in Q1 2021. The deterioration arises from the increase of our gross loss target from 40% to 60% as of 1 January 2022, due to the Russian invasion of Ukraine. Our overall IBNR as of 31 March 2022 stands at $55.8M, an increase from $49.4M at year-end 2021.
- QTD/YTD Results on London/EU paper:
o London Q1 GWP amounted to $19.5M, a 27% increase over Q1 2021.
o Our Q1 combined ratio in London is 90.6% and PTOI is $1.7M, compared to 68.5% and $5.0M in Q1 2021. The deterioration is the result of increasing our loss target from 40% to 60%, due to the Russian invasion of Ukraine. Our London IBNR as of 31 March 2022 stands at $41.8M, an increase from $37.0M at year-end 2021.
- Losses: After several excellent months, losses increased significantly in March. The most significant activity was $8.1M of new reserves on two cases for Trafigura in Sudan. In spite of this, our incurred loss ratios in Q1 were 28% gross and 17% net across all issuing companies, and 40% gross / 31% net in London.
- Invasion of Ukraine: The 24 February invasion of Ukraine by Russia is expected to have a significant impact on losses for 2022. As noted above, we have increased our loss target for AY 2022 to 60%. We have added twenty-seven items to the Watch List, with total gross exposure of $128M ($120M on London/EU paper) and total net exposure of $103M ($97M on London/EU paper). No reserves have yet been posted, although we currently have $40M gross / $28M net on high-severity WL, which includes Severity 3 and 4.
- Production: As noted above, our production increased in Q1, returning to the level seen prior to the pandemic. Prior to the 24 February invasion of Ukraine, we had been seeing an increase in bound risks and benefitting from higher rates in some areas.
Current underwriting approach:
We have now reverted to the strict conservative underwriting approach implemented from Q2 2020 and are factoring in the multiple risk factors inherent to the current global environment (higher commodity prices, global inflation, volatility, supply chain disruptions, slowdown in Chinese economy and increasing interest rates). We are aiming for higher premium rates wherever justified. Our declination rate has once again increased.
Business
· Production detail by Insureds and brokers:
Shown below are our leading insureds and brokers for Q1 2022 in UK/France, and their GWP for full-year 2021 (thousands of USD).
Insured Groups
1
Insured_Group
Sum_GWP
African Export-Import Bank (Afreximbank)
2040101.92
There are no rows in this table
Broker_Groups
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Broker_Group
Sum_GWP
Notes
BPL
1777974.67
Open
EIA
43399.31
Open
Lockton
1213417.77
Open
Marsh JLT Specialty
791763.98
Open
Miller
9516.92
Open
RK Harrison
76678.14
Open
Texel Finance
13826.15
Open
Willis
82641.25
Open
BPL
1777974.67
Open
EIA
43399.31
Open
Lockton
1213417.77
Open
Marsh JLT Specialty
791763.98
Open
Miller
9516.92
Open
RK Harrison
76678.14
Open
Texel Finance
13826.15
Open
Willis
82641.25
Open
There are no rows in this table
Debtor limits $15+M in Q1 2022 for Exec Summary and EUMC
HCCI_Policy_Ref
Insured
Debtor
Debtor_Country
Effective_Date
Exposure_Expiration
USD_Limit
Coverage_Code
Credit_Rating_or_Score
Notes
1
22RXN51727AA
Societe Generale, NY
Boston Scientific Corporation
United States
2022-01-20T00:00:00.000Z
2026-06-10T00:00:00.000Z
25000040
MTSD
BBB
Open
2
22RXN51753AA
Societe Generale, NY
HP Inc.
United States
2022-02-21T00:00:00.000Z
2026-06-11T00:00:00.000Z
25000000
MTSD
BBB
Open
3
22RXNZC018BA
BNP Paribas
American International Group Inc
United States
2022-02-04T00:00:00.000Z
2026-11-19T12:39:09.000Z
25000000
MTSD
BBB+
Open
4
22RXS51773AA
Standard Chartered Bank
Oracle America, Inc.
United States
2022-03-23T00:00:00.000Z
2023-04-07T00:00:00.000Z
25000000
STSD
BBB+
Open
5
22RXC51774AA
Standard Chartered Bank
CEND - Bangladesh
Bangladesh
2022-03-23T00:00:00.000Z
2024-04-22T00:00:00.000Z
24000000
CEND
N/A
Open
6
22RXC51774AA
Standard Chartered Bank
CEND - Ghana
Ghana
2022-03-23T00:00:00.000Z
2024-04-22T00:00:00.000Z
24000000
CEND
N/A
Open
7
22RXC51774AA
Standard Chartered Bank
CEND - Nigeria
Nigeria
2022-03-23T00:00:00.000Z
2024-04-22T00:00:00.000Z
24000000
CEND
N/A
Open
8
22RXN51747AA
Societe Generale, NY
Baxter International Inc.
United States
2022-02-09T00:00:00.000Z
2026-12-29T00:00:00.000Z
21080000
MTSD
BBB
Open
9
22RXS51767AA
Castleton Commodities Merchant Europe
Uniper SE
Germany
2022-03-16T00:00:00.000Z
2022-11-04T00:00:00.000Z
20000500
STSD
BBB
Open
10
22RXN51754AA
Societe Generale, NY
The Dow Chemical Company
United States
2022-02-21T00:00:00.000Z
2026-12-23T00:00:00.000Z
20000000
MTSD
BBB
Open
11
22RXN51761AA
Societe Generale, NY
Hewlett Packard Enterprise Company
United States
2022-03-02T00:00:00.000Z
2026-12-24T00:00:00.000Z
20000000
MTSD
BBB
Open
12
22RXN51765AA
Deutsche Bank AG
Verizon Communications
United States
2022-03-14T00:00:00.000Z
2027-05-28T00:00:00.000Z
20000000
MTSD
BBB+
Open
13
22RXS51030DA
BP Oil International Limited
Motor Fuel Limited
United Kingdom
2022-03-31T00:00:00.000Z
2023-05-03T14:29:06.000Z
19667081.992544
STSD
bb-
Open
14
22RXE50137CA
Trafigura Pte Ltd
Ministry of Natural Resources - Kurdistan
Kurdistan(Iraq)
2022-02-11T00:00:00.000Z
2025-04-30T11:03:08.000Z
15458438.02
PREX
B-
Open
15
22RXS50935DA
BP Oil International Limited
Peninsula Petroleum Ltd.
Ireland
2022-01-01T00:00:00.000Z
2023-04-03T15:36:32.000Z
15000000
STSD
b
Open
16
22RXS51475CA
BP Oil International Limited
Duke Oil Company (Nigeria)
Nigeria
2022-02-01T00:00:00.000Z
2022-07-07T15:45:20.000Z
15000000
STSD
b-
Open
17
22RXS51615BA
BP Oil International Limited
Tupras
Turkey
2022-03-17T00:00:00.000Z
2023-06-17T11:32:51.999Z
15000000
STSD
B
Open
There are no rows in this table
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