Bermuda-incorporated entities A listing

2018. June 19. Multinational companies’ practice of booking profits in low-tax jurisdictions like Bermuda to avoid high corporate taxes elsewhere may become more lucrative as a result of the US tax reform. That was the finding of a Reuters report that highlighted pharmaceutical giant AbbVie’s use of Bermuda as home for most of the patents for its best-selling drug, Humira. Before the US reform, backed by Republicans including President Donald Trump and enacted at the end of last year, companies like AbbVie had to pay 35 per cent on profits they brought home from abroad. Under the new rules, the overall corporate tax rate has been slashed to 21 per cent, and income from overseas is taxed at a much lower rate, as low as 10 per cent. The change to a territorial tax system means that only profits of US subsidiaries are subject to US tax at the full rate. Richard Gonzalez, AbbVie’s chief executive officer, told investors earlier this year that the Lake Bluff, Illinois-based drug maker expected its tax rate to fall to 9 per cent from around 22 per cent in recent years. Many other companies who use this similar profit-shifting strategy, known as transfer pricing, will benefit similarly — despite the stated intention of the authors of the Tax Cuts and Jobs Act to dissuade companies from shifting profits from US sales overseas. Transfer pricing is particularly popular with drug makers. Typically it involves patents for drugs being owned by a subsidiary in a low-tax or no-tax domicile. Then royalty fees are paid to the subsidiary from other divisions of the company generating sales elsewhere. Among companies that have been highlighted in international media for using Bermuda in a similar fashion are Google, Forest Laboratories and Nike. While the island’s international reputation is damaged by this type of tax avoidance, Bermuda gains no taxes from it and usually the subsidiaries based here employ no one. Bob Richards, the former finance minister, in his February 2017 budget, singled out international companies without a physical presence for a hefty permit fee increase — from $1,995 to $25,000 — and signaled that the island did not place a high value on them. As MPs backed the legislation in the House of Assembly, Mr Richards said it was expected that some companies would “pack up and leave”. He added: “Those that really want to be here are going to have to pay. Those that don’t — see you later.” Reuters said its analyzed 88 of the patents for Humira, a drug used for the treatment of rheumatoid arthritis, and found that two-thirds of those patents were assigned to this Bermuda subsidiary. Most of those patents were developed by teams of researchers entirely or somewhat based in the US, according to details in patent filings. Reuven Avi-Yonah, director of the International Tax at the University of Michigan Law School, told Reuters: “This is the blueprint. The illusion that you would see more patents kept in the US [under the new tax law] is unreal as long as there are places you can keep them offshore where you pay zero.” Despite recording more than half its $28.2 billion in 2017 sales in the US and basing most of its research facilities there, the company has never reported a profit in its home country. In 2017, AbbVie reported foreign earnings before income tax of $10.4 billion on international revenue of only $9.97 billion. Yet, between 2013 and 2016 AbbVie had to pay around $1 billion a year of taxes in the US, when it took the profits reported by foreign subsidiaries home to help cover expenses from its US operations. Democrats in the US Congress are looking at how the new tax law actually encourages companies to use patents to shift profits overseas. Ron Wyden, an Oregon senator, plans to publish a report later in the summer that will partly refer to this issue. “The US shouldn’t get suckered into a race to the bottom with a bunch of no-tax, resort-lined islands to please the tax avoidance industry and their lobbyists,” Sen Wyden, who is the Senate Finance Committee Ranking Member, said. Other US companies likely to benefit from the territorial tax system include Pfizer, Expedia Group, Boston Scientific, Synopsys and Microsoft. Reuters reported that Microsoft and Synopsys have both experienced eight-year runs of reporting around half their sales in the US but less than a quarter of their profits there. The Tax Cuts and Jobs Act did include anti-tax avoidance measures. For example, the new Global Intangible Low Tax Income provision, if a company generates untaxed profits in a low-tax jurisdiction, it will be liable to have that profit taxed as though it arose in the US. However, the effective tax rate that will apply is half the US tax rate of 21 per cent, or 10.5 per cent. And if a company reports a loss in the US, this can be set against the Gilti provision, potentially reducing the tax liability further.

6/2/1993. World HQ in Bermuda. Ace Building, 30 Woodbourne Avenue, Hamilton HM 08. Phone 295-5200. Fax 295-5221. P. O. Box HM 1015, Hamilton HM DX, Bermuda.  

2017. April 20. The start of the Ace story in Bermuda has been marked with a special plaque at the Hamilton Princess. The founding chairman of the firm John Cox wrote the company’s first insurance policy in room 348 at the hotel in 1985. Ace, now Chubb, has since grown to be the largest publicly traded property and casualty insurance company in the world. Executives from the hotel and Chubb unveiled the plaque on Wednesday. Guests included Eric Dibkin, director of insurance and risk management at Merck & Co, a US pharmaceutical company, which held Ace’s first policy, which was numbered 348 after the room number. Joseph Clabby, division president of Chubb Bermuda, said: “Room 348 of the Hamilton Princess has always held a special place in our company’s history as our first, albeit temporary, headquarters. “We are honored to be joined here again by our first policyholder, many of our earliest employees and colleagues from the broking community to commemorate John Cox, his vision and achievements.” Mr Cox died in February aged 84 and is regarded as a giant in the property and casualty insurance industry. A company spokeswoman said: “Not only did he shape Ace in its formative years, he also helped to establish Bermuda’s leading role in the international insurance and reinsurance industry.” Allan Federer, general manager of the Hamilton Princess, said: “We are pleased to commemorate the room where Ace wrote its first policy, a legacy that will always be an important part of Bermuda’s history.”

Regional headquarters are in London, including Lloyd's Syndicate 2488, Stamford and Dublin. The original insurance company of the ACE Group of Companies, provides insurance protection for risks worldwide. Established in 1985 by a consortium of 34 Fortune 500 companies to provide excess liability and directors &officers insurance when capacity was scarce. Today, is a leading provider of high-level excess liability, directors and officers, professional liability and property insurance. Through its subsidiaries, ACE Bermuda also offers political risk coverages and captive programmes.

AIG, New York

American International Group (AIG) Bermuda headquarters.

American International Building, 27 Richmond Road, Hamilton HM 08. Phone (441) 295-2121. Fax (441) 292-6735. Very prominent in Bermuda with a massive Bermuda-incorporated corporate offshore presence as shown in the AIG companies (corporations) listed below. Second-largest single user and registrant of Bermuda's offshore companies, second only to the Chevron Corporation. World's largest insurer by market value, with a $100+ billion balance sheet. Founded in Shanghai, China, in 1919. New York-headquartered at Maiden Lane, a block from Wall Street. On 16th September 2008 AIG was rescued after the US Federal Reserve extended an $85bn bridging loan to the troubled insurance giant that provides mortgages insurance and more to most banks in the USA and many abroad. The Fed, after meeting with senior officials of the US Treasury, Senate and Congress, offered the money to the corporation in return for it pledging all of its assets. In addition, the Fed  received warrants which gave it an ownership stake of almost 80pc. In March 2009 AIG announced a huge loss, highest in US corporate history, of $61.7 billion for the fourth quarter of 2008 on Monday. The US Government provided another $30 billion of aid in its third bailout of the company, now totaling $180 billion, since September 2008. The latest bailout increased the government's commitment to keeping AIG on life support, and avoided any crippling credit rating downgrades that might have forced AIG to come up with billions of dollars it might not have had. Most of the loss stemmed from big write-downs tied to credit default swaps and other toxic debt. AIG built up its exposure to swaps earlier this decade, when long-time CEO Maurice (Hank) Greenberg and then Martin Sullivan ran the company. Briefly changed its name to Chartis, now back to AIG, following its return to health, profitability and hugely less debt to Uncle Sam. Employs around 200 people in Bermuda. First major insurance company to locate in Bermuda and in the 1960s was allowed to have a separate agency of the American Life Insurance Company, an AIG subsidiary, active in the Bermuda marketplace. 

2020. February 26. American International Group Inc has entered into an accelerated share repurchase agreement with Citibank, N.A. to repurchase $500 million of AIG’s common stock. It is part of AIG’s existing share repurchase authorization of $2 billion announced a year ago. AIG has offices in Bermuda, and its chief executive officer is Bermudian-born Brian Duperreault. Mr Duperreault said: “We remain committed to delivering long-term sustainable value to all of our stakeholders. While AIG 200, investing in our businesses and reducing leverage are key components of our capital management strategy, we continue to be mindful of the importance of deploying capital through a balanced approach that also includes returning capital to investors. As a result, in addition to our recently announced redemption of $350 million of 4.35 per cent callable notes due 2045, we are proceeding with this $500 million share buyback.”

2018. November 2. NEW YORK — Investors aren’t blaming Brian Duperreault for the forces of Mother Nature. American International Group shares surged as much as 8.1 per cent yesterday, the biggest increase in almost seven years, as the insurer showed improvement in a key metric for chief executive officer Duperreault’s turnaround strategy. That overshadowed a surprise third-quarter loss from natural catastrophes in Japan and the US. The results reported on Wednesday evening showed that AIG had fallen short of analysts’ expectations for a fifth straight quarter. The adjusted loss was 34 cents a share, while analysts had been expecting a profit of nearly six cents. Duperreault, who joined last year as CEO, has been given the task of restoring confidence in a company that had suffered losses and an exodus of talent. He’s declared 2018 the “year of the underwriter” with a goal of having AIG post an underwriting profit by the end of the year. He reiterated that pledge after announcing third-quarter results. “We are making progress towards positioning AIG for the long-term,” Duperreault said yesterday on a conference call discussing the results. “We continue to work deliberately and thoughtfully and with a sense of urgency to improve our core underwriting capabilities, reduce volatility, deliver an underwriting profit.” A ratio that shows the amount of losses that AIG has to pay out relative to the premiums it earns on policies improved to 63.6 per cent in the company’s general insurance business, which offers property-casualty coverage. That was a “long-awaited” improvement, according to Keefe, Bruyette & Woods analyst Meyer Shields. The change was one of the biggest positives in AIG’s third-quarter results, Wells Fargo & Co analyst Elyse Greenspan said on Wednesday in a note to clients. AIG shares rose as high as $44.63 earlier yesterday, their biggest increase in intraday trading since the end of November 2011. They pared gains to close on $43.12, a gain of 4.4 per cent. Executives laid out further actions, including tweaking reinsurance coverage and expanding the duties of AlphaCat CEO Lixin Zeng to help with underwriting in the general insurance business. The comments from AIG’s new chief actuary for general insurance, Mark Lyons, added to the positive nature of the conference call, given his endorsement of AIG’s underwriting actions despite Lyons being a “self-described cynic”, Shields said. Still, some analysts expressed scepticism about other aspects of the earnings report. Other units, including the life and retirement business, reported slightly weaker-than-expected results, according to RBC Capital Markets analyst Mark Dwelle. AIG also added to reserves tied to losses from last year’s California wildfires, a move that might “bring back the question of turnaround strategy,” according to Buckingham Research Group’s Amit Kumar. Hurricane Florence and the typhoons in Japan hit AIG harder than its rivals. The insurer reported $1.6 billion in catastrophe costs for the period, the midpoint of the range AIG had announced last month. The loss was about three times larger than initial forecasts from Morgan Stanley analysts. Old disasters also came back to haunt AIG. The insurer added $170 million to reserves in the third quarter, as costs from last year’s wildfires in California climbed higher than the insurer anticipated. Duperreault said the insurer remains on track for a key metric in his turnaround effort: an underwriting profit by year-end. In reporting its earnings, AIG broke out the catastrophe costs from one of its newest additions, Validus. That unit’s losses from storms totaled about $200 million and were mostly tied to Japan. Private-equity returns are providing a lift to insurers such as AIG and Travelers. They helped fuel a 1.4 per cent gain in AIG’s net investment income, which includes legacy insurance portfolios, to $3.4 billion.

2018. May 4. NEW YORK (Bloomberg). American International Group shares dropped to the lowest level in almost two years after first-quarter profit declined and fell short of analysts’ estimates. Insurance results were hurt by catastrophe costs and a decline in net premiums written, the company said. AIG has said it’s making progress in its turnaround, but investors aren’t seeing the results they want yet. Chief executive officer Brian Duperreault, who’s been in charge about a year, has re-organized the company, replacing senior executives and announcing a $5.56 billion deal to buy Bermudian-based reinsurer Validus Holdings Ltd to expand abroad and enter new businesses. AIG expects to report an underwriting profit by the end of this year, Duperreault said in a conference call yesterday. “We need to get to an underwriting profit in this place and we’re going to do it,” he said. The combined ratio for general insurance was 103.8 per cent, meaning AIG lost 3.8 cents for every premium dollar after claims and expenses. Duperreault said getting the combined ratio under 100 per cent would produce a good return on equity. AIG fell 5.3 per cent to $51.94 in New York yesterday. The shares had declined 8 per cent this year through Wednesday. AIG’s net income fell to $938 million, or $1.01 a share, from $1.19 billion, or $1.18, a year earlier. Adjusted after-tax income per share was $1.04, missing the $1.25 average estimate of 14 analysts surveyed by Bloomberg. Book value was $69.95 at March 31, down from $72.49 as of December 31. The underwriting loss was $251 million.

2018. February 12. American International Group says it expects its new Bermuda-based run-off company to bring jobs to the island. The new entity, known as DSA Reinsurance Company, will manage four-fifths of AIG’s legacy business and will be backed by $40 billion of invested assets. DSA Re will manage the group’s life, as well as property and casualty run-off business, with total reserves of about $37 billion. Asked about the potential for new jobs, an AIG spokesman told The Royal Gazette: “As the functional build-out of DSA Re continues, there will be an increase in the number of employees based in Bermuda.” New York-based AIG has had a presence in Bermuda for 70 years and is based in the American International Building on Richmond Road. Last month, the company announced it agreed a $5.6 billion all-cash deal to buy Bermudian reinsurer Validus Holdings, which operates out of the neighboring building, and will further increase the group’s Bermudian interests. AIG has been led since May last year by Bermudian-born chief executive officer Brian Duperreault, who has spent a large part of his career in the Bermuda insurance market, with Ace Group and later with Hamilton Insurance Group, a company he founded and led. After AIG spent most of the past decade shedding assets and paying off a massive US government bailout that saved it from collapse after the 2008 global financial crisis, Mr Duperreault has vowed to bring back growth. An AIG spokesman said DSA Re would be managed in line with the Bermuda head office requirements. He added: “The Bermuda-based insurance businesses of AIG each have distinct business models, and AIG believes it will derive better value from those businesses by allowing them to operate largely independently of each other, to compete with their respective peers and focus on their respective markets. Over time, there may be some sharing of back-office resources and facilities in Bermuda where it makes economic and strategic sense.” He added that AIG’s Legacy Team, established in 2016, and their support functions would be responsible for managing DSA Re. Selection of Bermuda as the domicile for DSA Re came after AIG had reviewed various potential jurisdictions and structures, the spokesman said. Bermuda, he added, had emerged as a logical choice for several reasons:

• Bermuda is the domicile of many key run-off comparables.
• Bermuda is one of the few jurisdictions that allows for life and non-life reinsurance liabilities to be housed in a single entity, allowing efficient management of liabilities on a portfolio basis and benefiting from diversification of the business lines.
• Credibility and reputation of the Bermuda Monetary Authority as insurance regulator.
• AIG’s current and historical presence in Bermuda.

The news of DSA Re’s formation came in AIG’s earnings statement for the fourth quarter of last year, which showed a loss of $6.7 billion. However, the net loss was roughly equivalent to a one-off charge related to US tax changes, while the underwriting loss at AIG’s North American business narrowed 94 per cent to $316 million. AIG reported $762 million in catastrophe losses during the fourth quarter and a record $4.2 billion for the whole of 2017. Sid Sankaran, AIG’s chief financial officer, said in a conference call with analysts last Friday: “We formed a Bermuda-domiciled legal entity, named DSA Reinsurance Company Ltd, to reinsure our legacy life and non-life run-off lines. By combining these run-off lines into a single well-capitalized legal entity, we were able to achieve operating synergies and strong diversification in assets. Legacy remains non-core and will be managed by a team with extensive run-off expertise.”

2017. November 2. Catastrophe losses of $3 billion before tax, caused primarily by hurricanes Harvey, Irma and Maria, impacted American International Group’s third-quarter earnings. The company reported a net loss of $1.7 billion, or $1.91 per share. That compares with a $462 million profit in the same period last year. After-tax operating loss was $1.1 billion, or $1.22 per share. Brian Duperreault, president and CEO, said: “In the third quarter, the insurance industry witnessed unprecedented catastrophic events. AIG’s resilience in the wake of these events reflects the strength of our balance sheet and capital position. “I am extremely proud of our response and commitment to our customers, as well as the assistance our colleagues provided to the communities most affected by these events. We also strengthened reserves based on additional information that became available in the third quarter through our quarterly reserve review, which primarily related to the 2016 accident year. We are laser focused on commercial underwriting and taking actions to enhance underwriting tools and, more importantly, our talent base — so much so that I have declared 2018 the ‘Year of the Underwriter.’ With this increased focus on underwriting, and our recently announced changes to AIG’s operating structure and executive leadership, we will continue to execute on our strategy to better position AIG for long-term profitable growth.”

2017. June 30. Acquisitions are on the agenda for American International Group under new chief executive officer Brian Duperreault. Speaking after the company’s annual shareholders meeting in New York on Wednesday, Mr Duperreault said: “I’d love to find great additions to the company. I think the important thing is that we look at companies that can make us better.” He said he might scale back share buy-backs and use excess capital for acquisitions. That would be a change of direction for the company, which last year embarked on a two-year plan to buy back $25 billion in shares by the end of 2017. The scheme, which was instigated by former CEO John Hancock, has returned $18.1 billion to date. Bermudian-born Mr Duperreault was appointed CEO of AIG in May. He previously worked for the company between 1973 and 1994, before going on to lead Ace Ltd, now Chubb. After retiring in 2006, he returned to head Marsh & McLennan Companies, the second-largest insurance broker in the world. Then in 2013, he founded Bermudian-based Hamilton Insurance Group with New York-based Two Sigma Investments. His extensive background in the sector, and his long association with AIG, made him the favourite choice to lead the giant insurance company as it continues to recover from the impact of the global financial crises of 2008.And Mr Duperreault’s popularity with shareholders was clearly indicated in the result of the shareholders’ vote for the election of directors on Wednesday. He attracted the most votes in favour, some 743 million, and the least votes against at 467,732.AIG has a global workforce of about 56,000 and a market capitalisation of $58.5 billion.

2017. May 18. A subtle pattern of symmetries has been created by this week’s appointment of Brian Duperreault as chief executive officer of American International Group. Not only has Mr Duperreault, 70, come full circle in his career, having entered the insurance sector in 1973 at AIG, he is now leading the company that seven decades ago was the first international insurer in Bermuda. The company was a pioneer for Bermuda’s subsequent emergence as one of the world’s major insurance and reinsurance hubs. Now, just as AIG played such a key role in bringing a prosperous direction to the island’s economic destiny many years ago, it is a Bermudian who has stepped up to help AIG through a difficult period. By further coincidence, Mr Duperreault was born in Bermuda in 1947, the same year that American International Company incorporated on the island. AIC was a component of what became AIG, and handled the non-US business of the American International group. Although born in Bermuda, Mr Duperreault was raised in Trenton, New Jersey, the only child of a single working mother. He started work for AIG and its affiliates in 1973 and rose through the executive ranks, being viewed as a potential future CEO. However, in 1994 he joined Ace, now Chubb, in Bermuda — fulfilling a desire to reconnect with the island, albeit after 47 years. When Mr Duperreault was approached for the CEO role at Ace he already had a Bermudian passport and status, but he did not reveal those facts until he had secured the post as he wanted the appointment to be made solely on merit. At the time, Ace was a relatively narrowly focused Bermudian-based insurer. During his decade at the company, Mr Duperreault transformed it into a globally significant insurer. After his ten-year tenure as CEO, he remained for a further two years as non-executive chairman before retiring in 2006. Two years later he was approached to come out of retirement and lead Marsh & McLennan Companies, the second-largest insurance broker in the world. Marsh was saddled with a series of problems, including legacy issues, excess capacity, lawsuits and organisation woes. Mr Duperreault accepted the challenge and during his four years as CEO reorganized and turned the company around. He retired for a second time in 2012, but it was another short hiatus. The following year he founded Bermudian-based Hamilton Insurance Group with New York-based Two Sigma Investments. He was chief executive officer and chairman. Then on Monday, he was appointed CEO of AIG, 44 years after first working for the company. AIG has a global workforce of about 56,000 and a market capitalisation of $57 billion. It has maintained a strong presence in Bermuda since the incorporation of AIC in 1947, and has offices on Richmond Road, Pembroke. AIG hit rocky ground in the early 2000s and teetered on the brink of collapse as a result of the global financial crisis of 2008. It received a $185 billion bailout from the US government, which was fully repaid by 2012. However, the pace and nature of the company’s slow recovery has concerned investors, including billionaire activist investor Carl Icahn. In Marsh, Peter Hancock, CEO of AIG, announced plans to resign. This sparked a hunt for a replacement. Mr Duperreault, as one of the industry’s most effective and highly regarded leaders, was immediately included on a speculative list of possible candidates. He stood out with his impressive track record at Ace, Marsh and Hamilton, and his key role with AIG from 1973 to 1994 as it became a global powerhouse. His appointment this week to lead AIG was broadly welcomed. Mr Icahn, in a tweet, said: “Very pleased the AIG board is finally making some of the much needed changes we’ve been advocating the last 18 months.” While Douglas Steenland, AIG chairman, said: “He is a hands-on leader who has consistently delivered strong bottom line results.” And Mr Duperreault, who is also part of the team spearheading the redevelopment of Morgan’s Point, has made clear his intentions at AIG. As his insurance industry career came full circle on Monday, he said: “It is a privilege to return and lead AIG. I look forward to building on AIG’s nearly 100-year heritage as one of the world’s leading insurers for its next century.” 

2017. May 16.  NEW YORK (Bloomberg) – American International Group will give Brian Duperreault $12 million in cash, 1.5 million stock options and an annual pay package valued at $16 million to turn around the company as its seventh chief executive officer since 2005. AIG will also pay Mr Duperreault’s previous employer, Bermudian-based Hamilton Insurance Group, as much as $40 million over two years to waive their former CEO’s non-compete agreement, according to a regulatory filing yesterday. Mr Duperreault, 70, spent time at AIG earlier in his career as a deputy to Maurice “Hank” Greenberg, who built the company into the world’s largest insurer before departing in 2005. Mr Duperreault will begin immediately, AIG said in a statement. He succeeds Peter Hancock, who said in March he would leave because of insufficient support from investors such as activist Carl Icahn. The new CEO will seek to bring stability to AIG, which has endured the departures of top executives, higher-than-expected claims costs and four losses in seven quarters. Before joining Hamilton, he was CEO of insurance broker Marsh & McLennan Cos, where he helped restore confidence of investors and clients. He also led Ace Ltd, which is now known as Chubb Ltd and is one of AIG’s largest rivals. “It is extremely gratifying that the activist strategy continues to create value for all shareholders,” Mr Icahn said in a Twitter post yesterday, adding that he was pleased AIG was making “much needed” changes he’s been advocating. The annual pay comprises $1.6 million in salary, a $3.2 million target bonus and an $11.2 million long-term incentive consisting of restricted shares, some of which are linked to performance. Taken together, that’s 23 per cent more than Mr Hancock’s $13 million target annual pay. Of the 1.5 million options, Mr Duperreault will get a third within three years and the remaining will vest in increments if AIG’s share price exceeds hurdles set $10, $20 and $30 above its current level. AIG also agreed to pay about $110 million to acquire a US operation from Hamilton, which includes a $30 million premium to the book value of the Bermudian-based firm. AIG will allow Hamilton the chance to collect about $150 million of reinsurance premiums over six years. AIG said it will work with hedge fund firm Two Sigma Investments, which already works with Hamilton, to create a “next generation insurance platform” for Duperreault’s new company. Mr Duperreault helped create Hamilton in 2013 with backing from principals of Two Sigma. Former Citigroup CEO Sanford “Sandy” Weill had a stint as Hamilton’s chairman and remained a shareholder when he stepped down from the board. Mr Duperreault “has an excellent grasp of the global insurance industry and he has proven to be a real innovator over many decades,” Weill said in an e-mail. “He views change as creating opportunities, and I really believe that we will see good things from AIG as a result of Brian’s leadership.” Hamilton focused on data analytics with Two Sigma to help decide which insurance risks to take, and how much to charge for them. The company formed a venture last year with AIG to provide coverage to small and medium-size businesses. Mr Duperreault will seek to improve return on equity, and also boost AIG’s stock price. Shares of the company have slumped 6.6 per cent this year, while the S&P 500 Index has climbed 6.8 per cent. He will need to decide the right size for AIG, which has been shrinking for years through asset sales. Icahn sought a breakup when he disclosed a stake in AIG in late 2015, and the billionaire has representation on the insurer’s board. Chairman Doug Steenland said earlier this year that a split would compromise the company’s global reach, and that the plan is to continue returning capital to shareholders and cutting expenses.

2017. May 15. Hamilton Insurance Group founder Brian Duperreault has written to his staff after leaving to take over as president and CEO of insurance firm AIG. Mr Duperreault told Hamilton employees that he was not leaving because there were problems at Hamilton — but because there were problems at AIG he was confident he could help fix. He said: “Hamilton was founded on a bold idea whose time had come. As other industries leapt ahead in their pursuit of value in data and technology, insurance lagged behind. It was only a matter of time before someone disrupted the industry. Hamilton’s investors believed that with the right underwriting talent and with Two Sigma’s data science prowess, we could be the ones to do it. And we’ve been proven right.” Mr Duperreault said Hamilton had set up “a nimble, client-focused company widely admired — and in many cases, envied — by the markets in which we do business. In the US, we were the drivers behind the establishment of Attune, a groundbreaking platform for small commercial insurance. In Bermuda, we’re redefining what it means to be a Tier 1 company. At Lloyd’s, we came to market with a full suite of product offerings faster than any other syndicate, leveraging technology to strip out much of the inefficiency that plagues Lloyd’s. So I know that Hamilton is in great shape. Some of the best minds in the business work here. There’s an energy that’s palpable when you visit our offices. If you ask me why I’m leaving, it’s not because there are issues at Hamilton. I’m leaving because there are issues at AIG. And I think I can help fix them, in no small part by unlocking the potential represented by the Hamilton/Two Sigma/AIG partnership already in place at Attune.” And Mr Duperreault said the move would be “transformative” for the group he founded nearly four years ago. He explained: “As part of the expanded partnership with AIG and TSIQ, Hamilton will play a significant role in leading the data-driven evolution in underwriting. That’s what we had in mind when we launched this company just over three years ago.” Mr Duperreault added: “In closing, I want you to know how proud I am of what we’ve done together. I know the best is yet to come. I look forward to the opportunities we’re going to have to work together and I thank each and every one of you for your commitment to Hamilton’s present and to its future.”

2017. May 15. Industry veteran Brian Duperreault has left island-based Hamilton Insurance Group to become head of American insurance giant AIG. Douglas Steenland, chairman of AIG, said: “Brian is uniquely qualified to lead AIG at this important time. He is a hands-on leader who has consistently delivered strong bottom-line results.” Mr Duperreault’s successor as chairman of Hamilton, William Freda, said: “It is with regret that we have accepted Brian’s resignation from Hamilton. He is an industry icon with a well-deserved reputation for visionary leadership. We have had the privilege of experiencing this first-hand at Hamilton.” Mr Duperreault, 70, is a former lieutenant and protégé of ex-AIG CEO Maurice “Hank” Greenberg and is recognized for his experience in turning around struggling companies. He will replace Peter Hancock as AIG CEO, who was almost three quarters through a plan designed to turn the ailing giant around after a series of poor results. Mr Duperreault moved up through the ranks of AIG early in his career, leaving in 1994 to build Ace, now Chubb, from a small operator into a global operation. Mr Duperreault, who was also CEO of Hamilton, will be replaced in that role by David Brown, the former CEO of Flagstone Re. Mr Freda said: “We have in David an experienced industry CEO who has been with the company since inception. He is an ideal resource to lead Hamilton through this transition. With a superlative management team, and a board of directors representing a cross section of disciplines from the insurance, finance and technology industries, we are well prepared to continue to execute our mission of writing the future of risk. In addition, our relationship with Two Sigma, our technology and investment partner, has been an extremely productive one since Hamilton’s launch at the end of 2013. Our experience with Attune, the technology-enabled company established with Two Sigma and AIG, has demonstrated the huge potential in applying data science and analytics to transform the underwriting process. We are all excited about the potential for ongoing growth and development at Hamilton.” Mr Duperreault, who founded insurance and reinsurance company Hamilton four years ago after a long career in the sector, had been touted as the new CEO of AIG for some time. AIG’s shares climbed 1.4 per cent yesterday to $61.82 after the news was announced. Mr Duperreault took charge at Marsh & McLennan Companies in 2008 and launched a successful turnaround after the firm had been hit by reputational problems and lost business after then-New York Attorney General Eliot Spitzer alleged it had rigged bids for insurance contracts. Marsh paid an $850 million civil penalty in 2005 to settle the claims. Mr Freda worked for Deloitte on a wide range of multinational engagements for 40 years through 2014. Mr Brown was CEO of Flagstone Reinsurance Holdings from its foundation in October 2005 until November 2012. He previously served as chief executive of Centre Solutions from 1994 until 1997. Before joining Centre Solutions, he was a partner with Ernst & Young. He has been chairman of the board at the Bermuda Stock Exchange since 2000.

2016. May 3. NEW YORK (Bloomberg) — American International Group, the insurer that’s shrinking under pressure from activist shareholders, posted a third-straight unprofitable quarter on losses from hedge funds and declines in the value of other investments. The first-quarter net loss of $183 million, or 16 cents a share, compares with profit of $2.47 billion, or $1.78, a year earlier, the New York-based company said yesterday in a statement. Operating profit, which excludes some investment results, was 65 cents a share, missing the $1 estimate of 20 analysts surveyed by Bloomberg. Chief executive officer Peter Hancock is reshaping the insurer’s portfolio, expanding bets on highly rated bonds and property lending while scaling back on hedge funds after the company was burnt on those investments. AIG also is among insurers that have large holdings of bonds tied to energy and mining, assets that were pressured by declines in commodities prices. “Results were impacted by market volatility on investments,” Hancock said in the statement, which also highlighted his efforts to cut costs and simplify the company. “By transforming AIG into a leaner, more profitable and focused insurer, we can leverage our risk expertise.” The loss on hedge funds widened to $537 million from $349 million in last year’s first quarter. Results also included $1.11 billion in net realized losses, compared with a gain of $1.34 billion in the first three months of 2015, according to AIG’s statement, which didn’t include a breakdown of impairments. The insurer dropped 2.8 per cent to $55 in extended trading in New York. AIG had slipped 8.7 per cent this year compared with the 1.8 per cent climb in the S&P 500 Index. Results were released after the close of regular trading. AIG also intends to exit personal insurance in dozens of countries after announcing deals to scale back in Taiwan and sell operations in Panama, El Salvador and Guatemala, Hancock said in his annual letter in March. The CEO also announced a reinsurance agreement that month in which Swiss Re agreed to take on some of AIG’s risks tied to casualty policies. The changes, along with job cuts, are designed to improve return on equity in the long run. Activist investor Carl Icahn has mocked Hancock for failing to generate a 10 per cent ROE. AIG agreed in February to appoint hedge fund manager John Paulson and a representative of Icahn’s firm to the insurer’s board. The normalized ROE, which excludes some one-time items, was 8.9 per cent in the first quarter, compared with 7.8 per cent a year earlier. Book value, a measure of assets minus liabilities, climbed to $78.28 a share from $75.10 at the end of last year, helped by stock repurchases. Profit at the commercial insurance operations, run by Rob Schimek since his promotion in December, fell 39 per cent to $889 million. Kevin Hogan’s consumer business slipped 17 per cent to $788 million. Both divisions were hurt by deteriorating investment results. At the largest segment under Schimek, property-casualty coverage, income slipped 38 per cent to $720 million. Policy sales fell 15 per cent to $4.31 billion on the Swiss Re deal. The combined ratio improved to 96.9, meaning the insurer had an underwriting profit of 3.1 cents on every premium dollar, after paying claims and expenses. That compares with a ratio of 97.1 a year earlier. Hancock has planned some initiatives for growth, including a joint venture announced last week with Hamilton Insurance Group and hedge fund firm Two Sigma Investments to sell coverage to small- and mid-sized enterprises. The goal is to better use data analytics when underwriting insurance policies. At the mortgage insurer, which guards lenders against borrower defaults, profit rose 12 per cent to $163 million as claims costs declined. Hancock has filed for an initial public offering to sell a stake in the United Guaranty mortgage insurer, and plans to eventually exit the operation. At the other unit under Schimek, institutional markets, profit plunged to $6 million from $147 million, hurt by investment results. At the retirement operation, the main segment under Hogan, profit slumped 42 per cent to $461 million, driven by hedge fund losses. Life insurance fell 39 per cent to $105 million. AIG said personal insurance generated $222 million, compared with $26 million loss a year earlier. The improvement reflects lower expenses and better underwriting results tied to US property coverage.

• Airis Aerospace has a website at airisaero.com

2018. December 13. Enstar Group Ltd is partnering with German insurance giant Allianz and investment manager Hillhouse to launch a new Bermuda re/insurer. Enstar, a Bermuda-based company which specializes in acquiring and managing companies and portfolios in run-off, will own nearly half of the new company, called Enhanzed Reinsurance Ltd. The new Class 4 and Class E company will reinsure life, non-life run-off, and property and casualty insurance business, initially sourced from Allianz SE and Enstar. Enstar, Allianz and Hillhouse affiliates have committed a combined total of $470 million to Enhanzed Re. Enstar will own 47.4 per cent of the entity, with Allianz owning 24.9 per cent, and an affiliate of Hillhouse Capital Management Ltd owning 27.7 per cent. Enstar will act as the re/insurance manager for Enhanzed Re. Hillhouse will act as primary investment manager and an affiliate of Allianz will also provide investment management services. Enhanzed Re intends to write business from affiliates of its operating sponsors, Allianz and Enstar. It will seek to underwrite business to maximize diversification by risk and geography. Dominic Silvester, Enstar’s chief executive officer, said: “Enhanzed Re brings Enstar together with our established partners Allianz and Hillhouse to provide a vehicle that will reinsure a diversified book of life and P&C reserves sourced through a strong pipeline of opportunities provided by Enhanzed Re’s operating sponsors. Enhanzed Re will benefit from world-class investment managers prudently managing capital while pursuing risk-adjusted returns. Through Enhanzed Re, Enstar gains exposure to attractive life and P&C business and in return can offer opportunities for Enhanzed Re to participate in our future significant legacy transactions.”

2017. April 27. Allied World made a total of profit of $80.3 million in the first three months of this year. The figure was up $6.2 million on the $74.1 million recorded in the first quarter of last year and equal to 90 cents per share, compared to 81 cents per share for the same period in 2016. Scott Carmilani, president and CEO of Allied World, said: “Despite a challenging market environment, I am pleased with our ability to produce an annualized net income return on average shareholders’ equity of 8.9 per cent this quarter, while growing diluted book value per share by 2.8 per cent from year end 2016. “Additionally, we have made great strides within the global markets insurance segment which generated a 14.4 percentage point improvement over the prior year period as we are beginning to reap the benefits of the strategic re-underwriting of this segment. “Looking ahead, I feel that we are well-positioned for continued growth in our core specialty business.” The company, in line to be taken over by Fairfax Financial Holdings, notched up gross premiums written of $860.9 million, a decrease of 0.3 per cent on the $863.5 million for the first quarter of 2016. The company report said that was driven by growth in the North American insurance segment, partially offset by decline in the reinsurance segment, which saw a 5.6 per cent decrease, caused mostly by the reduction in property casualty risk, as well as the non-renewal of some property and casualty treaties. The quarter saw $11 million in catastrophe losses related to Cyclone Debbie, compared to no major catastrophe losses in the same period of 2016. The $11 million total represented $7.5 million in the reinsurance segment and $3.5 million in the global markets insurance segment. The firm recorded net investment income of $52.3 million, $1 million down on quarter one last year.

2017. March 23. Allied World shareholders approved a special dividend as the insurer moved a step closer to its merger with Canadian firm Fairfax Financial Holdings. Allied Word, one of the Class of 2001 insurers to form in Bermuda after the September 2001 terrorist attacks in the US, is now based in Zug, Switzerland, but has substantial operations on the island. Yesterday’s vote gave the go-ahead for a $5 special dividend to be paid to shareholders immediately following the completion of the Fairfax deal. Shareholders also approved the amending of the company’s Articles of Association to remove the limitation on the voting rights of a holder of 10 per cent or more of the company’s ordinary shares. Scott Carmilani, Allied World’s chief executive officer, said: “We are pleased with the overwhelming support we received today from our shareholders. “With today’s vote, we move one step closer to completing the transaction with Fairfax, to the benefit of our shareholders, customers, business partners and employees.” Fairfax has promised Allied World will be allowed to continue to run as it does now after the completion of the merger.

2016. December 21. Allied World Assurance Company operations will not be changed as a result of Fairfax Financial Holdings proposed $4.9 billion acquisition. Prem Watsa, the chief executive officer of Fairfax Financial, has praised the performance of the insurer and reinsurer since its formation 15 years ago, and the guidance of CEO Scott Carmilani. During a conference call featuring executives from both companies, Mr Watsa said: “AWAC will be run by Scott on a decentralized basis with no cost synergies. I emphasise no cost synergies. “No change in operations other than what Scott sees fit to do. AWAC will continue to be built under Scott’s vision.” There are about 125 staff at Allied World’s offices in Richmond Road, Pembroke. The company was formed in Bermuda in 2001, in the wake of the 9/11 attacks in the US. It moved its headquarters to Switzerland in 2010, and globally has about 1,040 employees. Fairfax Financial, a Canadian investment and insurance company, has a track record of buying companies and allowing them to continue to operate in the manner that made them prized acquisitions in the first place. This was highlighted by Andy Barnard, president of the Fairfax Insurance Group, during the conference call with analysts. He listed insurers and reinsurers that have previously been acquired by Fairfax, including OdysseyRe, Crum & Forster and Brit Plc, and said: “The point is in Fairfax all of these companies are run by their CEOs. They all enjoy the autonomy that comes with our decentralized operating philosophy. We have a fantastic group of CEOs running all of these companies.” Mr Barnard pointed to strong results achieved by the individual companies as a result of “that system of operating”. Meanwhile, Mr Carmilani noted: “Allied World’s business is highly complementary to the Fairfax franchises, and truly creates a world-class specialty insurance and reinsurance franchise, with leading positions in North America and Bermuda, and having a global territorial reach.” It was announced on Monday that Fairfax Financial is to acquire Allied World in a cash-and-stock deal. The transaction is subject to regulatory and shareholders’ approval, and is expected to conclude in the second quarter of 2017. The move is in line with a trend by smaller insurers to seek merger partners, due to the preference of commercial coverage clients and their brokers to place business with larger insurers and reinsurers. As a combined entity, Fairfax Financial and Allied World will become the seventh largest North American insurer, excluding Berkshire Hathaway. It will have a market capitalisation of $15 billion. We’ll have enhanced size and capabilities in an industry in which scale increasingly confers significant competitive advantage.” S&P Global Ratings yesterday placed all its ratings for Allied World and its operating companies on credit watch with negative implications. One of S&P’s concerns is the potential departure of Allied World key executives following the transaction, as they have not entered into any long-term contracts to remain employed with the company after the deal. This topic was mentioned during the conference call on Monday, when Mr Watsa said: “Because of our decentralized operations, we have had many presidents who’ve retired in the past, but no president has ever left our company for another job in the industry. They retired and that’s happened over the years, we’ve been in business now for 31 years but we’ve never lost a president.” None of our companies have contracts, and we haven’t had anyone leave. One of the reasons is we have 35 people in our head office, and we’ve got 22,000 people in our companies, and we really do believe in a decentralized operation, and that’s been a major plus for our company over the years.” S&P also has concerns about possible implications to Allied World’s enterprise risk management, which it presently states as “strong”, once the company comes under Fairfax’s ownership. The agency views Fairfax’s enterprise risk management as “adequate” and has concerns that Allied World will likely shift its investment strategy to align with Fairfax’s. The ratings agency said its credit watch action will be resolved and updated within the next three months after it has discussed the transaction with the management teams of Fairfax Financial and Allied World. This year has been a busy one for mergers and acquisitions in the insurance sector. In October, Fairfax Financial bought a number of American International Group’s commercial and consumer operations, including those in Argentina, Chile and Turkey. Deals with a Bermuda connection have included the $3 billion sale of Bermudian-based Ironshore to Liberty Mutual Holding Company, a transaction announced earlier this month. Meanwhile, Endurance Specialty Holdings Ltd is being taken over by Tokyo-based Sompo in a $6.34 billion deal expected to close by the end of March next year.

2016. December 19. Canadian investment and insurance company Fairfax Financial Holdings Ltd has agreed to buy Allied World Assurance Company in a $4.9 billion cash and stock deal. The proposed transaction has been unanimously approved by the directors of both companies. Allied World was among a number of insurers and reinsurers formed in the immediate wake of the 9/11 attacks in the US. The company was set up in Bermuda as a joint venture between American Insurance Group, Chubb Corporation and an investment fund managed by Goldman Sachs & Co. In 2010, Allied World redomiciled from Bermuda to Switzerland, however it maintains an office in Bermuda. Globally, the company has 1,040 employees, according to a Forbes report. Two years ago, it expanded its North American insurance operations by opening a branch in Toronto. In the proposed deal, Toronto-based Fairfax will pay $54 for each Allied World share, which is about 18 per cent higher than their closing price on Friday. Allied World shareholders will receive about $10 cash and $44 of Fairfax’s stock for each share they own. Fairfax has an option to increase the cash portion up to $30 per share. Prem Watsa, chief executive officer of Fairfax, said: “We are excited to have Allied World join the Fairfax group. Allied World is a high-quality company with an excellent long-term track record and an outstanding management team led by Scott Carmilani. Allied World will operate within the Fairfax group on a decentralized basis after closing, and we are looking forward to supporting Scott and the entire team at Allied World in growing their business over the long-term.” Mr Carmilani will continue as chief executive officer of Allied World, according to a report by The Washington Post, which quoted Mr Watsa as saying Allied World “will be the largest and the best company that Fairfax has purchased in 31 years”. Meanwhile, Mr Carmilani called it a tremendous opportunity. He said: “Our shareholders are being rewarded for the strong performance of Allied World over the last ten years since going public. We are strategically aligning ourselves with Fairfax, one of the premier companies in the insurance industry which has a great track record of supporting their operating companies and creating value for shareholders. We are excited to be joining the Fairfax organisation — we share their passion for underwriting excellence and their entrepreneurial approach to growing the business with a long-term orientation. Our shareholders will benefit from Fairfax’s tremendous investment capabilities as demonstrated by its superior long-term investment track record.” He added: “The success of Fairfax’s decentralized approach in empowering their management teams to drive profitable underwriting and combining Fairfax’s investment philosophy will position us to create long-term value for shareholders. Fairfax provides a great home for Allied World to continue to build a strong business for our customers, business partners and employees.” It is intended that the transaction will be effected by way of an exchange offer, followed by a squeeze-out merger, and conclude in the second quarter of 2017. The acquisition deal is subject to a sufficient number of the outstanding Allied World shares having been tendered in the offer, approval by Allied World shareholders and, to the extent required by applicable regulations, Fairfax shareholders, approvals from applicable regulators and satisfaction of other customary closing conditions. In a statement, Allied World said its position “as a market-leading global property, casualty and specialty insurer and reinsurer, its major worldwide presence and its disciplined approach to underwriting make it a natural candidate to join Fairfax’s expanding worldwide operations”. The company said its “growing international reach is highly complementary to Fairfax’s existing worldwide operations and the acquisition further diversifies Fairfax’s group risk portfolio. In addition, Allied World will be able to leverage Fairfax’s expertise in Canada, the US and international insurance and reinsurance markets, thus enhancing Allied World’s global product offering and providing it with expanded underwriting opportunities and support”. Last year, Fairfax Financial acquired insurance and reinsurance group Brit Plc.

2016. July 20. Allied World Assurance yesterday reported net income of $153.4 million for the second quarter of the year — up nearly $144 million on the same period in 2015. The figure is equivalent to $1.70 per share, compared to ten cents per share for the sane period of last year. Scott Carmilani, president and chief executive officer of the Swiss-based firm, which maintains a Bermuda arm, said: “I am very pleased with our results this quarter, which were attributable to strong performance across both the underwriting and investment portfolios. In particular, with a combined ratio of 92.3 per cent, our North American insurance business is showing the strength and results of our focused build-out.” Gross premiums written for the quarter amounted to $800.3 million, a 3.1 per cent decrease, compared with $825 million in the second quarter of 2015 as all three segments — North American insurance, global markets insurance and reinsurance — declined. Allied World showed $20.9 million in catastrophe losses for the quarter, compared with $25 million in the same quarter in 2015. An April hailstorm in Texas cost $6 million on the reinsurance side, while the Fort McMurray wildfires in Alberta amounted to losses of $10.3 million. In the North American insurance segment, losses of $4.5 million came from the Texas hailstorm.

2016. April 20. Profits at insurance and reinsurance firm Allied World dropped by more than $50 million for the first quarter. Allied World had a net income of $74.1 million for the first three months this year, down from $124.4 million in the same quarter the previous year. The drop was offset by a 19.5 per cent increase in investment income over the same period, up to $53.3 million from the $44.6 million recorded for the first quarter of 2015. Allied World president and CEO Scott Carmilani said: “We’re pleased at the positive contribution from our investment portfolio and solid underwriting results this quarter. Although market conditions remain challenging, we continue to find attractive opportunities while maintaining our strong focus on risk selection and capital management.” The earnings for the first quarter in 2016 is equivalent to 81 cents per share, compared to the $1.27 per share for the same period the year before. The firm, which is headquartered in Switzerland but has substantial operations in Bermuda, recorded gross premiums of $863.5 million, down 1.9 per cent on the $880.6 million recorded in the same quarter last year. The firm’s report said: “This was driven by a decline in the reinsurance segment, partially offset by growth in the global markets insurance segment. North American insurance was essentially flat. The global markets insurance segment grew by 94.7 per cent on a constant dollar basis and 90.96 per cent per cent on an as reported basis, driven by the inclusion of the acquired Asian operations.” Allied World’s reinsurance segment dropped 16 per cent, which the company attributed to a reduction in property catastrophe risk and the non-renewal of other property and casualty treaties. Total shareholder equity at the end of the first quarter totaled $3.53 billion, in line with the end of the first quarter in 2015.

2015. October 22. A massive explosion in a Chinese port helped propel this insurance firm to a loss of $51.6 million in the third quarter. The Switzerland-based firm, which maintains this Bermuda operation, said the explosion in Tianjin in August cost it nearly $30 million in claims. And Allied World also reported net realized investment losses of $113.6 million. The $51.6 million loss amounts to 57 cents per share and compares to the net income of $30.9 million, or 31 cents per share, for the same quarter last year. Allied World president and CEO Scott Carmilani said: “Despite a challenging investment environment and a large event loss, we believe that we are well positioned to create shareholder value. We continue to be excited about the attractive platform we have built over the last few years.” The firm also reported operating income of $51.4 million — 56 cents per share — for the third quarter of 2015, compared to operating income of $606 million (61 cents per share) for the same quarter the previous year. The firm’s gross premiums written rose by more than $46 million (6.5 per cent) for the third quarter compared to the same period last year. The global markets insurance segment wrote 100 per cent more business, driven by the inclusion of the acquired Asian operations. Premiums at the North American insurance segment dropped slightly — 1.4 per cent — led by decreases in various lines of business including healthcare and property. The firm’s reinsurance segment dropped 9 per cent, driven by the non-renewal of several casualty and property treaties.

