Aon Insurance Managers Guernsey · PDF fileAon Insurance Managers Guernsey Newsletter Spring...

Aon Insurance Managers Guernsey Newsletter

Spring 2013

Table of Contents

2 Insurance Regulation in a Global Framework

3 Aon Guernsey re-launches company website

Cell formation at record high

Changes to Guernsey Company Law

4 An Interview with Chris Louw

6 Review of 2012 Aon Risk Symposium

Risk Maturity Index

7 Master Class 2013

Marston’s CEO in Guernsey

Introducing the Graduates

Welcome to the second edition of our newsletter. This edition is teeming with what we hope are useful and interesting articles, both in relation to the captive and insurance industry and locally at Aon Guernsey.

There is a mix of features, some looking back at 2012 whilst others look further forward into 2013. Accordingly we report Guernsey experiencing new levels of cell formation last year, and the pending changes to insurance regulations globally and to the Guernsey Company Law (2008). All of which indicates that Guernsey is proving to

be as innovative as ever. Whilst on the subject of innovation, we are excited to introduce the Aon Risk Maturity Index to you which is an award winning risk management tool that a number of our clients are using as a catalyst to invigorate and improve risk management practice across their businesses.

We were delighted to meet up with Chris Louw of SABMiller at the Aon Risk Symposium in Warsaw, and are pleased to introduce him to you through our interview with him on page 4. Chris’s work with SABMiller allied to his colourful personality provides an interesting read, which we hope you will enjoy. We are also pleased to announce the addition of four new graduates to our team at Aon Guernsey. These recruits provide us with great new intellectual energy and resources that can be put to work for our clients in 2013 and beyond.

Looking forward, we aim to provide you with regular updates through our recently re-launched website and various events including this year’s Master Class to be held on Tuesday, 30 April 2013 in London. We have been working hard to build a relevant interesting agenda and I’m delighted that Guernsey’s Minister for Commerce, Kevin Stewart has agreed to join a high quality panel of speakers for the Master Class. Please visit our website for details. I’m confident that the event will be stimulating and useful not forgetting the contribution it makes to CPD so we hope to see you there if possible.

Finally our contact details are contained on the back of this newsletter and we welcome any suggestions you may have for the next newsletter or any other thoughts you may have as to how Aon can support our clients in 2013.

Best regards,

Paul Sykes Managing Director Aon Insurance Managers (Guernsey) Limited [email protected]

A message from our Managing Director

Spring 2013Aon Insurance Managers Guernsey Newsletter

2 Aon Risk Solutions | Global Risk Consulting | Captive & Insurance Management

Insurance Regulation in a Global FrameworkThe International Association of Insurance Supervisors (IAIS) was established in 1994 and includes regulators of 190 jurisdictions or, as described on their website www.iaisweb.org , 97% of the world’s insurance premiums. Its objectives are to promote effective and globally consistent supervision of the insurance industry in order to develop and maintain fair, safe and stable insurance markets for the benefit and protection of policyholders; and to contribute to global financial stability.

In 2011 the IAIS updated and consolidated existing principles and guidance into the Insurance Core Principles (ICPs). The International Monetary Fund supports these ICPs and considers consistency between them and local regulation in its assessments of a jurisdiction. Each core principle consists of a headline statement, standards linked to that statement and guidance notes. The guidance is not prescriptive but describes what a statement or standard means and, in many cases, gives examples of ways in which the standard may be met.

Winston Churchill is credited with the quote “if you have ten thousand regulations, you destroy all respect for the law”. Happily then, there are only 26 core principles. These are not regulations, just descriptions of what good regulation should achieve. Supervisory measures should not go beyond what is needed and explicit in the ICPs is flexibility, ensuring that regulation is appropriate for the risks posed by individual insurers. This flexibility is key to creating an environment that is robust but does not restrict business.

• ICPs 1 through 3 set out the legislative framework, the structure, governance and independence of the supervisor and the ability to exchange information with other relevant supervisors. Of particular note are the requirements that the supervisor is financed in a manner that does not undermine its independence and should be free from undue political interference. This suggests that direct government funding of regulators may

not be compliant and that the world should, once again, follow Guernsey’s model.

