Element Re Announces Deal
Element Reinsurance Ltd., a Hamilton, Bermuda-based provider of weather risk management products, has completed its first international transaction, with German utility Elektrizitatswerk Dahlenburg AG.
The deal is one of the first to help to protect business revenues against rainfall instead of against temperature, a more common index in risk management programs for utilities, the company said.
Under the terms of the transaction, Element Re, a subsidiary of XL Capital Ltd., will provide financial protection to the utility against excessive rainfall during summer months.
"This deal demonstrates that weather risk management can be used to help mitigate a wide variety of risks," said Lynda Clemmons, president of Element Re. "It's also exciting for us as a company because it signals our first foray into Europe, a market that's maturing rapidly and in which we expect to be very involved."
The deal was structured around rainfall because of its influence on the utility's revenue, Element Re said in a statement.
Herr Bannehr, CEO of Elektrizitatswerk Dahlenburg AG, said: "Many of our customers are farmers who use electric power to pump water during periods of insufficient precipitation. The power we supply to them is an important part of our total revenue projection."
"During periods of excessive rain, Elektrizitatswerk Dahlenburg AG now has protection against declining revenues caused by decreased power demand," said Hans Esser of FinanzTrainer.com, the German consultancy providing risk management advice to the utility.
The deal was brokered by Spectron, the London-based energy broker.
Armed-Conflict Risks Covered
With increased tension in the Middle East, banks and other companies investing there can reduce the risk of damage to corporate performance caused by armed conflict with a new insurance policy from Lloyds of London.
The policy protects companies active in the region and other areas of unrest against the effects of war and other political violence on their investments, property and personnel.
After learning that many of their clients and other companies are nervous about the security situation in Israel, the political risk team at MAP Underwriting at Lloyds developed the new policy to help answer these concerns.
It combines a number of covers that would normally be excluded from standard insurance–especially those losses arising from acts of war.
"It is clear that Israel has great economic potential, but investors are understandably worried about the political situation," said Ben Garston, political risk underwriter at MAP.
"This policy is intended to take away much of that political uncertainty, and so enable businessmen to concentrate on more mainstream commercial considerations," he said.
XL Brockbank Exits Sports
Lloyds Managing Agency, XL Brockbank Ltd., has closed its sports, leisure and entertainment account. The move follows a review, which identified that the account did not fit with its corporate strategy going forward.
As a result Mark Filipek, Class Underwriter for Sports, Leisure and Entertainment has left the company. His deputy, Lee Davis, will remain to run-off the account.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, June 11, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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