2018. Bermuda-based Nephila Capital, the world’s largest manager of insurance-linked securities, has agreed to be bought out by US insurer Markel Corporation. Nephila has about $12.2 billion of assets under management and Markel indicated today that the firm would continue to be run as a separate entity after the acquisition goes through. Markel, an insurer, reinsurer and investment company, already has a presence on the island. The US firm acquired Bermuda-based reinsurer Alterra in 2013 and CatCo Investment Management, a Bermuda-based collateralized reinsurance specialist, in 2015. The terms of the Nephila deal, which is expected to close during the fourth quarter of this year, were not disclosed. Nephila was founded in 1997 in London as part of reinsurance broker Willis Ltd and relocated to Bermuda in 1999 to build relationships in Bermuda’s world-leading catastrophe reinsurance industry. Over the past 20 years, the firm has grown in size and reputation, flourishing at the forefront of the ILS revolution. It has offices on the third floor of Victoria Place, as well as in London, San Francisco and Nashville, Tennessee. Founders Frank Majors and Greg Hagood are the firm’s co-chief executive officers. The deal will make Markel a world leader in the ILS fund management sector, with the combined assets under management of Nephila and Markel CatCo standing at about $19 billion, or about 20 per cent of the ILS sector, according to Markel. Richie Whitt, Markel’s co-CEO, said: “We are excited to welcome Nephila to the Markel team. Frank Majors and Greg Hagood have built the industry’s pre-eminent and longest-tenured insurance-linked securities manager. With a proven 20-year track record of success, they bring with them an incredibly experienced and talented management team and a culture of creativity, innovation and excellence that exemplifies the Markel style. The addition of Nephila to Markel’s insurance, reinsurance, insurtech, fronting, and existing insurance-linked securities capabilities will enhance and strengthen the breadth and depth of Markel’s offerings to policyholders, producers and investors.” Nephila will be run as a separate unit by its existing management team at its existing office locations. Mr Majors said: “We are delighted to be joining Markel, a company with a similar culture, strategic outlook and long-term focus. They have built a great company with a sterling reputation for both outstanding performance and a collaborative business approach, and have a proven track record of successful acquisitions. Markel shares our strategic vision for the future of the insurance markets; this transaction will allow us to accelerate our delivery of that strategy, creating additional value for our investors and our trading partners.” Mr Hagood added: “As the industry continues to evolve, we believe the resources and expertise from both platforms will provide meaningful benefits to our investor base, as it combines the investment independence of a 20-year, stand-alone insurance-linked securities manager with the additional resources of a well-respected and strongly rated insurer.”

American International Group (AIG) Bermuda headquarters.

American International Building, 27 Richmond Road, Hamilton HM 08. Phone (441) 295-2121. Fax (441) 292-6735.  Bermuda headquarters of the AIG companies mentioned earlier above and those shown below. 

2020. February 14. American International Group has reported a profit of $922 million, or $1.03 per diluted common share, for the fourth quarter. That compares to a net loss of $622 million, or 70 cents per share, in the prior-year quarter. The company said the improvement was primarily due to the favourable impact of general insurance underwriting and reinsurance actions, favourable net prior year loss reserve development of $153 million (pre-tax) compared to unfavorable net. In addition, there was a reduction in pre-tax net catastrophe losses of $385 million year-on-year, and an increase of $833 million (pre-tax) in net investment income. For the full year, net income was $3.3 billion, or $3.74 per share, compared to a loss of $6 million, or one cent per common share, in 2018. Brian Duperreault, AIG’s chief executive officer, said: “Our financial results for the fourth quarter and for full year reflect the significant progress we made over the course of 2019 to position AIG for long-term, sustainable and profitable growth.” He added: “As we look to 2020, we will continue to be laser focused on executing on our strategy to position AIG as both a leading insurance franchise and a top-performing company and we remain committed to achieving a 10 per cent adjusted ROCE by the end of 2021. In addition to continued work as part of the turnaround of general insurance, AIG 200 will be a top priority. AIG 200 is our multiyear, enterprise-wide transformation programme focused on the long-term strategic positioning of AIG and designed to achieve operational excellence. I remain confident we are on the right path at AIG and am very proud of what our colleagues accomplished since I joined the company in 2017. We entered 2020 with great momentum and excitement about what the future holds for AIG.”

2019. November 29. American International Group has sold a majority stake in its Bermuda-registered legacy reinsurer Fortitude Re. The deal involves private-equity group Carlyle Group and Japanese insurer T&D Holdings partnering to pay $1.8 billion for a 76.6 per cent stake in Fortitude, whose headquarters is in the AIG building on Richmond Road. In a statement, Carlyle said it was looking forward to working with the existing management team at Fortitude, which was set up by AIG in 2017 under the name of DSA Re. Its initial role was to house AIG’s legacy portfolio comprising insurance reserves associated with discontinued lines of commercial property and casualty and life insurance business. The company has evolved to write third-party business, providing reinsurance and run-off management solutions. The company has about more than $40 billion of invested assets and over $35 billion in reserves. Brian Duperreault, AIG’s chief executive officer, said the deal represented “another important step in our strategy to efficiently manage our legacy liabilities by further preparing Fortitude Re for independence, while strengthening our balance sheet and maintaining our primary focus on upholding policyholder and regulatory commitments. Carlyle’s expertise in separating and standing up companies has been invaluable to date, and we look forward to working with their team and T&D, with whom we have a longstanding relationship in Japan, as we continue the separation process. I also want to thank the entire Fortitude Re team for all their hard work in building the organisation. We look forward to their future success.” Carlyle first purchased a 19.9 per cent stake in Fortitude Re a year ago and after the deal just announced closes, its stake will increase to 71.5 per cent, while T&D will own 25 per cent and AIG 3.5 per cent. AIG is also due to receive a $500 million distribution due to be paid by May 13 next year or when the transaction closes, whichever is later. The transaction will enhance Carlyle’s ability to support Fortitude Re’s growth plans, provide Fortitude Re access to Carlyle’s wide array of investment strategies and position it for long-term success. T&D brings additional industry and international expertise to develop Fortitude Re’s strategically differentiated capabilities. With the backing of Carlyle, T&D and AIG, Fortitude Re will pursue global opportunities to successfully acquire and manage legacy insurance portfolios. Kewsong Lee, Carlyle’s co-chief executive officer, said: “This transaction demonstrates Carlyle’s strategy of developing scalable platforms to drive shareholder value. Fortitude Re, led by CEO James Bracken, is strongly positioned as an industry leader in managing run-off insurance liabilities, and Carlyle looks forward to partnering with the management team to help Fortitude Re grow. “We are excited about the prospects of further developing our global investment management services for Fortitude Re as we work to deliver attractive returns across a variety of asset classes. We welcome T&D to our partnership with AIG, both of whom are highly experienced players in insurance, and look forward to creating an attractive investment opportunity for our fund investors.” Hirohisa Uehara, T&D’s representative director and president, said: “We are really honoured to invest in Fortitude Re, which has developed a sophisticated platform for managing life and P&C insurance liabilities. We have longstanding relationships with both AIG and Carlyle, and we believe Fortitude Re’s closed book business will contribute significant synergies to our domestic life insurance business as well as diversification of our business portfolio. Additionally, we look forward to supporting Fortitude Re’s growth by leveraging our years of experience as a Japanese life insurer.” The transaction is expected to close in mid-2020, subject to required regulatory approvals and other customary closing conditions.

2019. November 5. American International Group’s shares gained on Friday and yesterday after the insurer reported net income of $648 million for the third quarter. The result was a positive swing from a net loss of $1.3 billion in the corresponding period last year. However, profits were limited by catastrophe losses and a $143 million charge related to an actuarial review of its life and retirement business, which resulted in AIG having to put aside extra cash to meet future claims. The insurer posted a profit of $505 million, or 56 cents per share, on an adjusted basis, well below analysts’ expectations of $1 per share. Shares of AIG climbed 1.5 per cent on Friday after the results were announced and climbed another 2.18 per cent yesterday to close on $54.93 in New York. AIG is in the midst of a turnaround, launched by chief executive officer Brian Duperreault, who took charge in 2017. “Our results this quarter reflect the significant, ongoing work across the company to lay a foundation for long-term, sustainable and profitable growth,” Mr Duperreault said. “Results are in line with our expectations, particularly in general insurance, which demonstrated a significant improvement over the prior-year quarter driven by our focus on underwriting excellence, expense discipline and enhanced reinsurance strategy. Life and retirement continued to produce solid results despite ongoing headwinds from the sustained low interest rate environment. This business remains on track to deliver double-digit returns for the full year. As we approach 2020, we remain confident we will deliver underwriting profitability for the full year 2019 and deliver double-digit return on common equity by the end of 2021. We still have much work ahead of us, but we are well on our way to positioning AIG as a leading global insurance company.” Mr Duperreault has deployed a reinsurance programme to offset catastrophe losses, which he said “played out as designed”. Some of those changes involve AIG’s speciality commercial unit, Lexington Insurance. It reduced total casualty insurance limits by 58 per cent during the quarter while increasing premium rates by more than 30 per cent, AIG chief financial officer Mark Lyons said in a call with analysts. AIG has also been building up “meaningful” cash reserves for potential mass tort claims, Lyons said. AIG’s net pre-tax catastrophe loss narrowed to $511 million in the quarter from $1.6 billion a year earlier. The company also reported a smaller underwriting loss in its general insurance business, $249 million, compared with $1.73 billion last year.

2018. October 25. American International Group has been given the green light to split its European subsidiary into two, as it prepares for the UK’s exit from the European Union. The High Court of England and Wales has approved the transfer of British-based AIG Europe Limited’s business into two new entities, one to serve UK customers and the other for business in the rest of Europe. AIG is led by Bermudian-born Brian Duperreault. The two new entities created ahead of Brexit — which is scheduled to happen next March — are American International Group UK Ltd, which will be based in London, and AIG Europe SA, which will be headquartered in Luxembourg and have 21 branches across the European Economic Area and Switzerland. The company said the London court’s approval was the final piece needed “to complete the restructuring of AIG’s European operations and ensure AIG’s readiness for Brexit”. Through the two companies, AIG will continue to service all of its policyholders and business partners across the UK and Europe, “and to guarantee contract certainty to all AEL policyholders, regardless of the future relationship between the UK and the EU”. Both companies will start writing business and policyholders will transfer from AEL to the new entities on December 1. Anthony Baldwin, chief executive officer of AEL and AIG UK, said: “Today is an important day most of all for our clients, as we can now guarantee them access to the full range of our capabilities after Brexit. We have cleared the final major legal hurdle in our Brexit plans which will enable us to offer our clients, partners and colleagues certainty that AIG is ready to overcome the challenges posed to the insurance industry by Brexit, regardless of the UK’s future relationship with the European Union. All our clients can be assured of past, present and future contract certainty under the new structure. As we launch our two new legal entities to ensure the smooth operation of our business across Europe after Brexit, it’s an exciting time for AIG.”

2018. September 16. It could take 18 months to build the necessary independent infrastructure for American International Group’s Bermuda-domiciled legacy risk unit to compete for third-party business, AIG's CEO Brian Duperreault said. The AIG chief executive officer spoke at a breakfast briefing at the Rendezvous de Septembre networking event in Monte Carlo and described legacy risk as a hot area of the insurance market. AIG set up DSA Re in February this year to act as a Bermudian-based composite reinsurer of its own legacy risks, backed by some $40 billion in invested assets. Last month AIG announced that private-equity firm Carlyle Group was to acquire a 19.9 per cent stake in DSA and that the plan was for DSA to become a stand-alone provider of reinsurance, claims management and run-off solutions for long-dated complex risks. In Monte Carlo, Mr Duperreault said that DSA “gives me great optionality”, according to a report by The Insurance Insider. Insurers or insurance portfolios that have ceased writing new business are described as being in run-off. According to a report by PwC, global run-off liabilities amount to some $730 billion. Several Bermudian companies have become specialists in acquiring and managing run-off assets and liabilities, including Enstar Group, Catalina Holdings and Randall & Quilter. At the same Monte Carlo briefing, Mr Duperreault said recent acquisitions of reinsurance specialists by major insurance carriers are a recognition of the quality of the Bermudian reinsurance industry. He cited his own firm’s acquisition of Validus Holdings and Axa’s buyout of XL Group as examples. Mr Duperreault added: “This isn’t a new trend, it comes and goes. The reinsurance market is a bit of an accordion – [it goes through] waves of formations and consolidations.” Reinsurance buyers should view such deals positively, he added, as putting a wholesale reinsurer into a huge insurance balance sheet gives cedants more faith in the stability of that carrier, the Insider reported. For AIG, the attraction of the Validus deal was that it gave the firm capital flexibility and a source of market intelligence. “There are times when the reinsurance market is where you want to deploy,” Mr Duperreault said. “If you don’t have both [insurance and reinsurance capabilities], you can’t move the capital around.” The reinsurance market is here to stay despite being in a phase of transition, driven by insurtech and ILS disruption, he added.

2018. August 1. American International Group and The Carlyle Group are in a strategic partnership to build newly established Bermuda-based DSA Re into a stand-alone provider of reinsurance, claims handling, and run-off management solutions for long-dated, complex risks to the global insurance industry. DSA Re, which was formed by AIG in February, currently reinsures $36 billion of AIG’s Legacy Life and Annuity and General Insurance liabilities. In a statement, AIG said that utilizing Carlyle’s expertise in separating and standing up companies, the two companies plan to build DSA Re into a platform that complements DSA Re’s “financial strength with its strategically differentiated capabilities”. As part of the transaction, Carlyle will acquire a 19.9 per cent stake in DSA Re and enter into a strategic asset management relationship whereby DSA Re and AIG will, in aggregate, allocate $6 billion of assets into various Carlyle managed strategies across corporate private equity, real assets, and private credit. Brian Duperreault, AIG’s president and chief executive officer, said: “AIG launched DSA Re to help us efficiently manage our legacy liabilities, honour our policy obligations and maximize financial flexibility. This partnership with Carlyle meets these objectives while allowing AIG to free up capital and participate in the buildout and growth of the business. We look forward to working closely with Carlyle to position DSA Re for long-term success.” Kewsong Lee, Carlyle’s co-CEO, said: “This strategic partnership extends Carlyle’s investment capabilities into the $15 trillion global insurance industry. Carlyle is excited to deliver our global investment platform across a variety of asset classes to DSA Re, and will work to generate attractive returns for the DSA Re portfolio for many years to come. We have a terrific partner in AIG, and will work closely together to help DSA Re become independent and positioned for growth over time.” The transaction is expected to close in approximately 60 days, subject to required regulatory approvals and other customary closing conditions.

2018. July 18. American International Group Inc has completed its acquisition of Bermud-based Validus Holdings Ltd. The deal was first announced in January and has now close following receipt of regulatory approvals and approval of Validus shareholders. Brian Duperreault, president and chief executive officer of AIG, said: “We are very pleased to welcome Validus to AIG. Validus’s experienced team and complementary businesses will help us deliver sustainable, profitable growth as we continue to build value for our shareholders.” In a statement, AIG said Validus adds “attractive and diversified franchises” with reinsurance platform Validus Re, an insurance-linked securities asset manager AlphaCat, Lloyd’s syndicate Talbot, together with Western World, a specialist in US small commercial excess and surplus underwriting, and Crop Risk Services, which provides access to the North American crop insurance market. Peter Zaffino, AIG’s CEO, General Insurance, said: “We look forward to working with the Validus team on the expanded capabilities and value we can deliver to our clients and broker partners. The Validus businesses will be immediately accretive to our performance in General Insurance now that they are officially part of AIG.” Validus was among the Bermuda “Class of 2005” reinsurance start-ups that followed in the wake of the major insured losses from hurricanes Katrina, Rita, and Wilma that year.

2017. August 2. American International Group has reported a $1.1 billion profit for the second quarter. Now headed by Bermudian Brian Duperreault, the company’s net income for the quarter was $1.19 per share, and was down from the $1.9 billion, or $1.68 per share, in the same quarter in 2016. In a statement the company said the results primarily reflected net realized capital losses of $69 million compared to net realized capital gains of $1 billion a year ago. After-tax operating income was $1.4 billion, or $1.53 per diluted share, for the second quarter compared to $1.3 billion, or $1.15 per diluted share, a year ago. Mr Duperreault, who became CEO in May, said: “Our second quarter results show the value of AIG’s diverse businesses and the opportunities we have to grow profitably. “We will build on AIG’s strong franchise by maximizing the value of our international footprint, which distinguishes us from many of our competitors. While market conditions remain challenging, we are committed to disciplined underwriting and are focused on investing in profitable growth.”

2017. June 12. American International Group is to sell $590 million of shares in Bermuda-based insurer and reinsurer Arch Capital Group. AIG, which has many Bermuda-incorporated subsidiaries, last month appointed former Hamilton Insurance Group chief Brian Duperreault as president and CEO, acquired more than 6.38 million common shares last year through the conversion of 638,141 convertible preferred shares the US-based giant got as a result of the sale of United Guaranty Corporation to Arch. The offering is scheduled to close on Wednesday and is subject to the usual closing conditions. AIG said it had given underwriters a 30-day option to buy an additional 957,210 common shares in Arch, which would be issuable on conversion of 95,721 additional convertible preferred shares, worth about $89 million. After that, AIG would still own 542,420 convertible shares in Arch, which are subject to a lock-up which expires in mid-January next year.

2017. May 31. Confidence in American International Group has grown in the two weeks since Brian Duperreault was appointed chief executive officer. The giant insurance company’s share price has risen 3.7 per cent, from $61.82 to $64.10, since the Bermuda-born CEO took the helm on May 15. And last week AM Best’s outlook for the ratings assigned to AIG was declared “stable”, raising investor confidence after the agency had placed the ratings under review for the previous four months. Darian Ryan, an analyst with AM Best, said the appointment of Mr Duperreault, 70, was a factor in the ratings decision. Morgan Stanley, billionaire activist investor Carl Ichan, and Hank Greenberg, who was CEO of AIG for 38 years until 2005, all gave immediate support to Mr Duperreault’s appointment. Morgan Stanley upgraded AIG’s stock to overweight and assigned a price target of $72. For the past two weeks the shares have been steadily rising. The stock currently has an analyst’s target price on Yahoo! Finance of about $69. Three days after becoming CEO, Mr Duperreault showed his faith in the road ahead for the company when he purchased 80,000 shares for $4.91 million, buying at $61.48 during a brief dip in the stock. From January to mid-May, AIG shares fell 7 per cent, but since Mr Duperreault’s appointment the stock has recovered a chunk of that loss, boosted by the positive words of support from the likes of Mr Ichan and Mr Greenberg, and improved investor sentiment.

2017. May 16.  NEW YORK (Bloomberg) – American International Group will give Brian Duperreault $12 million in cash, 1.5 million stock options and an annual pay package valued at $16 million to turn around the company as its seventh chief executive officer since 2005. AIG will also pay Mr Duperreault’s previous employer, Bermudian-based Hamilton Insurance Group, as much as $40 million over two years to waive their former CEO’s non-compete agreement, according to a regulatory filing yesterday. Mr Duperreault, 70, spent time at AIG earlier in his career as a deputy to Maurice “Hank” Greenberg, who built the company into the world’s largest insurer before departing in 2005. Mr Duperreault will begin immediately, AIG said in a statement. He succeeds Peter Hancock, who said in March he would leave because of insufficient support from investors such as activist Carl Icahn. The new CEO will seek to bring stability to AIG, which has endured the departures of top executives, higher-than-expected claims costs and four losses in seven quarters. Before joining Hamilton, he was CEO of insurance broker Marsh & McLennan Cos, where he helped restore confidence of investors and clients. He also led Ace Ltd, which is now known as Chubb Ltd and is one of AIG’s largest rivals. “It is extremely gratifying that the activist strategy continues to create value for all shareholders,” Mr Icahn said in a Twitter post yesterday, adding that he was pleased AIG was making “much needed” changes he’s been advocating. The annual pay comprises $1.6 million in salary, a $3.2 million target bonus and an $11.2 million long-term incentive consisting of restricted shares, some of which are linked to performance. Taken together, that’s 23 per cent more than Mr Hancock’s $13 million target annual pay. Of the 1.5 million options, Mr Duperreault will get a third within three years and the remaining will vest in increments if AIG’s share price exceeds hurdles set $10, $20 and $30 above its current level. AIG also agreed to pay about $110 million to acquire a US operation from Hamilton, which includes a $30 million premium to the book value of the Bermudian-based firm. AIG will allow Hamilton the chance to collect about $150 million of reinsurance premiums over six years. AIG said it will work with hedge fund firm Two Sigma Investments, which already works with Hamilton, to create a “next generation insurance platform” for Duperreault’s new company. Mr Duperreault helped create Hamilton in 2013 with backing from principals of Two Sigma. Former Citigroup CEO Sanford “Sandy” Weill had a stint as Hamilton’s chairman and remained a shareholder when he stepped down from the board. Mr Duperreault “has an excellent grasp of the global insurance industry and he has proven to be a real innovator over many decades,” Weill said in an e-mail. “He views change as creating opportunities, and I really believe that we will see good things from AIG as a result of Brian’s leadership.” Hamilton focused on data analytics with Two Sigma to help decide which insurance risks to take, and how much to charge for them. The company formed a venture last year with AIG to provide coverage to small and medium-size businesses. Mr Duperreault will seek to improve return on equity, and also boost AIG’s stock price. Shares of the company have slumped 6.6 per cent this year, while the S&P 500 Index has climbed 6.8 per cent. He will need to decide the right size for AIG, which has been shrinking for years through asset sales. Icahn sought a breakup when he disclosed a stake in AIG in late 2015, and the billionaire has representation on the insurer’s board. Chairman Doug Steenland said earlier this year that a split would compromise the company’s global reach, and that the plan is to continue returning capital to shareholders and cutting expenses.

2017. March 9. LONDON (Bloomberg) — American International Group, the Bermuda-incorporated global provider of commercial property-casualty coverage, said it plans to open an insurer in Luxembourg to write business in the European Economic Area and Switzerland once the UK exits the European Union. “This is a decisive move that ensures AIG is positioned for whatever form the UK’s exit from the EU ultimately takes,” Anthony Baldwin, chief executive officer of AIG Europe, said yesterday in a statement. “We are ensuring that our clients and partners experience no disruption from the UK’s EU exit.” Financial firms are shaping their Brexit plans after Prime Minister Theresa May announced in January that the UK would leave the EU’s single market in 2019, likely spelling the end of passporting, where companies seamlessly service the rest of the bloc from their London operations. AIG currently writes business in Europe from a single insurer based in the UK. The New York-based company has more than 2,000 employees based in London and has already been cutting staff there and in other cities as part of a separate cost-cutting initiative. The re-organisation is expected to be completed in the first quarter of 2019, and AIG will retain an insurer in the UK for sales in that market, according to the statement. Nicola Ratchford, a spokeswoman for the insurer, said the company has a few employees already in Luxembourg. She said there might be shifts in the leadership ranks in Europe, but that it is too soon to know how many workers will move, or to comment on real estate decisions. AIG CEO Peter Hancock said before the Brexit referendum last year that he’d consider an operations hub in continental Europe if UK voters opted to leave the EU. Luxembourg is among European cities seeking to attract banks and insurers that are looking to open EU hubs. “Luxembourg, a founding member of the European Union, offers us a secure location in a stable economy with an experienced and well-respected regulator in continental Europe close to many of our major markets,” Baldwin said in the statement. AIG’s Europe segment had about $5.4 billion in operating revenue last year, about 11 per cent of the insurer’s total, according to the company’s most recent annual report.

2019. July 22. Bermuda-based insurance holding company American Overseas Group Ltd has reported a net loss of $3.2 million and an operating loss of $600,000 for the year ended December 31. The results were announced on Friday in a regulatory filing with the Bermuda Stock Exchange. AOG Ltd is incorporated in Bermuda and is a tax resident of the United Kingdom. The consolidated net loss available to common shareholders of $3.2 million, or $69.12 per diluted share, compares to a consolidated net loss of $10.6 million, or $233.62 per diluted share, for the year ended December 31, 2017. The year-over-year improvement in results was driven by improved results associated with the company’s reinsurance of Puerto Rico-related credits in its financial guaranty segment, as well as improved underwriting results in the property and casualty segment, the company said. Book value per share at the end of 2018 was $1,212.83, a decline from $1,308.58 year-on-year. The company’s operating loss of $600,000, or $11.97 per diluted share, compared to an operating loss of $20.8 million, or $456.94 per diluted share, at the end of 2017. Operating income for the property and casualty segment was $2.9 million, up from $1.1 million the previous year. The legacy financial guaranty portfolio of American Overseas Reinsurance Company Ltd continues to run-off satisfactorily, the company reported. The financial guaranty operating loss of $4.5 million in 2018 is significantly lower than the operating loss of $21.2 million in 2017 primarily due to reduced unfavorable development on outstanding losses. Operating expenses of $13.4 million in 2018 were comparable to 2017’s $13.8 million. As part of its ongoing capital management efforts, the company said it will continue to redirect excess capital within the group to debt reduction unless other compelling opportunities present themselves. AOG Ltd’s operating subsidiaries provide specialty property/casualty insurance, reinsurance and insurance management services.

2017. April 4. Lloyd’s of London has fined Amlin Underwriting Ltd £630,000 ($786,600) for breaches of the Lloyd’s Premium Trust Deed (PTD) and for failings in its response to those breaches. Following a restructure of the Amlin group in 2014, which AUL is part of along with two non-Lloyd’s insurance companies, it was found that premiums for certain outward reinsurance contracts were paid from the premium trust fund on behalf of multiple group entities including the non-Lloyd’s insurance companies, according to Lloyd’s. Intelligent Insurer reported that the payments made on behalf of the non-Lloyd’s entities did not relate to the underwriting of AUL’s Syndicate 2001. This constituted a breach of the terms of the Premium Trust Deed, under which assets are held in trust for the benefit of members and ultimately policyholders and therefore cannot be used to pay for liabilities of non-Lloyd’s entities. AUL then failed to ensure that this matter was investigated in a fully effective and timely manner and it failed to ensure that the board and Lloyd’s were notified of the breach promptly. There was no allegation this breach was intentional and AUL acknowledged the breach. AUL also fully repaid all amounts incorrectly taken (with interest). In addition, at no point was the solvency of the trust fund at risk. “The fine reflects the importance that Lloyd’s places on the terms of the PTD being followed,” said Jon Hancock, director, performance management. “The reputation of the market depends on our syndicates and policyholders knowing that assets held on their behalf are used appropriately. When an error is discovered it is incumbent on our firms to respond quickly and effectively.” AUL accepted the errors and co-operated fully with the Lloyd’s investigation. The fine of £630,000 includes a 30 per cent discount for early settlement and AUL will pay £90,500 towards the cost of proceedings. This has been approved by the Enforcement Board of Lloyd’s. This is the first fine to be issued against a firm under the framework for the imposition of sanctions that was adopted by Lloyd’s in 2014 and which establishes the appropriate level of sanctions when prosecuting enforcement cases. Amlin has offices in Hamilton at 141 Front Street.

2015, August 25, CEO Charles Philipps stated Amlin was not looking for a buyer. It has been the subject of buyout rumors amid a mergers and acquisitions spree in the industry. But during the first-half earnings call with analysts, Mr Philipps asserted that Amlin was strong enough to remain a stand-alone company.  Amlin reported pretax profit of £143.3 million in the first half of 2015, down 3.5 per cent from a year earlier. Gross premiums written rose by 6.2 per cent to just over £2 billion from £1.89 billion in the first half of 2014. 

2020. March 9. Aon said today it would buy Willis Towers Watson for nearly $30 billion in an all-stock deal that creates the world’s largest insurance broker. Both companies have significant operations in Bermuda. However, as Aon is the second largest insurance broker in the world and Willis the third, the deal is likely to face antitrust regulatory hurdles. The combined company would be worth $76 billion by current share prices and adds scale in a battle with falling margins and challenges ranging from the coronavirus to climate change. In Bermuda, both companies have reinsurance and insurance broking operations and both also provide captive management services. Aon is based in offices on Woodbourne Avenue and Willis on Pitts Bay Road. “We know each other well and this came together pretty quickly,” Aon chief executive officer Greg Case said on a call with analysts, adding that the deal was motivated by “unmet client needs”. First mooted a year ago, the deal creates a company that will overtake market leader Marsh & McLennan in terms of value. Aon confirmed last year that it was in early stage talks with Willis Towers before quickly scrapping the plans, without giving a reason. Analysts said that an Aon-Willis deal might have trouble clearing antitrust hurdles and Aon’s shares plunged 14.5 per cent in pre-market trade, while Willis’ shares slid 7.1 per cent, although both moves came in a market hit heavily by today’s collapse in oil prices. “The insurers and reinsurers are unlikely to be happy about the deal given the scale of the two players coming together,” said analyst Ben Cohen at Investec. The deal terms state Aon will be obligated to pay a fee of $1 billion to Willis if the deal were to fall through. Aon chief financial officer Christa Davies said she was confident of getting all the “necessary approvals” for the deal. The deal follows other moves to consolidate the global insurance business. Marsh last April sealed its own purchase of British rival Jardine Lloyd Thompson for $5.7 billion, at the time cementing its position as the biggest global player. Under the deal, Willis shareholders would receive 1.08 Aon shares, or about $232 per share as of Aon’s Friday close, representing a total equity value of $29.86 billion. The offer is at a premium of 16 per cent to Willis’s closing price on Friday. When the deal closes, existing Aon shareholders will own about 63 per cent and existing Willis investors will own about 37 per cent of the combined company on a fully diluted basis. The deal is expected to add to Aon’s adjusted earnings per share in the first full year of the deal, with savings of $267 million, reaching $600 million in the second year, with the full $800 million achieved in the third year. The deal is subject to the approval of shareholders and regulatory approvals and is expected to close in the first half of 2021. Aon will maintain its headquarters in London and the combined firm will be led by Aon CEO Case and Aon CFO Davies. Aon’s financial adviser for the deal is Credit Suisse Securities, while Willis was advised by Goldman Sachs.

2016. June 21. NEW YORK (Bloomberg) — Aon chief executive officer Greg Case, who moved the insurance broker to London from Chicago four years ago, said Britain’s centuries-long leadership in the industry would be damaged if voters choose to leave the European Union. “The UK has been at the centre of insurance and risk management since maritime trade and shipping was insured at Lloyd’s in the City of London more than 325 years ago,” Case said in a letter posted yesterday on the company’s website. “Leaving the EU jeopardizes the UK’s leading position in the epicentre of our global service economy.” Industry leaders have been stressing the benefits of global commerce, along with the risks of isolationism, ahead of the June 23 vote. American International Group CEO Peter Hancock said last week that he’d consider establishing a European operations hub beyond London if the “Leave” side prevails. Case said Aon may not be able to provide the same coverage options to clients if trade barriers increase. He also said the company would find it harder to recruit and retain top talent. Aon moved its headquarters to the UK in 2012, citing improved access to Lloyd’s of London and emerging economies. Lloyd’s is the world’s oldest insurance market and is used by businesses seeking to guard against large or complicated risks. Aon’s shift also provided tax benefits. Case’s company acts as a middleman in the insurance industry, helping clients arrange coverage to guard against risks ranging from natural disasters to bed bugs to lawsuits. It is the second-largest broker by market capitalization to New York-based Marsh & McLennan Cos. “In our world, risk is inevitable and we manage it accordingly,” Case wrote. “But leaving the EU is an unnecessary gamble.” Aon climbed 95 cents to $107.81 in New York, extending its gain for the year to 17 per cent as global stocks rallied after weekend polls showed “Remain” prevailing in the UK vote. Marsh & McLennan rose 76 cents to $66.62 and is up 20 per cent since December 31.

2019. July 25. Bermuda-based global financial services provider Apex Group Ltd has signified its commitment to become a leader in the ESG (environmental, social and governance) investment services space. Apex has announced the launch of a new ESG data and rating service, Apex GreenLight ESG Ratings, and has appointed a global head of ESG product to drive development. As Apex continues to expand its capabilities to meet client demand across financial services the launch of GreenLight demonstrates the firm’s ongoing focus on ESG innovation, the company said. GreenLight will deliver an in-house developed ESG rating evaluating privately held companies globally, unlocking unique market intelligence and delivering unprecedented access to a previously opaque asset class. Amara Goeree has been appointed as the group’s global head of ESG product and will lead the firm’s product development and go-to-market strategy, the company said. Ms Goeree is a sustainability specialist with almost a decade’s experience in ESG innovation within financial services. Most recently, she was head of corporate sustainability and responsible investment at Julius Baer, the private bank. She also acted as deputy head of the team leading the ESG ratings process for the Dow Jones sustainability index at RobecoSAM AG. To further show its commitment to ESG, Apex is currently in the process of becoming a UN Principles for Responsible Investment signatory, the company said. Peter Hughes, founder and chief executive officer of Apex Group Ltd, said: “This product builds on our leading position in the private equity and real estate administration sector where data analytics is one of our key differentiators. GreenLight will deliver insights into private companies that investors were unable to access previously.” He added: “For Apex, this product is just the start of the ESG revolution we hope to pioneer across financial services, enabling us to make a positive impact on the world. We envision a future in which a company’s ESG score is as important as its credit score.” Ms Goeree said: “Over the course of my career, I’ve seen ESG and sustainable finance develop from a niche and conviction-based topic into a top priority for all investment firms. This new framework will pave the way for all types of companies, across all industries, to understand and accurately assess their ESG contribution.” Established in Bermuda in 2003, Apex has more than 40 offices worldwide and 3,000 employees. The company has a broad range of clients spanning asset management, allocators and financial institutions.

What was earlier Equinoxe Alternative Investment Services Holdings was founded in Bermuda on 2/20/2007. It had offices on Bermudiana Road, Pembroke. It was a Bermuda-based and headquartered fund administrator formed by experienced hedge fund administration professionals including founder and CEO Stephen Castree. It also had offices in Dublin and Sligo in Ireland, Atlanta, Malta, Mauritius, and Singapore since 2013. .It was a full-service alternative investment fund administration company. In 2014 it  announced a strategic relationship with Asia-focused HFO Pty Ltd. HFO, a hedge fund services provider with offices in Hong Kong and Australia, decided after a strategic review to offer its clients the opportunity to transition to Equinoxe’s global business platform, offering middle and back office outsourcing, full administration services and customized reporting. In March 2015 the company won a top European hedge fund administration award.

2018. August 30. Apollo’s proposed takeover of Aspen Insurance Holdings could be derailed in the event of major catastrophe losses in the coming months. The Bermuda-based insurer and reinsurer agreed a $2.6 billion deal to be acquired by funds owned by US private-equity firm Apollo. A regulatory filing shows the agreement gives Apollo the right to terminate the deal if Aspen suffers losses of more than $350 million from catastrophes occurring between July 1, 2018 and January 31, 2019. In the last six months of 2017, Aspen posted catastrophe losses of $438.7 million, in a heavy year of losses for the industry. Also, if the deal fails to happen because the Aspen board accepts another offer, the insurer will have to pay Highlands Holdings, Apollo’s subsidiary, a termination fee of $82.9 million. If Highlands Holdings fails to live up to its obligations, then it would have to pay a $165.9 million reverse termination fee to Aspen. Aspen’s board opted to take the Apollo offer after a lengthy strategic review of future options, following a rocky period for financial results. On Tuesday, after the deal was announced, Chris O’Kane, Aspen’s chief executive officer, gave an update to all staff. He said: “I know that the media speculation over the past several months about our future path has not been easy. I want to thank all of you for your professionalism and focus. The outcome we are announcing today was well worth the wait. Apollo has a successful track record in the insurance and reinsurance industries. This transaction will provide us with additional scale, and access to Apollo’s investment and strategic guidance, which will help us to accelerate our strategy. In our discussions with Apollo, they have indicated support for our overall strategy, with the intention to help enhance our underwriting profitability.” Yesterday AM Best put Aspen’s credit ratings under review with developing implications. In a statement, the ratings agency said it needs to assess the impact of the planned change in ownership on Aspen’s balance sheet strength, operating performance and business profile. “AM Best will conduct detailed discussions with Aspen regarding its planned strategy as a privately held portfolio company of the Apollo Funds,” Best stated. “AM Best expects the ratings to remain under review pending the completion of the transaction.” Aspen’s operating subsidiaries have a financial strength rating of A (excellent) from AM Best.

2018. August 28. Private-equity firm Apollo Global Management has struck a $2.6 billion deal to buy Aspen Insurance Holdings Ltd. Rumors that the Bermudian-based insurer and reinsurer had put itself up for sale surfaced in June this year, with Argo Group and Blackstone among reported rival bidders. Apollo already has significant interests in the Bermudian insurance market as its funds already own stakes in life and annuities reinsurer Athene Holdings and run-off specialist Catalina Holdings. The Aspen takeover, announced yesterday, is an all-cash deal worth $42.75 per share, marking a 6.6 per cent premium over Monday’s closing share price. Spokespersons from both Apollo and Aspen declined to comment on whether the insurer would continue to be domiciled in Bermuda, whether existing senior management was likely to remain in place and whether the deal was likely to have any impact on staffing levels. However, according to a source who spoke with The Royal Gazette yesterday, little is expected to change in the way the company is run and the deal is viewed inside Aspen as providing an opportunity for the company to expand. Glyn Jones, Aspen’s chairman, said: “We are delighted to have reached this agreement with the Apollo Funds. This transaction, which is the outcome of a thorough strategic review by Aspen’s board of directors, provides shareholders with immediate value and will allow Aspen to work with an investor that has substantial expertise and a successful track record in the re/insurance industry.” Aspen was launched in 2002, one of a group of new insurers to set up in Bermuda in the wake of the 9/11 terrorist attacks a year earlier. It was previously the subject of buyout interest in 2014, when its shareholders rejected a $49.50 bid from Endurance Specialty Holdings. Financial results have disappointed investors over the past 18 months and even Chris O’Kane, the company’s chief executive officer, described 2017’s performance as “deeply disappointing”. Mr O’Kane said yesterday: “This transaction is a testament to the strength of Aspen’s franchise, the quality of our business and the talent and expertise of our people. Under the ownership of the Apollo Funds, Aspen will have additional scale and access to Apollo’s investment and strategic guidance, which will help us to accelerate our strategy and take Aspen to the next level. We are excited about the future as we embark on a new chapter in our history with a partner that understands our strengths, culture and customer-centric philosophy.” Provided the deal is approved by shareholders and regulators, it will mean one less publicly listed Bermudian insurer, as it will become a privately held portfolio company of the Apollo funds and Aspen’s shares will no longer be listed on the New York Stock Exchange. The transaction is expected to close in the first half of next year. Apollo managed about $270 billion of assets as of June 30 across private equity, credit and real assets funds. Alex Humphreys, partner at Apollo, said: “We believe that Aspen benefits from strong underwriting talent, specialized expertise and longstanding client relationships which makes them well positioned in the market. We look forward to working with Aspen to build on the existing high quality specialty insurance and reinsurance business and we aim to leverage Apollo’s resources and deep expertise in financial services to support the company as it embarks on its next chapter.”

Arbitrade has a website at arbitrade.io.

2020. February 14. Disposing of Victoria Hall is an option being considered by Arbitrade Ltd, which took control of the seven-floor office building in October 2018. It acquired the property through an amalgamation with a local company, and it was to be its world headquarters. However, the building on Victoria Street appears to have been unused during the past 1½ years. When asked by The Royal Gazette if there are any plans for the use of Victoria Hall, the company said: “Arbitrade is considering options to either partner with strategic parties for the purpose of promoting blockchain development or to dispose of the property to similar strategic party.” We also asked if Arbitrade was still in operation, as its website is no longer active, with the domain name arbitrade.io expired. In an e-mailed response, Arbitrade said: “With ongoing delays in mining and the suspension of ICO [initial coin offering] application, the company is considering all options”. The company once claimed it had “title” to 395,000 kilograms of gold, worth about $19 billion at current prices. The gold was to be used to back four crypto tokens. However, in August it said it had terminated its gold trading agreements with Sion Trading FZE and divested itself of all interests in the gold which was provided to it by Sion under the agreements. Three months earlier, the company said its acquisition of sister company Cryptobontix had never been completed, and therefore it had never owned that company nor assumed any liabilities for its four ingot tokens. Stephen Braverman, the former chief operating officer of Arbitrade Exchange (Bermuda) Ltd, is now president of Delaware-headquartered Dignity Gold LLC, which, along with Dignity Mining Group, acquired Cryptobontix and its family of tokens, which are said to be backed by Sion Trading FZE’s “gold in Dubai”. One of those tokens is called dignity. It reached a peak value of about 27 cents in 2018. Yesterday, amid a warning about irregularities in trading, its value fell to 0.0083 of a cent, as recorded by CoinMarketCap.

2019. August 8. Arbitrade Ltd has terminated its gold trading agreements with Sion Trading FZE and divested itself of all interests in the gold which was provided to it by Sion under the agreements. The Bermuda-registered company has also stated it never assumed any liabilities for the crypto tokens called dignity, namaste, honor and orectic. Arbitrade said its business and contractual relationships with United Arab Emirates-registered Sion have now been assumed by Cryptobontix. In its statement, Arbitrade made no mention of its future plans. It acquired Victoria Hall, on Victoria Street, last October as its global headquarters, but the building has remained unused. The company’s relationships with Sion and Cryptobontix have featured a number of turns. Arbitrade announced in March 2018 that it was to acquire Ontario-registered Cryptobontix Inc, which owned the suite of crypto tokens. Since then Arbitrade has made numerous mentions of its tokens, and also a multibillion dollar gold agreement to back its tokens with precious metals. In November it said its directors had secured “in excess of $10 billion in gold to back their tokens”. This was in relation to a safe keeping receipt, or SKR, for 360,000 kilograms of gold that was said to have been verified by “an independent public accounting firm”. The identify of the accounting firm has never been publicly revealed. In January, Arbitrade said it had completed the purchase and vaulting of an additional $3.8 million of hallmarked gold bars through Sion. It issued photographs of some gold bars next to a card featuring Arbitrade’s name and the names of the crypto tokens dignity, namaste, honor and orectic. Len Schutzman, Arbitrade’s chief executive officer, said: “With our alliance with Sion, and their gold-mining network, we are able to expand our family of precious metals-backed crypto coins”. Also in January, Arbitrade’s gold procurement agent Sion announced it was to purchase a major shareholding in Arbitrade by acquiring the shares in the company held by Leila Holdings Ltd, a Bermuda exempted company owned by Arbitrade founder Troy Hogg. However in May, Arbitrade announced it had never completed the 2018 purchase of Cryptobontix due to “timing issues and regulatory approvals”, and that Mr Hogg was working to close the sale of Cryptobontix and its tokens to Sion. The following month Sion announced the completion of that deal. In an announcement from Arbitrade’s directors, released yesterday through Bermudian-based law firm Trott & Duncan Ltd, further information was given on the history and background to the deal. It said Cryptobontix issued the digital asset tokens, or ingot tokens [dignity, namaste, honor and orectic], which were designed to be backed by precious metals. “It was intended that once Arbitrade had been set up in Bermuda, Cryptobontix, which was in majority common ownership with Arbitrade, would be brought into the Arbitrade group and as part of this the ingot tokens would also transfer. In preparation for this Arbitrade contracted with Sion to provide gold in order to back the ingot tokens,” Arbitrade said in its statement. Arbitrade’s agreement to acquire Cryptobontix was conditional with the major condition being adequate proceeds from an initial coin offering. Following a number of regulatory challenges and approval delays, generally being faced in the fintech market in Bermuda, along with market conditions affecting the ICO market, the proposed ICO was not undertaken, the acquisition of Cryptobontix did not proceed and consequently the ingot tokens remained squarely with Cryptobontix. As a result, Arbitrade has never owned Cryptobontix nor assumed any liabilities for the ingot tokens.” Regarding the gold agreements, the company said: “With Arbitrade having no requirement for gold in relation to any exchange, mining or other business activities that it might undertake, negotiations for Sion to move all contractual obligations in relation to the gold to Cryptobontix were aligned when Sion identified a business opportunity in the ingot tokens and indicated their desire to acquire the shares in Cryptobontix. As a result, Arbitrade’s business and contractual relationships with Sion have now been assumed by Cryptobontix.” Trott & Duncan provided legal advice on the transaction. Arbitrade’s announcement comes two weeks after newly-formed Dignity Holdings LLC, registered in Delaware, claimed its subsidiary Dignity Gold had acquired Cryptobontix and its tokens and would continue the relationship with Sion through the SKR for 395,000 kilograms of gold. That amount of gold would be worth $18 billion at today’s prices. The CEO of Dignity Holdings is Stephen Braverman, the former chief operating officer of Arbitrade Exchange (Bermuda) Ltd. In a court document in January, Mr Braverman also referred to himself as being an officer and director of Cryptobontix. Investment and real estate businessman Kent Swig is chairman of Dignity Holdings. He is also president of New York-based Swig Equities LLC and Helmsley Spear LLC. During the past two weeks, requests by The Royal Gazette to Sion, Dignity Holdings, Dignity Gold, and Cryptobontix for information about the reported acquisition of Cryptobontix by Dignity Gold have not been answered.

2019. August 5. Arbitrade’s chief operating officer Stephen Braverman has left the company and is leading a new business that owns the crypto tokens once controlled by Arbitrade. Separately, a gold company in the US said it stopped doing business with Sion Trading FZE, a gold procurement agent for Arbitrade, very soon after the business arrangement was announced in December. The future plans of Bermudian-registered Arbitrade, now bereft of what it thought were its crypto tokens, are unknown. During the past three months The Royal Gazette has made repeated attempts to contact Arbitrade, but has received no response. Arbitrade’s former COO, Mr Braverman, is now president and chief executive officer of newly created Dignity Holdings LLC. Investment and real estate businessman Kent Swig is the chairman. He is president of New York-based Swig Equities LLC. Dignity Holdings said that through its subsidiaries it had acquired Cryptobontix and its tokens. It intends to grow into “one of the largest, most stable global cryptocurrencies”. The company and its subsidiaries are registered in Delaware, with offices in New York City, according to a July 25 statement. There has been no update on Arbitrade’s future plans since January. A year ago the cryptocurrency exchange and mining company said it would create hundreds of jobs on the island, that it had “title” to billions of dollars of gold bullion to back its crypto tokens, and that it would store bullion in Bermuda. It acquired the seven-storey Victoria Hall office building, on Victoria Street, in October to be its global headquarters. However, ten months later the building remains unused and in darkness. At the end of June its website was cleared of all information, including a list of officers and directors, and replaced with a “coming soon” message. Arbitrade is still listed as active at Bermuda’s Registrar of Companies. The company does not have a licence to operate a digital asset business on the island. Arbitrade lost control of Cryptobontix Inc and its family of crypto tokens in unusual circumstances. It was thought it had acquired Cryptobontix in March 2018, but in May this year it was announced that deal was never completed due to timing problems and regulatory approvals, and that Sion Trading FZE was to acquire Cryptobontix. That new deal was said to have been completed in June. Arbitrade previously claimed it had “title” to 395,000 kilograms of gold bullion, which would be worth $18 billion at today’s market price, and that the bullion would be used to back its crypto tokens. It claimed that in partnership with Sion it had secured title to the gold through an SKR, or safe keeping receipt. Arbitrade never revealed who had given it title to the gold and under what conditions, nor where the gold was, or the name of the “independent public accounting firm” that it said had verified the account. The gold bullion SKR was to be transferred to United Arab Emirates-based Sion with its acquisition of Cryptobontix in June. Four weeks later, the situation surrounding Cryptobontix changed again, according to the July 25 statement from Dignity Holdings that announced it had acquired Cryptobontix and its tokens. It said its subsidiaries, Dignity Mining Group LLC and Dignity Gold LLC, had “acquired Cryptobontix, a family of tokens backed by Sion Trading FZE’s gold in Dubai”. According to the company, Dignity Gold owns the crypto tokens called dignity, namaste, honor and orectic, and will “continue the relationship with Sion Trading FZE through the safe keeping receipt for 395,000 kilograms of gold in addition to the tokens”. The Royal Gazette has reached out to Sion for comment on the development, and to Dignity Holdings for further information, but has not received any response. In December, Sion announced it had secured a precious metals contract with Don David Gold Mexico to purchase “metal dore” from its Oaxaca Mining Unit. It planned to allocate precious metals, including those bought from Don David Gold Mexico “to further enhance Arbitrade’s existing gold assets”. Don David Gold Mexico is a wholly owned subsidiary of Colorado-based Gold Resource Corporation. Gold Resource said it quickly ended its relationship with Sion due to “red flags” that included questionable procedures, weight confirmations and payment of invoices. Max Barber, owner of Sion, disputed that and said it was his company that was unsatisfied with the weight and purity documentation for the gold provided by the mine. In reply, Jason Reid, CEO and president of Gold Resource, said his company has been selling gold for years to reputable buyers in the industry without encountering any of the issues claimed by Sion. He said Gold Resource has since closed out the deal and terminated its relationship with Sion.