• ICPs 4 through 8 and 16, 21 and 22, cover corporate governance and compliance issues. They encompass licensing requirements, suitability of

persons, changes in control and portfolio transfers, corporate governance and risk management. ICP 16 specifically covers the requirement for an Own Risk and Solvency Assessment (ORSA) while ICPs 21 and 22 cover prevention of fraud and anti-money laundering/combating the financing of terrorism.

• ICPs 9 through 12 deal with the supervisory process itself encompassing offsite and onsite monitoring and enforcement of preventive and corrective measures, which must be progressive; a so called “ladder of intervention”.

• ICPs 13 through 15 deal with the investment activities of insurers, the valuation of assets and liabilities and the use of mechanisms for insurers to transfer their own risk, ranging from conventional reinsurance to the use of special purpose entities.

• ICP 17, Capital Adequacy, is the “numbers” ICP and is taxing minds at the moment. Insurers must be able to absorb significant unforeseen losses and trigger points for the regulatory ladder of intervention must be identified. In particular a total balance sheet approach is required. This is a step change from

many existing solvency regimes and requires consideration to ensure that an appropriate level of capital is maintained, given the explicit need for regulatory flexibility in accordance with the nature, scale and complexity of the entities being regulated.

• ICPs 18 through 20 deal with the insurance market and cover the conduct of intermediaries, conduct of business rules and public disclosure requirements.

• ICPs 23 through 26 encompass the wider remit of the regulator relating to group wide supervision and cooperation with other relevant authorities, both generally and specifically in respect of crisis management. They also include the fantastically titled Macroprudential Surveillance which seems to be an impressive way of saying “keep an eye on the market as a whole and any factors that might affect it, or at least watch the news.”

Taken as a whole the ICPs can appear hard to swallow but, in the same manner that the way to eat an elephant is one bite at a time, the regulator, Guernsey Financial Services Commission and the Guernsey International Insurance Association are working together to ensure that Guernsey’s approach to regulation remains consistent and globally highly regarded.

Solly Bourne GIIA Regulatory & Techinal Committee

“ if you have ten thousand regulations, you destroy all respect for the law”

— Winston Churchill


Aon Risk Solutions | Global Risk Consulting | Captive & Insurance Management 3

According to figures from the Guernsey Financial Services Commission there have been 97 new international insurer licenses in the past 12 months.

There were 737 licensed international insurers in the island at the end of December 2012, compared with 687 at the end of December 2011.

The 97 additions include 4 ‘pure’ captives and 3 Protected Cell Companies, 87 PCC cells, and 3 ICC cells.

Of the 737 entities domiciled in Guernsey 404 of these were PCC cells and 18 ICC cells at the end of December 2012. The significant increase in cell incorporations is due in part to the Protected Cell Companies’ role in the United Kingdom’s Government backed New Buy Mortgage scheme.

Another source is the demand from investment funds for cells to provide reinsurance to the international insurance markets.

For further information on Protected or Incorporated Cell companies please contact [email protected] or visit www.aon.com/guernsey.

Aon Guernsey Website – Re-Launched

Cell Formations at Record HighChanges to the Guernsey Company Law

The Companies (Guernsey) Law, 2008 (the Law) has been in force since 1 July 2008.

In April 2010, the Commerce and Employment Department released a consultation paper identifying a number of proposed amendments to the Law. Detailed responses were received from various individuals representing the different industry sectors. These responses were carefully reviewed and analysed and have resulted in a consultation response document being released on 30 May 2012.

Some of the changes in this document may prove pertinent to Captives, PCCs , ICCs and Aon’s Fiduciary clients. These key changes include:

PCCs do not need to consolidate core and cells in financial statements

Five year rule on authorisation to issue shares removed

Directors’ obligations to Company (not shareholders) clarified and liabilities limited

Electronic only documents permissible

Introduction of a provision permitting a protected cell of a protected cell company to become incorporated

It should be noted that the draftsman might make further amendments before the amendment legislation comes into force.