2019. July 12. The president of a company linked with Arbitrade’s past claim to have “title” to $16 billion of gold bullion, has been named as a defendant in an unrelated US civil court action that involves the alleged non-return of a $4 million deposit. Utah-based Scotia International of Nevada Inc, and its owner Max Warren Barber, have been named among defendants in a complaint filed at the District Court for the Eastern District of Pennsylvania. The Evolant Blind Trust is the plaintiff, and the complaint involves an allegation that a $4 million deposit paid to Scotia has not been returned, and that a surety bond linked to the deposit and guaranteed by another named defendant, Wyoming-based SubGallagher Investment Trust, has not been paid. The Evolant Blind Trust is represented by law firm Bochetto & Lentz, PC, and has demanded a trial by jury. As of yesterday, there was no listed counsel for the defendants. The Royal Gazette was unable to reach SubGallagher Investment Trust, and did not receive a response to an e-mail inquiry to Mr Barber at Scotia International about the case. Mr Barber is president of Sion Trading FZE, a subsidiary of Scotia International of Nevada. A year ago it was named by Bermudian-registered Arbitrade as its partner in securing “title” to 395,000 kilograms of gold bullion to back four crypto-tokens. Details of the case were first reported by the OffshoreAlert website.

2019. July 5. Arbitrade’s future plans in Bermuda are a mystery after its website was cleared of information. It is a year since Arbitrade announced plans to create a “world-class cryptocurrency exchange and coin company” in Bermuda, training Bermudians and eventually having 400 employees on the island. However, its global headquarters, the seven-floor Victoria Hall, on Victoria Street, remains in darkness nine months after being acquired, and its website has reverted to a “coming soon” message. Arbitrade was separated from a family of crypto-tokens and crypto-mining operations due to a business deal involving two other companies. That deal was completed last week. It has also been indicated that the crypto-currency exchange and coin company will no longer possess its purported “title” to gold bullion worth $16 billion, which Arbitrade said would be used to back the crypto-tokens. Arbitrade’s website became devoid of information a week ago. A list of directors and officers vanished, along with details of its plans, including those regarding the creation of a cryptocurrency exchange called the Bermuda Block Exchange, and photographs of its global headquarters Victoria Hall, on Victoria Street. The website now shows the words “coming soon” and the e-mail address support@arbitrade.io. It is a similar situation at the website of Cryptobontix Inc. Cryptobontix was thought to have been acquired by Arbitrade in March 2018, until it was announced two months ago that the purchase never closed due to timing problems and regulatory approvals. Cryptobontix Inc, a Canadian-based company, has now been acquired by United Arab Emirates-based Sion Trading FZE. That deal was completed on June 28, and included all assets belonging to Cryptobontix, including its family of four crypto-tokens. A claimed gold agreement giving Arbitrade “title” to 395,000 kilograms of gold bullion, to be used to back the crypto-tokens, was to be transferred to Cryptobontix ahead of the closing of its acquisition by Sion Trading FZE. Arbitrade has never revealed the name of the independent accounting firm it said had verified the safe keeping receipt for the bullion. Sion Trading FZE had been acting as the precious metals procurement agent for Arbitrade. Last week, a day before the deal between Sion and Cryptobontix was completed, Cryptobontix issued an apology for a technical error that had resulted in 1,200 e-mail addresses on a private directory of subscribers to its website being made publicly visible for a short time. The message was shared by Arbitrade. It was at about this time that the websites of the two companies reverted to “coming soon” messages. Last Friday, Max Barber, president of Sion Trading FZE, in a statement said: “Sion Trading FZE [has] completed the purchase and acquisition of all shares and assets of Canadian crypto firm, Cryptobontix Inc. The transference of assets includes the tokens — Dignity, Namaste, Honor, and Orectic. Subscribers and token holders can look forward to more exciting news following the upcoming holiday period in the United States and Canada.” In light of the changed circumstances surrounding Arbitrade, The Royal Gazette has sent it a request for information about its future plans. Arbitrade is not listed as a licensed entity on the Bermuda Monetary Authority website.

2019. May 25. Arbitrade is to transfer its purported $16 billion gold bullion agreement to another company after an unexpected change in its ownership rights. The Bermuda-incorporated cryptocurrency exchange and coin company will also no longer have any involvement in the crypto token called “dignity”, which was to be backed by gold bullion, nor will it be involved in three other planned bullion-backed crypto tokens. The reason is the discovery that a business deal, announced more than a year ago, never closed due to timing problems and regulatory approvals. As a result, Arbitrade’s purchase of partner company Cryptobontix Inc, revealed in March 2018, was not concluded. The two companies have been under the Arbitrade umbrella for more than a year. Cryptobontix owns the family of Arbitrade-associated crypto tokens, including dignity, which trades at about half a cent per token. The nature of the ownership situation between Arbitrade and Cryptobontix came to light in the wake of Sion Trading FZE announcing in January that it would become a major shareholder in Arbitrade. Sion Trading FZE entered into a conditional agreement to acquire the shares in Arbitrade Ltd held by Leila Holdings Lt d, a Bermuda exempted company owned by Arbitrade founder Troy Hogg. But after the revelation that the deal between Arbitrade and Cryptobontix was never closed, Mr Hogg is now working to close the sale of Cryptobontix to Sion, according to a statement issued by Cryptobontix and shared by Arbitrade. Cryptobontix said, “Sion Trading FZE’s owners and Troy have now separated themselves from everyone else to finish the final details necessary for closing the sale of the company.” The firm added that both parties had agreed to use Canadian-based law firms to complete the transaction. The statement said: “The board of directors, employees, and partners of Arbitrade Ltd no longer have any involvement in this negotiation nor operations of Cryptobontix Inc, its tokens, or the mining operations.” Cryptobontix also announced that all the company’s profitable crypto mining rigs have been sent to CoinMint, a US-based digital currency data centre, and “all previous mining facilities have been terminated due to lack of service, high fees, or closing of those facilities”. Arbitrade announced in November it had received title to 395,000 kilograms of gold bullion, worth about $16.2 billion at today’s prices. It has not revealed the name of the independent public accounting firm which is said has verified the SKR, or safe keeping record, for the bullion. The firm said that was because it was bound by non-disclosure and privacy obligations. The bullion is intended to be used to back the crypto tokens dignity, namaste, orectic and honour. However, Cryptobontix said in its statement: “The original agreement for the gold shall be transferred to Cryptobontix as Sion Trading FZE moves to take over control and proceed with conducting business. “Cryptobontix, under the new ownership, will continue procurement of gold, precious metals and further developments of its crypto mining programme, as set forth when the project began.” It also said that once the sale was completed it was “understood that Sion Trading FZE would then move the company to another cryptocurrency-friendly country where they can move ahead with the plans and operations on the following tokens”. Sion holds a commercial licence in the Ras Al Khaimah economic zone of the United Arab Emirates, where its activity is listed as trading non-manufactured precious metals. It is a subsidiary of Scotia International of Nevada Inc, a mining equipment supply company based in Salt Lake City, Utah. Sion has been acting as precious metals procurement agent for Arbitrade. Arbitrade acquired the Victoria Hall office building, on Victoria Street, Hamilton, as its global headquarters last October. It did so, with Bermuda Government permission, through its subsidiary Arbitrade Properties (Victoria Hall) Ltd. The two listed shareholders of the subsidiary at the time were Mr Hogg and American James Goldberg. Victoria Hall remains vacant. Arbitrade’s earlier plans included setting up a cryptocurrency exchange and cryptocurrency mining operations and said last summer that it expected to create hundreds of jobs on the island. Arbitrade has several incorporated entities in Bermuda, but to date it has not listed as a licensed entity on the Bermuda Monetary Authority website. Arbitrade was asked for an update on its plans, but the firm did not respond.

2019. May 7. A string of communications over cryptocurrency firm Arbitrade’s bid to set up in Bermuda revealed “an embarrassing shambles”, the Opposition leader said yesterday. Craig Cannonier added he feared the island’s reputation had been put at risk after a worried managing partner of a US-based spice company and investor in Arbitrade wrote to David Burt, the Premier, and asked if Arbitrade was working with Bermuda and in operation on the island. Mr Cannonier said: “The Arbitrade saga has become an embarrassing shambles that cannot be good for Bermuda’s reputation.” He was speaking after The Royal Gazette revealed that a government official asked Arbitrade to keep its promise to donate $1 million for fintech development on the island. Correspondence received in response to a public access to information request also showed apparent confusion among Cabinet Office figures over whether or not a memorandum of understanding with the company was ever reached. The One Bermuda Alliance leader said: “It is astonishing that there was confusion within Government’s own fintech unit about whether an MOU was signed or not. “It [beggars] belief that this specialist department could apparently not find a record of any agreement.” Last night, David Burt, the Premier, said: “We are preparing Bermudians for the technology jobs of the future and I will not be deterred by the Opposition leader’s myopic focus on one of 80 tech companies that have incorporated in Bermuda since we took office.” Mr Cannonier asked: “Why was Government seeking $1 million from the firm when it did not even have a licence to operate? This was clearly an act of desperation as Government knew that without that money, it could not fulfil a key promise on its only economic plan — the creation of a fintech centre, which was, indeed, later scaled down. Government’s excuse that it wanted to exercise ‘fiscal prudence’ over this scheme was clearly an extremely disingenuous statement to cover a failure to deliver on its promises.” He added: “I am also extremely concerned that it appears that at least one investor was worried enough to contact the Premier suggesting that Arbitrade was trading on its relationship with Bermuda and asking ‘if they are inappropriately trading on a false relationship’ with the island. Is this the kind of reputation that Bermuda wants — on top of being blacklisted by the EU due to a basic error in drafting legislation?” Mr Cannonier also asked about the status of other MOUs signed with the Government more than a year ago and how much the companies involved had invested in training schemes. Arbitrade announced plans for the island last summer when it talked about a $1 million contribution for a fintech incubator. The company also said it wanted to donate $125,000 to a variety of projects, including a gang violence reduction scheme that involved young people working on chicken farms, the Mirrors programme, Family Centre, and a programme for active shooter preparedness in schools and charities. Copies of correspondence provided to The Royal Gazette last week showed Wayne Smith, the head of the fintech business unit, wrote to Len Schutzman, the Arbitrade chairman, to ask that “in accordance with the public announcement of July 2018” the company proceeded with its “commitment of a $1 million contribution to Bermuda Fintech Development Fund”. The documents revealed that Cherie-Lynn Whitter, the Cabinet Office permanent secretary, earlier asked Mr Smith for a “copy of the MOU that speaks to the commitment”, but he replied that he could not find an agreement. They also included an e-mail from Zach Bobker, a managing partner of a US-based online spice delivery service, who said he had invested in Arbitrade cryptocurrency token dignity, or Dig, since February 2018. He asked Mr Burt if the Premier could clarify whether Arbitrade was working with Bermuda and was operating on the island. He said it seemed the company had “completely disappeared” on token holders since January. Mr Bobker added: “Or, if you can’t speak directly on the matter perhaps you can gently encourage Arbitrade to get in touch with their token holders.” Mr Bobker added: “If they are inappropriately trading on a false relationship with Bermuda, this would be important for us remaining token holders to know.” Mr Smith told Mr Bobker that Arbitrade had not been granted a licence to launch an initial coin offering or to conduct digital asset business in Bermuda. He added that the company could not operate from its Victoria Hall building on Victoria Street, Hamilton, until it obtained the required licences. Mr Cannonier said there were questions Mr Burt should answer “urgently”. He asked: “Does he still expect Arbitrade to donate $1 million to the fintech centre? If so, when? What about all the other donations that Arbitrade promised, such as the chicken farm? Has it donated the $45,000 it promised? Has the fintech centre started yet? If so, what is happening? Did the Premier reply to the concerned investor? If he did, what did he say?” A government spokeswoman said on Saturday that no money had been paid into the fintech development fund. The Premier explained: “We have an extremely high standard and the Government, in conjunction with the Bermuda Business Development Agency, will continue the work of attracting companies to our shores that can meet the Bermuda Standard. I am fully confident in the Bermuda Monetary Authority’s ability to scrutinize companies who wish to operate digital asset businesses in and from Bermuda, and look forward to the pace of job creation in this industry to accelerate as more companies become licensed.” Senior executives at Arbitrade have not responded to requests for comment.

2019. May 6. A spice trader who invested in an Arbitrade cryptocurrency token wrote to the Premier seeking assurances about the company’s operations in Bermuda after it “disappeared on” backers earlier this year. Zach Bobker, a managing partner of online delivery service My Spice Sage, told David Burt he feared the firm could be “inappropriately trading on a false relationship” with the island. He said in an e-mail to Mr Burt that he had invested in dignity, or Dig, since February 2018 and had followed Bermuda’s emerging fintech industry. Mr Bobker said he had listened to more than 200 hours of Bermuda Parliament sessions and was “impressed”. He wrote: “I reach out because of the strange situation Dig/Arbitrade investors are currently in. The few of us remaining that is. Arbitrade has been trading on their relationship with Bermuda since last year.” Mr Bobker added: “Unfortunately, the company has gone completely quiet since January. It is impossible to get a response from anyone at the company.” He said: “I know this isn’t your problem and I’m not trying to make it your problem, as I know listening to Bermuda Parliament you have much more pressing matters at hand. However, given that Arbitrade has traded on the Bermuda name for close to a year now, I was hoping you can clarify if they are in fact working with Bermuda and are still in operation in your country. Or if you can’t speak directly on the matter perhaps you can gently encourage Arbitrade to get in touch with their token holders. I would imagine Bermuda does not want companies falsely capitalizing on the Bermuda name, especially in this emerging space. They have completely disappeared on us token holders since January. If they are inappropriately trading on a false relationship with Bermuda, this would be important for us remaining token holders to know so we can both move on with our investment lives and also pursue any appropriate legal remedy.” The e-mail was among Arbitrade-related correspondence released to The Royal Gazette by the Government after a public access to information request. Denis Pitcher, a technical consultant in Bermuda’s fintech business unit, forwarded the e-mail to Jane Walker, a senior lawyer at legal firm Trott & Duncan, which acts for Arbitrade. He told her his official position was not to disclose the status of applications to protect the privacy of companies. Mr Pitcher wrote on April 1: “Arbitrade at this time have not been granted a licence either to launch an ICO in Bermuda or conduct digital asset business in Bermuda.” Mr Pitcher added that getting a licence could take some time and that Omega One, an agency brokerage for cryptocurrencies, had acquired one only two weeks before after it signed a memorandum of understanding in May last year. He pointed out that was “testament to the high standard of requirements”. Ms Walker said Mr Bobker’s inquiry was not the first and revealed that Mr Burt and Wayne Caines, the Minister of National Security, who had responsibility for fintech at the time, had earlier recommended that public statements about Arbitrade should be limited. She wrote: “As with the Government’s policy of non-disclosure in relation to the status of applications other than to regulators or the Government as required we advise our clients [on the advisement of the Premier and minister Caines some months ago] keep all statements in relation to the company to a minimum.” Mr Bobker received an e-mail reply from Wayne Smith, the head of the fintech business unit, on April 8, who also said that Arbitrade had not been granted a licence either to launch an initial coin offering or to conduct digital asset business in Bermuda. He added that the company had “successfully passed the vetting process” for permission to buy Victoria Hall, its intended global headquarters on Victoria Street, Hamilton. Mr Smith said: “However, they are not permitted to operate their business from the premises until they have obtained the appropriate licences. We do note that Arbitrade lists on their website that Victoria Hall is the home of their future office, not their current office.” A government spokeswoman said the Bermuda Monetary Authority should be contacted for information on digital asset business licences. Omega One is the only DAB licence-holder listed on the BMA website. The Gazette e-mailed senior Arbitrade figures for comment, but there was no response.

2019. May 6. An acting Registrar of Companies found “no obvious deficiencies” in a business licence application from cryptocurrency firm Arbitrade, but compliance checkers said there were problems with the company’s plan to combat money laundering and terrorist financing. Correspondence provided by the Government to The Royal Gazette in response to a public access to information request showed concerns outlined by a Registrar of Companies team, that found three requirements in Bermuda’s initial coin offering regulations were not satisfactorily met. A note to the Fintech Advisory Committee sent from Sameera Hasan Swan, the assistant registrar for compliance dated January 7 said the ROC’s compliance unit considered an Arbitrade application to carry out ICO business in December last year. An ICO is an offer by a company to the public to buy or acquire digital assets. The letter said Gladwina O’Mara, the acting registrar, “conducted a review of the application package for completeness”. It added: “Noting no obvious deficiencies in the application package as a whole, on 27 December 2018, Ms O’Mara forwarded the application package to Cheryl Mapp, chairperson of the Fintech Advisory Committee to circulate to the whole Fintech Advisory Committee for consideration and review.” The letter advised the fintech committee of the compliance team’s comments after consideration of Arbitrade’s anti-money laundering and antiterrorist financing compliance programme outline, which was dated December 18, 2018, and submitted in relation to the ICO application. It added that responses were based only on the documents reviewed and did not include “an opinion on the quality of the business model” or other matters. The compliance unit said the company should submit a final version of its AML/ATF plans “containing no place holder or bracketed parts”. It found the compliance programme outlined by Arbitrade Ltd “sufficiently” addressed regulations on identity verification, measures to cease transactions with an ICO participant if necessary and record-keeping. But the unit said the AML/ATF compliance programme outline did not properly address “how the company will apply enhanced due diligence to business relationships on a risk-sensitive basis” or how it intended to use third parties. It advised that Arbitrade should submit an outline that contained information which had been referenced in brackets to rectify the two issues. The unit also found that the proposal did not sufficiently address requirements to audit the ICO. Two pages of the document were among a number of items provided to The Royal Gazette but the note had no closing remarks or signature, so it was unclear if it was written by Hasan Swan or whether the original included further pages. No response was received to a request for clarification on Friday. The Pati disclosures also contained an e-mail from Troy Hogg, an Arbitrade founder, that revealed he was considering the introduction of a Bitcoin exchange traded fund on the Bermuda Stock Exchange that would make it easier for investors to gain exposure to the cryptocurrency. Mr Hogg told Wayne Caines, the Minister of National Security, who had responsibility for fintech at the time, that he was “curious” as to whether there would be any objection to him “launching another crypto asset in Bermuda”. He added in the e-mail on January 14: “If not, I am interested in launching a Bitcoin ETF on the BSX. Since it’s an actual traded commodity on the stock exchange, would I need to obtain a digital asset licence in order to launch that on the exchange if the BSX was willing to do it?” The request was forwarded to David Burt, the Premier, Wayne Smith, the head of the fintech business unit, and Moad Fahmi, a senior adviser for fintech at the Bermuda Monetary Authority. Mr Smith suggested a digital asset licence may be needed for Mr Hogg’s proposal, but if Arbitrade had already applied for one it might not be necessary. Mr Fahmi said the regulator could not disclose whether or not any such applications had been received. He added that issues related to a bitcoin ETF were “not simple”. Mr Fahmi added: “I find the US experience with Bitcoin ETF very telling of the complexity of such products that should be deployed with great care by a sophisticated ETF provider.” Several attempts to establish a Bitcoin ETF in the US have been blocked by the Securities and Exchange Commission, the US financial services watchdog, over the past three years because of concerns about a lack of transparency and the potential for fraud and price manipulation. Mr Hogg did not respond to a request for comment on his Bitcoin proposal.

2019. May 6. Crypto-currency firm Arbitrade were urged by the Bermuda Government to keep its promise to plough $1 million into fintech development, despite not having a licence to run a digital asset business on the island. Correspondence obtained by The Royal Gazette showed apparent confusion among leading Cabinet Office figures over whether or not a memorandum of understanding was signed with the cryptocurrency exchange and coin company. And one feared a planned incubator set-up for the new sector would “fall off the radar” if there was no written commitment to donate the money. Arbitrade Ltd is incorporated in Bermuda, along with four subsidiaries, and revealed bold plans for operations here last summer, including a seven-figure contribution towards a fintech development hub later named Project 44 and earmarked for Church Street, Hamilton. It emerged earlier this year that the project was shelved and the Government said in February it wanted to guarantee “fiscal prudence” and to make sure that the proposed centre, expected to include sleeping pods and a gaming area, were not already available in the private sector. Copies of communication received by The Royal Gazette last week in response to a public access to information request showed that officials asked Arbitrade in January to follow through with its $1 million announcement. A government spokeswoman confirmed last Saturday no payment had been made. Wayne Smith, the head of the fintech business unit overseen by the Cabinet Office, wrote to Wayne Caines, the Minister of National Security, who had responsibility for fintech at the time, on December 12, 2018. He asked: “Do we have anything in writing from Arbitrade? Project 44 is about to fall off the radar and the list of initiatives if we cannot find anything. I have nothing.” He said “Cherie”, understood to be Cabinet Office permanent secretary Cherie-Lynn Whitter, had a sample cheque that was attached to the e-mail. Mr Smith added: “That’s not worth anything.” A photograph included in the documents provided to The Royal Gazette showed a mock cheque dated June 29, 2018 that suggested $1 million would be paid to The Bermuda Fintech Innovation Hub. It had no payee name and made no reference to Arbitrade, any other company, or individuals. Mr Caines replied: “Yes, we have to ask them directly if they have completed the KYC [know your customer] process and when they will give the money.” He directed Mr Smith to Delroy Duncan, the director and head of litigation at Trott & Duncan which acts for Arbitrade, but no correspondence between the pair was included in the documents. Jane Walker, a senior corporate attorney at Trott & Duncan, declined to comment on the exchange when she was approached last Friday. Mr Smith wrote in an e-mail to James Goldberg, an Arbitrade founder, on January 9: “Further to our conversation last evening, we wish to write to you to formally request that you deposit the one million dollars that Arbitrade promised to donate to Bermuda into the Bermuda Fintech Development Fund.” Mr Goldberg forwarded the e-mail to Len Schutzman, Arbitrade’s chairman and chief executive, Troy Hogg, another founder of the company, and Max Barber, who is understood to be a manager at Sion Trading FZE, a business partner of Arbitrade. Mr Smith also asked for an address where he could send a letter. He added: “I could also bring a hard copy with me next week when it is hoped we can all meet in Miami.” Mr Schutzman responded two days later with his Florida address and agreed a meeting could be held the next week. A reply from Mr Smith the same afternoon said he would e-mail the letter that day and deliver a print copy in person. He proposed to meet the following Tuesday at the Kimpton Epic Hotel in Miami before lunch. Mr Smith was also in an e-mail exchange with Ms Whitter over the same period — January 9 to 11 — when he sent her a draft of the letter to review. She answered: “Please amend the language. We cannot write to a company and ask them to ‘make good on your promise’. Do you have a copy of the MOU that speaks to the commitment? Your letter should refer to the document that sets out the commitment and direct them accordingly ... please send a copy of the MOU. Wherein the commitment is referenced. Needed urgently.” Mr Smith replied: “I’m looking but don’t see an MOU anywhere. I will have to check with others but I don’t see an MOU. All we have is the check picture you sent and the media coverage.” A letter from Mr Smith addressed to Mr Schutzman, said: “Further to our communication over the past few days, I am writing as a follow-up to formally request that in accordance with the public announcement of July 2018, Arbitrade proceeds with its commitment of a one-million dollar contribution to Bermuda Fintech Development Fund.” He added: “As also discussed, I plan to be in Miami next week and would like to meet with the Arbitrade team to obtain an update on your progress.” Nothing in the documents provided to The Royal Gazette confirmed receipt of the letter or if the Miami meeting took place. A government spokeswoman confirmed that Mr Smith had met Arbitrade representatives “to obtain an update on the status of the Arbitrade Bermuda project”. She said that no money had been paid into the fintech development fund and added: “An announcement will be made when it has.” The Royal Gazette asked the Government on the evening of January 8 about a procurement notice issued last September that sought architectural and interior design services to transform 44 West Church Street “into Project 44, a premier fintech hub”. The e-mail was sent about the same time that Mr Smith spoke to Mr Goldberg on the phone about the $1 million donation. A spokesman said a $74,000 contract was awarded to Clarico Ltd for work on the West Church Street project but the project was “on hold” in a response to The Royal Gazette about 16 days later. Jamahl Simmons, the Minister without Portfolio, later said the Government decided to reallocate funds from the proposed building project to provide fintech training for Bermudians. Mr Schutzman, Mr Hogg, Mr Goldberg and Mr Barber did not respond to a request for comment.

2019. March 8. Dirt and dust cake the smoked glass doors and windows of Victoria Hall, while trash litters an approach area of overgrown shrubs. The doors are locked; there is no one inside. At the front entrance, an overflowing cigarette butt receptacle is so rusted at its base it appears likely to topple at any moment. This is the global headquarters of Arbitrade, the cryptocurrency exchange and coin company that claims it has “title” to gold bullion worth more than $15 billion. With that bullion, it intends to back a series of crypto tokens with $1 worth of the precious metal per token. One of the tokens is called dignity; it peaked in value at 29 cents in May, but has been on the slide ever since, and yesterday was trading at a ¼ cent per token on CoinMarketCap. The company has made headlines since announcing in June that it intended to establish Bermuda as its home. At the time, it told The Royal Gazette it intended to create hundreds of jobs on the island. Arbitrade claimed it was securing title to billions of dollars of bullion through a partnership with Sion Trading FZE of Dubai, which it described as “the only licensed gold trader on the Dubai Gold Exchange”. However, subsequent inquiries by The Royal Gazette revealed that Sion Trading was not a member of the Dubai Gold & Commodities Exchange, and had no affiliation or relationship with it. Instead, Sion holds a commercial licence in the Ras Al Khaimah economic zone, United Arab Emirates, and has a “flexi desk” address at the Rakez Business Zone. During the summer, Victoria Hall, a vacant seven-storey office block on Victoria Street, was listed for sale at $6.5 million. Arbitrade, which had been based in an office above a former dress shop in a beach community in Canada, took possession of Victoria Hall in October. It did so through an amalgamation of its subsidiary, Arbitrade Properties (Victoria Hall) Ltd, with the 36-year old Victoria Hall Company Ltd. In December, The Royal Gazette sent 12 questions to Arbitrade, seeking information from the company about its operations, its personnel, and its ambitions. Today, three months later, and after repeated inquires, we are still awaiting answers to those questions. Here are the questions together with, where appropriate, explanations as to why we are seeking the information.

• Will Arbitrade give full disclosure about the gold bullion claim, such as announcing the auditing firm that has verified the account?
• How many mining rigs does Arbitrade have up and running at present?

We also asked how many crypto mining rigs Arbitrade expected to have running by the end of this year. The reason we asked these questions was because the company intends to partially raise revenue by mining cryptocurrencies. In November, the company said it had about 8,700 rigs.

• Is dignity about to be listed on more exchanges, how many and when?

We asked this because Arbitrade’s dignity token trades only on Livecoin.net, a bitcoin and alt-coin exchange. The exchange suffered a malfunction in September that temporarily restricted trading in Arbitrade’s token.

• Has Steve Braverman met the CEO of Binance?

We asked this because Mr Braverman is Arbitrade’s chief operating officer. Binance is the world’s biggest crypto exchange. In an interview with The Royal Gazette in December, analyst Ronnie Moas claimed Mr Braverman had told him the dignity token was going to be listed on “a dozen exchanges”, and that he was going to Malta to meet the CEO of Binance. Binance has a Bermuda connection. In April, the company and the Bermuda Government signed a memorandum of understanding that proposed Binance develop its global compliance base on the island, creating at least 40 jobs, and develop a digital asset exchange in Bermuda “as soon as practicable”.

• Is Mohammed Markatia still involved?

We asked this because Mr Markatia was named as a director last March, and later as senior vice-president of technology, and president of technology, for Arbitrade’s payment systems subsidiary company Arbipay. He has a technology background and his resume includes founding PaySmart America and TSI Group of Companies, which were involved in distribution networks for prepaid products. While he is still listed as an Arbitrade director on the register of directors in Bermuda, he does not appear on the line-up of Arbitrade directors on the company’s updated website. Attempts to contact Mr Markatia through his Florida-based technology solutions company 24Seven Technologies, and his Twitter account, which has been publicly dormant since November, have been unsuccessful.

• What is Thomas Carter Ronk’s association to Arbitrade?

We asked this after Mr Ronk’s name was mentioned in online discussions regarding Arbitrade. Mr Ronk is chief analytics officer at Wallstreet Online Protection Research, a distributed computing system.

• Has Arbitrade applied for an operating licence in Bermuda?

We asked this to find out how close the company was to being able to proceed with its next phase of development on the island. We had additional questions that have subsequently become moot. In communications with Arbitrade during the past three months, The Royal Gazette has been told that its questions are being dealt with, including, on January 10, that “the company will shortly be making a series of press statements touching upon a number of your questions”. However, Arbitrade has released no press releases since November, except for news about a civil action in a Florida court. Meanwhile, the only signs of life at Victoria Hall are the plants that grow on the outdoor balconies.

2019. January 15. Arbitrade has put 38 gold bars on show to accompany its latest claim about the billions of dollars in bullion it has to back its crypto tokens. It has provided two photographs which show gold bars stacked in front of a card that features Arbitrade’s logo and the names of four of its crypto tokens, including “dignity” the token that is currently in circulation. The Royal Gazette is seeking further clarity on the press release, which mentions a $250 million credit being provided to Arbitrade by its precious metals procurement agent Sion Trading FZE. It also claims that a shipment of $3.8 million of gold bars has been sent to it, through Sion, and that the bullion is now vaulted in Dubai. Arbitrade is a cryptocurrency exchange and coin company that is registered in Bermuda, and has acquired the Victoria Hall office block to be its global headquarters. It is in the process of applying for its subsidiary Arbitrade Exchange (Bermuda) Ltd to be licensed under the Digital Asset Business Act 2018. In November, Arbitrade’s chief executive officer Len Schutzman said the company had “title” to 395,000 kilograms of bullion, which would be worth $16.4 billion today. The company plans to use the bullion to back a number of crypto tokens. However, Arbitrade has not said who has given it title to the gold and under what conditions, or where the gold is, or the name of the “independent public accounting firm” that it says has verified the account. It has stated the reason for this is because it is legally bound by non-disclosure and privacy obligations. In its latest press release, Arbitrade said “Sion has provided $250 million in credit to facilitate these [gold] purchases on Arbitrade’s behalf”. It also said it was “happy to confirm that it has completed the purchase and vaulting of the additional $3.8 million of hallmarked gold bars through Sion”. The Royal Gazette has sent four questions to Arbitrade’s Bermudian-based law firm Trott & Duncan regarding the release. We have asked why Arbitrade is continuing to add to its bullion stockpile after it had stated it already had title to 395,000kg of gold. We asked this, because the previous amount it said it had title to is sufficient to meet Arbitrade’s stated requirements for backing its crypto tokens, based on details it released last year. We also asked why Arbitrade needs $250 million in credit from Sion to make the purchases, and how and when that will be paid back, and why there were only 38 single kilogram bars on show in the two photographs — 20 in one, 18 in the other, representing a value of about $1.5 million. In addition, we queried two mistakes on the Arbitrade card in the photographs, where the crypto token dignity is spelled as “dignaty”, and the sentence below appears to read: “Trade tokens backed by real precious metals for the only real trade”, with the word tokens spelled as “tokes”. Sion Trading holds a commercial licence in the Ras Al Khaimah economic zone of the United Arab Emirates, where its activity is listed as trading non-manufactured precious metals. It is a subsidiary of Scotia International of Nevada Inc, a mining equipment supply company based in Salt Lake City, Utah. This month, Sion announced it is set to become a major shareholder of Arbitrade, having entered into a conditional agreement for the acquisition of the shares in Arbitrade Ltd currently held by Leila Holdings Ltd, a Bermuda exempted company owned by Arbitrade founder Troy Hogg. The deal is subject to approval being granted by the Bermuda Monetary Authority. The Royal Gazette is awaiting a response to its questions about the latest gold bullion announcement. We are also awaiting answers to a separate set of questions sent to Arbitrade a month ago. Arbitrade’s dignity token peaked in value at about 29 cents in May, but has declined and is now valued at about 0.6 of a cent per token on CoinMarketCap.

2019. January 7. The company that is acting as the precious metals procurement agent for Arbitrade is set to become a major shareholder of the cryptocurrency exchange and coin company. Sion Trading FZE has entered into a conditional agreement for the acquisition of the shares in Arbitrade Ltd currently held by Leila Holdings Limited, a Bermuda exempted company owned by Arbitrade founder Troy Hogg. In a brief statement, Arbitrade said the deal will happen subject to the approval of the Bermuda Monetary Authority, and added that BMA consent and completion of the share transfer is expected in the near future. Len Schutzman, chief executive officer and chairman of Arbitrade, said: “Sion has been a valued partner in the development of the Arbitrade business and we are delighted that one of the largest gold trading companies, that procures gold from mines around the world, will be playing a larger role in the company going forward.” Among Arbitrade’s directors is William Richard Sanders, who is listed on its website as also being a director of Sion Trading FZE. Mr Hogg is one of the two shareholders of Arbitrade Properties (Victoria Hall) Ltd, a subsidiary of Arbitrade, that gained government clearance to take possession of Victoria Hall, on Victoria Street, at the end of October. Arbitrade has named Victoria Hall as its global headquarters and said that once its subsidiary Arbitrade Exchange (Bermuda) Ltd, is licensed under the Digital Asset Business Act 2018, it will commence hiring for positions with the company. Sion Trading FZE holds a commercial licence in the Ras Al Khaimah economic zone of the United Arab Emirates, where its activity is listed as trading non-manufactured precious metals. It is a subsidiary of Scotia International of Nevada Inc, a mining equipment supply company based in Salt Lake City, Utah. Last month, Sion Trading announced it had secured a precious metals contract with Don David Gold Mexico to purchase “metal dore” from its Oaxaca Mining Unit. It said it planned to allocate precious metals, including those bought from Don David Gold Mexico “to further enhance Arbitrade’s existing gold assets”. Arbitrade said in November that it had “title'" to 395,000 kilograms of gold bullion, which would be worth $16.2 billion at current prices, to back its coins and tokens. One of the tokens is called “dignity” and is in circulation. The company has not said who has given it title to the gold and under what conditions, nor where the gold is, or the name of the “independent public accounting firm” that it says has verified the account. It has stated the reason for this is because it is legally bound by non-disclosure and privacy obligations. A spokesman at Sion Trading FZE last month told The Royal Gazette: “I can’t speak on behalf of Arbitrade, but Arbitrade has title to it [the bullion], end of story. I don’t know what the contract or deal between it is, but they have ownership of it.”

2019. January 5. Three leading people involved with Arbitrade - incorporated in 2018 in Bermuda - are seeking protection from alleged cyber- stalking by an analyst and former supporter of the cryptocurrency exchange and coin company. A civil lawsuit has been filed in Florida by Arbitrade founding figures Troy Hogg and James Goldberg, and chief operating officer Stephen Braverman, claiming they are the victims of cyber- stalking. Stock picker and analyst Ronnie Moas and his Florida-based company Standpoint Research are named as the defendants. In documents filed on Thursday at the Miami-Dade County Civil Court, it is claimed Mr Hogg, Mr Goldberg and Mr Braverman and their families have been threatened and stalked after Mr Moas and Standpoint Research posted on social media and communicated to third parties various private mobile numbers, private e-mail addresses, licence plate numbers and other information. The emergency motion for injunction for protection against cyber- stalking is pursuant with the section of Chapter 784 of the Florida Statutes, where cyber- stalking is defined as to communicate, or cause to be communicated, “words, images, or language by or through the use of electronic mail or electronic communications, directed at a specific person, causing substantial emotional distress to that person and serving no legitimate purpose”. Mr Moas has authored more than 1,000 research reports and appeared in more than 100 television, newspaper, radio and magazine interviews since 2014, and been a headline speaker at conferences, according to the Standpoint Research website. For most of 2018 he was highly positive towards Arbitrade and its “dignity” crypto token. However, that changed at the end of November, a few weeks after Arbitrade announced it had “title” to $15 billion of gold bullion to back its coins and tokens. At the end of the month Mr Moas, who has thousands of newsletter subscribers and more than 44,000 followers on Twitter, expressed concerns about the company. Arbitrade, which in October named Victoria Hall, on Victoria Street, as its global headquarters, responded with a statement in which it rejected claims that it had misled Mr Moas. Throughout December, Mr Moas continued to express his concerns through Twitter posts and interviews. The court in Miami on Thursday issued a 20-day summons to the parties named in the case. An evidentiary hearing has been scheduled for January 10, when it is expected there will be a formal examination of the charges, testimony heard and evidence received in support or in defence of the charges. Mr Hogg, Mr Braverman and Mr Goldberg are represented by attorney Donald J. Hayden, of Mark Migdal & Hayden. When last checked, Mr Moas and Standpoint Research did not have an attorney listed in relation to the case.

2018. December 28. Arbitrade Ltd’s claim to have ‘title’ to more than $15 billion of gold bullion has been supported by a company that is acting as its precious metals procurement agent. A representative of Sion Trading FZE told The Royal Gazette: “I can’t speak on behalf of Arbitrade, but Arbitrade has title to it [the bullion], end of story. I don’t know what the contract or deal between it is, but they have ownership of it.” In October, a subsidiary of Arbitrade acquired the $6.5 million Victoria Hall office block on Victoria Street. The vacant building will be the global headquarters for the cryptocurrency exchange and coin company. Len Schutzman, chairman of Arbitrade, said last month the company had title to 395,000 kilograms of bullion, a total that would be worth $16.2 billion in today’s rising gold market. The company will use the bullion to back a number of crypto tokens it has planned, including one called “dignity” that is in circulation. However, Arbitrade has not said who has given it title to the gold and under what conditions, nor where the gold is, or the name of the “independent public accounting firm” that it says has verified the account. It has stated the reason for this is because it is legally bound by non-disclosure and privacy obligations. In June, Sion Trading FZE of Dubai was identified in a conference call by Arbitrade as “one of the only licensed gold traders on the Dubai Gold Exchange,” and as its partner in securing title to what at the time was said to be $10 billion of gold. The bullion was to be audited by “a major auditing firm that operates in Bermuda, Dubai and the US”, and be stored in a Brink’s vault in Dubai. As Arbitrade paid off the bullion debt, through revenue from crypto mining operations, the gold would be shipped to a vault in Bermuda. Subsequent checks by The Royal Gazette showed that Sion Trading was not a member of the Dubai Gold and Commodities Exchange and had no affiliation with it. It holds a commercial licence in the Ras Al Khaimah economic zone of the United Arab Emirates, where its activity is listed as trading non-manufactured precious metals. Its address is a “flexi desk” at the Rakez Business Zone. Sion Trading is a subsidiary of Scotia International of Nevada Inc, a mining equipment supply company based in Salt Lake City, Utah. Two weeks ago, Sion Trading announced it had secured a precious metals contract with Don David Gold Mexico to purchase “metal dore” from its Oaxaca Mining Unit. It said it planned to allocate precious metals, including those bought from Don David Gold Mexico “to further enhance Arbitrade’s existing gold assets”. In a press release, a member of Sion Trading’s senior management, said: “We are pleased to support Arbitrade with precious metals procured from respected mining companies and known sources.” When contacted by The Royal Gazette, a representative for Sion Trading, who verified their position but asked not to be identified for security reasons, said Arbitrade’s gold deal was “doable”. He said: “Sion Trading has already put together that gold for Arbitrade. They are utilizing that as of now. There is gold from Gold Resources, and there is a bunch of other clients coming on board. Gold miners are very private people and they don’t really announce what they have going out.” Arbitrade has said an independent public accounting firm has confirmed the Safe Keeping Receipts totaling 395,000kg of gold. Regarding the use of SKRs, the Sion Trading spokesman said: “The SKR gives you ‘title’ to your bullion, and part of that receipt is the genealogy behind it, which people don’t generally give out because there are a lot of security issues pertaining to it. You don’t want to put a sign outside your door and say you’ve got gold in your safe and you go to work nine-to-five.” Don David Gold Mexico is a wholly owned subsidiary of Colorado-headquartered Gold Resource Corporation. The Royal Gazette contacted Greg Patterson, vice-president corporate development at Gold Resource Corporation, to confirm the details of the Sion Trading press release regarding the precious metals contract with Don David Gold Mexico. He confirmed it was accurate and also pointed out the final paragraph, which stated that Don David Gold and Gold Resource Corporation, its subsidiaries and affiliates “disclaim any responsibility for the adequacy or accuracy of this release, including any or all proposed plans that Sion Trading has or may have relating to precious metal dore sold to Sion”. It also said: “Gold Resource Corporation and its subsidiaries have no affiliation to any company or entity referenced in this release beyond the sale of dore to Sion Trading. Furthermore, Gold Resource Corporation and its subsidiaries are not affiliated with and have no direct or implied association with any cryptocurrency.” Arbitrade has said it will back each of its three billion dignity tokens with $1 worth of gold. The token peaked in value at about 29 cents in May, but has declined and is now valued at less than ½ cent per token on CoinMarketCap. The Royal Gazette has asked Arbitrade a number of questions, including a request for more clarity on the gold deal. A representative for Arbitrade has confirmed the questions are being dealt with.

2018. December 18. Interpol and several other agencies provided information to Bermuda’s authorities about Arbitrade, a cryptocurrency exchange and coin company, MPs heard yesterday. David Burt, the Premier, provided a personal explanation to the House of Assembly to clarify a statement he made earlier. Mr Burt told MPs in response to a query about Arbitrade during Premier’s Question Time last Friday, he indicated that “enhanced due diligence” was carried out by accessing the international Interpol system. The Premier said: “The information systems used by Bermuda’s Financial Intelligence Agency, to facilitate enhanced due diligence requests, contain information from multiple sources, not solely Interpol. Although this is a minor distinction, I felt that it was important to clarify for the record.” It was revealed this month that Arbitrade was granted permission from the Government as it acquired Victoria Hall, an office block on Victoria Street, for its global headquarters. The company earlier said it intended to back each of its three billion “dignity” tokens with $1 worth of gold, after the firm stated it had “title” to 390,000 kilograms of gold bullion. Mr Burt noted yesterday that Arbitrade had attracted much attention in the House, as well as in various forms of media. He added: “Some of this commentary has erroneously conflated the Government’s approval of a licence for this company to purchase property with due diligence done on any digital asset issued by Arbitrade prior to incorporation in Bermuda, specifically the dignity token. I wish to make it clear to this honourable House that the Government of Bermuda has not examined, scrutinized or approved any digital asset instituted by Arbitrade and to date no application has been received under the initial coin offering Act for the issuance of a digital asset.” Mr Burt added that the Bermuda Monetary Authority had not issued a licence for Arbitrade to conduct a digital asset business. He said: “The approval for a company to purchase property is wholly unrelated to Bermuda’s digital asset regime and it would not be correct to state that one will affect the other or to imply that somehow that approval to purchase property is a sign that other approvals are imminent.”

2018. December 13. An analyst who has been highly positive towards Arbitrade and its “dignity” token all year is now expressing serious concerns about the cryptocurrency exchange and coin company. Ronnie Moas, of Standpoint Research, is calling on Arbitrade to give full disclosure about its claim that it has title to $15 billion of gold bullion. He told The Royal Gazette that he now sees “yellow and orange flags and smoke” and has had heartbreaking messages from people who have suffered significant investment losses on the crypto token that he had been bullish on in his subscription service newsletter and through posts on Twitter. Mr Moas has 45,000 followers on the social media platform. Meanwhile, Arbitrade’s board of directors said they had called on Mr Moas to stop writing about dignity and Arbitrade in his e-mails and on Twitter, and dismissed claims that he had been misled by its executives and consultants, or about its “timelines for delivering certain items”. Mr Moas is the founder of Standpoint Research, which lists among his achievements the authoring of more than 1,000 research reports and appearances in more than 100 television, newspaper, radio and magazine interviews since 2014. He has also been a headline speaker at a number of conferences. Speaking to the Gazette, Mr Moas said he had received heartbreaking messages from people who had invested in the token and now stood to lose their life savings after its price plummeted. Dignity was yesterday valued on CoinMarketCap at a fraction above half a cent, having fallen 85 per cent during the past month. Arbitrade incorporated in Bermuda this year and has named Victoria Hall, on Victoria Street, as its global headquarters. The $6.5 million office block was acquired by Arbitrade Properties (Victoria Hall) Ltd, a subsidiary of Arbitrade Property Holdings. The company is in the process of having its subsidiary, Arbitrade Exchange (Bermuda) Ltd, licensed under the Digital Asset Business Act 2018. Arbitrade has made a number of bold claims during the past six months, including its plan to use gold bullion to back five crypto tokens, with each token backed by $1 worth of bullion. One of the tokens is dignity, and it has a total supply of three billion tokens. At present there are 523 million dignity tokens in circulation, according to CoinMarketCap. Len Schutzman, chairman of Arbitrade, said Arbitrade had “title” to 395,000 kilograms of gold bullion, worth about $15.5 billion, to back its crypto tokens, and that this gold had been verified by an independent public accounting firm. However, the company did not identify who had given it title to the gold, under what conditions, nor where the gold is or the name of the independent accounting firm. A reason given later for this was that it was commercially sensitive information and the company was legally bound by non-disclosure and privacy obligations. Mr Moas said he wants Arbitrade to “come clean” on its gold claim, and to provide answers to questions he has asked them in the past few weeks. He said his outlook on Arbitrade had also changed for a number of reasons. On Monday he shared some his thoughts on the Wild West Crypto Show online podcast. Speaking to The Royal Gazette, he said: “The deal-breaker for me was that I sent them [Arbitrade] a couple of dozen questions last week, and they did not respond to any. I don’t think they had an answer to my questions. They are saying they have $15 billion of gold, but the DIG [dignity] coin is trading at less than a penny right now. If you have $15 billion, your name does not trade at $3 million on CoinMarketCap.” Arbitrade’s board of directors last week said it was legally bound by non-disclosure agreements and obligations, and had been “as open and transparent as possible with Mr Moas on everything that the company was working on which could be publicly shared”. The statement added: “The company recognizes that Mr Moas has been a loyal supporter of Arbitrade and is an authority in the blockchain space and, as a result, the company has not contradicted him up until this point; however, this behavior has now become unacceptable. We trust that on mature reflection Mr Moas would accept the position that the company is legally bound to take as a result of the NDAs [non-disclosure agreements] to which it is subject.” When asked what he felt now needed to happen Mr Moas, who owns three million dignity tokens, said: “At the very least I want there to be full disclosure before this gets listed on any other exchanges. I don’t think they can clear this up unless they can show the $15 billion of gold.” The Royal Gazette has sent a number of questions to Arbitrade and will publish further news in the coming days.

2018. November 6. Arbitrade Ltd has stated it has “title” to 395,000 kilograms of gold bullion, a total that would be worth $15.6 billion. However, the company’s short statement does not mention who has given it title to the gold and under what conditions, nor where the gold is, or the name of the “independent public accounting firm” that it says has verified the account. The cryptocurrency exchange and coin company last week announced it had bought the seven-storey Victoria Hall office building in Hamilton as its global headquarters. Attempts by The Royal Gazette to gain further information directly from Arbitrade and its US-based media partner, both last week and yesterday, have so far been met with silence. In its statement, Arbitrade said that Len Schutzman, its chairman, had announced the company has “received title of gold bullion stored at independent security facilities in the amount of 395,000 kgs with a current market value in excess of $10 billion” and as such “has completed the required regulatory gold vaulting verification compliance”. The statement continued: “As mandated, an independent public accounting firm has verified the account in good standing, confirmed Safe Keeping Receipt ‘SKR’ totaling 395,000 kgs of gold, by direct confirmation from the independent secure vaulting company”. Mr Schutzman is quoted as saying: “Since most cryptocurrencies are not backed by gold, this feature should make purchase of Arbitrade’s coins and tokens more attractive to the blockchain community.” Explaining how the gold bullion transactions will work, Arbitrade stated in July: “As Arbitrade pays off the gold bullion debt, the gold can be traded for the appropriate metals backing each token before being shipped to the vault in Bermuda, where it will be audited once a year as the reserves build up.” In an earlier explanation of its gold acquisition process, Arbitrade said it was similar to a house purchase and a mortgage. It stated: “In a nutshell, the entities that are selling us the bullion are giving us title upon closing, meaning we own it like a person would if they purchased a house. Then they place a debt against bullion under a structured financing over a certain period of time, which would be similar to a mortgage. Fifty per cent of the daily mined proceeds is applied to that debt. The only difference between a house mortgage and the Arbitrade bullion acquisition is that every day a certain amount of the bullion becomes wholly owned by the tokens each of the four bullion represents.” [Arbitrade previously spoke of utilizing gold, silver, platinum and palladium bullion]. Arbitrade has stated its intention to pay for the bullion through cryptocurrency mining operations, and in May said it was lining up “the largest deal ever placed for mining rigs in the history of the industry”. Mining rigs are computer units that are used most commonly to validate and process cryptocurrency transactions by solving complex mathematical equations. Digital tokens of the currency that has been validated are used as payment for the service. The profitability of cryptocurrency mining has been brought into question this year after the fall in value of the likes of bitcoin, which is now valued at less than $7,000, compared with its peak of around $19,000 in December. Yesterday’s gold bullion statement was released through a press release distribution service and was initially posted and shared by individuals on Twitter many hours before appearing on the official Arbitrade Exchange account on Twitter. An attempt to contact Arbitrade’s US-based media partner, Creative Management Partners, which has offices listed in New York and Beverly Hills, ended up at an anonymous automated voicemail service, apparently in Massachusetts, while an e-mail bounced back undelivered. The same lack of response was encountered last week following Arbitrade’s announcement that it had acquired Victoria Hall. Similarly, there was no response to an e-mail sent to Stephen Braverman, Arbitrade’s chief operating officer. In June, during a conference call where no questions were allowed, Arbitrade said it intended to back five crypto tokens with $10 billion of gold and precious metal bullion. At the time it claimed it was in partnership with Sion Trading FZE of Dubai — which he described as “the only licensed gold trader on the Dubai Gold Exchange” — would be granted $10 billion worth of physical gold to be used to back its tokens. However, enquiries by The Royal Gazette subsequently revealed that Sion Trading was not a member of the Dubai Gold & Commodities Exchange and had no affiliation or relationship with it. A company called Sion Trading FZE does hold a commercial licence in the Ras Al Khaimah economic zone, United Arab Emirates. There is no gold exchange in Ras Al Khaimah. Sion’s activity is listed as trading non-manufactured precious metals, while its address is a “flexi desk” at the Rakez Business Zone. When Arbitrade last week announced it had acquired Victoria Hall — a vacant property that had been on the market for $6.5 million — Mr Schutzman said: “Once its subsidiary, Arbitrade Exchange (Bermuda) Ltd is licensed under the Digital Asset Business Act 2018, it intends to commence its hiring process, which will create numerous training and employment opportunities for Bermudians.” David Burt, the Premier, said: “We thank Arbitrade for this tangible sign of commitment to Bermuda and look forward to further announcements as the island continues to set the pace for the world in fintech.” Arbitrade’s “dignity” crypto token rose more than 40 per cent in value yesterday in the wake of the gold bullion statement.

2018. July 11. A company that Arbitrade said would be its partner in a $10 billion gold bullion deal in Dubai is not a member of that city’s gold exchange. It raises a question over a claim by the founder of Arbitrade, Troy Hogg, who said the company was in partnership with Sion Trading FZE of Dubai to be granted title to $10 billion worth of physical gold. In a telephone press conference on June 28, he described Sion as “one of the only licensed gold traders on the Dubai Gold Exchange”. However, the Dubai Gold & Commodities Exchange, in a response to an enquiry by The Royal Gazette, said: “We can confirm that Sion Trading FZE is not a member of Dubai Gold & Commodities Exchange and we have no affiliation or relationship with them.” Arbitrade is a cryptocurrency exchange and coin company that is relocating to Bermuda. It has said it is in the process of acquiring Victoria Hall, the $6.5 million seven-storey office block on Victoria Street, as its new headquarters. The gold bullion mentioned in the press conference is to be used to back five crypto tokens. Arbitrade plans to bring gold, silver, platinum and palladium bullion to a vault on the island. Arbitrade has also said it will donate $1 million towards the refurbishment and launch of a Bermuda Government co-working incubator space for the fintech sector. It has expressed a desire to donate a further total of $125,000 to a variety of charities and programmes on the island. The Royal Gazette has made an enquiry with Arbitrade’s media contact regarding the Dubai Gold & Commodities Exchange’s comments about Sion Trading. We are awaiting a response. Arbitrade has said it has incorporated in Bermuda, and has passed the KYC/AML [Know Your Customer/Anti-Money Laundering] process. The Royal Gazette has made an enquiry with the Bermuda Monetary Authority about the status of the company, and is awaiting a response. Wayne Caines, Minister of National Security, during an interview with ZBM’s Bermuda Tonight on Monday, said three directors of Arbitrade had met with the BMA and had gone through the vetting process. “At the end they were given permission to incorporate, but that is only the first part,” he said. The minister explained that the company would go through a further regulatory process and vetting regarding its business plan. The company did not appear on the Bermuda Registrar of Companies website yesterday, however eight directors of Arbitrade Ltd do appear on the Directors Register. There is no listed address for the company. Separately, the Limited Liability Company (Initial Coin Offering) Regulations 2018, and the Companies (Initial Coin Offering) Regulations 2018 were gazetted in the Bermuda Government official notices yesterday. In a statement, Mr Caines said that all companies wishing to launch an initial coin offering or run a digital exchange are subject to a stringent assessment and review process. He said: “To be clear, once the Acts fully come into effect, any company will need to follow the application process. Therefore any discussions about potential offerings or exchanges are premature.”

2018. July 9. An office above what was once a small dress shop in a tiny beach community in Canada seems an unusual place to find a crypto company that is set to take over a seven-storey office block in Bermuda and be granted title to $10 billion of gold bullion in Dubai. 

But the upstairs floor of the property that once housed the Skirt shop at 38 Main Street, Grand Bend, Ontario, is the given address for the headquarters of Arbitrade, which has said it will donate $1 million to the Bermuda Government. That donation was to have been made in the early part of last week. Arbitrade’s office location in Grand Bend was a perplexing oddity to some who had looked it up on Google Maps and found the dress shop on the street view image. The company issued a statement to explain the situation. It said the original creator and owner of Arbitrade owned the large office above the shop and used the address as a temporary headquarters “until more suitable accommodations could be acquired”. The statement on May 24, added: “Very shortly, Arbitrade will officially announce that it has placed an offer to purchase a seven-storey office tower in the country where the business will ultimately be domiciled. The new headquarters will house 360 employees and be the head office of operations.” Speaking to The Royal Gazette on June 27, Len Schutzman, Arbitrade’s non-executive chairman, said the company had chosen Victoria Hall, on Victoria Street, for its global headquarters. At the time, the building was on the market for $6.5 million. The following day, Arbitrade founder Troy Hogg said the property deal was set to close during the following two weeks, with renovations to be carried out during the summer. The Royal Gazette has taken a closer look at the company after it made bold statements regarding its ambitions for its future path as it establishes its global headquarters in Bermuda. Arbitrade said it would donate $1 million to the Government to help pay for the refurbishment and launch of a fintech co-working incubator space in a Hamilton building. It has also expressed a desire to donate a further $125,000 to a variety of projects including the Mirrors programme, Family Centre, and two programmes that have not been announced by the Government — one an Alice programme for active shooter preparedness in schools and charities, the other a gang violence reduction proposal that is to include gang members being paid to work on chicken farms. Arbitrade said it has incorporated in Bermuda, but as of Friday its name did not appear on the Bermuda Registrar of Companies website. In its May statement to “followers, investors and token holders” that explained the Grand Bend office, Arbitrade also gave an explanation of how the purported multibillion bullion deal will work. It referred to acquiring $8.7 billion of bullion, comprising gold, silver, platinum and palladium, to back four crypto tokens. That total was subsequently increased to $10 billion to back five tokens, when Mr Hogg spoke during a telephone press conference on June 28. In the earlier statement, Arbitrade explained: “This gold acquisition is similar to that of a house purchase and a mortgage. In a nutshell, the entities that are selling us the bullion are giving us title upon closing, meaning we own it like a person would if they purchased a house. “Then they place a debt against said bullion under a structured financing over a certain period of time, which would be similar to a mortgage. Fifty per cent of the daily mined proceeds is applied to that debt. The only difference between a house mortgage and the Arbitrade bullion acquisition is that every day a certain amount of the bullion becomes wholly owned by the tokens each of the four bullion represents. This wholly owned bullion is what can be redeemed each year during the utility token swap period if desired.” Arbitrade said last week that as the bullion debt is paid off the gold and other precious metal bullion will be shipped to a vault in Bermuda. It said it would take title of the bullion through what is called a SKR [safe-keeping receipt]. The Royal Gazette is attempting to establish secondary verification of the other company mentioned in the bullion deal, Sion Trading FZE of Dubai. The Dubai Gold and Commodities Exchange, where Sion is said to be a licensed gold trader, has not yet responded to an e-mail enquiry about the company. During Arbitrade’s telephone press conference, where no questions were allowed, a man identified himself as being from Sion Trading and said its parent company was Scotia International in the US. Scotia International of Nevada, based in Salt Lake City, Utah, has been identified by a number of people, including the Medium.com website, as the company mentioned. The Royal Gazette has phoned Scotia International and sent e-mails seeking verification that it has a subsidiary in Dubai, and that it has an agreement with Arbitrade. We are awaiting a response. In its news update last week, Arbitrade said Mr Hogg was one of the first people to meet the Premier and ministers in charge of the fintech space, and that Arbitrade had made ten visits to the island. A question to Government to confirm the meetings and how many had taken place has not been answered. Mr Burt did post a message on Twitter at the end of May to say he had attended a presentation by Arbitrade at the Bermuda Underwater Exploration Institute. Arbitrade said last week it is awaiting licences to operate in Bermuda, which “might take as long as September”.

2018. July 6. Gold, silver, platinum and palladium bullion will be shipped to Bermuda and held in a vault to back a number of crypto tokens, according to Arbitrade. The cryptocurrency exchange and coin company, which is setting up its global headquarters in Bermuda, has given further details about a purported deal to acquire title to $10 billion in gold bullion. The bullion will be used to back five crypto tokens with a variety of precious metals. The tokens are Dignity, Namaste, Oretic, Honor, and the Arbitrade ICO token. In a telephone press conference last Thursday, Arbitrade’s founder Troy Hogg expressed a desire to support a number of unconfirmed Bermuda government projects, ranging from chicken farms employing gang members to an active shooter preparedness programme for schools and charities. He also said it was donating $1 million to the Government to help pay for the refurbishment and launch of a fintech co-working incubator space in a Hamilton building. In an updated news release yesterday it added details about its plans, including the $10 billion gold bullion deal. “Arbitrade Ltd has made a definitive deal with Sion Trading FZE Dubai to acquire $10,000,000,000 in gold bullion. The bullion will be held at Brinks’ vault at the Dubai Gold Exchange. Arbitrade will have the title certificate, which is called an SKR, in hand in the next two weeks,” the company said in a statement credited to the “Arbitrade Team”. “The company will have the bullion audited by a major accounting firm that operates in both (sic) Bermuda, Dubai and the United States before the end of September or as the accounting firm’s schedule permits. The audit is not an important factor and is only being done to satisfy US regulators.” The company outlined how the gold bullion will be divided up to provide backing in gold, silver, platinum and palladium, for its tokens. “As Arbitrade pays off the gold bullion debt to Sion, the gold can be traded for the appropriate metals backing each token before being shipped to the vault in Bermuda, where it will be audited once a year, again, as the reserves build up,” the Arbitrade Team said. The company said it had been told that it may take until September for it to receive licences to operate in Bermuda and launch an initial coin offering, with the delay being due to “regulatory issues”. In the meantime, it will oversee the buildout and upgrades to Victoria Hall, the seven-storey office block on Victoria Street that is to be its headquarters. Arbitrade has said the purchase of the building, on the market for $6.5 million, is expected to be completed in the next two weeks. Michael Dunkley, the former Premier who is now Shadow Minister for National Security, yesterday raised concerns about press comments made by Arbitrade, particularly regarding the unconfirmed government initiatives and the $1 million donation. He also questioned Government’s silence on Arbitrade’s comments, the decision by Mr Hogg to open his presentation by defending himself against social media and online attacks, and the conference ending with no questions being allowed. In yesterday’s update, Arbitrade said its representatives had made ten visits to Bermuda, with Mr Hogg being “one of the very first people that met with the Premier and ministers in charge of the new fintech space”. Arbitrade said its partnerships and agreements require approvals from all partners and the Government “before we can release anything”. It apologized for its “rushed” press conference on June 28. Included was a photograph of Arbitrade’s directors in a meeting held at the Hamilton Princess, along with pictures of an Arbitrade event at Elbow Beach. In a list of questions and answers printed at the end of the update, one unattributed question asked why Arbitrade did not show up on a list of registered businesses in Bermuda. The company replied: “It should show up on the registry as Arbitrade Ltd, now. If it doesn’t, it will soon.” As of yesterday, Arbitrade did not feature on the Bermuda Registrar of Companies website. In a statement that arrived too late to appear in yesterday’s print edition, a government spokesman responded to Royal Gazette questions about Arbitrade. However, the statement did not mention the company by name, nor did it address any of the firm’s specific claims, such as the Alice programme [active shooter preparedness] or any plans for gang members to be paid to work on a chicken farm. The statement said: “The Fintech Development Fund was passed in the Senate today. When the fund is set up and contributions can be received, the Government will make such contributions public. We are pleased that companies are looking to set up in Bermuda, planning to invest in building our fintech industry and supporting community initiatives. The same way insurers assisted with developing our insurance industry while supporting community organisations over the years.”

2018. July 4. From expecting to be granted title to $10 billion in physical gold, to a pledge to support programmes in Bermuda that will see gang members paid to work on chicken farms, it is hard to know where to start with the latest news attributed to Arbitrade. The cryptocurrency exchange and coin company has said it will set up its global headquarters in Victoria Hall in Hamilton, purchasing the $6.5 million seven-storey office block. Some bold statements have been made in a reported telephone press conference about what Arbitrade would like to do for Bermuda, including:

• A donation of $1 million to what is claimed to be the Bermuda Government’s $4 million purchase of a Park Place building for a fintech incubator space;

• A $45,000 donation to a gang violence reduction proposal that is to include gang members being paid to work on chicken farms.

• A $30,000 donation towards the ALICE programme for active-shooter preparedness taught by the FBI at schools and local charities.

• A $25,000 donation to the Mirrors programme.

• A $25,000 donation to The Family Centre.

It makes for an impressive list, together with prior talk by Len Schutzman, chief executive officer of Arbitrade, about plans for hundreds of jobs for the island as a result of Arbitrade setting up its global HQ at Victoria Hall. So far, there has been no comment from the Government on Arbitrade’s presence in Bermuda or its intentions, other than a message on Twitter by David Burt, the Premier, who in May said he attended a presentation by Arbitrade at the Bermuda Underwater Exploration Institute. The latest details from Arbitrade emerged after a telephone press conference conducted by the company on Thursday. The Royal Gazette had tried to connect to the call-in live, but the attempt was aborted 20 minutes after the scheduled start due to inactivity on the line. The reason for the delayed start was later given as technical difficulties. The Royal Gazette was told it would receive an audio recording of the conference, but this has not happened. However, in reported recordings and transcripts of the conference call posted online, Troy Hogg, the founder of Arbitrade, begins by defending himself against social media and online attacks, and saying he does not have the time to argue online and “defend myself”, however, he adds that he will be creating his own website and blog “giving full occurrence of everything through my attorneys, through my publicists, and through our agents”. Regarding Arbitrade, he said it had passed through the KYC/AML [Know-Your-Customer/Anti-Money Laundering] process with Bermuda, and the business has built “the most robust system in the entire crypto sector, and we will be revealing that in early September”. He said: “We are building an infrastructure that allows for payment merchant services. It allows for trading of cryptocurrencies. It allows for interest payments on cryptocurrencies held within our platform. I guess you could call it the all-in-one merchant banking platform.” Mr Hogg also said: “In partnership with Sion Trading FZE, out of Dubai, which is one of the only licensed gold traders on the Dubai Gold Exchange, we will be granted $10 billion worth of physical gold, which we are receiving title to. Agreements are in place and signed.” A man then introduces himself as being from Sion Trading. He said the parent company was Scotia International in the US. He said: “We’re a gold trading facility, in-ground asset facility, mining clone concept 224, and trade on an open market. We’re 100 per cent committed behind and thoroughly ecstatic about what’s been afforded us the opportunity to be a part of Arbitrade.” Mr Hogg extended gratitude to the people of Bermuda and detailed how Arbitrade will assist the island. He said it had been asked to allow the people of Bermuda “the first right of a free ICO [initial coin offering] position when we launch our ICO. We accept those terms”. He then mentioned a $1 million donation to “the Government’s state-of-the-art co-working space, an incubator for the new fintech sector. The Government has purchased a building at Park Place for $4 million, and Arbitrade will be donating $1 million for the refurbishment and launch of that facility in the coming months ahead.” The donation was expected to happen early this week. Mr Hogg then spoke about how it would like to help Bermuda with a number of donations. “The Government has launched a gang violence reduction proposal with the BDA [Bermuda Business Development Agency] and the Government, and Arbitrade would like to help them in their therapeutic gardening initiative, where five acres have been given to the government where gang members are taught therapeutic farming and plant husbandry. And then, also chicken farming. Gang members will be paid to work on the chicken farms, but this costs money, and Arbitrade would like to assist in that as we help Bermuda develop the most advanced student and young person learning process into the fintech sector, and to help them get off the streets and into education, Arbitrade will donate $45,000 to that initiative.” Mr Hogg continues by speaking about Arbitrade’s desire to make donations regarding the ALICE and Mirrors programmes, and to The Family Centre. He concludes the conference call by saying no questions will be taken “but that will come at a later date”. The Royal Gazette has contacted the Government and the Bermuda Monetary Authority to seek details on the status of Arbitrade and its reported comments, and is awaiting responses. The Bermuda Business Development Agency said it has not been involved with the group. The Royal Gazette has reached out to New York-based Marston Webb International, which is the media contact for Arbitrade, and is awaiting a response.

2018. June 28. Coin and cryptocurrency exchange Arbitrade has spoken of bringing hundreds of jobs to the island as it sets up its world headquarters and digital exchange in Victoria Hall, on Victoria Street. Members of its board have met on the island, and chairman Leonard Schutzman told The Royal Gazette that meetings have been held with David Burt, the Premier, and members of the Bermuda Government. The company plans to launch an initial coin offering this year, expected to be worth $500 million. Gold is to be used to back the cryptocurrency. “We feel that puts us in a unique position,” said Mr Schutzman, a former top executive with PepsiCo. He spoke about Arbitrade training Bermudians and creating jobs, and said the company could eventually have 400 employees on the island. Arbitrade was this morning set to hold a media conference call to detail progress towards establishing itself as a “world-class cryptocurrency exchange and coin company”.

2018. June 8. Coin and cryptocurrency exchange Arbitrade is bringing its world headquarters to Bermuda. The company, which is also in the process of buying solid gold casts of Nelson Mandela’s hands, palm and fist for $10 million, held “strategic meetings with several major countries” in January and February before deciding where to domicile. It chose Bermuda after a number of visits to the island, and meetings with David Burt and other members of the Bermuda Government, the Bermuda Monetary Authority and the Bermuda Business Development Agency. Arbitrade said it is registered on the island and expects to be a legally licensed and insured company in Bermuda later this month. “The company made numerous visits over several months and a considerable amount of work was done to securing our incorporation,” Leonard Schutzman, chairman of Arbitrade, said in a statement. Bermuda is justly regarded as the gold standard in the fintech and reinsurance industries globally and Arbitrade’s goal was always to domicile its head office in this exacting jurisdiction before registering subsidiaries in other countries around the world.” Once it is legally licensed in Bermuda, Arbitrade intends to commence an eight-week initial coin offering, followed by the launch of the Arbitrade platform in late August and early September. The ICO could be the first to take place in Bermuda after the passing of ICO legislation by the Government, which is expected to happen in the coming weeks. In his statement, Mr Schutzman said the company welcomed the cryptocurrency legislation and associated regulations “that form a strong foundation in developing the best strategies to advance its business model into other countries”. He said Arbitrade also welcomed the stringent know-your-customer and anti-money-laundering process. “It seemed to us the only way our industry will receive global acceptance. With this thoughtful and timely structure of Bermuda’s laws to guide and support us, Arbitrade can now move forward into over 12 additional countries quickly and then continue to introduce our platforms to more jurisdictions,” he said. Arbitrade held a presentation about its business at the Bermuda Underwater Exploration Institute on May 31. The event was attended by the Premier who, in a tweet the same day, said: “The team demonstrated their cryptocurrency platform and explained plans to create more job opportunities in Bermuda for Bermudians.” Arbitrade plans to be “in all segments of the cryptocurrency business, including currency mining, trading, gift cards, debit cards, money transfer and points of sale processing”. Last Friday, the House of Assembly passed the Digital Asset Business Act 2018. Referring to the legislation in his statement, Mr Schutzman said: “This thoughtful and timely action demonstrates, once again, why Bermuda is a world leader in regulating financially related services. The progressive legislation sets the highest standards for those companies who have chosen to establish digital assets businesses on the island and validates the company’s decision to incorporate and domicile our global headquarters in Bermuda.” A separate and unusual piece of company news is Arbitrade’s decision to agree to buy the Nelson Mandela Golden Hands Collection. The collection consists of solid gold casts made of Mr Mandela’s hands, palm and fist. Arbitrade completed the $2.5 million purchase of the first item, a cast of the former South African president’s fist, last month.

2020. February 11. Arch Capital Group Ltd posted net income of $316 million for the fourth quarter. The Bermuda-registered re/insurer said the profit, up from $126 million in the corresponding period of 2018, broke down to 76 cents per share and represented a 12 per cent annualized return on average common equity. For the full year, net income more than doubled to $1.59 billion from $713.6 million in 2018. After-tax operating income for the fourth quarter was $308.4 million, or 74 cents per share, exceeding the 68 cents per share consensus estimate of analysts tracked by Yahoo Finance. Arch said pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums were $30.4 million. Favourable development in prior year loss reserves totaled $54.7 million. Arch’s combined ratio — a measure of underwriting profitability representing the proportion of premium dollars spent on claims and expenses — was 81.4 per cent. Book value per common share was $26.42 at the end of last year, a 3.2 per cent increase for the fourth quarter and a 22.8 per cent increase for the year.

2019. October 29. Arch Capital Group Ltd has reported a profit of $382.1 million, or 92 cents per share, for the third-quarter. That is up from $217 million, or 53 cents per share, for the same period last year. After-tax operating income was $261 million, or 63 cents per share, up from 59 cents. The Bermuda-based company’s combined ratio was 84.2 per cent, up from 82.3 per cent. However, excluding catastrophic activity and prior year development, the combined ratio decreased 0.9 per cent to 80.9 per cent. Gross premiums written were $2.18 billion, up from $1.73 billion. Book value per common share of $25.61 at the end of September.

2019. October 7. Arch Capital Group Ltd expects a hit of up to $75 million from catastrophes in its third-quarter results. The Bermuda-based re/insurer said today that the bulk of the losses relate to Hurricane Dorian, which devastated parts of the Bahamas last month, and Typhoon Faxai, the strongest storm to hit Japan in 60 years. Arch said the pre-tax loss estimate, which is in the range of $65 million to $75 million, was net of reinsurance recoveries and reinstatement premiums. “At this time, there are significant uncertainties surrounding the scope of damage for these events, as well as the other global events,” Arch said. The loss estimates exclude the operations of Watford Holdings Ltd, in which Arch owns an 11 per cent equity stake.

2019. July 30. Bermuda-based Arch Capital Group Ltd has reported net income for the second quarter of $458.6 million, nearly double the $233.2 million achieved for the same period last year. After-tax operating income was $317.4 million, compared to $242.6 million in the second quarter of 2018. Book value per common share was $24.64 at June 30, a 6.6 per cent increase in the second quarter and a 19.2 per cent increase for the trailing 12 months. The combined ratio, excluding catastrophic activity and prior year development, was 80 per cent. Gross premiums written by the insurance segment in the second quarter were $919.9 million, 19.6 per cent higher year-on-year, while net premiums written were $627.8 million, 19.8 per cent higher. Gross premiums written by the reinsurance segment in the second quarter were $545.5 million, an 11.3 per cent increase year-on-year, while net premiums written were $376.1 million, up 6.2 per cent. Gross premiums written by the mortgage segment in the second quarter were $364.5 million, up 10.1 per cent year-on-year, while net premiums written were 14.8 per cent higher at $321.6 million.

2019. July 29. Bermuda-based Arch Capital Group has tapped the capital markets for more than $700 million to bolster the reinsurance of its mortgage insurance business. The group’s third insurance-linked note transaction of the year was the biggest issuance ever made by a mortgage insurance company, according to a statement from Arch. Arch Mortgage Insurance, a US-based subsidiary of Arch, obtained $700.9 million of indemnity reinsurance on a pool representing $49.6 billion of mortgages through Bellemeade Re 2019-3 Ltd, a Bermudian special purpose insurer. In total, Arch has issued nine Bellemeade transactions, which have provided aggregate reinsurance coverage of more than $4.1 billion. Jim Bennison, executive vice-president, Alternative Markets for Arch Capital Group (US) Inc, said: “Since the inception of the Bellemeade ILN programme, one of our goals has been to transfer a portion of the risk across the entire US mortgage insurance portfolio, which we’ve now largely achieved. “With over $4 billion dollars of aggregate reinsurance protection on our portfolio, we believe we’re at the forefront of managing capital and risk in the mortgage insurance industry.” The latest issuance has four classes of amortizing notes with ten-year legal final maturities.

2019. April 4. A British subsidiary of Bermuda-based re/insurer Arch Capital has completed the acquisition of UK managing general agency Axiom Underwriting. Arch Insurance (UK) Ltd had initially acquired a 60 per cent share of Axiom in 2015. The terms of the deal for the remaining 40 per cent were not disclosed. Axiom generated about £20 million ($26.2 million) of gross written premium in 2018. It will become part of the recently formed Arch UK Regional Division, focused on commercial property, casualty, motor, professional liability, personal accident and travel, Arch stated. The transaction will involve 20 Axiom employees moving to Arch. “We are pleased to announce the completion of the acquisition of the remaining shares in Axiom, which was the origin of Arch’s decision to become more visible in the UK regional markets,” Steve Bashford, chief executive officer of the Arch UK Regional Division, said. “The Axiom team has been led by Mike Bottle for 15 years and, having worked alongside Mike for the last five years, we are delighted to not only welcome his team into Arch but also to see him assume a senior role in the UK Regional Division as senior vice-president and head of strategy and distribution,” Mr Bashford added.

2019. March 22. Constantine “Dinos” Iordanou is to step down as Arch Capital Group’s chairman in September and will be succeeded by vice-chairman John Pasquesi. Mr Iordanou is a well-known veteran of the Bermuda insurance industry, having led the Bermudian insurer and reinsurer as chief executive officer for 15 years until he was succeeded by Marc Grandisson in September last year. Mr Pasquesi is lead director of Arch’s board and has been a member of the board and vice-chairman since 2001. Mr Pasquesi is the managing member of Otter Capital LLC, a private-equity investment firm he founded in January 2001. Before he joined Otter Capital, Mr Pasquesi was a managing director of Hellman & Friedman LLC. Mr Pasquesi said: “Dinos was instrumental in developing Arch into a highly profitable company with a worldwide insurance, reinsurance and mortgage insurance presence. The board and I want to recognize all he did to establish Arch as a leader in the insurance industry and to develop the generation of managerial talent that is currently leading the business. We have great respect and admiration for Dinos both as a leader and as a person.” Mr Pasquesi added: “We have successfully completed the CEO transition process, and I look forward to continuing to work with the rest of the board, Marc and the existing management team to help sustain Arch’s future growth.” Mr Grandisson said: “I want to thank Dinos for his significant contributions in making Arch such a successful company. I am grateful to have had the opportunity to learn from and work with him for nearly 20 years. I look forward to ongoing engagement with our board of directors under John’s leadership as we continue to help our clients, employees, investors and communities achieve their greatest potential.”

2019. February 13. Arch Capital Group Ltd posted net income of $126.1 million in the fourth quarter of last year, despite significant catastrophe losses. The Bermudian-based insurer and reinsurer estimated $118.2 million in pre-tax catastrophic losses, primarily related to Hurricane Michael and the California wildfires. The quarter’s net income broke down to 31 cents per share and represented a 5.9 per cent annualized average return on equity. It was down on the $203.5 million, or 49 cents per share, of net income recorded in the corresponding quarter in 2017. After-tax operating income available to Arch common shareholders, a non-GAAP measure, of $189.2 million, or 46 cents per share. This beat the 37 cents per share consensus estimate of analysts tracked by Zacks and represented an 8.8 per cent annualized return on average common equity. The results were helped by favourable development on prior-year loss reserves, net of related adjustments, of $74.4 million, the company said. The combined ratio — the proportion of premium dollars spent on claims and expenses — was 87.8 per cent, compared to 86.3 per cent in the fourth quarter of 2017. Gross premiums written in the quarter increased 16.7 per cent year over year to $1.69 billion. Book value per share was $21.52 at December 31, 2018, a 1.7 per cent increase in the 2018 fourth quarter and a 6 per cent increase for the year.

2018. August 1. Arch Capital Group Ltd made a profit of $233.2 million, or 56 cents per share, in the second quarter. That is up from $173.8 million year-on-year. The Bermuda-based company’s after-tax operating income was $242.6 million, up from $168.9 million. That represented an operating income per share of 59 cents, which outperformed a Zacks census estimate by 13. 5 per cent. Gross premiums written were up 5.4 per cent at $1.696 billion, while the combined ratio fell 1.9 per cent to 82.7 per cent. Combined ratio excluding catastrophic activity and prior year development was 84 per cent. The company reported $14.9 million of pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums. The book value of Arch Capital’s common shares at the end of June was $20.68, a rise of 1.3 per cent in the second quarter, and 4.1 per cent in the trailing 12 months. The company repurchased 6.4 million shares, valued at $170.3 million in total, during the quarter. At the end of June it had $272.9 million of share repurchases remaining and available for buy back under its current authorized programme.

2018. February 12. Arch Capital Group beat forecasts and finished the year strongly with net income of $203.5 million, or $1.46 per share, for the fourth quarter. That compares to a profit of $63.4 million for the same period in 2016. While it suffered pre-tax catastrophe losses of $68.5 million from the California wildfires, and $1.5 million from other events, it benefited from $69.1 million of reductions from the third-quarter hurricane events. This resulted in pre-tax catastrophe losses, net of reinsurance and reinstatement premiums, of $800,000. Arch Capital’s profit for the fourth quarter, adjusted for non-recurring gains, was $1.34 per share, which beat the expectations of analysts who had forecast $1.13 per share. Its combined ratio, excluding catastrophic activity and related adjustments was 87 per cent, down from 90.7 per cent, while the underwriting combined ratio for the quarter was 86.3 per cent, and for the year was 82.5 per cent. There was a $50.9 million favorable development in prior year loss reserves. During the quarter, Arch took a $21.5 million charge related to the re-evaluation of its net deferred tax assets as a result of the lower US corporate income tax rate that began this year. After-tax operating income for the period was $187.4 million, or $1.34 per share, compared to $141.5 million, or $1.13 per share a year ago. Gross premiums written for the quarter were up 25.7 per cent to $1.452 billion. For the full year the Bermudian-based company’s net income was $556.5 million, down from $664.6 million.

2017. June 12. American International Group is to sell $590 million of shares in Bermuda-based insurer and reinsurer Arch Capital Group. AIG, which has many Bermuda-incorporated subsidiaries, last month appointed former Hamilton Insurance Group chief Brian Duperreault as president and CEO, acquired more than 6.38 million common shares last year through the conversion of 638,141 convertible preferred shares the US-based giant got as a result of the sale of United Guaranty Corporation to Arch. The offering is scheduled to close on Wednesday and is subject to the usual closing conditions. AIG said it had given underwriters a 30-day option to buy an additional 957,210 common shares in Arch, which would be issuable on conversion of 95,721 additional convertible preferred shares, worth about $89 million. After that, AIG would still own 542,420 convertible shares in Arch, which are subject to a lock-up which expires in mid-January next year.

2017. June 8. Arch Capital Group Ltd has revealed that its second-quarter profit will take a $38 million hit from reinsurance losses. The news prompted Arch shares to fall more than 2 per cent in early trading on the Nasdaq Stock Exchange and follows filings that show chairman Dinos Iordanou sold nearly half of his personal stake in the company during the past three weeks. In a Securities and Exchange Commission filing, the Bermudian insurer and reinsurer said $38 million in losses emanated from its property facultative reinsurance book of business. “Such activity related to losses incurred on a small number of contracts across multiple underwriting years and represents an unusually high level of activity for the property facultative reinsurance unit,” the filing stated. “Since its inception in 2007, the property facultative reinsurance unit has consistently produced significant underwriting profits for the company.” Arch shares had risen more than 12 per cent since the start of the year by Tuesday’s close. Yesterday, Arch closed down $2.10, or 2.2 per cent, at $95.04, in New York trading. Other recent SEC filings show insider selling by board members. Chairman Dinos Iordanou sold 100,000 shares — nearly half his stake in the company — since May 18. As of May 31, after those sales he still held 107,151 shares in Arch, worth about $10.15 million at yesterday’s price. Arch director John Vollaro also sold 10,000 shares on May 31 and June 1, leaving him with a holding of 118,016 shares.

2017. February 10. Arch Capital’s top executive accused some in the insurance industry of “cheating” with reserves. Dinos Iordanou, chairman and chief executive officer of the Bermudian insurer and reinsurer, warned of “noise” in apparently strong balanced sheets among insurers that have mis-priced risk. His comments were reported by industry publication The Insurance Insider, which was hosting the InsiderScope conference at which Mr Iordanou was speaking. “It’s a self-grading exam — you decide what it’s going to be on the day,” Mr Iordanou said. “There’s a tendency within our industry to mis-price risk, and there’s a tendency to cheat, sometimes intentionally, sometimes unintentionally. There’s noise in the underlying healthiness of the balance sheets,” he added. “Those who intentionally or unintentionally cheated the most have the worst problem.” The Arch chairman added that the industry traditionally “has not done well in managing, financing and transferring risks for our clients in a smart and consistent way”, the Insider reported. Mr Iordanou said he expected mergers and acquisitions to continue, with weaker companies becoming opportunistic takeover targets. The reinsurance industry is awash with capital, one of the factors keeping pricing down. And Mr Iordanou did not see that trend changing any time soon. “I think this cycle is going to be prolonged,” Mr Iordanou said. “There’s not going to be an abrupt correction but an evolution, with companies improving.” He added that tighter regulation and tougher auditing “has enhanced our ability to have less defects in our decision making”. “In essence our ability to cheat is less,” he added.

2016. December 28. Arch Capital Group’s $3.4 billion acquisition of United Guaranty Group has been approved by the North Carolina Department of Insurance. It was announced in August that the Bermudian-based company would buy the mortgage unit from American International Group in a cash and securities deal. United Guaranty is the leading private mortgage insurance company in the US. It is based in Greenboro, North Carolina. In a statement, the North Carolina Department of Insurance said: “After the acquisition, Arch Capital Group, will be the largest mortgage insurance company in the country and will relocate their headquarters to Greensboro.” The headquarters referred to are those of Arch Mortgage Insurance Company, currently based in Walnut Creek, California. Constantine “Dinos” Iordanou, CEO of Arch, in August said: “We expect to quickly integrate Arch’s existing California-based mortgage insurance operations and the North Carolina-based operations of United Guaranty while maintaining a strong presence in both locations, thereby further developing our superior customer service with nationwide and worldwide coverage.” Announcing the approval, Wayne Goodwin, North Carolina’s insurance commissioner, said: “I always strive to recruit companies to North Carolina that will encourage growth and I believe Arch Capital Group’s choice to invest in the Tar Heel state will benefit everybody. “This acquisition is great for North Carolina business and I am excited for what promises to be an enormous economic impact.”

2016. August 17.  NEW YORK (Bloomberg) — Like an archer at the Olympics, Arch Capital has landed its target: AIG’s mortgage insurance business.  The Bermuda-based insurer said late on Monday that it would buy United Guaranty for $3.4 billion in cash and stock. The deal is set to be more than 35 per cent accretive to both its earnings per share on a run-rate basis and will also immediately lift the company’s book value per share. Investors applauded Arch’s biggest deal on record — the shares climbed as much as 5 per cent yesterday to the highest level since its initial public offering some 21 years ago. The transaction isn’t a complete surprise. Arch has been scaling back its property-and-casualty operations and recently made a notable stride in mortgage insurance. In the second quarter, that culminated in the latter posting an 81 per cent jump in new premiums written, a figure that was driven by its reinsurance of Australian mortgages. For AIG, the price tag is lower than the $4 billion United Guaranty was said to be valued at in a planned IPO, but the sale allows for a cleaner exit. The insurance giant will receive at least $2.2 billion up front, and can begin selling its Arch Capital shares after an initial six-month lock-up. The proceeds will come in handy for AIG, considering it hopes to return $25 billion to shareholders by the end of next year through dividends and buy-backs.

2016. April 28. Arch Capital Group increased its gross premiums written during the first quarter but saw its profits fall. The net income available to common shareholders was $149.3 million, down from $277 million for the same period last year. That result, which equates to $1.20 per common share, beat analysts’ estimates of $1.10. Pre-tax foreign exchange losses of $22 million were a drag on Arch’s earnings. In the corresponding period in 2015 the company had made $66.9 million of foreign exchange gains. In a statement the company pointed out that the majority of those amounts are unrealized “and resulted from the effects of revaluing the company’s net insurance liabilities required to be settled in foreign currencies at each balance sheet date”. Pre-tax net realized investment gains dropped year-on-year from $61.9 million to $29.9 million. Gross written premiums rose to $1.39 billion, up 6.1 per cent, while the underwriting combined ratio edged down a fraction to 87.1 per cent. Among its business units, Arch reported a big jump in the gross premiums written by its mortgage segment, which rose 83.8 per cent to $111.2 million. Gross written premiums in the insurance segment were $798.5 million, up 4.2 per cent, while the reinsurance segment was little changed year-on-year at $481 million. During the first quarter Arch repurchased 1.1 million shares, at a cost of $75.3 million. At the end of March there were $446.5 million of repurchases available under the company’s buyback programme. In New York, Arch shares closed yesterday at $71.40, up 10 cents, or 0.14 per cent.

2015. October 29. Arch Capital Group reported operating profits of $125.8 million for the third quarter of the year, surpassing analysts’ expectations. After-tax earnings per share were $1.01, compared to the 98 cents consensus of analysts tracked by Zacks Investment Research. The figure is $1.3 million down on the amount recorded for the third quarter last year, which was equal to $1.05 a share. Net income for the quarter was $74.5 million, or 60 cents per share, compared to $223.2 million and $1.64 a share in the third quarter of 2014. Gross premiums written for the third quarter totaled $1,158,451 compared to $1,138,398 for the same period last year — a 1.8 per cent increase. The company said net investment income for the quarter fell to $67.3 million, equal to 54 cents a share, compared to $72.2 million and 53 cents a share in quarter three last year. Arch’s report on the company’s performance said: “Total return in the 2015 third quarter reflected the impact of the strengthening US dollar against the British pound sterling, Canadian dollar and other major currencies on non-US denominated investments. “Excluding the effects of foreign exchange, total return was 0.04 per cent for the 2015 third quarter as investment grade fixed income returns were substantially offset by negative returns on equities, high yield and alternative strategies.” Arch added it had also bought up “a small number” of its own shares during the quarter. The company report said: “Since the inception of the share repurchase programme through September 30, 2015, Arch Capital Group Ltd has repurchased 124.1 million common shares for an aggregate purchase price of $3.61 billion. At September 30, 2015, $521.8 million of repurchases were available under the share repurchase programme.”

2020. February 24. Bermuda-based Argo Group International Holdings Ltd made a $103.3 million loss in the fourth quarter, which resulted in a $8.4 million loss for the full year. For the quarter it was equivalent to a loss of $3.01 per share. The GAAP combined ratio was 126.7 per cent for the final three months of 2019, and 109.1 per cent for the year. In the same quarter in 2018, Argo made a loss of $43.6 million, while finishing with a full-year profit of $63.6 million. Kevin Rehnberg, who was confirmed as Argo’s new chief executive officer this month, said: “We believe our organisation has great potential, but our results for 2019 are not indicative of our future direction. “Immediately upon my appointment as interim-CEO in November, we started a review process of all of Argo’s operations. That review process is ongoing. The company has a strong foundation of specialty insurance and reinsurance businesses, focused largely on the most attractive specialty market — US domiciled risks. The core of this foundation is not going to change, but it can certainly be enhanced. Some of our businesses are performing very well today, while others are not meeting return expectations. We are acting swiftly to address areas where the available return prospects are not achievable in the near term and do not fit our focused strategic direction.” It has been a testing 12 months for this re/insurer. It endured a bruising proxy battle, an SEC investigation and the sudden and immediate resignation of Mark Watson as CEO in November. Chairman Gary Woods will retire at Argo’s annual meeting on April 16, and is set to be replaced by chairman-elect Thomas Bradley. For the past year, activist shareholder Voce Capital Management has been calling for changes to the board. The San-Francisco hedge fund has jointly agreed with Argo on board nominees Bernard Bailey and Fred Donner ahead of the annual meeting. Carol McFate, also championed by Voce, joined the board earlier this month. Argo’s gross written premiums increased from $702 million to $712.8 million for the quarter, which ended on December 31. Mr Rehnberg said: “Going forward, we are insisting upon a culture of results and accountability, as well as a set of operating principles that will help us to be a more focused and efficient organisation. We are eliminating unnecessary spending and will deploy capital more strategically going forward. We believe Argo has an excellent specialty platform and world-class talent. We intend to work together to aggressively pursue our financial targets and deliver an improving return on equity over the near and long term. We look forward to sharing more about this strategy on our earnings call tomorrow and throughout the rest of the year.”

2020. January 2. Peace has broken out between Argo Group International Holdings Ltd and activist shareholder Voce Capital Management LLC. The two organisations have entered into a co-operation agreement to effect changes to Bermudian-based Argo’s board of directors. Former Xerox executive Carol McFate is being appointed to the board. She was a previous board nominee put forward by Voce. In addition, Voce will work with Argo to identify two more independent director candidates, one of whom will be selected from a list produced by Voce. The co-operation agreement follows an almost year-long to-and-fro between the organisations, including a bruising proxy battle, as Voce called for changes to the board and attacked what it called a “spendthrift culture” and “inappropriate corporate expenses” at Argo. Voce is a San Francisco hedge fund, and is beneficial owner of about 5.8 per cent of the shares of Argo. Last month, Voce made a filing with the US Securities and Exchange Commission aimed at securing a special general meeting of Argo shareholders, with a view to seeking the removal and replacement of up to five members of the Argo board. In a counter move shortly afterwards, Argo announced its annual meeting in 2020 was being brought forward from May to March, and that five directors, including chairman Gary Woods, would retire at that meeting. Now, with the announcement of the co-operation agreement, Voce has agreed to certain customary “standstill” provisions and to withdraw its proxy solicitation to seek board changes at the requisitioned special general meeting of shareholders it had sought. Argo is under investigation by the SEC regarding disclosure of certain compensation matters. The company announced the immediate retirement of Mark Watson as chief executive officer of Argo in November. Mr Watson continued to serve as a member of the board until December 31. Ms McFate will fill the board seat vacated by Mr Watson, subject to regulatory approval. She will join the board’s nominating and corporate governance committee and an additional committee as selected by the board. She was originally put forward as a nominee for the board by Voce last May, before the activist shareholder withdrew its candidates shortly before Argo’s annual meeting. Ms McFate was chief investment officer at Xerox Corporation from 2006 to 2017. Prior to that she served as executive vice-president and global treasurer for XL Global Services Inc, a subsidiary of XL Capital Ltd. Ms McFate also held senior executive positions with American International Group and The Prudential Insurance Company of America. As mentioned, Voce will work with Argo’s nominating and corporate governance committee to identify two new independent director candidates to stand at the annual meeting in March. One candidate will be selected from the list produced by Voce for election at its previously sought special meeting of shareholders. Thomas Bradley, chairman of the nominating and corporate governance committee said: “We are pleased to have reached a constructive agreement with Voce and value their input as we continue to enhance our board composition and governance practices.” He welcomed Ms McFate to the board, and said: “Her strong leadership and executive experience in the insurance and investment management industries will help drive continued value creation for our shareholders.” Meanwhile, J. Daniel Plants, founder and chief investment officer of Voce, said: “We made a substantial investment in Argo because we believe it has significant untapped value that can be realised. The appointment of Carol McFate to the board, the addition of two other independent directors selected with Voce’s input, and the company’s ongoing governance improvements, are substantive and positive developments that give us confidence in the new course that Argo has charted. We look forward to working with Argo’s board and management in the shared pursuit of creating value for all shareholders.” The agreement between Argo and Voce will be filed with the SEC.

2019. December 13. A month after losing its chief executive officer, Argo Group International Holdings Ltd has announced its chairman Gary Woods is to retire in March, along with four other directors. It has also moved to head-off a proposed special shareholders’ meeting aimed at removing and replacing up to five directors — something it said is unnecessary given its “board refreshment” announcement. The Bermuda-based company is under investigation by the US Securities and Exchange Commission regarding disclosure of certain compensation matters. In addition, Argo’s independent directors are conducting a review of governance and compensation matters. Argo’s credit ratings were last month placed under review with negative implications by AM Best. The agency said that when it affirmed Argo’s ratings in October it had been unaware of the SEC subpoena that had been issued to Argo “some time before”. Mark Watson retired as CEO last month, and was set to place $2.2 million of his company shares into an escrow account, to be used to reimburse Argo if an investigation finds that certain personal expenses of his were paid for by the company. He continues to act as an adviser to the company and board member until the end of the year. Kevin Rehnberg has been appointed interim CEO. Earlier this year, Argo was involved in a bruising proxy battle with activist shareholder Voce Capital Management LLC, which has been calling for changes to the board. The San Francisco hedge fund is beneficial owner of about 5.8 per cent of the shares of Argo. It attacked what it called a “spendthrift culture” and “inappropriate corporate expenses” at Argo. The company responded by saying the claims were “poorly researched” and had “little regard for the truth”. Last Friday Voce, along with Voce Catalyst Partners LP, Voce Capital LLC, Voce Catalyst Partners New York LLC and American J. Daniel Plants, made a filing with the SEC aimed at securing a special general meeting of Argo shareholders, with a view to seeking the removal and replacement of up to five members of the Argo board. Argo has now filed a consent revocation statement and is urging shareholders to sign it. In a statement, it said: “The board has concluded that such a special general meeting is unnecessary given its ongoing corporate governance review and board refreshment process which has resulted in the aforementioned changes. “With the retirement of five members of the board and an accelerated timeline for the 2020 AGM, the board does not believe it is constructive to call a special general meeting that would be convened a few weeks before the AGM and entail unnecessary costs and distraction.” The four directors who, along with Mr Woods, will retire at the annual meeting, are F. Sedgwick Browne, risk and capital committee chairman; Hector De Leon, member of the audit and human resources committees; Mural Josephson, audit committee chairman; and John Power, human resources committee chairman. The AGM is usually held in May, but is being brought forward to March. Argo said the changes were being made as part of a proactive refreshment process announced in August. It said it has engaged a leading national executive search firm to identify highly qualified director candidates, and welcomes input from shareholders in the director search process. In its statement, Argo said: “The board intends to present proposals at the 2020 AGM to declassify the board and reduce the maximum size of the board from 13 to 11 director seats. The board will also present to shareholders its revised executive compensation programme.”

2019. November 27. Activist shareholder Voce Capital Management is pushing for five new independent directors to replace incumbents on the board of Bermuda-registered re/insurer Argo Group. Voce says the governance situation at Argo has “significantly deteriorated” since the insurer’s annual meeting this year, citing an SEC investigation into executive compensation and subsequent ratings agency actions. The San Francisco-based hedge fund also criticizes the “lucrative package” given to Argo’s former chief executive officer Mark Watson on his “sudden retirement” this month. Voce said it has launched a process to call a special meeting of shareholders as it seeks backing for the replacement of directors. The investor, which owns about 5.8 per cent of Argo, has been fighting a proxy battle with Argo since February, when it claimed the company had a “spendthrift culture” and misdirected corporate assets to support the former CEO’s “lifestyle and hobbies”. Argo announced the immediate retirement of Mr Watson three weeks ago after it was revealed that the US Securities and Exchange Commission were investigating the company over disclosure of certain compensation matters. Argo has said it is fully co-operating with the SEC investigation. Argo added at the time that company shares valued at $2.2 million, owned by Mr Watson, were to be placed into an escrow account to be used to reimburse Argo if an investigation finds that certain personal expenses of his were paid for by the company. The insurer will pay Mr Watson $2.5 million under the terms of the separation agreement made public in an SEC filing. Argo appointed Kevin Rehnberg as interim CEO to replace Mr Watson. Voce yesterday filed a Preliminary Consent Statement in connection with the call for a special meeting. Voce said: “Since the 2019 annual meeting of shareholders, the situation at Argo has significantly deteriorated. In October, the press reported that the SEC had subpoenaed Argo over its executive compensation and perquisites, which investigation Argo was then forced to publicly confirm. On November 5, Argo announced the sudden ‘retirement’ of its CEO, yet the board awarded him a lucrative package of cash severance, accelerated stock vesting and benefits. The board replaced him with an internal CEO after failing to consider even a single external candidate for the job. Both AM Best and S&P Global Ratings subsequently announced negative actions related to their ratings of the company’s debt, and each specifically cited Argo’s poor corporate governance and failed board oversight as the reason for their actions.” On November 7, AM Best said it was placing Argo’s credit ratings “under review with negative implications”. The rating agency added that when it affirmed Argo’s ratings in October it had been unaware of the SEC subpoena that had been issued to Argo “some time before”. AM Best added that ratings review “considers the serious nature of the aforementioned SEC inquiry and the diminished credibility among Argo stakeholders in light of the board’s actions to keep this inquiry confidential while undergoing an extensive internal investigation on compensation governance matters related to Argo and its former chief executive officer.” It added: “Perhaps of most concern to AM Best are the pending conclusions of the SEC investigation and the potential for this inquiry to extend beyond Mr Watson.” In its statement today Voce said: “There are crucial leadership, governance and strategic choices which are being made in real time and will have lasting and potentially irreversible effects once rendered.” Voce said it had repeatedly insisted that shareholders’ voices should be heard in the Argo boardroom, “yet the board has refused every overture that we have made to appoint directors nominated by shareholders. These issues are critical and urgent, and time is of the essence. Argo’s shareholders cannot wait any longer.” Voce wants to replace five of Argo’s existing board members with “highly qualified, fully independent directors”, a proposal it wants to air at the special meeting. “Once we file our definitive consent solicitation statement, we will simply be asking shareholders to consent to the calling of a special meeting, which is permitted by Argo’s byelaws and will require the concurrence of holders of at least 10 per cent of Argo’s common stock. Consents at this stage will not determine if any Argo directors are removed or replaced, only whether a shareholder meeting to consider and vote on such proposals will occur.”