For more details visit our website to view our white paper. www.aon.com/guernsey/law-amendment

Aon Guernsey is pleased to announce the re-launch of our dedicated website. We pride ourselves in being innovators demonstrating thought leadership and organising relevant and enjoyable industry events. We are pleased to bring to you virtual access through the website.

Managing Director Paul Sykes said of the re-launch, “In an ever changing business environment it is imperative for our online presence to be at the very centre of the

industry, and through utilising the www.aon.com/guernsey/ site we aim to bring relevant updates and information to our clients in a timely manner.”

The site includes a directory of all staff along with their contact details, please bookmark for your ease of reference www.aon.com/guernsey/contact-us.

To visit our site, please go to www.aon.com/guernsey or for more information contact [email protected].



An interview with Chris LouwWho are you and what do you do?

My name is Chris Louw. I am the Group Insurance and Operational Risk Manager at SABMiller. I look after SABMiller’s global insurance programmes, risk engineering, loss control and BCM programmes. I am also a member of the ERM facilitation team.

How did you end up in your current role?

I have worked in the SABMiller Risk Department for twenty years and was promoted into this role ten years ago, moving to the UK due to the London listing of SABMiller. I report into a department headed by the Director of Finance & Control. The team is made up of me, the head of risk control and business continuity and an insurance administrator. This is a relatively small team but we do have risk management support from colleagues in each of our group’s 6 global hubs.

I understand you had an interesting career before getting into insurance, can you tell us about that?

I had a tennis scholarship to the University of Miami, Florida and obtained a business degree. Following graduation I played US Tennis Association Challenger tournaments for two and a half years. Progressing my

tennis career was hard, due in part to apartheid in South Africa which meant I was banned from playing in many countries, which you needed to do in order to win ranking points. These ranking points allowed you to play major tournaments and make a living. I’m not a naturally fast athlete and this realisation at professional level (ranking 270 in the world) made me think it was time to get a real job. So I returned to South Africa because of the talk of a new democracy and the end of apartheid and I was excited to be part of that. I also missed the African bush terribly.

Does starting your career in RSA influence your view of Risk Management?

Dealing with developing countries, you have to consider aspects of risk management that would not concern you in developed world countries. There are cultural, educational and of course security issues, which you have to consider. It is exciting and stimulating though because every day brings with it a new challenge that has to be managed in a very hands on way. One has to walk the risks and inspect them in order to get what is expected.

What is the most memorable moment of your time in the industry?

I have so many, but probably the one that stands out most was during the purchase of Miller Brewing Co from the mighty Philip Morris which was 20 times the size of SABMiller and based in America. Myself and a broker from South Africa met with their risk management team and we overheard the risk manager commenting on how advanced our insurance programme was, as well as being ahead of what they were

doing in many respects. We were able to place the brewing risk alongside our global programme at better terms than their large programme could.

I am also very proud of SABMiller’s commitment to our ten sustainability goals, in particular, to the eradication of HIV/AIDS. Having grown up in RSA two of my closest boyhood friends on our family farm succumbed to AIDS, making this even more meaningful to me. I sometimes wish I could work more closely with those functions that are involved in these projects.

What is the worst job you have ever had?

I’ve never had a terrible job. I spent 2 years in RSA Military which was tough, but looking back we had a great time.

If you could change one thing about the industry, what would it be?

I honestly believe everyone in insurance should actively strive to make people aware of how important our industry is. We are often perceived as a necessary evil or expense but the insurance industry is essential. No company can afford to send satellites into space or develop a new product without insurance. As members of the Insurance industry we must behave in a professional manner and hold our heads up to make ourselves known to be providers of financial security and risk management expertise. I don’t think we do a good job in getting that message across.

If you did not work in the industry, what job would you like to do?

I would be a game ranger at either Kruger or Yellowstone National Park.



Which other company in the industry do you most admire?

It is recent but it’s Aon. I have a very chequered history with Aon. But Aon is similar to SABMiller as it also grew through acquisition. Aon bought 350 companies and SABMiller only slightly fewer brands. Aon grew globally like SABMiller and are now striving to do things in a world class manner. Nick Maher and Steve McGill from the UK and David Stratton in RSA are a few members of the team that won the SABMiller account and all through their business I see Aon professionals living their ethos and values and providing world class assistance to their clients.

What do you see as the biggest challenge facing the industry?

The ability of insurers to hire and retain their underwriting staff. There are too few lead underwriters these days, who are in a role long enough to fully understand our or the client’s risks. We firmly believe in long term relationships with our insurers, but changing staff at insurers does make this quite challenging.

How do you let your hair down?

I coach my daughters at tennis – they are striving to become professional players. I do love it, but it’s tough at times when I have to be a tough coach.

Hunting is a passion, particularly wild boar with a bow and arrow in RSA. Fly fishing in the UK, especially in the River Test. I also enjoy playing golf (9 handicap); mountain biking for fitness and going on safari into national parks in Africa and the USA.

What level of awareness is there of the captive at executive level and elsewhere within your business?

There is significant awareness at the executive level that the captive facilitates our global assets and FG programme, allowing a small brewery in Malawi to be insured under the same programme as a mega brewery in Colombia.

Is the captive viewed positively within your business?

Yes, at plc level. However, in general the local businesses know very little of the captive, but there has been recent training given to all finance directors that will make them more aware of its involvement.

What programmes do you currently insure through the captive?

Assets and fidelity guarantee (i.e. crime) are the only risks ever to be insured through the captive, but I am always looking for future opportunities. Our captive’s retention is very low when compared to other companies our size. We have never built up large reserves, so taking on significant new risk would have to be carefully considered.

Have you found the captive has helped drive risk management strategies within your organization?

For 19 years I fought against penalty deductibles to drive risk and control measures. It was Ric Gale, formerly of Aon and now a captive board member, who has always nagged me to use captives to implement penalty deductibles on operations that have repetitive claims.

I resisted it on the basis that I believe that good risk management is the right thing to do, not because it has a financial (deductible) impact if not done. However, I have to admit I was finally convinced by Ric and our Director Finance and Control to use the captive retention and implement penalty deductibles. This was on isolated operations where we felt they were using insurance as a planned maintenance programme or not applying basic risk management measures. I have to admit it has proven to be successful.

Have you found that the captive has a role to play during mergers and acquisitions?

There are no specific examples where the captive has helped facilitate the integration of a new business into the insurance programme, although equally it has never created any issues. No insurance programme is able to swallow all acquisitions without some serious broking. Aon led our Foster’s acquisition and inclusion into our global programme and were able to achieve programme enhancements whilst providing significant savings year on year. They have set themselves a high target to maintain.

What is the strategic plan for your captive?

Look to use it more where it makes financial sense to do so. Always bearing in mind we make beverages and we are not an insurance company!



Review of 2012 Aon Risk Symposium

Top: Non-Executive Director and Symposium regular Chris Hubbard arriving with partner Helen

Left: Steve Harmer (left) and Jonathan Moore (Centre) discuss the Risk Maturity Index among other things

Next Plc’s John Gibson (left) and Aon Guernsey’s Derek Millar (right) discuss one of the Risk Symposium sessions during the coffee break.

Derek Millar (centre) and Aon Turkey colleagues Tevfik Erdengi (left) and Nejat Tolunay (right) discuss Turkey as an emerging captive market

Aon Risk Solutions: Risk Maturity IndexThe Aon Risk Maturity Index (RMI) is a first of its kind tool which has been designed to capture, aggregate and assess an organisation’s risk management practices and provide participants with immediate feedback in Risk Maturity Rating. The RMI was developed in conjunction with the Wharton School of the University of Pennsylvania, this allowed for joint research on the relationships between risk

management practices and actual performance to be carried out.

The RMI consists of an easy to understand questionnaire on risk management processes, corporate governance and risk understanding. Upon completion of the 30 – 35 minute questionnaire, participants receive a customised Risk Maturity Rating and general commentary on improving that rating.