2019. October 30. Argo Group International Holdings Ltd has said its results for the third-quarter of 2019 will be adversely affected by several loss items, primarily related to its international operations. The company is due to release it earnings news on November 7. Mark Watson, chief executive officer of Argo Group, said: “The adjustment made to our current and prior accident year loss expectations over the last two quarters is related to large loss activity, business we have previously exited or where we have taken aggressive underwriting actions to improve profitability. These charges are a result of increased loss occurrence and a more challenging claims environment in some classes of business. Despite these challenges, we continue to experience strong results in our US operations and we are seeing rate improvement across several key lines of business both in the US as well as in our international operations.” In a statement, the Bermuda-based company said that key items affecting the quarter include:

• Catastrophe losses of approximately $19 million pre-tax. Catastrophe losses were primarily related to Hurricane Dorian, Typhoon Faxai and flood losses in the US.
• Prior accident year losses of approximately $42 million. Reserve increases were related to the company’s Bermuda insurance business unit, as well as European and London operations within Argo’s international operations and were the result of new information received in the quarter relating to the resolution or notification of several large losses, as well as a continued review of international business currently in run-off. The company said the losses were partially offset by a modest net reserve decrease within its US operations.
• Current accident year losses of approximately $10 million, or an additional 6.4 points when compared to the second quarter 2019 year-to-date current accident year loss ratio for international operations. The losses are primarily related to property, liability and marine lines within international operations. Argo said the adjustment reflects a change in actuarial estimates based on a more frequent occurrence of large losses and the recalibration of the current year based on prior year adjustments. In its statement, the company also said it performs an internal review of run-off reserves during third- or fourth-quarter annually. It said at the end of the third-quarter the review of the reserve position was ongoing, and while information received to date “is consistent with management’s expectations”, it expects to conclude the review during the fourth-quarter. Argo is also reviewing possible reinsurance alternatives to address the run-off reserves.

2019. August 7. Bermuda-based Argo Group International Holdings Ltd has reported net income for the second quarter of $28.8 million, compared with $41.8 million for the same period a year ago. The second-quarter net income included pre-tax charges of $32.3 million related to an increase in current and prior accident year losses of $10 million and $22.3 million, respectively. In addition, the quarter included approximately $7.5 million of expenses associated with proxy solicitation and related activities. The speciality re/insurer said that given the unique and non-recurring nature of the events that gave rise to those expenses, they are not included in the its definition of adjusted operating income and, as such, not included in the calculation of the combined ratio. There were no comparable costs incurred during the 2018 second quarter. The expenses relate to a proxy battle between the company and activist shareholders Voce Capital Management LLC. Mark Watson, chief executive officer, said: “For the first half of the year, Argo’s book value per share growth plus dividends paid was 10.6 per cent and our annualized return on shareholders’ equity was 13.1 per cent, which reflects strong contributions from our investment portfolio.” He added: “We continue to deliver strong shareholder value creation despite some isolated claims volatility impacting the second quarter of 2019. Our focus on increasing efficiency through digital enhancements and growing profitable business lines continues to yield positive results, with 10 per cent gross written premium growth in the quarter.” Gross written premiums grew were $772.9 million, compared to $702.8 million for the same period last year. Combined ratio increased to 103.4 per cent, compared with 96.3 per cent in the second quarter of 2018. Net investment income for the quarter was up 28.9 per cent at $42.8 million, while book value per share was $56.28, up by 10.6 per cent from December 31.

2019. July 29. Bermuda-based specialty re/insurer Argo Group has announced that its results for the second quarter of 2019 will be adversely affected by several loss items in the London, Europe, and Bermuda operations. The company is set to release second quarter 2019 financial results after the close of US financial markets on August 5. The company said key items affecting the quarter include prior accident year losses of approximately $22.5 million, or 5.2 points on Argo’s consolidated loss ratio for the second quarter. Reserve increases primarily impacted the company’s Bermudian casualty business unit, the company said, and to a lesser extent European and London operations within Argo’s international operations, offset by modest reserve decreases within Argo’s US operations. Also affecting quarterly results, the company said, are current accident year losses of approximately $10 million, or 2.3 points on Argo’s consolidated loss ratio for the second quarter. The increased losses primarily relate to a number of large losses, driven by property and energy lines, affecting Argo’s international operations. Mark Watson, chief executive officer of Argo Group, said: “The losses we reported today reflect specialty insurance businesses that are subject to occasional volatility related to a number of large losses that we don’t believe are an indication of a longer-term trend. Our Bermuda casualty business has a strong track record of performance and has been very profitable over the long-term. The results in Europe and London are primarily related to businesses that we have previously exited or where we have taken aggressive remedial underwriting actions.” Argo added that the actual ultimate net impact may differ materially from Argo Group’s estimates.

2019. May 26. Argo Group International Holdings Ltd said that, based on a preliminary count provided by its proxy solicitor, shareholders have voted to elect all five of its Class III directors to the Argo board. This comes after a months-long proxy battle between the Bermudian-based insurer and reinsurer and activist shareholders Voce Capital Management LLC. “We appreciate the strong support from our shareholders,” said Gary Woods, board chairman. “The board and management value the conversations we have had with our shareholders in recent months regarding our strategy, governance, and plans for continuing to create shareholder value. We deeply value their perspectives, and we plan to maintain an active and productive dialogue with our shareholders as we continue to integrate their feedback and execute on our strategy.” Voce Capital is a San Francisco-based hedge fund that is the beneficial owner of about 5.6 per cent of the shares of Argo. Earlier this year, it attacked what it called a “spendthrift culture” and “inappropriate corporate expenses” at Argo. Argo rejected those claims. Voce was pushing for the removal of a number of the Argo board, and had put forward its own nominations to replace them. However, it withdrew its nominations a few days before Argo’s annual meeting on Friday after two out of five state departments of insurance in the US that had previously given permission for it filing of a definitive proxy statement, reversed their position. In a statement following the annual meeting, Argo said that, prior to Voce’s withdrawal, its nominees and proposals had received limited shareholder support. Argo said that as of the evening of May 20, Sedgwick Browne, Argo’s Class III director targeted for removal by Voce, had received support from shareholders holding over 80 per cent of the submitted proxies. Additionally, almost 80 per cent of the submitted proxies had voted against the removal of Argo’s chairman, Gary Woods and more than 80 per cent of the submitted proxies had voted against the removal of the other directors targeted by Voce. Argo said that, based on preliminary votes, the non-binding advisory resolution on executive compensation received 50.53 per cent of the votes in favour, with 49.47 per cent against. “We will work with our shareholders to fully understand the concerns that influenced the vote regarding the compensation of our executive officers and are committed to taking the necessary actions to address those concerns,” said Mr Woods. “Our board will carefully consider these results, as well as future shareholder input, in determining executive compensation going forward. We thank our shareholders for their continued feedback and support.” Final voting tallies from this year’s annual meeting are subject to certification by the company’s inspector of elections and will be included in the company’s report to be filed with the Securities and Exchange Commission once certified.

2019. May 22. A proxy battle between Argo Group International Holdings Ltd and activist shareholders has been halted, but recriminations continue. Voce Capital Management LLC had been pushing to have a number of Argo’s directors removed, and had proposed alternative candidates to replace them. The election of directors will form part of Argo’s annual meeting on Friday. However, Voce said yesterday it had “no choice” but to withdraw its nominations after two out of the five state departments of insurance in the US that had previously given permission for its filing of a definitive proxy statement “flip-flopped” and revoked their approvals. It laid the blame for the turn of events on lobbying by Argo. However, Argo, in its own statement, said: “It appears that Voce may have failed to take all steps or disclose all information required by the departments of insurance in a timely fashion.” Voce Capital is a San Francisco-based hedge fund that is the beneficial owner of about 5.6 per cent of the shares of Argo. Earlier this year it attacked what it called a “spendthrift culture” and “inappropriate corporate expenses” at Argo. In a statement yesterday it claimed Argo’s role in lobbying the various departments of insurances in the US “is clear and irrefutable”. It said one of the states to revoke its prior approval, Virginia, had said in a letter it had considered additional materials and information provided by Argo. In addition, Voce said the Illinois department of insurance had threatened to pursue injunctive relief or seek the voiding of any proxy votes cast should the contest proceed. “Given these disturbing, last-minute developments, it is clear there is a cloud of uncertainty hanging over the annual meeting and its potential outcome. Accordingly, we have no choice but to withdraw our nominations for election of directors and cease soliciting proxies therefore,” Voce said. In its response, Argo said: “It is unfortunate that Voce, having failed to address such rudimentary state regulatory requirements well in advance of beginning its campaign, now offers this as an excuse for its decision not to let its proposals proceed to a vote.” The insurer added: “As of last night, it was clear that shareholders were overwhelmingly supporting Argo, and that Voce did not have the support it needed for its proposals and director nominees. Rather than allow the process to continue and let shareholders decide the issue, Voce has chosen to abandon its activist campaign before the vote became final.” Voce said it would vote against the election of Argo’s “five Class III directors” and was urging others to do likewise. It also said: “Moving forward, we are evaluating all potential legal remedies for this situation, including potentially requisitioning a special general meeting.” Argo said it “fully supports the right for shareholders to exercise their vote”. It added: “Argo continues to engage with shareholders as we pursue our strategy for strong shareholder returns and our clear path for driving continued value creation. We thank our shareholders for their continued support.”

2019. May 16. In the latest twist in the proxy battle between Argo Group International Holdings Ltd and activist shareholders Voce Capital Management LLC, a proxy advisory firm has said “it would be reasonable” for the chairman of Argo to be asked to leave the board. Glass Lewis & Co also gave support to the idea to elect to the board two of the five picks proposed by Voce. Voce has trumpeted the report as strongly in line with its own views about Argo, and as further backing for its “compelling roadmap” to achieve cost savings and unlock shareholder value at the Bermuda-based insurer. Meanwhile Argo, while welcoming parts of the report, defended the contributions made to the company by Gary Woods, its chairman, and fellow board member Sedgwick Browne. The election of directors will form part of Argo’s annual meeting on May 24. Voce Capital is a San Francisco-based hedge fund that is the beneficial owner of about 5.6 per cent of the shares of Argo. Earlier this year it attacked what it called a “spendthrift culture” and “inappropriate corporate expenses” at Argo. It has issued a 66-page presentation, entitled “Righting the Ship”, outlining its plan for how Argo can reduce expenses, undergo compensation reforms, and achieve capital allocation improvements, portfolio rationalization and enhanced corporate governance. Glass Lewis said it believed Voce “had underscored several inferior corporate governance practices at Argo”, and that it had raised valid questions about the company’s “high expenses”. Reacting to the report, Voce also said: “We are pleased that Glass Lewis supports our multifaceted call for change at Argo and recommends shareholders vote for the election of our highly qualified nominees Charles Dangelo and Nicholas Walsh and the removal of its long-serving chairman.” On Tuesday, another proxy advisory firm, Institutional Shareholder Services, issued its report that gave support to Argo and its board. Following Glass Lewis’s report, Argo noted its positive remarks regarding shareholder returns, operational results and a commitment to board of director refreshment. In a statement, the insurer said: “We are pleased that both Glass Lewis and ISS recognize the strong results we have delivered for shareholders, our continued strong operational performance and the merits of our board refreshment process. We particularly value the support of ISS, which recognizes the strength of our board’s nominees and our commitment to strong corporate governance practices.” However, it said Glass Lewis had failed to acknowledge the important contributions that Mr Woods and Mr Browne “continue to make as strong and engaged directors”. Argo has previously described Voce’s claims directed at the company as spurious allegations that are part of a “misleading” media campaign. Earlier this month, a few days after Voce’s released its “Righting the Ship” document, Argo published a 68-page document entitled “Argo Group: driving growth and value for shareholders.” Argo is urging shareholders to vote for all of the company’s directors.

2019. May 15. Proxy advisory firm Institutional Shareholder Services Inc yesterday refused further comment after taking a swipe at Bermuda as a domicile in a report about a high-profile proxy battle. ISS, a subscription service for institutional investors, issued a report about the ongoing proxy fight between Argo Group International Holdings Ltd and activist shareholders Voce Capital Management, holders of a 5.6 per cent stake in Argo. The two groups have been at odds since Voce earlier this year attacked what it called a “spendthrift culture” and “inappropriate corporate expenses” at Argo. Argo has denied Voce’s claims. Argo and Voce have each put forward a slate of director nominees in advance of the company’s annual general meeting on May 24. In its report, ISS threw its weight behind Argo’s slate, citing the strong results that the Bermudian re/insurer’s board and management have delivered for shareholders. It also noted Argo’s “good overall governance” and said “the board has appropriately refreshed itself in recent years”. The report also stated: “For a business that requires constant risk assessment, it’s ironic that none of the directors saw the risk in a self-promoting CEO whose interests and hobbies were inextricably intertwined with Argo’s marketing budget. Some degree of complacency, perhaps as a byproduct of the company’s Bermuda domicile, may have played a role here.” ISS yesterday declined to comment about the company’s view of Bermuda as a jurisdiction, why being domiciled in Bermuda would lead to a degree of complacency on the part of the board of directors of Argo Group, and what evidence ISS reviewed that led to it making the comment about board complacency. Addressing ISS’ comment about board complacency, an Argo spokesperson said: “We don’t agree that this is the case.” ISS, in operation for more than three decades, has 30 offices worldwide in 13 countries, and has more than 1,800 staff. It claims to produce more than 42,000 proxy analyses annually in 115 global capital markets. The proxy battle war of words continued yesterday with Argo’s independent directors sending a letter to the company’s shareholders. The letter reviewed the company’s total shareholder returns over the last five years, and urged shareholders to vote for the Argo slate of director nominees. The letter said: “We have provided you with objective facts and reasoned analysis, not ‘flashy diatribe’.” Global governance firm Glass Lewis, a subscription service with more than 1,300 clients, is expected to soon issue its report on the proxy fight between Argo and Voce.

2019. May 3. Argo Group International Holding’s denial that it has an executive penthouse apartment above its New York City offices has stirred up more anger from activist shareholders. Because, while the company was correct when it batted away the claim, it did not mention the corporate penthouse six blocks away in Manhattan’s Chelsea neighborhood. “Argo should be ashamed for attempting to mislead shareholders by omitting this material from its response,” said Voce Capital Management LLC, the San Francisco-based hedge fund that is the beneficial owner of about 5.6 per cent of the shares of Argo. According to Voce, Argo’s Manhattan apartment on Ninth Avenue was purchased for $5.79 million, three years ago. It described it as: “Open views and beaming light from the continuous walls of glass pull you from the entry through to the large living room and dining room and out onto the 41-foot-long terrace.” It claimed to have confirmed that Mark Watson, Argo’s chief executive officer, lives there. However, this has been disputed. A source close to Argo told The Royal Gazette that the apartment is not used exclusively by any single executive, but is used when needed if an executive is in town, or as accommodation during a relocation. Meanwhile, in a 68-page presentation document released last night, Argo said: “Yes, we do have a corporate apartment in New York used by many employees, but it is not the fancy place described by Voce.” Argo has previously described Voce’s claims directed at the company as spurious allegations that are part of a “misleading” media campaign. The dispute was turned up a notch on Wednesday, when Voce said Argo “desperately needs a culture of respect, not disdain, for shareholders” and that its handling of Voce’s questions about the “potential penthouse apartment” where the CEO lives while in New York “demonstrates the company’s disregard for shareholders and lack of respect for honesty when engaging with investors”. Voce issued a 66-page presentation, titled “Righting the Ship”, outlining its plan for how Argo can “unlock substantial shareholder value” by reducing expenses, undergoing compensation reforms, capital allocation improvements, portfolio rationalization and enhancing corporate governance. According to Voce, its ideas could increase the company’s return on equity to 13.5 per cent and reduce expenses by $100 million. It claims an additional $20 million of savings could be achievable by “reigning in corporate expenses, including corporate aircraft and housing, vanity sponsorships and CEO compensation”. Voce has previously highlighted its concerns about the company’s use of corporate jets and its corporate housing programme. It is seeking the removal and replacement of five directors. In reply, Argo published an updated presentation titled “Argo Group: driving growth and value for shareholders”, in which it said: “Voce has deliberately avoided the truth in order to engage in a campaign of misinformation and outright falsehoods with the hopes of creating an overwhelming appearance of impropriety as a means to gain board seats.” It also hit back at what it claimed was Voce’s “sensationalist claims about corporate aircraft programme based on fundamentally wrong analysis”, and claimed Voce has “a track record of destroying shareholder value at the companies it targets”. Argo said its board was committed to ensuring strong corporate governance practices. It said: “The truth is that our oversight and governance of the company is strong and serves investors well. Argo has the right board and management team to continue our best-in-class performance and stewardship.”

2019. April 30. Argo Group International Holdings Limited has reported a 270.4 per cent jump in profit for the first three months of the year. The Bermuda-based insurer reported net incomes of $91.2 million, or $2.63 per share, which compares with $24.8 million for the same period in 2018. Gross written premiums were $760.8 million, a rise of 7.1 per cent year-on-year, while the combined ratio improved to 94.8 per cent, from 95.8 per cent. Adjusted operating income was $41.1 million, or $1.18 per share, beating the $1.07 expectation of a consensus of analysts. Mark Watson, chief executive officer, said: “Our strong first quarter 2019 results demonstrate our focus on delivering value to shareholders. Our annualized ROE [return on equity] of 20.1 per cent in the first quarter is an outstanding achievement. The 9.1 per cent annualized operating ROE for the quarter, a 100 basis point improvement year-over-year, reflects strong momentum towards our run rate objective of 10 per cent. In addition, book value per share increased 8 per cent from the beginning of the year. These results were enabled by a 7.1 per cent increase in gross written premiums, with a 10.2 per cent rise in the US operations, an improvement in our expense ratio, and a 26.6 per cent increase in our underwriting income. We expect our strategy to continue to deliver superior and sustainable returns to shareholders.” The first quarter net income included pre-tax gains related to changes in the fair value of equity securities of $54.2 million, compared to a corresponding pre-tax net loss of $30.9 million in the same period during 2018. Argo Group’s book value per share has increased 8 per cent since the start of the year, and was $55.23 at the end of March. Argo will hold its annual meeting on May 24. The company is involved in a proxy battle with activist shareholder Voce Capital Management LLC, which has questioned the use of Argo’s assets, such as corporate jets, housing, and has proposed changes to the board of directors. Argo’s shares closed at $74.61, down 34 cents, on the New York Stock Exchange, ahead of the earnings report.

2019. April 25. A corporate jet that has been used by Argo Group International Holdings appears not to have flown for more than two months since it became a talking point in a proxy battle between the company and activist shareholders Voce Capital Management LLC. Flight logs during the past three years show that the 20-seat jet was used regularly every month until February 16 when it touched down in Chicago, at which point publicly available flight details stopped. Eleven days later, Voce launched its proxy battle with a letter to shareholders of Bermudian-based Argo, claiming the company has a “spendthrift culture” and misdirects corporate assets to support the chief executive officer’s “lifestyle and hobbies”. Voce, a San Francisco-based hedge fund, is the beneficial owner of about 5.6 per cent of the shares of Argo. It is seeking the removal of a number of Argo’s directors, and has put forward nominees to replace them. Argo responded to Voce’s claims on April 15, appealing to shareholders to support the board at the annual meeting on May 24. In a statement, it said Voce’s claims were “poorly researched” and had “little regard for the truth”. Yesterday, in a counter-response, Voce included further questions together with a link to a flight log for a G-5 corporate jet, which it has estimated costs the company $3 million per year. Voce said: “Shareholders will notice that the G-5 doesn’t appear to have flown a single time since the publication of our shareholder letter, which would be the longest stretch it has ever sat idle during Argo’s control of this asset. Either Argo has found a way to cloak these embarrassing flight logs, or else perhaps its extensive prior use was not, in fact, for legitimate purposes, as we suspect. Once again, we call upon Argo to solve the mystery for shareholders.” The aircraft is owned by Jetaway Air Service. Argo has previously stated that the plane was also used by third parties unrelated to Argo at various times during periods referenced by Voce. The Royal Gazette sent inquiries to US-based Jetaway and Argo asking why the plane appears to have been inactive for the past two months. In a statement issued last night, Argo accused Voce of making “misleading statements”. It added that “the flight log Voce refers to is for an aircraft that was neither owned by Argo, nor exclusively used by Argo. Lastly, when our executives use corporate aircraft for personal trips, they do so at their own expense”. Voce had asked five questions in its release yesterday. The activist investor asked whether Argo “truly believes” that the company’s stock price moving in tandem with peers justifies “the misuse of corporate assets, including a fleet of three aircraft and a global network of corporate housing, for personal use by its CEO?” It also wanted to know what percentage of flights on corporate aircraft were used to transport Mark Watson, the CEO, for personal purposes or a mix of personal and professional travel. Voce also asked why Argo does not disclose the exact amounts it spends on its various sponsorships, “so shareholders can assess whether they constitute a ‘modest cost’ as the company argues”. It mentioned a series of yacht regattas, and land and ocean racing teams, that Argo has sponsored. In addition, Voce asked: “Why will Argo not come clean about its corporate housing programme?” It claimed it has discovered three corporate apartments in Miami Beach, Florida that Argo either owns or appears to have acquired, and noted that while Argo has refuted having a penthouse apartment above its offices in New York City, it has previously referenced having corporate housing in New York. Argo responded: “Like so much of Voce’s poorly researched narrative, this latest representation is simply wrong. The properties identified in Voce’s press release are not corporate housing, but rather part of our investment property portfolio: they are income-producing assets purchased in connection with a Section 1031 like-kind real estate exchange following the sale of a commercial property in California.” Argo added that the company had spent on average less than $1 million per year over the past five years for named sponsorships. The company added: “We are committed to an open and constructive dialogue with all our investors.” Voce said it will release a detailed plan next week “outlining how to unlock significant additional value at Argo by dramatically improving operations and capital allocation”.

2019. April 15. Independent directors who sit on the board of Bermuda-based Argo Group International Holdings Ltd have written to the company’s shareholders asking for their support in an ongoing proxy battle with activist shareholders  Voce Capital Management. The 3,144-word letter has been filed with the Securities Exchange Commission in the United States. Argo’s annual general meeting of shareholders will be held May 24. Writing that Voce’s principal, J. Daniel Plants has “put forward a series of poorly researched claims with little regard for the truth”, Argo’s independent directors appealed to shareholders for support to “prevent the short-term interests of an activist hedge fund from disrupting the steady growth and superior shareholder returns you have come to expect”. Voce Capital Management is a San Francisco-based hedge fund that owns about 5.6 per cent of Argo. Last month it attacked what it called a “spendthrift culture” at Argo by citing what it called “inappropriate corporate expenses”. Among examples given were the use of corporate aircraft, housing allowances and sponsorships, with Voce claiming that company resources were being used to support the lifestyle of Mark Watson, Argo’s chief executive officer, at the expense of shareholders. Voce has put forward a slate of five directors for consideration at the annual meeting. It has also claimed that two director appointments made by Argo are invalid under company bylaws and Bermuda law. Argo addressed those claims in an earlier filing with the SEC. The letter to shareholders outlines Argo’s shareholder returns for the one, three and five-year periods ending on February 1, 2019, “the last trading day before Voce Capital made its campaign public”. In the letter, the directors wrote: “As part of our engagement with our shareholders, we are correcting Voce Capital’s misrepresentations, careless errors and outright falsehoods. The company did not build, nor have we ever had, a penthouse apartment above our New York offices. While we do, on occasion, allow our executives to arrange for use of corporate aircraft for personal trips, they do so at their own expense, in which case no incremental cost is incurred by the company. Contrary to Voce Capital’s uninformed claims, the company did not use corporate aircraft to transport our CEO to all of the destinations described by Mr Plants in Voce Capital’s initial press release. Like so many other assertions in its initial press release, Voce’s representations to shareholders on this topic are rife with material misstatements of fact and demonstrate either a reckless disregard for the truth, gross negligence in fact-checking, or a combination of both.” According to the directors, the firm’s sponsorships “are effective marketing tools that provide exceptional client relationship-building opportunities at a modest cost”. The directors claimed the board had twice offered to meet with Voce’s director nominees, but in both instances Voce Capital refused to allow its nominees to meet with the board. Through the letter, the directors asked shareholders to vote wit the “white” proxy card “to end Voce Capital’s destructive and distracting campaign”, adding: “We urge you to discard any and all blue proxy cards sent to you by Voce. If you have already returned a blue proxy card, you can change your vote by signing, dating and returning the white proxy card. Only your latest-dated proxy card will be counted.” Argo shareholders of record as of the close of business on March 11, 2019 will be entitled to vote at the annual meeting.

2019. April 1. The battle between Bermuda-based Argo Group International Holdings Ltd and activist shareholder Voce Capital Management is heating up. The San Francisco-based hedge fund owns about 5.6 per cent of Argo, and earlier this month attacked what it called a “spendthrift culture” at the company by citing what it called “inappropriate corporate expenses”. Among the examples given were the use of corporate aircraft, housing allowances, and sponsorships, with Voce claiming that company resources were being used to support the lifestyle of Mark Watson, Argo’s chief executive officer, at the expense of shareholders. Now, in a regulatory filing with the US Securities and Exchange Commission, Voce has claimed that two director appointments made by Argo are invalid under company bye-laws and Bermuda law, called for the company to rescind the appointments of Samuel Liss and Tony Latham. Voce added that the assignment of invalidly appointed director Mr Latham to the company’s special nominating committee meant the committee’s recommendations should be annulled and the committee dissolved, and said the company has still to refute its claim that corporate assets are being misused. In the filing with the SEC, Voce said: “We will be publishing in due course our plan to unlock significant additional value at Argo through the dramatic improvement of its operations and capital allocation. In the meantime, we have nominated five highly qualified, independent director candidates that we believe will restore accountability, independence and integrity to Argo’s board: Bernard C. Bailey, Charles H. Dangelo, Admiral Kathleen M. Dussault, Carol A. McFate and Nicholas C Walsh. We look forward to the opportunity to make our case to Argo shareholders at this year’s annual meeting.” In reply, Argo filed the following statement with the SEC: “It is disappointing that Voce Capital continues to engage in a campaign of misinformation to support its activist campaign to remove members of Argo’s well-qualified and experienced board. “As publicly announced on February 20, 2019, the board properly appointed Messrs Latham and Liss to fill two vacancies, bringing the number of directors up to 13 as authorized by Argo Group’s bye-laws and Bermuda law. Voce’s assertions challenging these appointments are simply incorrect. It is telling that Voce waited five weeks to raise its latest attempt to distract Argo’s shareholders. Our board remains focused on continuing Argo’s strong performance and looks forward to continuing to engage with all shareholders in the coming weeks.”

2019. February 22. An activist investor has Argo Group International Holdings in its sights, claiming the company has a “spendthrift culture” and misdirects corporate assets to support the chief executive officer’s “lifestyle and hobbies”. Voce Capital Management, which has a 5.8 per cent interest in the Bermudian-based specialty insurer, is calling for the company to improve its return on equity, and said this can only be done in a meaningful way by addressing Argo’s “shockingly high” and “shockingly inappropriate” corporate expenses. Voce said it was deeply concerned that the Argo board of directors had “failed to hold the CEO and management accountable”, and has proposed that four directors be replaced. In a letter to shareholders, San Francisco-based Voce, which is the beneficial owner of more than 1.9 million shares of Argo, catalogued what it said was “a history of misuse of corporate assets” that had resulted in “value destruction” of the company and its shareholders. In reply, Argo defended its track record and said Voce has made a number of misleading and inaccurate statements, and had personally attacked Mark Watson, Argo CEO, in its letter. As examples of its concerns, Voce questioned the need for Argo to have a fleet of three corporate jets, two as fractional owners, and one which it estimates costs the company $3 million a year. It described that jet as Mr Watson’s “personal chariot, whisking him and his entourage around the world”. In its letter, filed with the US Securities and Exchange Commission, Voce detailed “dramatic and expensive real estate”, that it said had cost shareholders dearly, naming the offices in San Antonio, Texas, a New York office in downtown Manhattan, and a central London office near Lloyd’s. It also noted the purchasing of artwork for the offices, and said Mr Watson, who is a board member of the San Antonio Museum of Art, curates the Argo art collections himself. In addition, Argo’s sponsorship of sailing teams and events, including the Argo Gold Cup, has been questioned by Voce, which noted that sailing is another passion of Mr Watson. The letter to shareholders said that Mr Watson was given a $1.5 million relocation allowance for moving to Bermuda in 2007, along with a $1.4 million bonus for agreeing to move to the island with his family. Voce said he was also given $360,000 annual housing allowance that year. Listing its various concerns, Voce claimed the Argo board lacks independence and relevant experience and “is directly responsible for this waste of corporate assets”. Calling for change, it noted that many of the directors had been in place for between 10 and 20 years, and that four of them are more than 70 years old. In reply, the Argo board said it, and the company’s management, welcomed input from all shareholders. Its response, filed with the SEC, also stated: “In that spirit, we were looking forward to continuing our dialogue with Voce, but are disappointed that Voce has decided not to engage us constructively. Instead, Voce has sent a letter to shareholders that contains a number of misleading and inaccurate statements and personally attacks the company’s CEO, ignoring Argo’s track record of strong value creation for all shareholders. This is demonstrated by its leading one, three and five-year period total shareholder returns of 39 per cent, 69 per cent and 136 per cent, respectively. The company also returned in excess of $645 million of capital to shareholders from 2010 to 2018.” Argo said it had lowered its expense ratio by 260 basis points to 37.8 per cent, last year. It added: “The improving expense ratio, along with strong execution of the company’s strategy, is contributing to the achievement of the company-stated long-term ROE target of 700 basis points above the risk-free rate.” Voce has proposal removing from the Argo board Gary Woods, the chairman, Hector De Leon, John Power, and Mural Josephson, and replacing them with its nominees Carol McFate, Bernard Bailey, Rear Admiral Kathleen Dussault, and J. Daniel Plants. Argo said it will review the nomination notice and proposed nominees, and present its formal recommendations in a definitive proxy statement that will be filed with the SEC and e-mailed to shareholders eligible to vote at this year’s Argo annual meeting. The date for Argo’s annual meeting has not yet been scheduled.

2019. February 11. Argo Group posted a net loss of $43.6 million for the fourth quarter of last year, driven by a fall in the market value of its equity investments during the last three months of the year. However, the Bermuda-based insurer and reinsurer managed to grow gross premiums written to $3 billion for the full year, an increase of 9.6 per cent from 2017. Adjusted operating income was $18.8 million, or 55 cents per share for the quarter and $111.7 million, or $3.22 per share for the year. Full-year net income for 2018 was $63.6 million, up from $50.3 million in 2017. The combined ratio — the proportion of premium dollars spent on claims and expenses — was 99.5 per cent for the quarter and 97.9 per cent for the year. During the fourth quarter, Argo said it recognized the change in the fair value of its equity securities as a pre-tax loss of $83 million, or $66.4 million net of taxes, or a loss of $1.96 per diluted share. “Our results in 2018 demonstrate the continued execution of our strategy to optimize the efficiency of the platform, grow in lines with the most profit potential and scale the business globally,” Mark Watson, Argot's chief executive officer said. “Our business has been performing well against a difficult market environment. We posted 9.6 per cent growth in annual gross written premiums including a 12.1 per cent rise in the US, improvements in current year margins, and a 260-basis-point improvement in the annual expense ratio. While late year volatility in the investment markets masked the full impact of our solid results, we believe we are well positioned to continue to deliver strong shareholder value.” Book value per share was $51.43 at December 31, 2018 compared to $53.46 at December 31, 2017. Argo’s shares rose 35 cents, or 0.5 per cent, in New York Stock Exchange trading today ahead of the release of the results.

2019. January 17. Argo Group has estimated preliminary pre-tax catastrophe losses of $32 million for the fourth quarter. The losses are primarily related to Hurricane Michael and the California wildfires. Additionally, the Bermudian-based company’s fourth-quarter results will be impacted by higher than expected current accident year losses of approximately $12 million, including a number of discrete marine and energy claims. Argo announced the estimates in a statement, and said the catastrophe losses include claims costs net of ceded reinsurance recoverables and reinstatement premiums, and include losses related to certain aggregate excess of loss contracts. Mark Watson, chief executive officer, said: “Our estimate for catastrophe losses in the fourth quarter of 2018 again reflects the restructuring of our reinsurance program at the beginning of the year to reduce earnings volatility by incorporating a single retention for the combined reinsurance portfolios of Argo and the acquired Ariel Re, and also strategically increases our use of third-party capital.”

2018. October 18. Argo Group International Holdings expects pre-tax catastrophe losses of approximately $25 million for the third quarter of this year. Hurricane Florence, Typhoon Jebi and other catastrophe and weather-related events during the three-month period are the sources of the losses for the Bermudian-based insurer and reinsurer. The loss estimates include claims costs net of ceded reinsurance recoverables and reinstatement premiums, and include losses related to certain aggregate excess of loss contracts. Mark Watson, the company’s chief executive officer, said: “As we indicated following the catastrophe loss events in 2017, we restructured our reinsurance programme for 2018 to incorporate a single retention that combined the reinsurance portfolios for Argo and the acquired Ariel Re, and we strategically increased our use of third-party capital. Our loss results for the third quarter of 2018 reflect these actions.” Argo warned that the estimates were preliminary and the actual net impact may end up being materially different.

2018. March 13. Bermuda-based insurer and reinsurer Argo Group has acquired Italian speciality insurer Ariscom. Last year Argo acquired reinsurer Ariel Re and added a new team of property underwriters from Ironshore. Mark Watson, chief executive officer of Argo Group, said: “Ariscom provides an established platform that we can use to efficiently expand our presence in continental Europe. “Italy is one of Europe’s largest and best-performing P&C insurance markets. We’re also eager to tap into Ariscom’s existing broker and client network throughout Italy, with longer-term opportunities to develop capabilities across Europe — particularly in Spain and Portugal.” Matt Harris, head of ArgoGlobal’s European and Asian operations, has assumed the role of Ariscom managing director. ArgoGlobal will re-brand Ariscom to highlight “the strength of the new combined organisation”. Jose Hernandez, head of Argo Group’s international segment, said: “We are planning an aggressive re-launch strategy and intend to deploy some of the company’s proven digital solutions to enhance the value we provide to clients.”

2017. November 2. Pre-tax catastrophe losses estimated at $104.5 million impacted the third quarter earnings of Argo Group. The Bermuda-based company reported an adjusted operating loss of $57.4 million, or $1.91 per share, compared to operating income of $34.4 million in the same quarter last year. Net loss was $61.3 million, or $2.04 per share, down 213.3 per cent year-on-year, while the combined ratio was 126.5 per cent, up from 96.2 per cent a year ago. Mark Watson, Argo Group CEO, said: “In a quarter dominated by natural catastrophe losses, Argo Group’s risk and capital management framework was effective, together with our underwriting expertise and global platforms, it gives us the ability to react to the most attractive market opportunities as market pricing changes in reaction to these events. In addition, we continue seeing growth in many of our business lines as we leverage the ongoing investments in technology and talent.” Gross written premiums were $805.1 million, up 37.5 per cent compared to the same period in 2016. During the quarter, the company repurchased 565,534 of its shares, to a value of $33.8 million. The book value of Argo Group shares at the end of the quarter was $60.96, up 2.1 per cent since the start of the year.

2017. August 8. Argo Group International Holdings saw its net income improve to $46 million in the second quarter, compared with $30.9 million for the same period in 2016. The Bermuda-based company also saw 22 per cent increases in gross written premiums to $687.2 million, and net investment income to $43.6 million. Mark Watson, chief executive officer, said: “Argo Group’s results for the first six months of 2017 reflect strong investment returns and profitable growth in our US, Bermuda, and Latin America operations. “Book value per share grew 8.2 per cent over the past 12 months and the annualized return on average shareholders equity was 9 per cent at June 30. These results demonstrate continued value creation for our shareholders through our focus on specialized products and distribution globally.” On February 6, the insurer and reinsurer completed its buy-up of Ariel Re, and since that date Ariel Re results have been included in Argo Group’s consolidate international operations results. Argo’s net income for the quarter was $1.48 per share, up 48 per cent on the same period a year ago. Adjusted for investment gains, net income was $1.31 per share, up 9.2 per cent. Book value per common share is now $62.65, up 4.9 per cent since the start of the year. The company’s combined ratio was marginally higher, rising 1 per cent to 96.6 per cent. Estimated pre-tax catastrophe losses were $4.5 million, compared to $22.7 million a year ago. While estimated pre-tax catastrophe losses for the first half of the year are $6.3 million, down from $26 million during the same period in 2016. Before the earnings report was released, Argo Group shares closed in New York at $60.20, up 35 cents, or 0.58 per cent.

2017. May 23. When Star Wars actress Carrie Fisher died in December 2016, it triggered what is thought to be the largest single personal accident insurance claim payout ever. And among the more than 20 carriers that jointly covered Disney’s insurance policy on Ms Fisher, was Bermuda-based Argo Group International Holdings. The specialty insurer and reinsurer has offices on Pitts Bay Road, and is known for identifying and insuring risks that other traditional underwriters do not insure. Argo’s stake in the insurance policy covering Ms Fisher was highlighted in a report in the San Antonio Express-News. Film company Disney took out contract protection, estimated to be $50 million, on Ms Fisher in case she was not able to fulfil her obligations to appear in all the Star Wars trilogy sequel films. A number of Lloyd’s of London insurers took a stake in the risk contingency policy, which was underwritten by New Jersey-based Exceptional Risk Advisers. According to a report by The Insurance Insider, Atrium, a subsidiary of island-based Enstar Group, was the lead in the facility. As a legacy star of the original Star Wars trilogy, where she played the role of Princess Leia, Ms Fisher appeared in Star Wars Episode VII: The Force Awakens, the first of the new trilogy. The film was released in 2015 and took $2.07 billion at the box office, becoming the third most financially successful film of all time. Ms Fisher also completed filming of the follow up Star Wars Episode VIII: The Last Jedi, set for release later this year. She was due to star in the final film of the sequel trilogy, Star Wars Episode IX, but died in December a few days after suffering a heart attack on a flight from London to Los Angeles. Filming of the still untitled Episode IX, has not started. The film is due to be released in May 2019.

2017. May 1. Insurer and reinsurer Argo is to change its financial reporting — with just two segments, US and international. The change replaces the four reporting segments formerly used, with US figures now including excess and surplus and commercial specialty, while international figures will include the former Syndicate 1200, international specialty and Ariel Re. The new reporting method will take effect when the firm’s first quarter results are released later this week. Mark Watson, Argo Group CEO, said: “This is an important step better reflecting the way we are managing our businesses and thinking about our operating platforms. Argo had made important enhancements with the addition of Jose Hernandez to lead its international business and the acquisition of reinsurer Ariel Re earlier this year. These recent additions, combined with the consolidation of our US operations under the leadership of Kevin Rehnberg, allows us to make this change. With these additions and operational changes, we are better positioned as a global underwriter of specialty insurance and reinsurance products.”

2017. April 13. Argo Group, the Bermuda-based insurer and reinsurer, has warned that its first quarter profits will be adversely impacted by about $16.5 million. The four non-recurring charges include $5 million in late claims reported from Hurricane Matthew, and $4 million in relation to the transfer of some infrastructure and information technology functions to third party service providers. The others are $2.5 million relating to the recent acquisition of Ariel Re and an estimated $5 million to incorporate the recent change in the UK Ogden discount rate. Argo will announce earnings for the first quarter on May 3.

2017. February 14. Argo Group has reported a dip in profits for the fourth quarter and the full year. The Bermudian-based company’s net income for the quarter was $32.9 million, or $1.07 per common share, compared with $41.2 million for the same period in 2015. For the full year the profit was $146.7 million, or $4.75 per share, compared to $162.2 million, or $5.20 per share, in 2015. Argo’s fourth-quarter adjusted operating income was $19.8 million, or 65 cents per share, which was in line with analysts’ estimates. For the full year gross written premiums were $2.16 billion, a rise of 7.6 per cent, and net investment income was $115.1 million, up 29.9 per cent. Mark Watson, chief executive officer of Argo Group, noted that the company ended 2016 with book value of $59.73 per share, a 10 per cent increase “even with an increase in the incidence of global catastrophe losses relative to recent years”. He said: “For the past 15 years, Argo Group has grown book value per share in excess of 10 per cent on a compounded annual basis. As we have discussed in the past, we consider the compounded annual growth in book value as the measure that most clearly demonstrates value creation for our shareholders. Also, our annualized return on equity has averaged 9.8 per cent over the last four years. These results demonstrate the value of a well-balanced and diverse portfolio of businesses as well as thoughtful asset allocation. The recently completed acquisition of Ariel Re provides us with additional presence and scale in both our Bermuda and London-based operations.” The insurer and reinsurer acquired fellow island firm Ariel Re in a $235 million deal. For the fourth quarter, Argo reported estimated pre-tax catastrophe losses of $22.8 million, or 6.4 points on the combined ratio, compared with $5.2 million for the last three months of 2015. Its estimated full year pre-tax catastrophe losses are $61.7 million, up from $23.7 million. The company’s combined ratio for the year was 96.2 per cent, up from 95 per cent, and for the quarter was 98.8 per cent, compared to 94.5 per cent in the fourth quarter of 2015. Argo Group shares yesterday closed at $65.95, up 75 cents, in New York.

2017. February 7. Bermuda-based insurer and reinsurer Argo Group has closed the acquisition of fellow island firm Ariel Re. Agreement on the $235 million deal was announced last November. And today Argo also announced that Ryan Mather, former Ariel Re chief executive officer, will serve as Argo’s global head of reinsurance leading all reinsurance operations. “Ariel Re and Argo Group are a terrific fit — operationally and culturally,” Mark Watson, CEO of Argo Group said. “Ryan’s leadership and collaboration were key factors in our ability to finalise this agreement and begin implementing the company’s integration plan so swiftly. This is reflective of the teamwork and outstanding results we expect to see in the future.” Mr Mather’s organisation will retain the Ariel Re brand as a member of Argo Group, and he will report directly to Jose Hernandez, head of Argo’s international business. Ariel Re was jointly owned by Banco BTG Pactual SA and the Abu Dhabi Investment Council. The company underwrites a global portfolio of insurance and reinsurance business through Lloyd’s Syndicate 1910. Ariel Re employs around 100 people and has offices in Victoria Place, Hamilton. In November a spokesman for Argo told this newspaper that job cuts were not high on the agenda for the combined company. He said: “Cost savings were not a major driver in the rationale for the acquisition of Ariel Re, rather we are excited about bringing two significantly complementary businesses together. Both teams will have a significant role to play in bringing our platforms together for the benefit of our customers.” The reinsurance arm of Argo, whose headquarters is in Pitts Bay Road, will combine with Ariel Re. In November, Mr Watson said that the acquisition was part of Argo Group’s bid to build scale in its London and Bermudian platforms by adding complementary lines of special business. Argo said the combined company will have “a well-balanced portfolio mix” of about 88 per insurance and 12 per cent reinsurance.

2016. November 15. Argo International Holdings has struck a $235 million deal to buy Ariel Re in an all-Bermuda insurance combination. And it appears that job cuts on the island are not high on the agenda for the merged company. A spokesman for Argo said: “Cost savings were not a major driver in the rationale for the acquisition of Ariel Re, rather we are excited about bringing two significantly complementary businesses together. “Both teams will have a significant role to play in bringing our platforms together for the benefit of our customers.” Ariel Re employs around 100 people and has offices in Victoria Place, Hamilton. Argo, whose headquarters is on Pitts Bay Road, said the deal, which will see Argo’s reinsurance arm combine with Ariel Re, was expected to close in the first quarter of next year, subject to regulatory approvals. Mark Watson, CEO of Argo, said: “Ariel Re is a terrific fit for Argo Group — operationally and culturally. We remain focused on delivering enhanced shareholder value. This transaction enables us to build on the successes realized individually by Argo Group and Ariel Re, utilizing our combined strength to deploy capital in selected areas to produce maximum return and continued growth.” Mr Watson added: “Under the leadership of Jose Hernandez, head of Argo Group’s international business, the combination of Ariel Re and Argo Re will result in a market-leading business and will make a meaningful and immediate contribution to earnings and return on equity.” He said that the acquisition was part of Argo Group’s bid to build scale in its London and Bermuda-based platforms by adding complementary lines of special business. Mr Watson added that, after the deal goes through, Argo Group will have “a well-balanced portfolio mix” of about 88 per insurance and 12 per cent reinsurance. The transaction is claimed to provide Argo with added diversification, which will help to improve its ability to manage through changing market cycles. And the company said that other benefits, like Ariel Re’s “unique modelling and risk analysis tools”, would enhance Argo’s underwriting analytics. Mr Hernandez said: “Ariel Re is a group of proven insurance experts who rely on deep domain expertise, rigorous research and development and innovative thinking — values and capabilities that align with those of Argo Group.” Ryan Mather, CEO of Ariel Re, said: “Argo Group have long been supporters of Ariel Re and we are delighted to take this relationship forward by bringing Ariel Re under the Argo banner. There is great synergy between the teams from both companies and we are looking forward to working together to strengthen the offering for our clients.” Ariel Re is jointly owned by Banco BTG Pactual and the Abu Dhabi Investment Council and underwrites a global portfolio of insurance and reinsurance business through Lloyd’s Syndicate 1910. The company said it’s business is well-diversified by distribution, regional exposure and peril and that it had achieved “superior returns by sourcing low-frequency/higher severity high margin business”. Ratings agency Standard & Poors said that the US long-term ratings of Argo were unaffected by the move. The firm said: “SWE believe the acquisition’s size is relatively small on a net basis. While financial leverage, on a pro forma basis, will increase to around 26 per cent, we expect prospective capitalization to remain very strong, leverage to decline in part through accrued earnings and fixed charge coverage to remain above four times, which is consistent with our assessment of a strong financial risk profile.”

2016. November 2. Argo Group International Holdings has announced net income of $55.2 million for the third-quarter — up nearly $21 million on the same period in 2015. The figure is equivalent to $1.80 per common share, compared to $1.13 a year ago. Operating income for the quarter was $34.4 million, or $1.12 per diluted share. Mark Watson, CEO of the group, said: “Continued improvement in our underwriting results combined with strong alternative investment returns contributed to growth in book value per share, delivering real value to our shareholders. By almost all measures, our business continues to show year over year improvement.” Gross written premiums rose 10.2 per cent to $585.4 million, compared with $531.4 million in the third-quarter of 2015. The firm recorded $32.7 million in investment income, up from $18.4 million in the third-quarter of 2015. Argo estimated pre-tax catastrophe losses at $12.9 million for the quarter, compared to $13.1 million in the same period last year.