Launched in April 2011, the Aon Risk Maturity Index has since been honoured to win the 2012 Innovation Award by Business Insurance Magazine and the Alexander Hamilton Silver Award in the Enterprise Risk Management category.

To learn more about the RMI or to participate in the Index, contact [email protected] or visit www.aon.com/riskmaturityindex.



Aon Guernsey Master Class 2013Following the success of the Captive & Insurance Master Class held in May 2012, we will be hosting the Master Class again in London at the Chartered Accountants Hall on Tuesday 30 April 2013. Our key note speaker will be Commerce and Employment Minister Kevin Stewart, who will join a roster of experts from the insurance and finance industry.

For more information, or for details on how to register please contact Vicky Tailby at [email protected] or visit our website www.aon.com/guernsey. We hope to see you there!

Marston’s CEO Pulls a PintAon Guernsey was pleased to meet with Marston’s CEO Ralph Findlay, who visited Guernsey last year where Marston’s captive insurance company is based. Marston’s is the UK’s leading independent brewing and pub retailing business.

Whilst initially over on the island to attend a board meeting, Ralph still found time to ‘pull a pint’ at Guernsey’s premier public house, ‘The Cock and Bull’, which sources the great majority of the various real ales it sells from Marston’s. Ralph is pictured with landlord and owner, Steve Taylor.

Aon Guernsey, is realising the benefits of its graduate training investment following the recruitment of four local graduates over the past 15 months.

Harriet Walden originally trained on Aon’s Graduate Scheme in 2008 and moved to London with the firm before returning to Aon Guernsey in June 2012 following a period spent travelling.

Chris Retz joined in September 2011 and has returned to Guernsey following a successful 6 month secondment spent within Aon’s Malta Office.

Vicky Tailby joined the Company in May 2012 as part of the Marketing and Business Development Team, a role in which she can apply the skills she acquired through gaining her BA (Hons) degree in Marketing Management from Manchester Metropolitan University.

Helen Sinclair is the latest addition to the firm’s graduate cohort having joined Aon in September 2012 following her graduation from Swansea University. Helen will take her six month’s overseas placement in Malta in March this year.

Graduates on the scheme commence with an induction in London followed by a fully supported programme of work experience and study leading towards a professional qualification up to Chartered status. A significant feature of the programme is the six month’s overseas secondment in one of Aon’s 28 captive and insurance management jurisdictions worldwide.

Harriet Walden said of her time at Aon, “I recently returned to Guernsey and the Aon office, after spending a year travelling the world. My new role in the White Rock team particularly appealed as I could draw on both my professional experience from my Aon graduate training and from my BSc (Hons) Meteorology degree studies.

I first joined Aon in 2008 on the Global Risk Consulting Graduate Programme. It was an exciting graduate scheme offering the opportunity to work in Guernsey as well as undertaking secondments in Dublin and London. This broad experience has developed my working knowledge and my network of colleagues in different areas of business, both of which have aided my professional studies towards ACII qualification.”

To find out more about our graduate and apprenticeship programme, please go to www.aongraduates.co.uk or contact [email protected].

Introducing the Graduates

Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurancebrokerage, and human resources solutions and outsourcing services. Through its more than 62,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovativeand effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon’s global partnership and shirt sponsorship with Manchester United.

© Aon plc, 2013. All rights reserved.

Aon Insurance Managers (Guernsey) Limited is licensed and regulated by the Guernsey Financial Services CommissionRegistered Office: Maison Trinity, Trinity Square, St. Peter Port, Guernsey, GY1 4ATRegistration Number: 5821FP7050

Paul Sykes Managing Director +44 (0) 1481.707901 [email protected]

Stuart Brown Executive Director +44 (0) 1481.707932 [email protected]

Diana Knott Executive Director +44 (0) 1481.707923 [email protected]

Derek Millar Executive Director +44 (0) 1481.707966 [email protected]

Graham Powell Executive Director +44 (0) 1481.707926 [email protected]

John Rowson Executive Director +44 (0) 1481.707954 [email protected]

Simon Walker Executive Director +44 (0) 1481.707974 [email protected]

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