2017. February 7. Bermuda-based insurer and reinsurer Argo Group has closed the acquisition of fellow island firm Ariel Re. Agreement on the $235 million deal was announced last November. And today Argo also announced that Ryan Mather, former Ariel Re chief executive officer, will serve as Argo’s global head of reinsurance leading all reinsurance operations. “Ariel Re and Argo Group are a terrific fit — operationally and culturally,” Mark Watson, CEO of Argo Group said. “Ryan’s leadership and collaboration were key factors in our ability to finalise this agreement and begin implementing the company’s integration plan so swiftly. This is reflective of the teamwork and outstanding results we expect to see in the future.” Mr Mather’s organisation will retain the Ariel Re brand as a member of Argo Group, and he will report directly to Jose Hernandez, head of Argo’s international business. Ariel Re was jointly owned by Banco BTG Pactual SA and the Abu Dhabi Investment Council. The company underwrites a global portfolio of insurance and reinsurance business through Lloyd’s Syndicate 1910. Ariel Re employs around 100 people and has offices in Victoria Place, Hamilton. In November a spokesman for Argo told this newspaper that job cuts were not high on the agenda for the combined company. He said: “Cost savings were not a major driver in the rationale for the acquisition of Ariel Re, rather we are excited about bringing two significantly complementary businesses together. Both teams will have a significant role to play in bringing our platforms together for the benefit of our customers.” The reinsurance arm of Argo, whose headquarters is in Pitts Bay Road, will combine with Ariel Re. In November, Mr Watson said that the acquisition was part of Argo Group’s bid to build scale in its London and Bermudian platforms by adding complementary lines of special business. Argo said the combined company will have “a well-balanced portfolio mix” of about 88 per insurance and 12 per cent reinsurance.

2019. June 10. Argus Group Holdings Ltd bounced back to profitability with annual net earnings of $14.2 million compared to a net loss of $18.6 million in the previous year. The year ended March 31, 2019 closed with net equity at $120 million, an increase of $14.1 million compared to the previous year end. Alison Hill, Argus Group’s chief executive officer, said net operating income was $18.1 million, “a significant return to strength from 2018’s year of tough decisions”. The Argus board declared a dividend of nine cents per share for shareholders of record as of July 31, 2019 payable on August 23, 2019. Ms Hill said: “This year has seen us act strategically and decisively to enhance the long-term economics of our business. We have controlled the cost of our healthcare business in partnership with One Team Health, and are strengthening our international presence through the acquisition of FirstUnited Insurance Brokers in Malta.” She added that the employee benefits division performed well, while the health division working hard to reduce the cost of claims. “Against the backdrop of hospital financing reform, we experienced a challenging health renewal, where premium rate increases were necessary for many clients in order to keep pace with global health cost inflation,” Ms Hill said. “We work closely with our valued clients to ensure plan benefits fit their evolving needs and take our role as custodians of their health dollars very seriously. We also work closely with our health members to support healthy lifestyles. Supporting healthy lifestyles helps to control the cost of healthcare and promote a better life for our members.” Argus added that client retention rates were over 90 per cent. “Our position of financial strength, and capital in excess of regulatory requirements, has given us the robust foundation to accelerate investment in our future,” Ms Hill said. "We continue to focus on putting our capital to best use, making responsible and judicious choices to further our strategic aims, whilst ensuring long-term sustainable shareholder value.” The company was investing in new technologies and new ways of doing business to improve service and value to customers, she added.

2019. May 21. Argus Group has acquired One Team Health, a Toronto-based third-party overseas care administrator. The Bermuda-based insurer said the purchase would bolster its efforts to reduce healthcare expenses while improving quality of care. Alison Hill, chief executive officer of Argus, said: “With healthcare costs on the rise globally, Argus recognizes that we have a responsibility to help drive down these costs for Bermuda and this acquisition forms part of our commitment to a long-term solution. The purchase of OTH provides us with data and resources we can leverage to improve access to quality overseas care at affordable pricing for all of our clients.” The acquisition, the company said, builds upon the longstanding relationship between Argus and OTH founder John Park, who has partnered with Argus for more than 20 years as a senior executive of its previous overseas health management companies. OTH specializes in medical case management and offers access to top-quality healthcare providers around the globe, Argus said. With a patient-centric approach and focus on quality outcomes, OTH provides 24-hour worldwide medical assistance, including pre-authorization and emergency evacuation, pursuant to policy benefits. The OTH team is comprised of physicians, nurses, case managers, facilitators, and co-ordinators with a combined tenure and experience of servicing Bermuda for more than 50 years, Argus said. Peter Lozier, executive vice president, Argus Group Insurance, said: “OTH’s capabilities integrate perfectly with those of Argus. Historically, there has always been a segregation of local and overseas care when, in reality, the individual should be viewed and supported through a single lens. As the only provider in Bermuda to own such an entity, Argus is now uniquely positioned to provide fully integrated, seamless, continuity of care and record management via the use of our own local and overseas case managers. While such a holistic view primarily improves quality of care, it also has significant cost implications. “This integrated approach not only allows us to acquire care from a refined set of providers that are renowned for delivering better results, but also improves access to competitive pricing. We are continually finding ways to evolve and enhance our business model to better balance quality care and affordability.”

2018. December 10. Argus Group Holdings Limited has made a profit of $10 million for the six months to the end of September. This compares with a loss of $2.3 million for the same period last year. While welcoming the performance Alison Hill, chief executive officer, said the company remains concerned about the sustainability of the healthcare system in Bermuda. She also referenced “decisive short-term action” taken by Argus to improve long-term profitability. This year the company announced $19.5 million of write downs associated with disposing of illiquid, noncore assets as the group restructured its balance sheet. Ms Hill said: “We remain confident that these actions will lead to sustained earnings and future growth.” The group’s combined operating ratio for its insurance business was 80.5 per cent, markedly lower than the 93.6 per cent for the same period last year. Ms Hill said: “Following a year of significant increases of the cost of claims within our health business, we are now seeing a return to more normal claim levels. As promised, we will continue our efforts to drive changes that will help to control health claims without compromising quality of care. We remain concerned about the sustainability of the healthcare system in Bermuda and will continue to invest in our population health initiatives and work with key stakeholders as a way to influence change.” Argus Group’s combined property and casualty division reported an increase in net earnings year-on-year, which was helped by the absence of hurricanes and other major windstorms in Bermuda, although this was in part offset by large motor losses in Europe. Fee income generated by the group’s employee benefits, wealth management and insurance brokerage businesses was stable at $12.3 million. Ms Hill said the group’s investment portfolio generated positive returns during the six months, despite the events that impacted global investment markets; rate increases by the Federal Reserve and tightening of credit spreads." Against this backdrop, the group’s solid investment performance for the six months has contributed $7.9 million to our earnings. The investment income benefited from a one-time realised gain of $1.3 million from the sale of certain Bermuda equities.” Equity attributable to shareholders of the company stands at $107.9 million and remains well in excess of the capital level required by regulators. Argus has declared an interim dividend of nine cents per share payable on January 15, to shareholders of record on December 31.

2018. July 20. Insurance company Argus Group suffered a $18.6 million loss for the year, impacted by a large number of major medical claims, and a decision to exit a variety of illiquid investments. There was $19.5 million of write-downs associated with disposing of illiquid, noncore assets as the group restructured its balance sheet. Argus’s results were also impacted by claims in its health business that were $10.4 million higher year-on-year. Among the major medical claims was an unusually high number of difficult pregnancies and premature babies. Elsewhere, the group’s general portfolio of investments generated positive results; 84 per cent of its investments are fixed income bonds, of which 98 per cent are investment grade. Alison Hill, chief executive officer of Argus, said: “At the core of the group’s investment philosophy is our commitment to careful and diligent custodianship of policyholder and shareholder assets. The group’s investment portfolio is designed to ensure funds are readily available to satisfy our obligation to policyholders and to enhance shareholder value by generating appropriate long-term risk-adjusted yields.” Regarding the move out of the noncore asset positions that resulted in the significant write-downs, Ms Hill said: “Exiting these assets frees up resources and creates additional liquidity that can be used to drive further diversification and growth. These decisions have not been made lightly; after an exhaustive process to explore and evaluate the various options, it’s clear that now is the time to implement our strategy.” Peter Dunkerley, chief financial officer, added: “We have a conviction that taking the short-term loss is going to generate the best long-term value for our shareholders and all our stakeholders.” The group’s financial strength rating was upgraded to A- (excellent) by AM Best in December. Ms Hill said: “We have continued our balance sheet optimization strategy during the year with the sole focus of putting our capital to its best use while ensuring long term sustainable value. We are pleased that our diligent capital planning means that, despite our reported loss for the current year, the group remains in a healthy capital position and we are able to sustain our dividend to shareholders at 9 cents per share.” Argus Group’s three core divisions remained positive, with wealth management operating results improving from $0.1 million to $0.4 million, global property & casualty rising to $7.5 million from $4.7 million. However, the operating earnings from employee benefits in Bermuda dropped from $13 million to $0.2 million — this division includes health insurance. During 2015 and 2016, Argus saw a plateauing trend in health claims inflation and passed on premium savings to customers. In hindsight, the group believes that it made that move too quickly, which contributed to the loss in the health business this year. Looking ahead, Argus has signed an agreement to sell its private placement life business, a noncore business segment that is described as a drag on the group’s resources. Ms Hill said: “The terms of the deal will mean a gain of up to $6 million will be reported over the next three years, based on the persistency of the business.”

2018. June 27. Argus Group is selling its private placement life business to Puerto Rico-headquartered Advantage Insurance Inc. Financial terms of the deal have not be disclosed. The transaction is expected to be completed before the end of September. The sale includes Argus International Life Bermuda Limited and its subsidiaries, Argus International Life Insurance Limited, and Bermuda Life Worldwide Limited. Private placement life insurance, or PPLI, has been used as a wealth-preservation tool by the wealthy, according to a Bloomberg article last month. “It’s a strategy that’s perfectly legal and has existed for decades,” Bloomberg reported. “While insurance funds are typically a way to protect assets from lawsuits, the main appeal of PPLIs is that they can help investors avoid taxes on capital gains, ordinary income and high-net-worth estates.” Alison Hill, chief executive officer at the Argus Group, said: “The Argus Group made the business decision to reprioritize and focus on its core property and casualty and employee benefit businesses some time ago. We embarked on a search for the right purchaser for our private placement life insurance and annuity business. We are delighted to have found a suitable partner in Advantage Insurance and look forward to transitioning the private placement life business to them. Our shared business philosophy for service excellence, along with Advantage’s best-in-class practices and deep knowledge of the private placement life industry, gave us comfort that Advantage will provide our clients with the highest level of expertise, commitment and outstanding customer service that they expect and deserve.” Advantage Insurance is a speciality private placement life insurance company. It has 400 clients and administrates more than $2 billion of insurance assets from its locations in San Juan, Cayman Islands, the UK and US. Walter Keenan, CEO of Advantage Insurance, said: “We are pleased to be acquiring the companies that comprise Argus’ private placement life business and look forward to providing outstanding service to their policy owners. Advantage specializes in private placement life insurance and this acquisition demonstrates our commitment to the business. Argus’ clients can be confident in the quality of their new insurance provider, as Advantage is ideally positioned to assume this high-quality set of life insurance policies.” The transaction is subject to receipt of all required regulatory approvals.

2018. April 30. AFL Investments Limited has been rebranded to Argus Wealth Management Limited and is now a wholly owned subsidiary of The Argus Group, In a statement, Argus Wealth said it will continue to offer investment options to Bermuda-based private and institutional clients and leverage its existing institutional relationships to provide access to world-class managers through a simple and cost-effective structure. Advisory services are available to private clients who prefer to maintain control of their own investment portfolio. The company has also consolidated its in-house expertise to further strengthen the investment process through a disciplined, proactive approach to create appropriate solutions for clients. Joel Schaefer, president and chief executive officer of Argus Wealth Management, said: “We are delighted to have rebranded the company to reflect our affiliation with Argus, which is a well-recognized brand. We will continue to offer sophisticated investment options to help private clients grow their wealth over time.” Argus Wealth also provides investment solutions for institutional investors and corporate pension funds and has $1.4 billion in assets under management. For further information, visit arguswealth.bm.

2016. November 15. Argo International Holdings has struck a $235 million deal to buy Ariel Re in an all-Bermuda insurance combination. And it appears that job cuts on the island are not high on the agenda for the merged company. A spokesman for Argo said: “Cost savings were not a major driver in the rationale for the acquisition of Ariel Re, rather we are excited about bringing two significantly complementary businesses together. “Both teams will have a significant role to play in bringing our platforms together for the benefit of our customers.” Ariel Re employs around 100 people and has offices in Victoria Place, Hamilton. Argo, whose headquarters is on Pitts Bay Road, said the deal, which will see Argo’s reinsurance arm combine with Ariel Re, was expected to close in the first quarter of next year, subject to regulatory approvals. Mark Watson, CEO of Argo, said: “Ariel Re is a terrific fit for Argo Group — operationally and culturally. We remain focused on delivering enhanced shareholder value. This transaction enables us to build on the successes realized individually by Argo Group and Ariel Re, utilizing our combined strength to deploy capital in selected areas to produce maximum return and continued growth.” Mr Watson added: “Under the leadership of Jose Hernandez, head of Argo Group’s international business, the combination of Ariel Re and Argo Re will result in a market-leading business and will make a meaningful and immediate contribution to earnings and return on equity.” He said that the acquisition was part of Argo Group’s bid to build scale in its London and Bermuda-based platforms by adding complementary lines of special business. Mr Watson added that, after the deal goes through, Argo Group will have “a well-balanced portfolio mix” of about 88 per insurance and 12 per cent reinsurance. The transaction is claimed to provide Argo with added diversification, which will help to improve its ability to manage through changing market cycles. And the company said that other benefits, like Ariel Re’s “unique modelling and risk analysis tools”, would enhance Argo’s underwriting analytics. Mr Hernandez said: “Ariel Re is a group of proven insurance experts who rely on deep domain expertise, rigorous research and development and innovative thinking — values and capabilities that align with those of Argo Group.” Ryan Mather, CEO of Ariel Re, said: “Argo Group have long been supporters of Ariel Re and we are delighted to take this relationship forward by bringing Ariel Re under the Argo banner. There is great synergy between the teams from both companies and we are looking forward to working together to strengthen the offering for our clients.” Ariel Re is jointly owned by Banco BTG Pactual and the Abu Dhabi Investment Council and underwrites a global portfolio of insurance and reinsurance business through Lloyd’s Syndicate 1910. The company said it’s business is well-diversified by distribution, regional exposure and peril and that it had achieved “superior returns by sourcing low-frequency/higher severity high margin business”. Ratings agency Standard & Poors said that the US long-term ratings of Argo were unaffected by the move. The firm said: “SWE believe the acquisition’s size is relatively small on a net basis. While financial leverage, on a pro forma basis, will increase to around 26 per cent, we expect prospective capitalization to remain very strong, leverage to decline in part through accrued earnings and fixed charge coverage to remain above four times, which is consistent with our assessment of a strong financial risk profile.”

Since 2007. Bermuda Commercial Bank Building. Bermuda-based and incorporated group of re/insurance and service companies which specialize in the creation and implementation of solutions and acquisitions within the run-off insurance marketplace. It also has offices in London and Philadelphia. Founded by former Imagine Group executives John Williams and Chairman and CEO Brad Huntingdon in 2007. Privately held. Has acquired Mexico's largest title insurer, Fidelity National Title de Mexico, SA de CV, since renamed Armour Secure Insurance SA de CV. In its more than eight years of existence, Armour Secure Insurance has written more than $7 billion in policies.. Armour had the opportunity to acquire Fidelity National through another of its businesses, Secure Legal Title, which provides title insurance in Europe. It, like the Mexican operation, underwrites using Lloyd's capacity. Armour also has acquired Fidelity National Escrow Services, S de RL de CV, now renamed Armour Secure Escrow, S de RL de CV, the first in Mexico to introduce escrow services, which provide an essential element of security in real estate transactions. Armour Secure Insurance and Escrow will continue under the leadership of Juan Pablo Arroyuelo, director general. Armour Group. In all, the group employs around 80 people. Several of them are claims experts, heavily involved in the group's substantial run-off segment. Run-off refers to companies or books of business that have stopped writing new business, but still have reserves and obligations to be managed. Armour seeks value opportunities within distressed, discontinued and other specialty sectors in the insurance and reinsurance industry. Two years ago, Armour announced that an affiliate had acquired the US run-off business of OneBeacon, which came with some $2.2 billion of reserves. Armour Group subsidiary ILS Investment Management, working with Credit Suisse Asset Management, raised $576 million for the first insurance-linked securities (ILS) fund focused on property and casualty run-off portfolios. 

2019. October 1. Armour Group Ltd has appointed Yulia Bruskova as chief risk officer. Ms Bruskova will assume her new position in November and will report to the group CEO and appropriate governance committees. Ms Bruskova is an experienced reinsurance risk executive having previously served as group actuary for RenaissanceRe. Most recently, she served as the chief risk officer for Bermudian-domiciled F&G Re. Ms. Bruskova also previously led Deloitte’s Bermuda actuarial practice and is a qualified actuary and fellow of the Institute and Faculty of Actuaries, UK. Brad Huntington, Armour’s chairman and chief executive officer, said: “We are delighted that Yulia has agreed to join Armour as Group CRO. She brings a wide range of technical and practical experience and knowledge to our group. Ms Bruskova said: “I am excited to join Armour, particularly in light of the company’s significant growth and development opportunities.” 

2018. January 3. Bermuda-based run-off specialist Armour is to launch a new reinsurer after raising up to $500 million in equity commitments from an investor group led by New York private-equity firm Aquiline Capital Partners. The new reinsurance company Armour Group Ltd, will co-invest in global property and casualty run-off transactions in parallel with the group’s affiliates. As part of the transaction, the former Armour holding company will rename itself Trebuchet Holdings and transfer the Armour brand name to the new group. Trebuchet Holdings will also contribute its existing P&C run-off platform to the newly established holding company, including the firm’s claims-management operation Armour Risk and, subject to certain approvals, the group’s affiliate ILS Investment Management, which will continue its existing business. “Aquiline’s investment in Armour reflects the growing demand for run-off as an option for insurance companies that are looking to solve deteriorating reserve positions and optimize their capital,” said Jeff Greenberg, chairman and chief executive officer of Aquiline. “We are excited to partner with the highly experienced team at Armour and believe that their ILS management capabilities provide a strong competitive differentiator. The formation of our permanent capital vehicle provides the team with the full toolkit to capitalize on the market opportunity.” Armour founder and CEO Brad Huntington said: “Given Aquiline’s deep insurance industry experience, we believe they are an ideal partner to help us grow the team and scale our operation.” Jefferies served as financial adviser to Armour on the transaction. Trebuchet was advised by Clifford Chance LLP. Aquiline was advised by Sidley Austin LLP.

2019. November 22. Artex Risk Solutions continued to expand its operations today, announcing the acquisition of Dallas-based EWI Re, Inc. Terms of the transaction were not disclosed. Established in 1959, EWI offers reinsurance programme design and placement services for captives and mutual insurance companies; run-off and legacy solutions; and safety and loss control services. Its specialty risk management practice is built to support large insureds with demanding insurance needs, Artex said. The EWI team will report to Jennifer Gallagher, president of Artex’s North American operations. Ms Gallagher said: “The acquisition of EWI expands our ability to provide complex single-parent captive solutions to our clients.” She added: “Steve McElhiney and his staff are a terrific addition to our team and their skills enhance our insurance management capabilities. Steve is well respected in the insurance industry and currently serves as the board chairman of the Captive Insurance Companies Association. His expertise and experience will be invaluable to our clients.” Mr McElhiney said: “Our team is well versed in the design and placement of reinsurance needs for single-parent captives. We are excited to join Artex and create additional synergy around the development of comprehensive risk management solutions for large, individual risk clients.” The news comes just three days after Artex announced completion of the acquisition of insurance-linked securities specialists Horseshoe Insurance Services Holdings Ltd. Horseshoe, which specialises in providing insurance management, fund administration, advisory and corporate services to ILS and alternative fund markets, will become the global brand of ILS services for Artex.

2019. November 19. Artex Risk Solutions has completed the purchase of insurance-linked securities specialists Horseshoe Insurance Services Holdings Ltd, the company announced today. Artex said the acquisition significantly strengthens its ILS operations and furthers the company’s goal to become the best service provider to the world’s risk capital. The company said Horseshoe will become the global brand of ILS services for Artex, which will operate as one global team across multiple jurisdictions to better serve its clients and provide consistent delivery of services regardless of the domicile. Horseshoe specializes in providing insurance management, fund administration, advisory and corporate services to ILS and alternative fund markets. Founded by Andre Perez in 2005, Horseshoe is headquartered in Bermuda, with operations in London, Grand Cayman, Sri Lanka and Charlotte, North Carolina. Mr Perez and his associates will continue to operate from their current locations under the direction of Peter Mullen, chief executive officer of Artex, the company said.

2019. October 4. Artex Risk Solutions yesterday announced that it has reached agreement to acquire Horseshoe Insurance Services Holdings Ltd. The transaction, which significantly strengthens Artex’s insurance-linked securities operations, is subject to regulatory approval and expected to complete before the end of the year, the company said. Horseshoe specializes in providing insurance management, fund administration, advisory and corporate services to ILS and alternative fund markets. Founded by Andre Perez in 2005, Horseshoe is headquartered in Bermuda, with operations in London, Grand Cayman, Sri Lanka and Charlotte, North Carolina. Upon completion, Mr Perez and his associates will continue to operate from their current locations under the direction of Peter Mullen, chief executive officer of Artex, the company said. Mr Mullen said: “The combination of the Artex and Horseshoe teams and technology will provide our clients with the opportunity to find all insurance management, fund administration and advisory services under one roof.” He added: “Andre and his team mirror our culture at Artex. They will be a terrific fit and will help further our goal of becoming the best service provider to the world’s risk capital.” Upon completion, Artex said, Horseshoe will become the global brand of ILS services for Artex, which will operate as one global team across multiple jurisdictions “to better serve its clients and provide consistent delivery of services regardless of the domicile”. Mr Perez, chief executive officer of Horseshoe, said: “We are excited to join forces with Artex. For more than 14 years, Horseshoe has been the leader in the ILS services industry and together we will have quite a formidable team dedicated to servicing the ILS market.” He added: “Being part of a larger organisation will give us the opportunity to better serve our clients by accessing worldwide resources, and accelerating the development of bespoke solutions and products for ILS.” Mr Mullen said: “At Artex, we are proud to be ranked as the world’s third largest insurance manager. The addition of Horseshoe will position us to continue evolving and pushing the boundaries of what a global, top-tier insurance provider looks like.”

2019. June 19. Insurance industry veteran Scott Cobon is the new managing director, Bermuda, for Bermuda-based insurance managers, Artex Risk Solutions. Mr Cobon moves into the position formerly occupied by Rob Eastham, who is taking on the new role of executive chairman, Artex Bermuda. The changes are among four senior leadership announcements made within Artex’s international division. Artex also announced that Paul Eaton has been appointed managing director, ILS, and Mike Matthews has joined the company as commercial director, Artex International. Peter Mullen, chief executive officer of Artex, said: “These appointments position our team for even greater innovation and growth in the coming years.” Mr Cobon will have responsibility for the continued success and development of the growing Bermuda office, which handles a diverse range of insurance management products, including captives, insurance linked securities and commercial structures. Having more than ten years of experience in the Bermuda insurance management industry, he has been pivotal in the growth of Artex’s ILS business, the company said. He previously worked as a treaty reinsurance broker in Sydney, Australia and began his career with PricewaterhouseCoopers in Brisbane. Mr Eastham is an industry veteran with 38 years of experience in the Bermuda insurance industry, and is a well-known leader in all aspects of the ILS and captive industry, the company said. Artex said Mr Eaton will have responsibility for driving the strategy, planning and growth of Artex ILS business across all locations. The company has a complement of more than 20 ILS insurance professionals within its Bermuda, Cayman and Guernsey offices. Mr Eaton joined Artex in 2004 after a 13-year career with RSA in various underwriting and management roles. More recently he headed up Artex’s international business development. Based in Guernsey, he is a director of Artex Guernsey’s ILS cell companies. Mr Matthews takes on a newly established role, where he will be responsible for the strategy, planning and delivery of growth for the international business, the company said. The role encompasses sales, marketing, product development and supporting client services. He began his career at AIG and is a seasoned industry professional with more than 30 years’ experience in structuring and developing complex and innovative captive insurance solutions, Artex said. Artex, which claims to be the fastest-growing insurance manager in the world, has had an annual growth rate of 17 per cent over the last seven years, tripling in size over that term. The company serves some 1,500 customers with captive management and alternative risk management solutions through more than 1,000 risk-bearing entities. Licensed in 32 jurisdictions, it has more than 400 staff in 15 offices worldwide.

2019. April 4. Insurance industry veteran David McManus knows a thing or two about risk. But when the Belfast-born president and chief executive officer of Bermuda-based insurance manager Artex considered who should succeed him in the top job, well, let’s just say he knows a sure thing when he sees it as well. Mr McManus, 65, has assumed the role of non-executive chairman of Artex to facilitate the return to the fold of Peter Mullen, who began his term as CEO on March 21. Now 58, Dublin-born Mr Mullen cofounded Artex as a wholly owned subsidiary of brokers Arthur J Gallagher and Co in 1997 with Mr McManus and Jennifer Gallagher, now the president of Artex North America. He left in 2011 when Aon Captive Insurance and Management offered him their CEO position. “The timing was right,” Mr Mullen recalled. “David was not going anywhere, and I had to decide, at my age, if I should go and test myself and see if I could run my own shop. I got the usual good offer, the challenge was there, so I bit the bullet and jumped.” In 2016, Mr Mullen topped magazine’s Power 50, a ranking of the most influential individuals in the captive insurance industry. “There couldn’t be a better successor for Artex than Peter,” said Mr McManus, who met Mr Mullen when they worked together at AIG in the 1980s. He has all the knowledge of Gallagher and Artex from the founding, and taking into account the expertise you get when you run a global insurance manager like Aon, it was a bit of a no-brainer for us. You don’t bring a guy like Peter in and ask him to be number two. Now that he is on board, the transition feels good to me. A bond exists between Jennifer, Peter and I. Peter is running things now. I am excited to see what leadership he brings on the way to the next $100 million. Coming back to work with friends was attractive to me. Gallagher’s and Artex have been terrific in terms of the welcome. It’s almost like the prodigal son coming back.” Our internal headline when we made the announcement was ‘Peter’s coming home’,” Mr McManus said. Mr McManus will be an adviser, providing what he calls the “three Cs. Compass, the strategic perspective, to be clear where we are going,” he said. “Context, there is background to this and I can fill it in. Combinations, that’s how we refer to mergers. I have expertise with acquisitions. The decisions will be Peter’s but I can help him out.” Mr Mullen returns to a company with an annual growth rate of 17 per cent over the last seven years, tripling in size over that term. Artex serves some 1,500 customers with captive management and alternative risk management solutions through more than 1,000 risk-bearing entities. Licensed in 32 jurisdictions, it has more than 400 staff in 15 offices worldwide. Globally, the company’s clients are approximately 60 per cent commercial insurers and 40 per cent captives. The split in Bermuda, Mr McManus said, is 50-50. “We are the fastest growing insurance manager in the world, so it’s very attractive to come back, get inside Artex, and keep growing,” Mr Mullen said. "The challenge is to make the transition, keep the momentum going, and not clog up the works. I am pretty busy already.” While the number of captives registered in Bermuda, and their cumulative gross written premium, has declined recently, Mr Mullen said Artex is a net grower of captives. A dedicated, full-time sales force of ten people in Chicago supports the Artex programme, they said, adding that they are seeing growth in the upper middle market. Still, there are challenges, Mr Mullen said. “Bermuda is a mature market, so it suffers at the end of the day. There have been a lot of combinations over the last ten years. When a new captive comes in these days, there’s more than likely a matching exit. There is a lot of competition from US domiciles — 40 states now have captive regulations. At Artex, we see more coming in than going out. And Bermuda remains in top spot globally with Vermont, Cayman and Guernsey following. If a company stayed exclusively in captives, apart from stealing someone else’s chips, you’re not growing more than 2 or 3 per cent annually,” Mr McManus said. “Captive management is stable and low growth. The way to see revenues increase is through the broadening of services so you bring greater value and grow revenue from existing sources.” As in other jurisdictions, the OECD’s base erosion and profit shifting, or BEPS, project has caused a stir in Bermuda. “Substance presents both a challenge and an opportunity to provide greater turnkey services for capital looking to operate in any jurisdiction,” Mr McManus said. “The good thing about the directives of the OECD and EU is that they are a level playing field. All jurisdictions have got to show substance, so there is an opportunity in every domicile to seamlessly provide it. That will be a challenge for some of the smaller managers because capital now needs more than just regulatory compliance and accounting services. There is an opportunity to provide underwriting expertise, recruitment, serviced offices, and IT. If you can be a manager turnkeying those services, it could be very attractive. Not everybody will survive,” Mr Mullen said. “There will be companies that decide that they don’t see the value proposition any more. “But at a firm like ours, we might also see clients double down if they see value in the structure we’re managing and decide that we need to turnkey more to establish substance in the jurisdiction.” Latin America, Asia and Canada have been mooted by some as the next captive industry frontiers. “Latin America has been the next frontier for the last ten years, hasn’t it?” Mr Mullen said. “Latin America is growing for us,” Mr McManus added. As for Asia: “We’ll probably talk about it for the next ten years as the next frontier,” Mr Mullen said. Adds Mr McManus: “In Asia, if capital enters ILS, they’ll be comfortable in Singapore. Canada ... I just don’t think it’s that big an economy,” Mr McManus said. Terrorism, cybersecurity, and the shared economy are often identified as emerging issues. “Those three, plus political risk, you’ve got to keep an eye on them,” Mr Mullen said, “but the business in the upper middle market is more traditional lines: mortgage compensation, general liability and auto liability. While you keep an eye on cyber, it’s written by only 2 or 3 per cent of captives globally.” The “shared economy” perplexes the market, Mr Mullen said. “The traditional insurance market can’t get their heads around Uber and Uber Eats. The owners must take significant skin to get the market to come along for the ride. It’s not easily written. It’s best understood by the companies themselves, so a captive is the ideal solution.” Some 22 years on from their cofounding of Artex, Mr McManus said the company “is the best of both worlds. We are owned by Gallagher, are supported by them, but have an independent brand,” he said, still marvelling that Artex got the go-ahead to set up. It was ground-breaking for Gallagher’s,” Mr McManus said. “Brokers don’t take risk. Uncle Bob’ Gallagher wore a T-shirt that read ‘death before risk’. I mentioned that once to his nephew, Pat, who said: ‘T-shirt? No, it was tattooed on his chest."

2017. October 31. Artex Risk Solutions has acquired Cayman Islands-based Chandler Insurance Management. In a statement, Artex said Chandler brings to the company more than 20 years of captive insurance management experience in the Cayman Islands. Nick Heys, CEO of Artex’s International operations, said: “Chandler has earned a strong reputation in the Cayman insurance marketplace as a captive manager, with solid client relationships across a variety of industries covering multiple business lines. We are pleased to welcome Steven Butler and Beverly Hodkin to our existing Artex captive and insurance management team in Grand Cayman. David McManus, president and CEO of Artex Risk Solutions, which has offices in Bermuda, said: “Steve brings us a wealth of experience and is highly regarded by his peers. He’s also well-recognized, having served in a variety of leadership roles with the Cayman Insurance Managers Association over the past two decades, including as chairman. Steve, Beverly and their associates will be wonderful additions to our growing Artex family.” 

2016. March 23. Acquired the insurance management operations of Kane. The move means Artex’s operations in Bermuda and Cayman will combine into Kane’s. David McManus, president and CEO of Artex, said: “Kane is rightly recognized in the industry for the quality of its people and its innovative products and platforms. “This merger strengthens us considerably in Cayman and Bermuda and brings us industry-leading expertise in insurance linked securities and structured transactions administration. Combining these resources with the power Artex’s distribution list network is expected to drive exponential growth in each of the domiciles represented.” Artex’s Bermuda and Cayman businesses will combine into Kane’s under the respective leadership of Rob Eastham and Linda Haddleton. Together with the Guernsey, Channel Islands, office, they will report to Nick Heys, the CEO of Artex International. Artex is a wholly owned subsidiary of US-based Arthur J Gallagher & Co, one of the world’s largest insurance brokerage and risk management services firms. Mr McManus said: “This truly is a transformational merger and I’m delighted to welcome Rob, Linda, Ann and their teams to Artex.” Simon Hinshelwood, group chief executive of Kane, said that the firm had been approached “by a number of parties” over the last six months who shared Kane’s views that the industry would benefit from consolidation. He added: “The board determined that the best way to explore the value of those approaches was to hold a tightly controlled but formal process. That process concluded with the board selecting Artex for multiple reasons but importantly to our staff and clients, its culture, its distribution reach, its strength in Europe and the USA and the opportunities we believe it affords the Kane team for growth.” Kane’s US operations in South Carolina and Vermont, will merge into Artex’s US business under the leadership of Jennifer Gallagher, president of Artex North America. The merger means that Artex will have 370 staff and more than 1,400 customers, served through more than 900 risk-bearing entities in 27 domiciles. Mr McManus said: “We believe we’re the fastest growing and most diverse insurance manager in the industry. This exciting combination of operations and capabilities allows Artex to consolidate its position among the top three insurance management services providers in the world.” He added the merger would provide “clients and business referral networks with substantially greater scale and resource breadth”. The merger is expected to close at the end of this month. Kane’s insurance management arm was founded in 1984 to specialize in the formation and management of insurance and alternative risk provision, particularly in the healthcare, insurance, financial services, transportation and construction industries. It also provides insurance-linked security and structured transaction administration.

2020. March 31. A big fall in restructuring charges helped Ascendant Group Limited, the parent company of Belco, achieve a 129 per cent improvement in its full year profit, reporting net income of $12.4 million, or $1.27 per share, for 2019. That was up on the $5.4 million reported in 2018, when the company shouldered restructuring charges of $9.12 million in 2018. Last year those charges fell by 68 per cent to $2.88 million. Ascendant’s core earnings were $15.3 million in 2019, about $800,000 higher than the previous year. Sean Durfy, Ascendant CEO, said: “2019 was a very busy year for the company. We made great progress with our $250 million capital plan having built and commissioned Bermuda’s first battery energy storage system and completed construction of the NPS [North Power Station]. “These are significant investments that will ensure a safe, reliable and cost-effective energy future for Bermuda.” He said shareholders had also approved the sale of the company to Algonquin. “Algonquin is an established renewable energy and utility group with North American assets in excess of $10 billion and they currently own and operate 54 energy facilities, of which 90 per cent are renewable. As part of their proposal, Algonquin has committed to continue to run all Ascendant companies locally with current Bermudian management and to support Belco as it works alongside the [Regulatory] Authority to implement the Integrated Resource Plan for Bermuda and introduce modern energy technologies to accelerate the introduction of renewables, conservation and battery storage for the island.” He said the increased net income was due to “solid operating results”. Dennis Pimentel, Belco president, said: “Belco has made great progress on the $120 million NPS replacement generation project which is currently being commissioned. In addition, we have begun our $50 million-plus upgrade to our transmission and distribution system which will ensure a much more resilient grid and the ability to add large and small scale renewables. We were also pleased to complete our rate case and deliver lower rates to our customers beginning in January 2020.” He added: “Even though electricity sales continue to decline, our cost savings measures have allowed us to lower rates for customers. We are confident that the NPS and ongoing cost saving initiatives and efficiency measures will enable us to continue to provide safe, cost-effective electricity for our valued customers.” During the year, Belco’s earnings were $19 million, up $1.35 million, or 8 per cent, on 2018. The company said the 5 per cent increase in core earnings was due to increased results at Belco and continued growth in non-utility earnings at AG Holdings Limited, partially offset by higher group expenses. Ascendant continued its share repurchase programme until 1 April last year, when it was discontinued in light of the proposed sale of the company. Share repurchases during the year totaled 139,395 at an average price of $18.26 per share. The company’s earnings and cash flow enabled its board to maintain the annual dividend rate at 45 cents per share.

2020. March 6. Bermuda should consider all options, including offshore wind turbines, as it looks at future energy sources. There are strong reasons for this, according to Jens Alers, who touched on these as he spoke about a new style of ship being used to maintain offshore wind farms. The US is looking at the possibility of wind farm operations off its east coast, and the technology is increasingly being used in other places, including Europe. Mr Alers sees such developments opening up possibilities for Bermuda. He is group director of Bernhard Schulte Shipmanagement (Bermuda), which has offices in Par-la-Ville Road. Bernhard Schulte Offshore, part of the Schulte Group, won a tender to provide a new service operation vessel to give maintenance support for a wind farm off the coast of Germany. The Bernhard Schulte group all ready has two ships servicing wind farms in the North Sea. The new vessel will accommodate about 80 technicians and crew. The technicians will be able to use a “walk to work” bridge on the ship to access the wind turbines and carry out repairs and maintenance from within the structures. The vessel will be put to work at a offshore installation where each of the 66 wind turbines generates up to six megawatts. Such large expanses of turbines would not be needed to cover the energy demands of Bermuda. Mr Alers believes that 15 similar turbines would likely be sufficient. He acknowledges there are challenges, but said solutions are also available. Bermuda is seeking a new energy plan for the future. The Integrated Resource Plan has placed a focus renewable energy sources, such as solar, wind and biomass technology. Mr Alers said Bermuda should consider all options. “Wind is one, solar — given where we are — is the strongest. LNG (liquefied natural gas) is not the strongest because it is very expensive to create the infrastructure for it. But propane, which is already imported into the island and has an existing distribution network, belongs in the mix,” he said. When it comes to offshore wind turbines, he said Bermuda could, technically, have its energy needs met by about 15 of the six-megawatt turbines, although in practice it would likely install fewer. “We would not want to just rely on wind. Plus, the Sargasso Sea, where we are, is not the windiest of areas. Efficiency of turbines would be less near Bermuda than in the North Sea.” There are other challenges. Mr Alers said: “We really have to look at an environmental feasibility study, because these things have a foundation. You would need to ram them into the reef. They are basically built into the ocean floor. I’m sure there would be quite a few people who would have something to say about embedding these things into our reefs, and I totally understand that.” He mentioned research off the coast of Portugal into floating turbines that are anchored to the sea floor, something that could be less environmentally intrusive. As for the issue of hurricanes. Mr Alers said: “Well, you can stop these things. A winter storm in the North Sea is no different to a hurricane. Companies have been operating wind farms in the North Sea for quite a few years.” If Bermuda did have a small scale installation of offshore wind turbines, it would need to find a way to carry out maintenance, but not necessarily with a dedicated service operation vessel. Mr Alers said six or ten turbines would not require the full-time deployment of a support ship. “It would be very expensive for Bermuda to operate a ship like that, so other solutions would need to be found. But it can be done.” He said US states from Maine to South Carolina are keen on developing offshore wind farms. “The US will build a massive number of offshore wind farms. The aim is to be at about 20 gigawatts in just ten years from now,” Mr Alers said. “Because those wind farms require maintenance and support ships and we are not very far from that in Bermuda, our endeavours to develop wind technology could benefit. Of course it’s not something to rely on 100 per cent. It has never been good to rely on one source.”

2020. February 10. A deadline for a decision on the change of control of Belco to Canada’s Algonquin Power and Utilities Corporation has been extended to October. The Regulatory Authority will issue a final decision on the change of control application. A Bermuda government notice states that Walter Roban, Minister of Home Affairs, has concluded that there is “good cause to waive the deadline” due to the complexity of the statutory process to access the application, and the national significance of the proposed transaction. The new deadline to assess the application is October 4. In August, shareholders of Ascendant Group approved a takeover by Algonquin. Algonquin offered $365 million for the shares in Ascendant, which includes electricity supplier Belco Ltd, AirCare Ltd, iEPC Ltd, IFM Ltd and Ascendant Properties Ltd. In a statement about the deadline decision change, Ascendant said: “In light of this substantial extension, the company will continue to work with the minister and the RA to ensure that final consideration of the application is completed as expeditiously as possible. The Ascendant board of directors is confident that the sale will ensure Bermuda and Belco’s customers are well served with reliable electricity that will be cleaner, more efficient and more cost-effective. Algonquin has committed to reducing Belco’s operating costs by $5 million, with no company-initiated job reductions in connection with the sale, to benefit the customer, investing $5 million to launch the Sustainable Bermuda Foundation with the purpose of advancing and promoting renewable energy, conservation and sustainability in Bermuda, and investing $300 million into renewable energy in Bermuda through a competitive process. These commitments are in addition to Belco’s pre-existing $250 million investment in capital infrastructure upgrades. These commitments are expected to benefit all our stakeholders — our employees, customers and the Bermuda community.”

2020. January 17. It is hailed as the biggest solar panel installation in Hamilton, and it will generate estimated annual savings of up to 140,471 kilowatt hours each year for the operators of Richmond House. The projected electricity bill savings from the 276 photovoltaic modules are about $52,000 a year. “Every company in Bermuda that has a large electricity bill should be looking at this,” Nick Duffy, divisional manager of Bermuda Alternative Energy, said. His company was chosen to do the installation, which covers about 6,000 sq ft on the roof of the Par-la-Ville Road office building. The photovoltaic modules are bifacial, which means they collect solar energy from direct sunlight and any that is reflected from the roof onto the underside of the panels. They are expected to last at least 25 years, and to recoup their purchase and installation costs within the first six years. The electricity generated will be used as a power source for the building, with any shortfall in requirements being made up from the Belco supply. The project was 2½ years in the making. Anthony Alves, of JPM Ltd, and project manager for Richmond Holdings Ltd, said: “We’ve always talked about our carbon footprint and reducing that and showing other building owners that it is a worthwhile investment. We all need to be conscious of our environment and the use of fossil fuel, and by implementing solar we are chipping away at that. I congratulate the directors of Richmond Holdings for having the vision for moving forward on this exciting project. BAE have done an amazing job. Some due diligence had to be done first by the building owners on the roof. We had a group of engineers come up to test the integrity of our concrete slab.” He said Kaissa removed the old roof covering and replaced it with a new TPO [thermoplastic membrane] that enhanced the final project. Charles Dunstan, of Kaissa, said the new roof covering has a 20 to 25-year life span, as opposed to the old covering that had to be re-coated every five years. He said: “With the lack of space up there now, re-coating that roof would have been difficult. So now we have a life span that matches the solar panels, so when the owners come to redo things, they can do everything at one time.” Mr Duffy, of BAE, which is part of the BAC Group, said the Panasonic modules in the installation are guaranteed to still be producing 90 per cent of their installed maximum wattage after 25 years. When asked if other companies in Bermuda should look at what has been done at Richmond House, and maybe follow suit, he said: “Every company in Bermuda that has a large electricity bill should be looking at this.” He said sunshine is a free, renewable energy. “It makes total sense, and I compliment the owners of the building who are being very progressive. It is currently the largest PV system in Hamilton. It has now jumped to pole position. It’s very good that Richmond Holdings are setting the trend for others to follow.” Among the companies that have a home in Richmond House is Conyers. Paul Naylor, its chief operating officer, said: “We’re delighted to be part of an exciting project. It enhances our sustainability and our green credentials — something that we are very conscious of. There are lots of other benefits, such as cost-saving over the long-term.” Jens Alers, a director of Richmond Holdings, poured Gosling’s Black Seal Rum in a “roof and solar panel wetting” ceremony to mark the competition of the project.

2019. December 31. Beginning in January 2020, 95% of Bermudian families will see a reduction in their energy bills. This has been welcomed by the Progressive Labour Party. “This holiday season, we are committed to focusing on the sure and steady progress we’re making for Bermudian policies,” said Acting Leader Walter Roban. “Over the last few years, we’ve been working to bring down electricity prices and I’m happy that as of January 2020, those reductions will be realized. We expect reductions of at least 5% on energy over 2020 and we expect the vast majority of Bermudians to receive reductions. Across the region, electricity rates are going up, but, we are fortunate to be able to see them come down here in Bermuda. Bermudian families will see decreases in their bills. The reduction will reflect on your January 2020 BELCO bill. In the new year, we will continue to focus on reducing the cost of living for Bermudians,” Roban concluded.

2019. December 18. Electricity rates are going down in the new year, resulting in the average residential customer seeing an expected 2.3 per cent reduction in their monthly bill. Before any figures were released a Bermuda Government minister had said there would be a “slashing” of the electricity retail tariffs, while Belco referred to the changes as a “modest reduction”. The Regulatory Authority, and the Government released statements yesterday about the reductions, with Belco doing so today. However, initially there were no figures mentioned. Belco has now released a table illustrating bill impacts when the new rates are applied to meters on January 1. The table shows that a residential user using 300 kWh per month would see their bill go from $105.81 this month to $102.29 in January, a 3.33 per cent reduction. A user consuming 600 kWh, referred to as the average residential customer, would see their bill reduce by just over $5, or 2.31 per cent. Meanwhile, a residential user of 1,500 kWh per month will benefit from $4.50 reduction, or 0.69 per cent. In addition, there are illustrations of the impact on bills for commercial users, ranging from a 0.44 per cent reduction on a bill for 500 kWh, to a 0.64 per cent reduction on a 1,500 kWh bill. A user with a 5,500 kWh bill would see a 0.02 per cent reduction in their bill. The new rates have been developed by Belco and the RA to implement a retail tariff methodology issued by the RA last year. The RA was the first to announce the imminent reductions when, in a statement yesterday, it said retail tariffs for Bermuda’s electricity sector will be decreased across all customer groups. This was followed a few hours later by a statement from Walter Roban, Minister of Home Affairs, who said: “As a government elected with a mandate to improve the quality of Bermudians’ lives and to drive down the cost of living, we are pleased that the Regulatory Authority has today assisted in the delivery of one aspect of our agenda; driving down the cost of electricity via the slashing of electricity retail tariffs. From day one, the Government has refused to support a raise of Belco retail rates and sought ways to drive power costs down. Now, relief is on the way.” Belco was the last to confirm new rates are on the way, issuing a statement this afternoon. Dennis Pimental, president of Belco, said: “Belco remains committed to keeping rates as low as possible and we welcome the new rate reduction. Although we have encountered significant cost pressures during recent years, including inflation and decreased demand for electricity resulting from population decreases, Belco has continued to invest approximately $250 million in our infrastructure. These upgrades will allow us to import renewables onto the grid, ensuring reliable and sustainable electricity for Bermuda. Despite these pressures and investments, we have not raised customers’ electricity rates. Instead, we have focused on efficiencies and savings. For example, the North Power Station and Battery Storage System are expected to save $20 million per year on fuel costs. We are projected to save more than $30 million in expenditures compared to 2015 through efficiencies and material savings.” Mr Pimental said the company will continue working with the RA on reducing rates for Belco customers and providing a safe and secure energy future for Bermuda.

2019. November 19. Opinion. By Sir John Swan, a businessman, Premier of Bermuda between 1982 and 1995, and a former Belco board member and Michael Murphy, a former attorney for American International Group who was the chairman of the Association of Bermuda Insurers and Reinsurers between 1985 and 2005. "More than five months have passed since the announcement of a potential sale of Ascendant to Algonquin Power & Utilities Company. Since that time there has been no effort by the potential Canadian buyer to clearly state what benefits it may offer to the Bermudian ratepayers, the public or the future role it may play in the development of a distribution system in conjunction with the island’s developing local renewable sector. We estimate that 44 to 50 local Bermuda jobs exist in the solar installation and maintenance business. These small businesses have installed about one megawatt of generation capacity in the past year, with the ability to develop exponentially more jobs as a result of the Regulatory Authority’s long-term commitment to have 75 per cent renewables in place by 2035 to satisfy our total electric power needs. The combination of non-transparent events in the thinly traded stock of Ascendant, which lifted the acquisition price by Algonquin to a substantial premium, can lead only to higher prices for Bermuda’s ratepayers. In addition, our research indicates that Algonquin as the potential foreign buyer:

• Has no experience with renewable-energy technology in a small-island, hurricane-prone jurisdiction
• Owns mostly hydroelectric and natural gas production facilities, both not applicable to Bermuda
• Owns solar installations in large landmass areas, and/or mostly uses solar technology that cannot be applied to Bermuda cost-effectively.

Algonquin may present itself as a renewable-energy company, but does not appear to offer Bermuda the renewable resources it needs to develop that are unique to this small-island country. The recent discussions with home affairs minister Walter Roban, during which interest was expressed by Legal & General Re of Bermuda to explore local investment in renewables, opens a door that could both boost our local solar labour force and finance the renewables Bermuda needs at cost-effective prices without the control of Ascendant changing hands to a foreign-owned company. The parent company of Legal & General Re is a socially responsible British-based insurer that has made more than $1 billion of investments in renewable energy and its technology. This development may increase the interest of others to invest in Bermuda’s renewable-energy future. In addition, the RA recently improved the economics for solar panel owners by approving a significant increase in the return that Belco must pay solar-energy providers for kilowatt hours purchased from them from 17.36 cents to 22.65 cents per kWh. The increase more accurately shares the marginal saving Belco receives by not having to purchase fossil fuel to produce the equivalent amount of power. The new generators Belco has can satisfy the island’s power-generation needs for the transitional years while phasing out the use of fossil fuels. Bermuda has the opportunity to implement its renewables Integrated Resource Plan in response to climate change and become self-sufficient and freed of foreign control of a resource fundamental to its future economic survival.

2019. November 6. Opinion and statement about our announced purchase of BELCO. By Ian Robertson, chief executive officer of Algonquin Power & Utilities Corporation. "When Algonquin Power & Utilities Corporation was founded in 1988 to develop and own generating stations in mostly remote regions of Canada, it was imperative to build and maintain strong relationships with the communities in which we operate — primarily through job creation, excellent customer service and contributing to the communities where we live. This commitment to communities is a huge part of the reason why, over the course of 30 years, Algonquin has grown to become a diversified generation, transmission and distribution utility with more than $10 billion in assets. Through our operating subsidiaries, we provide safe, reliable and affordable rate-regulated natural gas, water and electricity generation, transmission and distribution utility services to nearly 800,000 customers in Canada and the United States, via more than 54 generation and distribution facilities. From our inception, we have approached business growth with a long-term view to creating value for our customers and communities through investment in long-lived, sustainable assets that are built for the future. Our ability to build a portfolio of close to 1,500MW of wind, solar and hydroelectric generating capacity speaks to that commitment, as well as a drive to be leaders in the renewable energy space. With the power of more than 2,300 talented employees, we are well on our way to our goal.

• Expanding our international presence. A few years ago, Algonquin’s board made the strategic decision to expand and diversify beyond our North American markets by seeking attractive international investment opportunities. Our business model focused on seeking regulated utility and renewable energy investment opportunities offering stable and predictable returns, and selecting investments whose risk profile is generally consistent with our existing portfolio of assets. As we learnt about Bermuda and Bermuda Electric Light Company Ltd, we grew confident that investing in Bermuda through Ascendant Group Ltd would be a great fit with Algonquin. Bermuda’s excellent infrastructure, skilled workforce, people and culture were key factors in reaching that conclusion. Belco is fortunate to have a talented and dedicated group of employees who have proudly built a power company over the past 115 years that is rated among the best in the world in terms of reliability and resilience. We also saw a significant opportunity to help Bermuda attain its sustainability goals — a theme that is closely aligned with our strategic direction and corporate purpose. Undoubtedly, the cost of electricity in Bermuda is high and we are confident that the combination of our expertise in renewable energy and the economies of scale achievable through our utility operations can be brought to bear to reduce this cost, while making Bermuda a leader in sustainability. As a leader in the North American utility industry, Algonquin is committed to sustainability through the inclusion of social, economic and environmental values in our daily operations and business planning activities. We will be imminently publishing our 2019 Sustainability Report using the Sustainability Accountability Standards Board framework. The report provides an extensive overview of our programmes, performance and efficiencies that contribute to our ability to meet our sustainability goals.
• The way forward. We have reviewed and embraced Bermuda’s first Integrated Resource Plan. Indeed, as I said publicly on a recent earnings call, the IRP was “music to our ears”, as this is exactly what we do: replace fossil-fuel generation with renewable technologies in a way that also creates savings for our customers. To be very clear: we don’t believe that natural gas is the best fuel choice for Bermuda. Our focus will be on integrating utility-scale solar and exploring the feasibility of offshore wind coupled with energy efficiency to steadily reduce Bermuda’s reliance on fossil fuels and reduce customers’ electric bills. As an example of our commitment to using renewable energy to reduce customer costs, we received final approvals in June to proceed with the construction of three wind farms with installed capacity of 600MW located in Missouri and Kansas to allow shutdown of a coal-fired generating plant. Construction of these wind farms is under way, with completion targeted by the end of 2020. This investment of more than $1.1 billion will reduce energy costs for customers over the life of the projects, at the same time delivering other significant economic and environmental benefits. We believe sustainability is not something we do; it’s something we are. We also believe that our employees are our greatest sustainable competitive advantage. Through our Passport Programme, our employees are encouraged to grow professionally by moving into roles throughout our company, broadening their perspectives and business knowledge. The talented Bermuda team will be afforded the same opportunity to work and learn in our other businesses in the US and Canada. We are also committed to diversity and inclusion, as without inclusion there can be no diversity, regardless of where our teams reside. One of the things that excites us about investing in Bermuda is the opportunity for Algonquin to learn from the best practices undertaken by Belco and Ascendant. We are very impressed with Belco’s plans to transition to all-electric vehicles, which we are seeking to replicate across our service territories by capitalizing on Belco’s progress. I want to assure the people of Bermuda that Algonquin is committed to investing in the island for the future. We have a strong history of bringing new utility companies into our family and being a permanent contributing member of the communities we serve. It’s a “live and give” local approach that is foundational to how we operate and, frankly, is a big part of our success. Algonquin is committed to excellence in terms of the safety of our operations, providing an enjoyable customer experience, maximizing employee engagement and a commitment to sustainability through inclusion, environmental, social and governance responsibility. We are committed to building on the solid foundation created by the Ascendant board and look forward to being part of building a greener, cleaner Bermuda."

2019. October 24. A new battery storage system that can instantly provide 10 megawatts of electricity to the grid in the event of a generation plant failure, has won an award for Belco. The Nolan Smith Battery Energy Storage System is a standby facility for Belco. If there is a system fault it kicks in and delivers electricity to the grid to fill the gap. It does this three times faster than can be achieved by a standard engine powering up to generate the additional electricity. It won the Best Energy Storage Project award at the Caribbean Renewable Energy Forum, which is the largest annual gathering of the Caribbean clean energy market. Dennis Pimentel, Belco president, praised the working group team involved, and said: “The BESS is an exciting project that is just a part of the foundation we are building for a better energy future for Bermuda, our $200 million-plus capital plan that has one overriding objective, to better serve our customers with safe, efficient and cost-effective electricity.” The reserve capacity storage system covers an area of 2,000 sq ft, with ISO containers and transformers. The containers hold the battery cells and other equipment involved in the system, which has a 20-year operating life. When the battery cells reach the end of their life, they will be shipped back to the US to be recycled. The storage system has been dedicated to the late Nolan Smith, a Bermudian who worked for Belco for more than 30 years and specialized in transmission and distribution system analysis.

2019. October 7. Customers selling excess electricity generated from their renewable energy systems to the Bermuda Electric Light Company, will be paid at a higher rate from today. The 30.4 per cent increase means customers will now receive 22.65 cents per kilowatt hour they sell to Belco. Previously they received 17.36 cents per kWh. The announcement was made by the Regulatory Authority of Bermuda. The feed-in-tariff for Bermuda’s solar PV distributed generators is the predetermined rate that Belco pays to residential or commercial solar distributed generators for the excess electricity they generate and feed into the grid. In Bermuda, distributed generators are primarily small-scale solar customers with renewable energy systems below 500kw, but may also include wind or other renewables generation sources. The RA said the feed-in-tariff will be reviewed again before 2022. For more information, see the FIT decision and order at www.ra.bm

2019. October 3. The Regulatory Authority is seeking to increase fees on electricity providers and telecommunications companies to fund a $1 million-plus increase in its budget for the next financial year. In its work plan consultation document for 2020-21, the RA estimates total expenditure at $7.43 million, up from $6.29 million in 2019-20. Special projects in both electronic communications and electricity — the two industries the RA oversees — are the main drivers of the 18 per cent jump in expenditure. These include the first phase of a pre-feasibility study of an offshore wind farm, as detailed in the Integrated Resource Plan, the RA’s blueprint for the future of Bermuda’s electricity supply. The study will be commissioned by the RA “to determine the level of offshore wind resource available together with the business case and the environmental impacts”. A radio frequency study will feature on the electronic communications side, to determine whether cutting-edge technology, such as a 5G network, would be appropriate for Bermuda. The independent regulator is funded by the fees its levies on the two industries and receives no funding from the Government. To fund the increased budget, the RA proposes an increase in the Electronic Communications Regulatory Authority fee, to 1.9 per cent from 1.75 per cent. On the electricity side, the RA suggests that the regulatory fee of $0.00475 per kilowatt hour that appears on Belco customers’ bills remain unchanged. However, the regulator wants to increase levies on bulk electricity generators at varying levels depending on their scale and how the power is generated. Utility-scale electricity generation providers like Belco, with more than 25 megawatts of installed capacity, would face an increase of $5,500 per megawatt — up to $6,500 from $1,000. Renewable and waste-to-energy suppliers, with 0.5MW to 25MW of installed capacity would deal with a $500 increase to $2,000 per MW. The plan adds: “The RA also recommends to the Minister of Home Affairs that there be no increase in the current level of Government authorization fees imposed on the electronic communications and electricity industries under the Government Fees Act 1965, until the RA has completed a taxation review.” The RA’s proposed budget for the electronic communications segment of its work is $3.76 million for 2020-21, up 8 per cent on 2019-20, while $3.75 million will be needed for the electricity budget, up 31 per cent. In its work plan, the RA says it has 18 employees, led by Denton Williams, its chief executive officer, with three additional positions open. The RA has submitted its work plan to the Ministry of Finance, seeking approval of its budget for the year. The regulator is seeking public feedback on the work plan. The consultation period is open until October 31

2019. October 1. Legal and financial advisory fees related to the sale of the Ascendant Group Ltd totaled $4.62 million in the first half of the year, contributing to a net loss of $1.9 million for the six-month period, the company reported. The loss compared to a profit of $3.1 million for the same period in 2018. The details were included in a filing with the Bermuda Stock Exchange. Ascendant announced on June 3 that it had signed an agreement with Algonquin Power & Utilities Corp for the sale of the company for $36 per share, subject to shareholder and regulatory approval. Shareholders gave the two-thirds approval of the total issued and outstanding shares of the company at a special general meeting on August 9. The company is now awaiting approval from the Regulatory Authority and the Ministry of Finance. In a letter to shareholders that accompanied the six-month earnings report, chairman Peter Durhager said those approvals “may take several months”. Ascendant’s year-to-date core earnings from operations before corporate expenses were $7.5 million for the first half of 2019, compared with $11.1 million for the same period a year ago. The company said that was due in part to Belco’s base rate electricity sales falling by $3.9 million. Belco’s total expenses increased, the company said, with depreciation associated with new assets higher by $600,000 and service allocations from Ascendant increasing by $700,000. Those expenses were offset by salary savings of $800,000 compared to the same period in 2018. Ascendant said the company’s non-utility businesses continued to grow, with core earnings increasing $500,000 over the prior year. The group’s core earnings year-to-date in 2019 were $2.7 million, compared to $4.1 million a year ago. Corporate expenses dropped by $2.2 million in the first six months of the year, Ascendant said, as cost saving measures led to reduced personnel, directors’ costs and consultants’ fees. Cost recoveries from affiliates increased by $800,000 during the period. Cash flow from operations, excluding the effect of working capital charges, totaled $9.8 million for the first half of 2019, compared to $14.1 million for the same period a year ago. Capital expenditures for the first half of 2019 were $73.1 million, compared with $36.5 million for the same period of 2018. The company said this increase reflected spending associated with Ascendant’s capital plan. Construction of the 10-megawatt battery storage system was completed, and construction of 56MW of replacement generation continues, the company reported. Ascendant said a rate case was submitted in April 2019 to the Regulatory Authority in respect of the retail tariff methodology released by the RA in October 2018, which provided clarity on future rate-setting methods and timing. “With these accomplishments, the company has laid the groundwork for Bermuda’s energy future,” the statement said.

2019. September 25. Former employees and overseas workers have helped to return power to Bermuda after Hurricane Humberto, a Belco representative said yesterday. The spokesman said: “Thankfully, with the assistance of our retirees, as well as extra linemen from Algonquin Power & Utilities Corp, we have 75 per cent more linesmen working to restore electricity.” He thanked all workers who had been “instrumental in getting the work done efficiently and safely” and said that the power provider “continues to make good progress in restoring power to our customers”. The spokesman said that work continued on main branch lines and smaller pockets of outages across the island. He added: “However, overgrown vegetation that was broken, uprooted and hitting power lines during the storm is making the restoration process much more time consuming, as it takes a few hours to reconnect small pockets of customers. In some cases, customers who have had their power restored will have it switched off temporarily so that other lines can be safely repaired.” The spokesman said crews had also faced other setbacks. He explained: “On Monday evening, there were a number of pole fires due to salt that had been deposited by Humberto, combined with a light rain, which knocked out power to a number of areas that had been restored. Dealing with these priority emergencies has slowed progress in planned restorations.” The spokesman said that crews would continue to work from 8am to midnight to get power restored across the island. As Tropical Storm Jerry approaches, Belco crews will work until the weather makes it unsafe to continue. Crews will be back out as soon as the storm passes and it is safe to recommence restoration.” He said that preparations had been made for Jerry. The spokesman explained: “Belco are replenishing supplies and equipment in staging areas across the island to prepare for any further damage to the grid.”

2019. September 5. Belco is ready to send teams to help the Bahamas in the wake of the devastation caused by Hurricane Dorian. The storm struck the island nation on Sunday as a Category 5 hurricane and lingered there for almost two days, causing extensive damage. A Belco spokesman said the company reached out to partners in the Caribbean Electric Services Corporation to offer help when it became clear the Bahamas would be hit. Dennis Pimentel, the Belco president, said: “Our first thoughts are for the safety of all the residents of the Bahamas. “It’s clear that this powerful Category 5 hurricane, the second most powerful ever recorded in the Atlantic, has caused several deaths and extensive damage to property and infrastructure on the Abaco Islands and on Grand Bahama. Our team is on standby as assessments need to be carried out and a plan of action put into place by the Bahamian disaster management team. We are in regular communication with our Cariclec counterparts, and are ready to assist, once our crews have the necessary accommodations and other considerations, to effectively help with restoration efforts.” Mr Pimentel added that Algonquin Power and Utilities, a Canadian energy company which has offered to purchase Belco’s parent company Ascendant, would be able to assist Bermuda, if the island faced a similar disaster. The sale has been approved by stakeholders, but the deal is still subject to regulatory approval. He said: “One of the major benefits of being acquired by Algonquin is having a mutual aid agreement in place. Through Algonquin’s Utility Division which employs over 130 linesmen, Belco will have access to a number of these resources, which can be deployed to Bermuda, in the event that we are impacted by a hurricane, greatly improving our ability to rapidly restore power throughout the island.”

2019. September 4. More than 20,000 customers across the island lost power after a major transmission fault at Belco this morning. Residents reported outages in every parish from about 10am. A Belco spokesman said at about noon that service had been fully restored. He added that at the height of the outages 20,269 customers were without power. The spokesman said that the outages were linked to a switchboard fault and not the result of ongoing work taking place at Belco. He added: “It was an isolated incident.” Warwick Academy was among the buildings to lose power for about 45 minutes on the first day of the school term, as did the new building at Somersfield Academy. Bermuda High School for Girls and Mount St Agnes for Girls experienced a brief glitch, while Saltus Grammar School reported business as usual because it has back-up generators. Lights in the west end of Hamilton remained on. The spokesman said shortly before 11am that a “major transmission fault” was to blame. He added: “We know that outages are inconvenient and we thank everyone in advance for their patience.”

2019. August 30. You’re not seeing things when your monthly Belco bill charges for more than a month’s worth of usage. In some instances, those additional days can tip a customer deeper into a higher rate tier. Belco is in the process of installing meters fitted with a small computer chip and radio that transmit information about a customer’s electricity usage to the company. This will overcome the problem of monthly readings exceeding 30 or 31 days. As an example of the problem currently encountered, a resident found their bill jumped significantly from June to July even though their energy consumption barely altered, with one month’s bill covering fewer days than the next. When they queried this with Belco, they were told “excess days” had been charged at the top kilowatt hour rate. However, when contacted by The Royal Gazette, a Belco spokesman said there is no “excess days” charge applied to monthly bills. He explained that while the company endeavors to keep the monthly meter-reading cycle to approximately 30 days, sometimes the period is extended by a few days. This happens as a result of delays, such as public holidays when meter readers are not out-and-about gathering readings. “Belco’s billing cycles are determined by meter reading cycles. The company’s meter readers start in the eastern end of the island at the beginning of each month and work their way westward, finishing in Dockyard at the end of the month,” the spokesman said. “Normal meter reading cycles are between 25 and 35 days, however every effort is made to complete reading cycles of approximately 30 days.” He said that between March and the end of September there are “significant challenges” in the meter reading cycle due to public holidays and staff vacations. “Meter readers work Monday through Friday, and on occasion, may work on Saturdays in an effort to balance out any challenges presented by the public holiday schedule. This means that some reading cycles are shorter and others are longer based on when routes are read.” He gave an example of what can occur to a customer who uses 20 kWh per day.

• If the monthly bill covers 28 days they would pay a total of $233.39, inclusive of additional charges and fees such as the fuel adjustment and Regulatory Authority fee. The first 250 kWh of energy cost 15.75 cents per kWh, and the remaining 310 kWh is charged at 24 cents per kWh.
• If the monthly bill covers 30 days they would end up paying for an additional 40 kWhs (two days usage) at the 24 cents per kWh rate. This, together with incremental increases to the fuel adjustment and Regulatory Authority fee in relation to the higher usage, would result in a bill of $248.68.

Belco’s energy charges are split into tiers: the first 250 kWhs at 15.75 cents per kWh, the next 450 kWhs at 24 cents per kWh, and the remaining kWhs at 33.62 cents per kWh. The spokesman pointed out that during the months of July and August energy usage tends to increase as air conditioning units work harder to cool rooms compared to the months either side. He added: “We are currently in the midst of an AMI meter deployment programme which will facilitate remote readings of our meters. Once full deployment has been achieved, Belco will be able to offer different reading cycles which will not require movement of our meter readers from one end of the island to the other.”

• Residents can learn more about AMI meters and how they can monitor and manage their energy usage at www.yourenergyfuture.bm

2019. August 14. A renewable energy company has predicted it will exceed expectations with a new solar farm on a disused airport runway. Saturn Solar Bermuda 1 explained its objectives in a string of documents submitted as part of a licence application posted on the Regulatory Authority website. The firm, part of Canadian-based Saturn Power, said it aimed to develop a six-megawatt power plant on the unused “finger” at the airport. It said in a Bulk Generation Licence application: “The goal of the project is to produce clean, emission-free, and sustainable power through the conversion of sunlight into electricity therefore reducing Bermuda’s dependence on dirty diesel power generation. This project provides the island of Bermuda with a price-stable and cost-efficient source of electricity with predictable supply. Saturn Power’s mission is to ensure the safe, efficient and timely installation of the project and long-term operation of the project to exceed the expectations of the Government of Bermuda, the citizens of Bermuda and local agencies.” The application showed the ownership structure of the company. It added: “At Saturn Power Inc, this same team has been responsible for the development, permitting, engineering, financing, and construction of over 70MWs of solar facilities in Canada and internationally. The company was founded over ten years ago and has seen great success with renewable energy development.” Walter Roban, the home affairs minister, said: “I am pleased that the project has progressed from a proposal phase towards becoming a reality.” He explained in June 2018, when he was the Minister of Transport and Regulatory Affairs, that Saturn Power had submitted the lowest bid out of nine proposals, six of which were Bermudian, and offered a rate of 10.3 cents per kilowatt hour. The Bermuda Government will collect rent for the site, although the licence application said that the lease was “in the process of being amended between the parties”. Portions of the company’s submission were removed from the documents released to the public, including the expected capital cost for the installation as well as anticipated annual expenses, which were predicted to rise in line with inflation each year. The application said that a local contractor would be used to build the solar power station with imported equipment for specialized parts such as “solar modules, inverters, racking, transformers and other electrical equipment”. Mr Roban said last year that the deal included an agreement that all bidders “were required to have Bermudian content in regards to labour during construction and operations, and maintenance personnel post-construction”. He explained then that the project will “create an opportunity for sustainable and sensible competition in the electricity sector”. Mr Roban added that it would stabilize a portion of ratepayers’ electricity bills for the next 20 years. He said that the replacement of oil fuel costs with solar power would keep an estimated $20 million or more in the island’s economy over the project’s lifetime. The Government’s Official Gazette said that comments on the proposed development could be submitted up to 21 days from the date of the application notice, which was on Monday.

• To view the Bulk Generation Licence submitted by Saturn Solar Bermuda 1, see http://www.royalgazette.com/assets/pdf/RG407193814.pdf.

2019. August 12. The Canadian company that intends to take over Ascendant Group sees an opportunity in Bermuda to replace fossil fuel energy generation with renewables, as it is doing elsewhere. That was among the comments made by Ian Robertson, chief executive officer of Algonquin Power & Utilities Corporation during a second-quarter earnings conference call on Friday. He spoke a few hours after Ascendant Group shareholders met and voted overwhelmingly to accept Algonquin’s $365 million offer for the group, which includes energy provider Belco. The amalgamation transaction is expected to close later this year, subject to the granting of regulatory approvals. Algonquin has reported adjusted net earnings of $55 million for the second quarter, or 11 cents per share, up from $50.9 million for the same period in 2018. Revenue fell six per cent, year-on-year, to $343.6 million. During Friday’s conference call, Mr Robertson responded to a question about the Ascendant transaction and said that while Belco is “a great utility in a highly stable and fairly well-off socioeconomic service territory, what really enthused us about it is the fact that, believe it or not, that the utility supplies almost 100 per cent of its energy from fossil fuel resources.” He said there are two consequences of that. “Obviously, I don’t think Bermuda is achieving its objectives from an ESG [environment, social and governance] perspective. And second of all, maybe where the real opportunity comes in, energy is very expensive in Bermuda, like 40 cents a kilowatt-hour with almost 20 cents of that being attributed to fuel. The company sees an opportunity to do in Bermuda what it is doing in the US Midwest in terms of replacing fossil fuel energy generation with renewables. And gosh, when you’re paying 20 cents for the energy alone — there’s a value proposition there.” He also mentioned the Regulatory Authority’s preference for renewable energy projects, as laid out in its Integrated Resource Plan, published last month. Mr Robertson said: “You can imagine that was the underpinning of our interest in Bermuda and music to our ears. From our perspective it has advanced the timing of our expectations of continued investment to replace fossil with renewables. So I think it’s great news.” Regarding debt within Belco, Mr Robertson said it is a “relatively low levered utility”.

2019. August 9. Shareholders of Ascendant Group Ltd have approved a takeover bid by a Canadian utilities group. They gave overwhelming backing to the bid from Algonquin Power and Utilities Corp, in a meeting at the Hamilton Princess Hotel and Beach Club this morning. Peter Durhager, the chairman of Ascendant’s board of directors, told shareholders in attendance that of those who voted 99 per cent had supported the transaction. Ian Robinson, the chief executive of Algonquin, said the company was “very pleased” by the strong support for the acquisition. He added: “We look forward to developing deep relationships with employees, customers, and the Bermuda community and look forward to being a part of the exciting future for Bermuda Electric Light Company Limited and Ascendant’s non-regulated businesses.” Algonquin had offered $365 million for the shares in Ascendant, which includes electricity supplier Belco, AirCare Ltd, iEPC Limited, IFM Limited and Ascendant Properties Ltd. Shareholders will receive $36 per share, a premium of 20 per cent over yesterday’s closing share price of $30 per share. Ascendant’s board of directors previously voted unanimously in favour of accepting the bid. Mr Durhager told attendees prior to the vote that Algonquin “have the capital resources, the operational knowledge and the experience in renewable innovation necessary to advance the company’s efforts to provide cleaner and more cost-effective electricity to our community”. The company currently operates 54 energy facilities, about 90 per cent of which are renewable. They operate in 13 states in the United States and one province in Canada with 2,300 employees. He said that there would be expectations on Algonquin to reinvest profits in Bermuda. He added: “A smart owner will both invest in the infrastructure that they own, and also in the community in which they are operating.” But Mr Durhager said: “At the end of the day, it is their prerogative what they do with their profits.” He said that the issue of the 60/40 rule would be examined after the takeover was backed. Mr Durhager added: “The Government regulators, in this case the Ministry of Finance, the Bermuda Monetary Authority and the Regulatory Authority, will have to get involved. Certainly the BMA and the Ministry of Finance will be making a determination to issue a licence to any non-Bermudian owner that would own more than the relevant portion. So there’s no difference in this transaction than any other business in Bermuda.” The bid by Algonquin will require regulatory approval before going ahead.

2019. August 7. Ascendant Group Ltd, which is the subject of a takeover bid by a Canadian utilities company, has reported a loss of $1.9 million for the first six months of the year. That compares to reported earnings of $3.1 million for the same period in 2018. The company said earnings were impacted by the changes to core earnings from operations, as well as $4.6 million in restructuring charges related to the sale of the company. Shareholders of the company will meet on Friday to consider a $365 million offer by Algonquin Power and Utilities Corp for the shares in Ascendant, which includes Belco. Shareholders would receive $36 per share under the proposed deal, which is backed by the company’s board of directors. In its financial statement, Ascendant said its core earnings from operations during the first six months were $2.7 million, compared with $4.1 million a year ago. It said the decrease was largely the result of lower electricity demand at Belco, in addition to a small increase in depreciation expense. This was partially offset by 21 per cent growth in Ascendant’s non-utility businesses and $2.2 million lower corporate expenses. Cash flow provided by operations, before changes in non-cash working capital balances, decreased $4.3 million, to $9.8 million for the six- month period that ended on June 30. The decrease was primarily driven by decreased Belco revenues and restructuring charges, offset by cost savings at Belco and Ascendant. Capital expenditures for the six-month period were $73.1 million compared to $36.5 million for the same period of 2018, reflecting execution of the company’s capital plan including Belco’s replacement generation, battery storage and transmission and distribution modernisation projects, the company said. The company’s share repurchase programme was suspended on April 1 as a result of the invitation for proposals for the purchase of the company. Trading was suspended on June 3 in anticipation of the announcement that the company had signed an agreement for the sale of the company, pending shareholder and regulatory approvals, and resumed on June 4. The company’s board of directors has declared a quarterly dividend of 11.25 cents per common share. Year-to-date, the company has declared dividends totaling 22.50 cents per common share. Ascendant said its capital plan progress continued in the first half of the year with engines delivered for the North Power Station and ongoing upgrades to transmission and distribution infrastructure. The company said continued cost reductions were made through operational efficiencies and implementation of an early retirement programme. Sean Durfy, chief executive officer, said: “The company has identified a prospective buyer, Algonquin Power and Utilities Corp, that has a long track record of renewable energy generation in the North American market and has the capital resources, operational knowledge and experience in technological innovation to bring more renewable energy to Bermuda. The board is in support of Algonquin purchasing the company and is asking shareholders to approve the sale.” Dennis Pimentel, president of Belco, said: “Belco is continuing the construction of the $120 million replacement generation and commissioned the battery storage project at the North Power Station. We also continue to invest in upgrades to the transmission and distribution grid to ensure reliability of the system but also to allow the integration of more renewables as per the release of the much anticipated Integrated Resources Plan by the Regulatory Authority on July 25. The company supports the IRP and all efforts to improve Bermuda’s environment and reduce greenhouse emissions wherever possible. Belco is currently in the review process to determine how it can work with the Authority to implement this aspirational plan and ensure a continued supply of safe, reliable and cost-effective power for our customers.” Mr Durfy added: “In addition, the company’s efforts to reduce costs are bearing fruit. Considering declining sales, these costs savings are critical to keeping rates in check. Our non-regulated businesses continue to perform well and experienced healthy growth of 21 per cent compared to the first six months of 2018.” Should Ascendant shareholders approve the deal on Friday, the bid by Algonquin would require regulatory approval before going ahead.

2019. March 8. Ascendant Group Ltd’s core earnings dropped 10 per cent to $18.3 million last year as electricity sales slipped. Net income plunged 73 per cent, to $5.4 million from $20.2 million in 2017, driven by a one-off $12.8 million restructuring charge, related to operational efficiency measures as well as costs for financial and strategic advisers, the company stated. Core earnings broke down to $1.87 per share compared to $2.06 per share in 2017. Ascendant said lower sales at its power utility, Belco, and higher expenses at group level drove the fall in earnings. This was offset by a 30 per cent increase in earnings for Ascendant’s non-utility business. The company spent $10.69 million on buying back 650,745 of its own shares last year at an average price of $16.43. In its earnings statement, released today, Ascendant said the aggressive repurchasing was made “in light of its strong financial position and the material discount to book value of its share price”. Book value, the accounting value of the business’s assets minus its liabilities, was $28.57 per share at the end of 2018. The buybacks benefited earnings per share by about 6.2 per cent, or 12 cents per share, the company added. Ascendant said that it closed new financial facilities totaling $158 million last year to support its capital plan and improve the company’s capital structure. The company’s board also announced a quarterly dividend of 11.5 cents per share, unchanged from the previous quarter. “Our performance in 2018 continued to be very strong from a financial and operational perspective,” Sean Durfy, chief executive officer of Ascendant, said. “We are proud of the company’s efforts to control costs in the face of lower electricity sales in 2018. We continued to work constructively with the Regulatory Authority to ensure an appropriate rate compact.” He added that 2018 had been a year of progress in implementing the company’s capital plan and building a strong foundation for the future, with work at the new North Power Station progressing well. We are currently halfway through the construction phase of the 56 megawatt replacement generation which will replace 50 per cent of our older generators,” Mr Durfy said. “The 10MW battery energy storage system, which will be used for spinning reserve, will be up and running by May 2019. The company also began the $55 million grid modernization programme in 2018. All of these initiatives are in support of a more reliable energy system that will reduce costs for our customers over the long run.” Ascendant announced in January that its board had begun to evaluate strategic options including a potential sale of the company. There was no detail on any progress made, but the company reiterated its reasons for this approach. Ascendant stated: “The company understands that its responsibility is to a broad group of stakeholders, including shareholders, customers, employees, and regulators. Each of these stakeholders brings to bear on the company a wide range of perspectives and expectations. Furthermore, the industry in which the Company operates is facing unprecedented change, and with change, we must have the ability to explore and leverage new opportunities for the betterment of Bermuda. The board remains enthusiastic about the future prospects of Ascendant, to the benefit of all of its stakeholders, and will continue to communicate progress on strategic alternatives for the company as this process continues.” Dennis Pimentel, president of Belco, said 2018 had been a busy year for regulatory matters. “Belco submitted an integrated resource plan in February 2018 as well as the final Grid Code in October 2018,” Mr Pimentel said. Also in October 2018, the Regulatory Authority released the new Retail Tariff Methodology as well as the Feed In Tariff Methodology General Determination. Having certainty around the regulatory process enables us to continue to provide Bermuda with a reliable, cost-effective electricity supply.”

2017. November 27. Ascot Group has launched a new reinsurance company in Bermuda and hired industry veteran John Berger as chief executive officer. Ascot Reinsurance Company Ltd, which received its Class 3B insurance licence from the Bermuda Monetary Authority earlier this month, will start life with $1 billion of capital and an A rating from AM Best. Mr Berger is a well-known executive in the Bermuda marketplace, having previously led Harbour Point and, most recently, Third Point Re, where he remains chairman until December 22, having stepped down as CEO nine months ago. Ascot Group is a Bermudian-based company, which owns Ascot Underwriting and related businesses. It is owned by the Canada Pension Plan Investment Board, who acquired the company from AIG in a $1.1 billion deal announced last year. “Ascot Re is an important development in the growth of the Ascot Group and the culmination of a long held strategy to strengthen Ascot’s global footprint by building a reinsurance company in a key marketplace,” said Andre Brooks, chief executive officer of Ascot Group. Neill Currie, the former RenaissanceRe CEO who is Ascot Group’s executive chairman, said: “Through Ascot Re, we look forward to becoming a leading reinsurer in the Bermuda market, which will enhance our ability to build meaningful, long-term relationships with brokers and their clients, and positions us well to service any demand for new cover.” Mr Berger will start as Ascot Re’s CEO in January 2018, pending approval by the Bermuda Immigration Department, and will work with the existing Ascot Group team on the island. “I have known and admired the Ascot team for a long time,” Mr Berger said. “I am very excited about joining the group and building out the Bermuda operation.” Mr Brooks added that Mr Berger’s “exceptional market knowledge, experience and reputation within our industry will play a huge role in building out the platform we aspire to”. Ascot Group added that the reinsurance capacity provided by Ascot Re would “enhance the leadership and servicing of business already established within the Ascot Group”. AM Best assigned a financial strength rating of A (excellent) and a long-term issuer credit rating of “a” to Ascot Re, with a stable outlook. Best said its ratings reflected Ascot Re’s “very strong” balance sheet strength, adequate operating performance, limited business profile and appropriate enterprise risk management, as well as backing from its parent, Ascot Group, and ultimate owner, CPPIB. According to Ascot Re’s business plan, it will start writing quota-share reinsurance for Lloyd’s Syndicate 1414, which is managed by Ascot Underwriting, next year. The rating agency expects the firm to also write some non-affiliated business.

2017. June 28. Neill Currie has been appointed executive chairman of Bermuda-based Ascot Group Limited. He was previously CEO of RenaissanceRe Holdings Ltd, which he cofounded in 1993, and led from 2005 until his retirement in 2013. Ascot Group holds Ascot Underwriting Ltd, a leading global specialty insurance underwriter, which manages Syndicate 1414 at Lloyd’s, and Ascot Underwriting Bermuda Limited, a managing general agency. Canada Pension Plan Investment Board, which acquired these operations in 2016, will invest and build a global property and casualty insurance and reinsurance platform through AGL. “The opportunity to work with AGL’s management team and CPPIB to build a dynamic and global P&C company is uniquely compelling,” said Mr Currie. “I am looking forward to working with the many people associated with AGL to build a company that will provide its clients with an array of best-in-class insurance and reinsurance solutions.” In a statement, Ascot said Mr Currie had, during his time as CEO of RenRe, “successfully stewarded the company through its growth and evolution to become one of the pre-eminent providers of reinsurance and insurance globally”. It noted that under his leadership the company’s success was “driven by its creative and unique insurance products for clients, leading-edge underwriting expertise and support for ground-breaking catastrophe research and mitigation activities”. Andrew Brooks, chief executive officer of AGL, said: “We are thrilled to have an individual of Neill’s calibre join as the executive chairman. “His deep expertise, excellent reputation and proven track record as a visionary in the insurance and reinsurance industry will position AGL well as it looks to build a leading global P&C insurance platform.” In his new role Mr Currie will work with AGL’s management and board of directors to grow its operations and capabilities through a variety of strategic initiatives including organic growth programmes, joint ventures, strategic investments and acquisitions.

Formerly known as ASX Settlement and Transfer Corporation PTY

2019. February 15. Chris O’Kane has stepped from his role as group chief executive officer of Aspen Insurance Holdings Ltd after the completion of the company’s takeover by US private-equity group Apollo Funds. Mr O’Kane has led the insurer and reinsurer since it was set up in 2002 in response to market opportunities in the wake of the September 11 terrorist attacks on New York and Washington. Apollo announced the completion of the deal this morning and Aspen’s shares ceased trading on the New York Stock Exchange and the Bermuda Stock Exchange. Glyn Jones has stepped down as Aspen chairman and will be succeeded by Mark Cloutier, who will assume the roles of executive chairman and group CEO. Mr Cloutier stepped down from his previous role as executive chairman of London-based insurer Brit Ltd in December last year. He was CEO at Brit from 2011 and became executive chairman in January 2017. Mr O’Kane also ceases to be a director. Also leaving the Aspen board with immediate effect are Albert Beer, Matthew Botein, Gary Gregg, Heidi Hutter, Karl Mayr, Bret Pearlman and Ron Pressman. John Cavoores and Gordon Ireland will remain as directors and will be joined on the Aspen board with immediate effect by Josh Black, Alex Humphreys, Gernot Lohr, Gary Parr and Michael Saffer, as well as Mr Cloutier. Mr O’Kane said: “Seventeen years ago, with 38 colleagues, $600 million of assets and a vision, we formed Aspen. As a result of hard work, determination and an unwavering dedication to our clients, Aspen is now a force in the reinsurance and insurance markets with over $12 billion of assets and around 1,150 employees. I am extremely proud of our accomplishments and I cherish the relationships and friendships, both within Aspen and in the broader market, which we formed along the way. I would like to thank all my colleagues at Aspen as well as our clients and brokers for all their considerable support over the years and it delights me to see Aspen poised to go from strength to strength under the new leadership of Mark Cloutier. I wish Mark and Aspen every success for the future.” Aspen said its 5.95 per cent and 5.625 per cent preference shares will remain issued and outstanding and listed on the New York Stock Exchange. Alex Humphreys, partner at Apollo, said: “We are excited for our funds to be acquiring Aspen as it embarks on the next chapter of its development. We are delighted to be working with Mark again following our successful investment together in Brit Insurance. Mark has a long and successful track-record in the insurance sector and we believe he is ideally placed to lead Aspen through a period of transition to substantially improved profitability. We look forward to working with him and Aspen’s talented management team to drive value creation over the coming years.” Mr Cloutier said he felt honored to be appointed as the CEO of Aspen. “I truly believe that the company benefits from strong underwriting talent and specialized expertise, which makes it ideally positioned to deliver innovative solutions to the increasingly complex risks faced by its customers. I am very excited about what Aspen can achieve in the coming years. I would like to thank Chris for his key role and support over the last few months and for making the transition from public to private so seamless. He has built an impressive franchise over the past 17 years and we wish him well in his future endeavors.” Apollo was advised by Willis Towers Watson and Libero Ventures and Sidley Austin LLP served as its legal counsel on this transaction. Goldman Sachs and JP Morgan Securities acted as financial advisers to Aspen and Willkie Farr & Gallagher served as its legal counsel on this transaction.

2018. August 30. Apollo’s proposed takeover of Aspen Insurance Holdings could be derailed in the event of major catastrophe losses in the coming months. The Bermuda-based insurer and reinsurer agreed a $2.6 billion deal to be acquired by funds owned by US private-equity firm Apollo. A regulatory filing shows the agreement gives Apollo the right to terminate the deal if Aspen suffers losses of more than $350 million from catastrophes occurring between July 1, 2018 and January 31, 2019. In the last six months of 2017, Aspen posted catastrophe losses of $438.7 million, in a heavy year of losses for the industry. Also, if the deal fails to happen because the Aspen board accepts another offer, the insurer will have to pay Highlands Holdings, Apollo’s subsidiary, a termination fee of $82.9 million. If Highlands Holdings fails to live up to its obligations, then it would have to pay a $165.9 million reverse termination fee to Aspen. Aspen’s board opted to take the Apollo offer after a lengthy strategic review of future options, following a rocky period for financial results. On Tuesday, after the deal was announced, Chris O’Kane, Aspen’s chief executive officer, gave an update to all staff. He said: “I know that the media speculation over the past several months about our future path has not been easy. I want to thank all of you for your professionalism and focus. The outcome we are announcing today was well worth the wait. Apollo has a successful track record in the insurance and reinsurance industries. This transaction will provide us with additional scale, and access to Apollo’s investment and strategic guidance, which will help us to accelerate our strategy. In our discussions with Apollo, they have indicated support for our overall strategy, with the intention to help enhance our underwriting profitability.” Yesterday AM Best put Aspen’s credit ratings under review with developing implications. In a statement, the ratings agency said it needs to assess the impact of the planned change in ownership on Aspen’s balance sheet strength, operating performance and business profile. “AM Best will conduct detailed discussions with Aspen regarding its planned strategy as a privately held portfolio company of the Apollo Funds,” Best stated. “AM Best expects the ratings to remain under review pending the completion of the transaction.” Aspen’s operating subsidiaries have a financial strength rating of A (excellent) from AM Best.

2018. August 28. Private-equity firm Apollo Global Management has struck a $2.6 billion deal to buy Aspen Insurance Holdings Ltd. Rumors that the Bermudian-based insurer and reinsurer had put itself up for sale surfaced in June this year, with Argo Group and Blackstone among reported rival bidders. Apollo already has significant interests in the Bermudian insurance market as its funds already own stakes in life and annuities reinsurer Athene Holdings and run-off specialist Catalina Holdings. The Aspen takeover, announced yesterday, is an all-cash deal worth $42.75 per share, marking a 6.6 per cent premium over Monday’s closing share price. Spokespersons from both Apollo and Aspen declined to comment on whether the insurer would continue to be domiciled in Bermuda, whether existing senior management was likely to remain in place and whether the deal was likely to have any impact on staffing levels. However, according to a source who spoke with The Royal Gazette yesterday, little is expected to change in the way the company is run and the deal is viewed inside Aspen as providing an opportunity for the company to expand. Glyn Jones, Aspen’s chairman, said: “We are delighted to have reached this agreement with the Apollo Funds. This transaction, which is the outcome of a thorough strategic review by Aspen’s board of directors, provides shareholders with immediate value and will allow Aspen to work with an investor that has substantial expertise and a successful track record in the re/insurance industry.” Aspen was launched in 2002, one of a group of new insurers to set up in Bermuda in the wake of the 9/11 terrorist attacks a year earlier. It was previously the subject of buyout interest in 2014, when its shareholders rejected a $49.50 bid from Endurance Specialty Holdings. Financial results have disappointed investors over the past 18 months and even Chris O’Kane, the company’s chief executive officer, described 2017’s performance as “deeply disappointing”. Mr O’Kane said yesterday: “This transaction is a testament to the strength of Aspen’s franchise, the quality of our business and the talent and expertise of our people. Under the ownership of the Apollo Funds, Aspen will have additional scale and access to Apollo’s investment and strategic guidance, which will help us to accelerate our strategy and take Aspen to the next level. We are excited about the future as we embark on a new chapter in our history with a partner that understands our strengths, culture and customer-centric philosophy.” Provided the deal is approved by shareholders and regulators, it will mean one less publicly listed Bermudian insurer, as it will become a privately held portfolio company of the Apollo funds and Aspen’s shares will no longer be listed on the New York Stock Exchange. The transaction is expected to close in the first half of next year. Apollo managed about $270 billion of assets as of June 30 across private equity, credit and real assets funds. Alex Humphreys, partner at Apollo, said: “We believe that Aspen benefits from strong underwriting talent, specialized expertise and longstanding client relationships which makes them well positioned in the market. We look forward to working with Aspen to build on the existing high quality specialty insurance and reinsurance business and we aim to leverage Apollo’s resources and deep expertise in financial services to support the company as it embarks on its next chapter.”

Reinsurance firm. 101 Front Street, Hamilton. See above.

2019. February 7. Catastrophe losses drove Aspen Insurance Holdings Ltd to a net after-tax loss of $146.8 million for the fourth quarter of last year. The quarter’s costly events included wildfires in California, Hurricane Michael in the US and Typhoon Jebi in Japan. The operating after tax loss was $124.4 million, or $2.23 per share, worse than the $1.03 loss per share average estimate of analysts tracked by Yahoo Finance. Aspen is going through the process of being acquired by funds affiliated with private-equity firm Apollo Global Management in a deal worth $2.6 billion. Chris O’Kane, Aspen’s chief executive officer, said: “Aspen’s fourth-quarter 2018 results were impacted by the significant natural catastrophe activity that we witnessed across the industry during the period. However, we improved our underwriting performance for the full year and achieved our target for reducing our expense ratio. We are making good progress with our proposed transaction with the Apollo Funds and have received most of the required regulatory approvals. We anticipate completing the transaction during the first quarter of 2019.” The closing of the deal is subject to closing conditions, including receipt of regulatory approvals, as well as the maintenance of certain financial strength ratings by Aspen’s subsidiaries. Gross written premiums of $603.1 million in the fourth quarter fell by 12.4 per cent compared to the $688.3 million recorded in the corresponding quarter a year earlier. in the fourth quarter of 2017 Aspen’s total expense ratio was 36 per cent in the fourth quarter, compared to 46.1 per cent in the fourth quarter of 2017. Amortization and non-recurring expenses of $5 million included $11.6 million of expenses related to the operational effectiveness and efficiency programme, $5.7 million of retention costs and $0.4 million of adviser fees relating to the proposed transaction with the Apollo Funds, partially offset by the write-back of a $14.1 million buy-out provision.

2018. January 26. Stephen Postlewhite, chief executive officer of Aspen Insurance, is leaving with immediate effect after 15 years with the company. The Bermuda-based insurer and reinsurer announced the news a day after it estimated an underwriting loss of $245 million for the fourth quarter of last year, prompting CEO Chris O’Kane to describe Aspen’s 2017 financial performance as “deeply disappointing”. David Cohen, chief underwriting officer of Aspen Insurance, will lead the day-to-day management of the insurance business, reporting to Mr O’Kane. Mr O’Kane said Mr Cohen had made positive changes since joining Aspen in November 2015. “Since his arrival, he has upgraded the underwriting talent in our insurance segment, is refocusing our underwriting book and is positioning Aspen Insurance for success in the next stage of its development,” Mr O’Kane said. “David is a strong and well-respected leader and I am confident that as we move forward, he will drive improvements across our Insurance business.” Mr O’Kane also praised Mr Postlewhite’s “significant contribution” to Aspen.

2018. January 25. Aspen is “deeply disappointed” with its 2017 financial performance, says the company’s chief executive officer Chris O’Kane. His remark came as the Bermudian insurer and reinsurer estimated an underwriting loss of $245 million for the fourth quarter of last year, of which net catastrophe losses are in the region of $135 million. Mr O’Kane said: “We are deeply disappointed with our financial performance in 2017. We have taken a number of actions to improve our underwriting performance and expect to see the impact of these reflected in our 2018 underwriting year results and beyond. We believe our capital position is appropriate to support our ongoing business and underpins our financial strength ratings.” The company added that its “does not anticipate a significant impact on its net income in 2018” as a result of US tax reform that took effect at the start of this year. Aspen said the catastrophe losses were related to wildfires in California in the last three months of 2017 and would mainly impact the company’s reinsurance segment. In addition, Aspen said it had suffered an increased frequency of mid-sized and attritional losses, including property and fire-related losses in the UK and the US, as well as cyber losses and an increase in a previously reported surety loss. “Aspen’s reserves for losses and loss adjustment expenses remain strong and the expected fourth quarter 2017 underwriting loss includes a release of reserves from prior years,” the company added. Aspen’s fourth-quarter financial results are scheduled for release on February 7.

2017. February 10. Aspen Insurance Holdings Ltd made an operating loss of $7.4 million, or 34 cents per share, in the fourth quarter, partly as a result of a repositioning of its insurance segment. For the year, the Bermuda-based re/insurer’s net income was $203.4 million, compared to $323.1 million in 2015. Losses from Hurricane Matthew, an earthquake in New Zealand and wildfires in Tennessee impacted the company’s bottom line. The final-quarter net loss of $71.5 million compared to a $117.9 million profit in the same period in 2015. The loss had been expected, but was worse than many analysts had forecast. One consensus view for MarketWatch.com had reckoned on a loss of 5 cents per share. The group’s combined ratio for the quarter jumped to 106.7 per cent, meaning the company made a loss of 6.7 cents on every premium dollar after paying claims and expenses. That compared with 91.8 per cent combined ratio in the same period the year before. Aspen’s full year combined ratio was 98.1 per cent. The insurance segment had a combined ratio of 99.6 per cent, up from 96.1 per cent. The reinsurance division managed 90 per cent, compared to 80.4 per cent in 2015. In a statement, Chris O’Kane, chief executive officer, said: “While the repositioning of our insurance segment had a significant negative impact on the fourth quarter’s results, we are confident that the actions taken are the right ones and that the underlying quality of our book of business is very strong. We remain intensely focused on driving growth and profitability by offering innovative solutions to meet our clients’ needs and risks, diversifying and expanding our global product offering, and enhancing capital efficiency. Our business is now firmly on course for the next stage of profitable growth.” Then, during an earnings conference call yesterday, he further explained that the company had identified elements of business that it had decided not to continue to write, and had decreased underwriting “a great deal of primary casualty business. In all, approximately $150 million of insurance business, or just under 5 per cent of our total underwriting portfolio, fell outside the refocused underwriting guidelines and was not renewed.” Aspen purchased $10 million of additional reinsurance coverage to protect itself from the run-off of some of the discontinued business. When asked about the potential for a sale of the company, Mr O’Kane said he was very confident about Aspen’s future. “We have a pretty strong franchise in reinsurance already. We have an improving franchise in insurance. Aspen is a successful operation relative to peers and is one that we want to carry on running”.

2016. December 16. A former economist with the Bank of England has been made group chief operating officer at insurer and reinsurer Aspen Insurance Holdings. Richard Thornton will add the newly-created role to the job of group head of strategy, but will give up his role as group chief risk officer. Chris O’Kane, group chief executive officer, said: “In this new role, Richard will be responsible for leading our operational strategy across our business segments, platforms and our corporate functions." Richard will bring strategic vision, new ideas and strong momentum to ensure that our operational activities are developed further and are even more effectively aligned to support our underwriting teams globally. I am delighted that we have someone of Richard’s considerable ability and experience to take on this important role.” Mr Thornton joined Aspen as group head of strategy early in 2014 and was appointed group chief risk officer six months later. Aspen plans to appoint a new group chief risk officer within the next few months. Mr Thornton, who worked in the Bank of England’s monetary analysis division, later joined Oliver Wyman in London as a partner, leading the firm’s development of its general insurance business in the UK and Europe. He worked on projects encompassing life and general insurance, ranging from retail to global corporate and from strategy to operations, risk and finance.

2016. October 27. Aspen Insurance Holdings Ltd reported earnings in line with analysts’ estimates as it overcame $24.9 million in catastrophe losses. The Bermuda insurer and reinsurer posted operating income after tax of $69.3 million in the third quarter, or 97 cents per share. Net income was $95.6 million, or $1.40 per share. The company wrote more business, with gross written premiums increasing by 6 per cent to $763.5 million in the third quarter of 2016 compared with $720.5 million in the same period last year. Chris O’Kane, Aspen’s chief executive officer, said: “Aspen’s results this quarter reflect good underwriting profitability across our business. This was demonstrated by our 93.8 per cent combined ratio and the improved accident year ex-cat loss ratios achieved by both business segments. Premium growth in the quarter was driven by Aspen Re, where the AgriLogic business is being successfully integrated and is performing well. At Aspen Insurance, we continued our efforts to reduce volatility, while also delivering growth in targeted areas such as in our Financial and Professional lines portfolio. We remain very disciplined in our selection of risk and continue to enhance our range of products.” The combined ratio benefited 5.2 points from $35.4 million of net favorable development on prior year loss reserves. Annualized net income return on average equity was 11.2 per cent, while operating return on average equity was 8 per cent for the quarter. Aspen spent $6.5 million buying back its own shares in the third quarter, bringing stock repurchases up to $50 million for the first nine months of the year. The company had $366.3 million remaining under its current share repurchase authorization as of yesterday.

2016. August 1. Aspen Insurance Holdings Ltd reported second-quarter net income of $64.9 million. On a per-share basis, the Bermuda-based insurer and reinsurer said it had net income of 89 cents, up from 62 cents per share in corresponding quarter of 2015. Operating earnings, adjusted for investment gains, came to 40 cents per share. That fell well short of the 69 cents per share estimate of analysts tracked by Yahoo Finance. Chris O’Kane, Aspen’s chief executive officer, said: “Aspen achieved 7.7 per cent growth in diluted book value per share and annualized operating return on equity of 7 per cent in the first half of 2016. We delivered this in the face of an eventful second quarter impacted by higher losses from natural catastrophes and other events. “However, on an accident year ex-catastrophe basis, the performance of both our insurance and reinsurance segments improved considerably. Our new leadership teams at Aspen Re and Aspen Insurance remain focused on disciplined underwriting, identifying and capturing attractive opportunities for profitable growth in our diversified businesses around the globe which, we believe, will create long-term value for our shareholders.” Gross written premiums increased by 10.9 per cent to $801.7 million in the second quarter, compared to $722.8 million in the second quarter of 2015. Aspen’s combined ratio — the proportion of premium dollars spent on claims and expenses — was 100.7 per cent for the second quarter of 2016 compared with 93.6 per cent for the second quarter of 2015. Pre-tax catastrophe losses, net of reinsurance recoveries and $3.1 million of reinstatement premiums, totaled $65.1 million, or 10.1 combined ratio points, during the quarter, compared with $11.9 million in the corresponding period of 2015.

2016. April 22. Aspen Insurance Holdings’ first-quarter profit fell by more than 10 per cent as catastrophe losses increased. The Bermuda-based insurer and reinsurer reported net income of $114.4 million, down from $128 million in the same period of 2015. Operating earnings were $1.29 per share, down 10 cents from 2015, and just shy of the consensus forecast of $1.32 per share of analysts tracked by Yahoo Finance. The company wrote more business in the first three months of the year, with gross premiums written rising 6.1 per cent to $957.7 million. “Aspen has started the year well, with solid first-quarter underwriting results from our insurance and reinsurance businesses contributing to an annualized operating return on equity of 11.2 per cent and 4.8 per cent growth in diluted book value per share,” Chris O’Kane, Aspen’s chief executive officer, said. “Our insurance teams are successfully executing our global products line strategy and delivered growth in targeted lines of business. At the same time, we continued to pull back from areas where we do not feel returns are adequate or are historically more volatile. Within Aspen Re, our teams had successful January and April renewals, again demonstrating our ability to maintain relevance with clients while navigating a challenging and changing market. We also welcomed our colleagues from AgriLogic. In addition, we continue to move closer to our clients, recently announcing the opening of our Dubai office to serve as our hub for the Middle East and Africa.” Aspen’s combined ratio — the proportion of premium dollars allocated to claims and expenses — of 91.6 per cent for the first quarter compared with 88.9 per cent for the first quarter of 2015. The company said pre-tax catastrophe losses, net of reinsurance recoveries, totaled $18.7 million during the January through March period, compared to $13.5 million in 2015. Most of these losses were caused by weather-related events in the US and an earthquake in Taiwan. Net favorable development on prior-year loss reserves of $21.6 million for the first quarter of 2016 compared with $27.5 million a year earlier. Investment income increased by 4.4 per cent to $49.5 million. The total return on Aspen’s aggregate investment portfolio was 2.08 per cent for the quarter.

2015. November 3. Aspen Insurance Holdings yesterday said its insurance operation had recorded the strongest quarterly underwriting performance in company history — but net income plunged due to investment losses. The Bermuda-based firm recorded underwriting income in its insurance business of $41.8 million for the third quarter of the year. Aspen chief executive officer Chris O’Kane said: “Our US insurance platform is on track to exceed $600 million of net earned premiums in 2015, together with an expenses ratio of less than 16 per cent, while our international insurance platform demonstrated a significant improvement in underwriting performance.” He was speaking as Aspen unveiled its quarterly results, which showed profits of $28.2 million — equivalent to 30 cents per share — for the third quarter of the year, down from $37.4 million in the corresponding quarter last year. Net realized investment losses widened to $40.4 million from a loss of $16.6 million in the third quarter of 2014. The firm said gross written premiums were up 10.4 per cent to $720.5 million in the third quarter, compared to $652.5 million in the third quarter of last year. Aspen recorded pre-tax catastrophe losses, net of reinsurance recoveries, of $19.1 million in the third quarter — $2 million more than in the same quarter of 2014. The reinsurance segment of the business logged gross written premiums of $316.6 million, an increase of 28.2 per cent on the $256.9 million reported for the same period last year. Mr O’Kane said: “At Aspen Re, our teams continued to demonstrate their innovative solutions, deep client relationships and disciplined underwriting. This was reflected in significant gross written premium growth, both from new business opportunities and the large pro-rata deals that we noted last quarter. Across our insurance and reinsurance businesses, we remain focused on building value for clients in our chosen areas of expertise. We continue to expect to achieve an 11 per cent operating return on our equity for 2015.”

2014. December. Renewed its Silverton Re subsidiary for next year with $85 million in capital. Silverton Re, set up to help investors with access to diversified catastrophe risk, will be used to write a quota share of Aspen Re's catastrophe portfolio. Aspen Re CEO Stephen Postlewhite said:  "Our objective when we established Silverton Re was to partner with the capital markets so that we are able to provide investors with access to diversified natural catastrophe risk backed by the distribution, underwriting, analysis and research expertise of Aspen Re. We are pleased with the progress that we have made in developing strong partnerships with new investors." A total of $15 million was provided by Aspen, with the remaining $70 million raised from outside investors. Silverton Re will enter into a quota share retrocession agreement with Aspen Bermuda Limited under which Silverton Re will reinsure a proportionate share of Aspen Re's globally diversified property catastrophe excess of loss portfolio. Bermuda-based Silverton Re was set up in 2013 as a special purpose insurer with start-up capital of $65 million to provide additional collateralised capacity to back its parent company's global reinsurance business.

2017. July 3. Assured Guaranty is suing Puerto Rico’s federal oversight board over its decision to push the Caribbean island’s electric utility into bankruptcy. The Bermuda-based firm insures some of the bonds issued by Prepa, as the utility is known, and the bankruptcy comes after the rejection of a longstanding debt-restructuring agreement with creditors. It marks the end of nearly four years of negotiations between Prepa, hedge funds, mutual funds and bond-insurance companies including Assured to find an out-of-court solution to reduce the agency’s obligations and modernize its system. Dominic Frederico, chief executive officer of Assured, said the decision “makes clear that the oversight board is not seriously seeking the consensual resolutions with creditors that Promesa was intended to encourage. The rejection of this consensual agreement will force Prepa into years of litigation, costing millions of dollars and driving up costs for customers.". A statement from Assured Guaranty said the company would “vigorously exercise its rights and remedies as guarantor of Prepa Special Revenue bonds, which benefit from special protections under bankruptcy law. Payments to holders of Prepa bonds insured by Assured Guaranty will continue to be paid without interruption for the life of the bonds”. Last week, Standard and Poor’s Global Ratings affirmed Assured’s AA financial strength rating.

2017. June 27. Bond insurer Assured Guaranty Ltd’s operating units have had their AA rating affirmed by Standard & Poor’s — even though the credit ratings agency expects to see some losses from bonds issued by debt-saddled Puerto Rico. S&P Global Ratings cited the Bermuda-based firm’s very strong capital adequacy, market leadership in risk-based pricing, its diversified underwriting strategy and record of credit discipline. S&P stated: “Although much of Assured’s business has been in the US public finance market, it has the most diverse underwriting strategy of any bond insurer, also conducting business in the global structured finance and international public finance markets. “Although some segments of these other markets have been risky in the past, we believe management’s current approach to writing business in them is well thought-out and measured.” S&P cautioned that Assured’s “exposure to issuers in Puerto Rico may pressure its capital position as losses begin to materialize". Dominic Frederico, Assured’s chief executive officer, said: “Once again, S&P reaffirmed Assured Guaranty’s AA stable rating. The affirmation validates not only our financial strength but also our proven business model, profitable financial results and the success of our strategic choices. “Our size and experience allow us to lead the US municipal bond market by participating broadly, regularly insuring large municipal transactions, including public-private partnerships, as well as small and mid-size transactions, while achieving favorable average premium rates. “Additionally, our international infrastructure and structured finance businesses further diversify our insured portfolio while providing a competitive advantage through the flexibility to capitalize on growth trends and pricing opportunities when they are better in one sector than in others.“ While low interest rates limited new business opportunities over recent years, we were able to produce good economic results through effective loss mitigation, re-assumptions of ceded business, and acquisitions. “Our insured portfolio has amortized significantly in recent years while our claims-paying resources have remained substantially the same at approximately $12 billion, significantly reducing our leverage ratios. “As a result, based on our understanding of S&P’s capital adequacy model, we estimate that Assured Guaranty had $2.8 billion of capital in excess of S&P’s AAA requirement at year-end 2016.”

2017. May 8. NEW YORK (Reuters) — Bermuda-based bond insurer Assured Guaranty, which has more than $5 billion at stake in Puerto Rico’s debt crisis, has sued the US territory and its financial oversight board, objecting to a fiscal turnaround plan approved by the board in March. MBIA, a US bond insurer also filed a similar suit on the day after Puerto Rico announced a historic restructuring of its public debt, touching off what may be the biggest bankruptcy ever in the $3.8 trillion US municipal bond market. It followed similar actions by another US bond insurer, Ambac Financial Group, and other major creditors earlier in the week. At immediate issue in the lawsuit is the legality of the turnaround plan adopted by the oversight board installed under last year’s US congressional rescue law, known as Promesa. The plan forecasts the island having only $800 million a year to service debt, auguring major haircuts for bondholders. It requires “illegal (fund) transfers by allowing the Commonwealth to simply misappropriate for its own general use special revenues that constitute property of its public corporations and their bondholders”, said the complaint filed in federal court in Puerto Rico. Assured could be on the hook for as much as $5.4 billion in bondholder losses on defaulted debt, while MBIA’s National Public Finance Guarantee Corp has about $3.6 billion of exposure. On Wednesday, Puerto Rico’s oversight board filed a petition to protect the commonwealth from its creditors in US District Court in Puerto Rico. The filing was made under Title III of Promesa, which allows for a court debt-restructuring process akin to US bankruptcy protection. Puerto Rico is barred from a traditional municipal bankruptcy under Chapter 9 of the US code. It was not immediately clear just how much of Puerto Rico’s roughly $70 billion of debt is included in the bankruptcy filing.

• Assured Guaranty reported first-quarter profit of $317 million. The company said last Thursday night it had profit of $2.49 per share. Earnings, adjusted for non-recurring gains, were $2.14 per share. Assured posted revenue of $527 million in the period. Its adjusted revenue was $375 million. Assured Guaranty shares have fallen slightly since the beginning of the year. The stock has climbed 47 per cent in the last 12 months.

2017. March 31. NEW YORK (Bloomberg) — Bermuda-based Assured Guaranty is among bond insurers whose shares have been hit in recent days by speculation that its exposure to potential losses related to indebted Puerto Rico could turn out to be greater than previously expected. When Puerto Rico struck a deal more than a year ago to cut the government electric company’s $9 billion debt, one group was spared the hit: bond insurers, whose guarantees the island needed to win back the faith of investors. That agreement and the precedent it set are now at risk as Governor Ricardo Rossello threatens to use the bankruptcy-like powers the US has since given the territory to seek additional concessions from MBIA Inc. and Assured Guaranty Ltd. That’s triggered a decline in bond insurers’ shares over speculation about the scale of the losses they face as Puerto Rico moves towards the bigger effort to slash its entire $70 billion debt. “For an outsider coming in, like the governor, it probably doesn’t seem to him like the people of Puerto Rico got the best deal here,” said Chas Tyson, an analyst with Keefe, Bruyette & Woods. The push to reopen the Puerto Rico Electric Power Authority’s December 2015 agreement — the only one the island has reached — marks an opening salvo in Rossello’s effort to pull the government out of a crisis that’s promising to impose deep losses on bondholders, who snapped up the territory’s high-yielding debt for years even as the economy contracted. Puerto Rico has already defaulted on a major swath of its debt and the fiscal recovery plan approved this month by US financial overseers would cover less than a quarter of what it owes between 2018 and 2026, assuming the government can accomplish its goals of cutting spending and raising revenue. Analysts say bond insurers have enough cash to weather their exposure to Puerto Rico and that’s reflected in the price of guaranteed commonwealth bonds, some of which trade for more than 100 cents on the dollar. But insurers’ shares have slid amid speculation the resolution will be more costly than previously anticipated. Since the end of January, MBIA has fallen 19 per cent and Assured 6 per cent, while Ambac Financial Group, which also insures Puerto Rico debt, has declined 13 per cent. The S&P 500 Index has gained more than 3 per cent over the same time. The companies that insured the debt of the utility, known as Prepa, were set to avoid paying out claims under the deal. Owners of uninsured bonds, including Franklin Advisers and OppenheimerFunds, agreed to accept 85 cents on the dollar by exchanging their securities for new debt backed by a share of residents’ electricity bills. Instead of covering payments on the other debt they guaranteed, the insurers agreed to fund a $462 million surety bond that would backstop the securities — providing investors with protection against a default. Assured and MBIA also purchased bonds from Prepa to provide the utility with cash needed to cover debt payments. Prepa’s uninsured debt is trading around 60 cents, indicating creditors got a good deal relative to the market, said Tyson. “Every dollar that you don’t spend on debt service can be passed on to utility customers in the form of lower prices,” he said. Rossello’s push has riled insurers and bondholders, who said it cast doubt on his ability to negotiate with other creditors and jeopardizes the government’s ability to return to the capital markets. If his administration can’t strike an agreement, Puerto Rico and the federal oversight board may turn to the courts to reduce what is owed, thanks to a provision included in a US law passed last year to give the island tools to deal with its debt. Puerto Rico is facing a deadline to reach out-of-court settlements with creditors by May 1, when a legal stay that’s sheltered it from the consequences of most lawsuits is set to lapse. The Prepa deal could also expire on Friday if it’s not extended, as insurers and bondholders have previously agreed to do. The gulf between Rossello and Prepa’s creditors was on public display at a March 22 congressional hearing in Washington, where Adam Bergonzi, chief risk officer of MBIA’s National Public Finance Guarantee unit, said the governor has done little to reach out to creditors. An adviser to Franklin and Oppenheimer also questioned Rossello’s failure to close the deal. On Tuesday, US Representative Doug LaMalfa, who heads the House panel that held the hearing, urged Rossello to complete the Prepa agreement by Friday’s deadline. MBIA’s National insures $8.6 billion of principal and interest payments, including $1.8 billion of Prepa debt, and had $4.6 billion of claims-paying resources at the end of 2016, according to the company’s disclosures. Assured guarantees $8.1 billion of principal and interest payments, including $1.1 billion from the utility, and had $11.7 billion to meet claims as of December 31. Syncora Guarantee Inc., which is also a party to the Prepa deal, had only about $461 million of exposure to Puerto Rico as of September 30. Ambac insures $9.7 billion of principal and interest, $7.3 billion of which comes due from 2047 to 2054, according to a filing. The company reported $8.8 billion of claims-paying resources as of December 31. It doesn’t guarantee Prepa securities. MBIA spokesman Greg Diamond, Assured Guaranty spokeswoman Ashweeta Durani and Syncora spokeswoman R. Sharon Smith declined to comment. An e-mail and phone message seeking comment from Ambac weren’t returned. Puerto Rico’s move to extract concessions from the insurance companies may be short-sighted, said Mark Palmer, managing director at BTIG LLC. He said the island may need the companies to guarantee its bonds whenever it wants to resume borrowing for public works, given that investors may be worried that it would default again if the economy doesn’t turn around. “It makes sense to use insurance where the investors are really taking risks on the insurer and not the municipality,” he said. The conflict between Puerto Rico and the utility creditors is unlikely to be resolved outside a broad agreement to restructure all of the island’s debts, said Tyson, the analyst with Keefe, Bruyette. “There’s a pretty wide distance between the governor, the oversight board and the major creditors of Prepa,” he said.

2016. August 4. Profits at Bermuda-based Assured Guaranty plummeted by more than $150 million in the second quarter compared to the same period last year. The firm yesterday posted net income of $146 million, down $151 million year-on-year. The latest profit figure is equivalent to $1.09 per share, compared with $1.96 per share in the corresponding period of last year. Net earned premiums for the period totaled $214 million, down $5 million compared with the second quarter of 2015. Net investment income remained steady at $98 million, the same as a year ago, while operating income fell from $278 million to $139 million. Dominic Frederico, the company’s chief executive officer, said: “Assured Guaranty had a solid second quarter. We continued to build our financial strength and furthered our strategic objectives on July 1 when we completed our acquisition of CIFG. Standard & Poor’s global ratings took note of our positive risk-adjusted pricing trend in its July 27 report affirming our AA financial strength ratings. In the report, S&P said that none of the severe stress scenarios it applied to our Puerto Rico exposure reduced our ‘very strong’ capital adequacy score.” The Assured Guaranty report said that net income was higher in the same quarter last year, in comparison to this year, “due primarily to the gains recognized upon the acquisition of Radian Asset Assurance in the second quarter 2015. This was offset in part by lower loss and loss adjustment expenses in second quarter 2016 compared with second quarter 2015.” During the second quarter of this year, the company repurchased 2.3 million shares worth a total of $60 million.

2016. June 8. NEW YORK (Bloomberg) — Puerto Rico’s bond insurers — including Bermuda-based Assured Guaranty — are urging the commonwealth to negotiate with creditors as speculation increases that the island will default July 1 for the first time on general-obligation debt. While commonwealth officials, investors and bond-insurance companies have been negotiating for months on how to reduce Puerto Rico’s $70 billion of debt, specific talks over addressing next month’s general-obligation payment have yet to occur, Nader Tavakoli, president and chief executive officer at Ambac Financial Group, said during a Debtwire conference in Manhattan yesterday. Such talks could allow Puerto Rico to avoid lawsuits, put off some of the payment, or restructure debt before next month’s deadline. “There really have been no good-faith discussions,” Mr Tavakoli said. He said avoiding a default will be “an uphill climb”. The lack of communication with creditors, out-of-date financial information and a local debt-moratorium law that allows the governor to temporarily suspend principal and interest on commonwealth debt ignores the rights of investors, Dominic Frederico, chief executive officer at Assured Guaranty, said during the conference. “I’ve never seen behavior at this level with the treatment of creditor rights,” Mr Frederico told a packed room of about 150 participants. “The current behavior will really impact the ability to access the market for a hell of a lot longer than five years.” Governor Alejandro Garcia Padilla has said the island is unable to repay $805 million of principal and interest due July 1 on the securities, which have the highest legal priority, and also continue providing essential services for the island’s 3.5 million residents. Those payments are part of $2 billion owed by Puerto Rico and its agencies next month. The default could become the biggest yet for the Caribbean island, which began skipping payments in August on some bonds with the weakest legal protections. The anticipated lapse comes as Congress is advancing legislation aimed at resolving Puerto Rico’s fiscal crisis by giving a federal control board power to oversee the government’s budget and a potential restructuring of its debt. Melba Acosta, president of the Government Development Bank, which is overseeing the island’s debt restructuring, said during a separate panel discussion that the island is in constant talks with creditors. “We are in fact in conversation,” Mr Acosta said. “We are in fact negotiating.”

2016. April 1. NEW YORK (Bloomberg) — Assured Guaranty Ltd is seeking financial information from Puerto Rico, and is looking to Washington for help. The Bermudian-based bond insurer, which guarantees repayment on about $3.8 billion of commonwealth securities, sent a letter on Wednesday addressed to Cleary Gottlieb Steen & Hamilton LLP, which is representing Puerto Rico in its attempt to restructure $70 billion of debt, detailing multiple requests for information. The letter signed by Bruce Stern, Assured’s executive officer, was also sent to US Treasury Secretary Jacob Lew, House Speaker Paul Ryan and other federal lawmakers working on legislation to address the island’s fiscal crisis. Assured says that it has failed to receive complete financial information that it is entitled to as insurer of commonwealth securities after repeated appeals during the last 18 months, beginning with a request for Puerto Rico Highways & Transportation Authority maintenance agreements in September 2014. Assured is also seeking current balances for accounts that repay Highways debt and Puerto Rico Convention Centre District Authority bonds after the two agencies began using reserve funds to make their January 1 debt-service payments. Assured needs the data to plan for possible draws on its insurance policies, Stern wrote in the letter. “The financial situation of the commonwealth and its public agencies remains opaque,” Stern said. “In the absence of a legitimate reason for this opacity, Assured is left to speculate what ulterior purpose the continued refusal to provide basic and readily-available financial information serves.” Barbara Morgan, a spokeswoman at SKDKnickerbocker in New York, which represents Puerto Rico’s Government Development Bank, didn’t have an immediate comment. Betsy Nazario, a spokeswoman at the GDB in San Juan, and Shannon Lynch, a spokeswoman at Cleary Gottlieb, didn’t immediately return phone calls and e-mails. Stern sent the letter as the House Natural Resources Committee plans to introduce on April 11 its bill that would establish a federal oversight board to manage any Puerto Rico debt restructuring and weigh in on annual budgets. The goal is to end the commonwealth’s practice of borrowing to fill budget deficits. US territories, including Puerto Rico, don’t have access to municipal bankruptcy. Governor Alejandro Garcia Padilla in June said the island was unable to repay its obligations on time and in full. Two agencies have missed bond payments since then and the government has redirected revenue from the Highways and Convention Centre authorities to instead pay general-obligation bonds, which have the highest priority under its constitution. Creditors, including mutual funds, bond-insurance companies, and hedge funds are working together on a unified counterproposal that would reduce Puerto Rico’s debt after island officials last week offered their latest debt-restructuring plan to the different parties. Puerto Rico has said it wants to reach an agreement with its creditors, an assertion that Stern questions. The responses of Cleary Gottlieb, Puerto Rico and the island agencies, “suggests the commonwealth and its public corporations are not serious about working towards a meaningful consensual restructuring”, Stern wrote. Assured guaranteed about $3.8 billion of Puerto Rico securities, as of December 31, as measured by gross par outstanding, according to financial documents on the company’s website.

2015. December 28. This Bermuda-based bond insurer struck a deal with Puerto Rico’s indebted electric company and its bondholders that will enable the utility to restructure about $8.2 billion of debt. The Caribbean island, a US territory, faces a mounting fiscal crisis and the deal marks a first step to reduce its financial obligations. The deal has been described as the largest restructuring in the history of the $3.7 trillion municipal bond market. The agreement brings together the Puerto Rico Electric Power Authority, the largest US public-power provider, insurers and others such as hedge funds that hold 70 per cent of its debt, the agency, known as Prepa, said in a statement. Prepa’s obligations would be cut by more than $600 million, with investors taking losses of about 15 per cent in a debt exchange. The transaction aims to free up cash so the utility can modernize plants. The pact requires that lawmakers approve the deal by January 22. The deal includes bridge financing to enable Prepa to avoid defaulting on its $196 million January 1 interest payment. Assured Guaranty said its share of the bridge financing was about $15 million. Assured Guaranty’s chief executive officer Dominic Frederico said: “We believe the restructuring transaction outlined in the restructuring support agreement can be the foundation for a consensual settlement that fosters modernization, long-term sustainable rates for ratepayers and continued access to efficient capital markets financing for Prepa. “We are committed to continue working cooperatively with Prepa and other stakeholders to implement the terms of Prepa’s recovery plan.” Among US states, only California and New York have more debt that the $70 billion owed by Puerto Rico, which has a population of 3.5 million. Governor Alejandro Garcia Padilla is seeking to reduce that debt load by asking investors to take losses. Lisa Donahue, Prepa’s chief restructuring officer, said of the restructuring deal: “It gives us liquidity, it gives us breathing room. “It gives us cash to invest in infrastructure and to provide, ultimately, sustainable clean power for Puerto Rico,” she told Bloomberg News. In a statement, Assured Guaranty added: “To facilitate the Securitization transaction, which enables Prepa to achieve debt relief and more efficient capital markets financing, Assured Guaranty will issue surety insurance policies in an aggregate amount not expected to exceed $113 million in exchange for a market premium to support a portion of the reserve fund for the Securitization bonds.” Assured’s shares rose 3 per cent in New York trading on Christmas Eve after the deal was announced.

2015. November 6.  Bermuda-based bond insurer Assured Guaranty yesterday posted profits of $129 million for the third quarter — $206 million down on the same period last year. The 2015 third quarter figure — equivalent to 88 cents per share — compares to third quarter 2014 profits of $355 million or $2.09 per share. Company president and CEO Dominic Frederico said: “Assured Guaranty had a successful third quarter in 2015. “We continued to lead the US municipal market in terms of both par and number of new issues insured. We also repurchased 5.4 million shares and with finished the quarter with a record adjusted book value per share just shy of $60.” The decrease in net income was largely attributed to lower fair value gains on credit derivatives and financial guaranty variable interest entities, as well as higher loss and loss adjustment expenses, offset in part by higher net earned premiums. Loss and loss adjustment expenses were attributed largely to increased loss reserves on exposures in Puerto Rico, which is in the throes of a debt crisis. The company spent $135 million on share repurchases in the third quarter. Net earned premiums totaled $213 million in the third quarter — up $69 million on the same quarter of last year. The firm said the increase was mostly down to higher accelerations and the acquisition of Radian Asset Assurance. Assured Guaranty is the holding company for operating subsidiaries which provide credit enhancement products to the US and international public finance, infrastructure and structured finance markets.

2015. May 8. Bermuda-based municipal bond insurer Assured Guaranty posted net income of $201 million for the first quarter and topped Wall Street estimates. The company’s board also authorized a new $400 million share repurchase programme, as its adjusted book value reached a record high. “Our first quarter provided an excellent start for 2015,” Assured’s chief executive officer Dominic Frederico said. “Adjusted book value per share, our key measure of the company’s intrinsic value, reached an all-time high. In US public finance, where we saw the highest municipal bond insurance penetration in years, Assured Guaranty led the industry in terms of par and the number of transactions insured, and we outpaced our competitors by an even wider margin in PVP. We also saw the benefit of our diversified business strategy, with solid PVP production in structured finance.” During the quarter, the company completed the acquisition of Radian Asset and spent $152 million buying back its own shares. “Additionally, as of May 4, 2015, we completed substantially all of the $400 million of share repurchases authorized in August 2014,” Mr Frederico added. “This week our board authorized an additional $400 million of share repurchases.” Operating income was $140 million, or 89 cents per share, for first quarter, trouncing the 60 cents per share consensus forecast of analysts tracked by Yahoo Finance. The earnings statement briefly mentioned a loss relating to the company’s insuring of Puerto Rico debt. “Economic loss development in first quarter 2015 was a benefit of $3 million, which was driven primarily by improvements in student loan and trust preferred securities transactions, offset in part by loss development in certain Puerto Rico exposures,” the statement read. Assured ended the quarter with shareholders’ equity of $5.79 billion.

2015. April 6. This Bermuda-domiciled bond insurer announced it had completed the acquisition of Radian Asset Assurance Inc for more than $800 million. The planned merger of the two firms, whose primary business is insuring municipal bonds, was first announced in December last year. Assured Guaranty Corp (AGC), a Maryland-based subsidiary of Assured, will merge with Radian Asset, with AGC the surviving company. Assured Guaranty has added a solid book of business that is consistent with our core strategic objectives. Assured Guaranty chief executive officer Dominic Frederico said. "We are pleased to have acquired Radian Asset and to extend AGC's protection to Radian Asset's insured bondholders. The acquisition increases AGC's capital base and policyholders surplus, and the transaction is accretive to Assured Guaranty's earnings, operating shareholders equity and adjusted book value." AGC paid $804.5 million in cash, after certain adjustments, to acquire Radian Asset. As of December 31, 2014, Radian Asset's statutory capital was approximately $1.3 billion. As of February 28, 2015, Radian Asset's statutory net par outstanding was approximately $13.9 billion.

2014. December 24. The insurer agreed to pay $810 million to buy the financial guaranty business of Philadelphia-based Radian Group. Assured's chief executive officer Dominic Frederico said the deal would boost earnings per share and would significantly increase the company's book of business. Assured is a major player in the US municipal bond insurance market and provides credit protection products to structured finance markets. The Bermuda company's subsidiary Assured Guaranty Corp (AGC) - see below - has entered into the agreement to buy Radian Asset Assurance Inc. The US company is working to streamline its business and focus on insuring home loans. US regulators are planning to tighten oversight of the mortgage insurance business and the capital from the sale of the financial guaranty unit will help Radian to meet the enhanced requirements. "The acquisition will strengthen Assured Guaranty's franchise by adding a solid book of business that is consistent with our strategic objectives and will also increase AGC's capital base and policyholders' surplus," Mr Frederico said. "We expect the transaction to be accretive to Assured Guaranty's earnings per share, operating shareholders' equity and adjusted book value. Additionally, the acquisition should enhance the value and market liquidity of the bonds insured by Radian Asset." Radian Asset had an insured portfolio of $19.4 billion at risk as of September 30. That would bring AGC's total net par outstanding to $68.3 billion. Radian Asset has approximately $1.3 billion of statutory capital, and Assured Guaranty estimates the transaction will increase AGC's statutory capital by $425 million to $475 million. "We are committed to streamlining our business and aligning our strategy toward the mortgage and real estate markets," Radian Group CEO SA Ibrahim said in Radian's statement on the proposed deal. This agreement marks an important milestone as we prepare for finalization of the proposed PMIERs in 2015. While we expect to fully comply, the sale of Radian Asset will help to accelerate our ability to do so." Assured Guaranty shares rose 2.3 per cent in New York trading yesterday, to close at $26.05. Radian Group shares gained two per cent to close on $16.60. Goldman Sachs Group Inc advised Radian on the sale. Assured Guaranty used Bank of America Corp's Merrill Lynch and Mayer Brown LLP.

2015. Chesney House, 96 Pitts Bay Road, Pembroke HM 08. Phone (441) 279-8400.

2020. March 3. A deal that presents the opportunity for Athene Holding Ltd to be included in a major S&P index, such as the S&P 500, has been concluded. The Bermuda-based retirement services company has concluded a “strategic transaction” with its partner Apollo Global Management Inc. Among other things, the transaction eliminates Athene’s multi-class share structure, increase Apollo’s economic ownership of Athene to around 34 per cent and added about $1 billion of incremental excess capital for Athene. In a statement, the company said the transaction had closed having obtained customary shareholder and regulatory approvals. Jim Belardi, chief executive officer of Athene, said: “We are pleased to announce the closing of this strategic transaction between Athene and our longstanding strategic partner, Apollo. With the recent overwhelming shareholder approval, Athene has eliminated its historical multi-class share structure and is now fully eligible for inclusion in a major S&P index. Importantly, this transaction will broaden our appeal to a wider range of both active and passive investors. We view our new direct investment in Apollo as strategic in nature, and look forward to participating in Apollo’s robust growth, profitability, and yield characteristics.” While Leon Black, chairman and CEO of Apollo, said: “We are tremendously excited to announce the completion of this important strategic transaction, which we believe meaningfully enhances value for both Apollo and Athene shareholders. Athene and Apollo have developed a special and symbiotic relationship since Athene’s inception more than a decade ago. By nearly doubling our ownership in Athene to approximately 34 per cent, we are reinforcing the durability of our relationship, and enhancing the strong alignment between the two companies. In addition, as a result of Athene’s new ownership stake in Apollo, which represents its single largest investment, Athene now has a direct economic interest in Apollo’s financial success for the first time.” Athene was set up in Bermuda in 2009 with four employees. It now has more than 1,300 employees worldwide. Last year it doubled its profit to $2.136 billion.

2020. February 19. A little more than ten years after setting up in Bermuda with four employees, Athene Holding Ltd could soon be knocking on the door for inclusion in the S&P 500 index. Being listed among the largest 500 companies on stock exchanges in the US would make more investors and analysts sit up and take notice of the company. The Bermuda-based retirement services company more than doubled its profit last year to $2.136 billion. There was a significant boost in the fourth quarter with net income of $432 million, or $2.42 per share, compared to a loss of $104 million for the same period in 2018. The full year net income was up 103 per cent, from $1.083 billion. The company said the increase was primarily driven by favourable changes in the fair value of reinsurance assets reflecting a decrease in US Treasury rates, tightening credit spreads, and higher adjusted operating income. Athene reported its earnings yesterday, and Jim Belardi, chief executive officer, told The Royal Gazette: “Our earnings were very good for the fourth quarter, but I think the best is in front of us. The more attention we get, the better for us. And getting in the S&P 500 would certainly be consistent with us getting more attention and analysis which is what we want. The more the asset managers know about us, the better for us.” There is an increased opportunity for Athene to feature in the S&P 500 as it concludes a “strategic transaction” with its partner Apollo Global Management. The transaction is expected to close in the coming weeks. Among other things, it will eliminate Athene’s multi-class share structure, increase Apollo’s economic ownership of Athene and add about $1 billion of incremental excess capital for Athene. The company said the transaction will broaden its investor appeal and enhance eligibility for inclusion in a major S&P index, such as the S&P 500. Mr Belardi said getting on the S&P 500 would be huge. “At a minimum, all these index funds would have to be owners of our stock, which is great. And then you would have active managers in those index funds and they would get more focused on our fundamentals. Our task is to get more people to look at our track record and operating history. The more managers that see that, will see we are way undervalued and the market is not fully appreciating our earnings power.” If Athene gained a place among the top 500 it would cap a remarkable story that started in 2009 when it was founded in Bermuda by Mr Belardi and Frank “Chip” Gillis. “We purposely wanted to headquarter the company in Bermuda. On day one we had four people in Bermuda, we have close to 90 people there now and growing. We are taking bigger office space as we speak,” Mr Belardi said. Athene began trading on the New York Stock Exchange in December 2016. Its initial public offering raised $1.1 billion, making it the third largest IPO of the year. Its subsidiaries largely issue, reinsure and acquire retirement savings products and liabilities. Last year, Athene closed about $6 billion in total pension risk transfer transactions, including its first in the UK, where it reinsured a block of pension benefit liabilities through its subsidiary Athene Life Re International Ltd. The company is bullish on the pension risk transfer market in the UK. “Compared to the US, the UK pension risk transfer market is bigger and less competitive. It’s still competitive, but not as competitive as the US. That’s a good combination, it’s bigger and less competitive than the US,” Mr Belardi said. “We are still very active and bullish in the US pension risk transfer market, but we feel there’s a bigger opportunity in the UK, so we are happy to get our first deal done, and we would like to do more there.” Athene’s book value per share at the end of the year was $76.21, while adjusted book value was $54.02. Between December 2018 and yesterday it repurchased $927 million of its common stock. It has a remaining share repurchase authorization total of $640 million. During a conference call with investors yesterday, Mr Belardi said: “Our undervalued stock is one of the best investments we can make. We expect to restart the activity tomorrow.” He said the company had marked its ten-year anniversary last year, with the past decade seeing it grow to become a public company with more than 1,300 employees, hundreds of thousands of customers, and managing $120 billion of net invested assets. Speaking to the Gazette he said Athene loved being in Bermuda and was spending time in philanthropic and educational efforts on the island. One of these is a scholarship programme at Bermuda College, announced in October, which provides free college education to ten students. It is hoped the programme will expand in coming years. “We love Bermuda. I think we have a fantastic relationship with the regulators, and I think we are one of the best corporate citizens in Bermuda. We are trying to make the island better for citizens and we are going to continue doing that,” Mr Belardi said Mr Gillis, executive chairman of the board of Athene Life Re Ltd, last year said Bermuda could lead the world in life insurance. When asked if he agreed, Mr Belardi said: “We may be the largest life insurer on the island now. We have huge growth prospects. The best is in front of us. I’m more optimistic about our prospects going forward. From zero to $120 billion in ten years. We’ll double our size in a fraction of the time it took us to get to $120 billion, without sacrificing returns. Our business model is very developed, and we have a great combination between organic and inorganic [growth], and a great combination in partnership with Apollo. We have no legacy issues, because we started after the financial crisis, and we have a lot of capital, probably more than any company to execute our business plan. We can act when prices are appropriately cheap. It’s hard work. There is no substitute for hard work. We pay attention to detail. We think we have successfully pivoted to become a solutions provider, especially for the restructuring that is going on in the insurance industry We are perfectly positioned to take advantage of appropriately priced businesses that other companies don’t want.”

2020. January 7. Athene Holding Ltd, a life reinsurer and retirement services company, reached $6 billion in total pension risk transfer transactions for 2019 — more than double the volume of the previous year. The Bermuda-based company’s 2019 total includes about $800 million from a recently completed funded reinsurance transaction with a leading UK insurance company. Under the terms of Athene’s inaugural transaction in the UK market, which closed December 19, 2019, the company will reinsure a block of pension benefit liabilities through its wholly owned subsidiary Athene Life Re International Ltd. In the space of a few years, Athene has become a leader in the PRT industry, managing pension payments for more than 168,000 annuitants. Since 2017, Athene has closed 16 pension risk transfer transactions totaling nearly $11 billion. “We are excited about our progress within the PRT business during the last few years,” said Bill Wheeler, president of Athene. "This year alone we have closed on more than twice the volume we closed on in all of 2018 — all with attractive targeted returns. As a leader in the US pension risk transfer market, we are now pleased to bring our strength and expertise to offer solutions to companies in the UK pension market as a reinsurance partner to domestic insurers.” Sean Brennan, EVP of pension risk transfer and flow reinsurance at Athene, said: “Similar to the prospects we continue to see in the US, we anticipate the UK PRT market could also be an attractive long-term growth opportunity for Athene. Our differentiated investment, actuarial, risk-management, and operational capabilities, combined with our strong balance sheet, position us well to serve the £2.3 trillion (approximately $3 trillion) UK defined benefit marketplace. Our recent transaction represents Athene’s ability to provide a reinsurance risk transfer solution in a complex and evolving landscape.” Athene is one of Bermuda’s fastest-growing companies and part of the island’s burgeoning long-term insurance market. It issues, reinsures and acquires retirement savings products designed for the increasing number of individuals and institutions seeking to fund retirement needs. Athene had total assets of $144.2 billion as of September 30, 2019.

2019. August 11. Two lawsuits filed in New York courts have been withdrawn after Bermuda Chief Justice Narinder Hargun upheld claims by Bermuda-based Athene Holding Ltd that such matters are the exclusive jurisdiction of the island’s courts.  A US-based investor in Athene, Central Laborers Pension Fund, made a derivative complaint against private-equity firm Apollo Global Management LLC and Athene Asset Management LLC. The plaintiff, on behalf of Athene shareholders, demanded damages for what it described as “looting” of Athene through “extravagantly expensive” fees paid for managing the reinsurer’s investment portfolio, according to the complaint, filed in the Supreme Court of New York on June 18. The fees agreed for managing the portfolio of about $130 billion run into hundreds of millions of dollars per year. Athene maintained that the suit should have been filed in Bermuda as the case hinged on the conduct of its directors, the Financial Times reported. According to the company’s by-laws, the FT said, any such matters must be resolved in Bermuda courts. Mr Justice Hargun granted an ex parte temporary injunction on July 5, ordering a halt to the CLPF action in New York. Thereafter, Cambria County Employees Retirement System — a public pension fund in Pennsylvania — launched a separate New York action, which made no reference to the conduct of directors. Cambria also sought an order from the New York court preventing Athene “from attempting to interfere with” the suit, according to a report in the FT. However, before the matter could be heard in New York, Athene again sought relief from the Supreme Court of Bermuda, and Mr Justice Hargun ruled in favour of Athene. The plaintiffs in the two matters subsequently withdrew the suits, citing the Bermuda injunctions, according to the FT. Apollo, the co-defendant in both matters, said the claims were “completely without merit and would fail in any jurisdiction”, the FT reported. Calling the dismissals “a routine application of Athene’s by-laws, which clearly provide that Bermuda is the proper forum for litigation”, Apollo added that the two cases were brought by the same law firm and “were ultimately nothing more than a failed attempt to forum-shop”, the FT said. A spokesman for Athene said the company had no comment.

2019. July 17. The Bermuda Supreme Court has ordered a temporary halt to a lawsuit filed in New York by a shareholder of Bermuda-based life reinsurer Athene Holding. US-based investor Central Labourers’ Pension Fund made the derivative complaint against private-equity firm Apollo Global Management LLC and Athene Asset Management LLC last month. The plaintiff, on behalf of Athene shareholders, is demanding damages for what it describes as “looting” of Athene through “extravagantly expensive” fees paid for managing the reinsurer’s investment portfolio, according to the complaint, filed in the Supreme Court of New York on June 18. The fees agreed for managing the portfolio of about $130 billion run into hundreds of millions of dollars per year. Bermuda Chief Justice Narinder Hargun granted an ex parte temporary injunction on July 5, ordering a halt to the New York action. Athene is domiciled in Bermuda and listed on the New York Stock Exchange. Athene maintains that the suit should have been filed in Bermuda, which, according to the company’s by-laws has sole authority to adjudicate matters relating to the conduct of directors. The pension fund argues that this argument does not apply, as it is suing Apollo, rather than the Athene board. The injunction has attracted international attention, with the Financial Times suggesting that the decision could have implications for investors in companies that are traded on US exchanges and registered elsewhere. It is not yet clear whether the Bermuda court’s injunction will prevent the lawsuit from proceeding in New York. “US courts often will respect the judgments of foreign courts, though they may not be obligated to do so,” Aryeh Portnoy, a partner at law firm Cromwell & Moring, told the FT. Mr Portnoy added that “context matters”, since judges will likely consider things such as when the foreign lawsuit was filed and whether any constitutional rights are engaged. If Athene’s efforts to bar the New York case are successful, more companies could be attracted to a Bermuda domicile, according to Neil Wertlieb, a lecturer at the UC Berkeley School of Law. “No company enjoys having a group of shareholders dictate its fate by suing its contractual counter parties on its behalf,” Mr Wertlieb told the FT.

2018. November 2. Athene Holding Ltd has reported a profit of $640 million, or $3.23 per share, for the third quarter. That is up on the $274 million, or $1.39 per share, recorded for the same period last year. Adjusted operating income was $381 million, or $1.95 per adjusted operating share, up on last year’s third quarter figure of $231 million. Jim Belardi, chief executive officer of Athene, said: “Our record third-quarter financial results reflect our continued focus on delivering superior value. We are extraordinarily well positioned with a multi-channel distribution platform that provides sustainable and opportunistic growth at very attractive ROEs [return on equity]. With a current portfolio of more than $100 billion, ongoing organic growth capabilities, and identifiable inorganic opportunities in excess of $100 billion, we have an abundance of opportunity in front of us. Importantly, we remain patient and disciplined in our approach to building shareholder value, which has resulted in a 23 per cent year-over-year increase in adjusted book value to approximately $46 per share.” The Bermuda-based company is a provider of retirement savings products. Its adjusted book value per share was up 8 per cent, quarter-over-quarter, at $45.94. That was a 23 per cent improvement year-over-year. Mr Belardi added: “In recognition of our superior financial performance, market leadership, capital growth, and improved business diversification, S&P upgraded the financial strength ratings of Athene’s operating companies to ‘A’ on August 16. This ratings upgrade will accelerate the strong momentum of our business, and we look forward to establishing new partnerships and engaging as a financial solutions provider to a broader market.”

2018. January 2. Bermuda-based life reinsurer Athene Holding Ltd is spinning off Ager Bermuda Holding Ltd, the holding company of its European operations. Ager’s main subsidiary is Athene Lebensversicherung, based in Wiesbaden, Germany, and it specializes in life run-off business. Athene will remain a minority shareholder in Ager along with other global investors including private-equity firm Apollo Global Management, LLC. Athene will also be “a preferred reinsurer for AGER’s spread liabilities”, the company said, and have representation on its board of directors. Ager will change its name to Athora Holding Ltd, effective mid-January 2018. “The new name and look reflects Ager’s expanded capabilities and the exciting direction the company is taking, conveying a highly efficient, constantly improving business with an analytical approach to success for all stakeholders,” the company stated. Ager raised around €2.2 billion in April 2017, laying the foundation for its European growth plans and furthering its “goal of becoming the premier European run-off consolidator and life reinsurance partner”. In August last year, Ager announced its intention to acquire Aegon Ireland, a Dublin-based insurer, and expects to draw down capital to close the acquisition in the first quarter of 2018.

2017. August 11. Fast-growing Athene Holding Ltd is continuing its expansion into Europe with the acquisition of Dublin-based life insurer Aegon Ireland. Bermuda-based life reinsurer and annuities provider Athene will carry out the transaction through AGER Bermuda Holdings Ltd, the holding company of the group’s European subsidiaries. Aegon Ireland provides wealth management and retirement planning products to more than 25,000 customers in Britain and Germany. It had assets of approximately £4.7 billion ($6.1 billion) as of June 30, 2017. The transaction is expected to close by the first quarter of 2018, subject to regulatory approvals. Athene said consideration for the deal will be approximately 81 per cent of the own funds of Aegon Ireland as of closing. Solvency II own funds of Aegon Ireland were approximately £200 million ($260 million) as of the end of June. “The successful capital raise by AGER in April 2017 has laid the foundation for our growth in Europe,” said Deepak Rajan, executive vice-president at AGER. “This transaction is another important step towards our goal of becoming the premier European run-off consolidator and life reinsurance partner. We see significant opportunities with Aegon Ireland. This acquisition gives us a strong platform to accumulate Irish annuities, to create a reinsurance hub in Europe, and to provide services to all AGER group companies including our existing German operations. A presence in Ireland has been part of our strategy from the beginning and Aegon Ireland is a perfect fit for our growth plans.” AGER, also based in Bermuda, said it intends to break away from Athene. “Athene will remain a large minority shareholder in AGER in addition to being a preferred reinsurer for AGER’s spread liabilities,” the company said. The acquisition news came after Athene posted strong earnings growth in its second-quarter results. Net income for the quarter was $326 million, compared to $193 million in the same period in 2016. Operating income was $1.43 per share, comfortably beating the $1.08 estimate of analysts tracked by Yahoo Finance and up from 96 cents per share a year earlier. “We have delivered another quarter of strong financial performance resulting in further strengthening of our balance sheet and capital position,” said Jim Belardi, Athene’s chief executive officer. “Our differentiated, multi-channel distribution platform generated record deposits of $3.2 billion resulting from growth in both our retail and institutional channels. I am pleased to announce that we successfully entered the pension risk transfer market in the second quarter, securing our first deal in which we assumed approximately $320 million in pension liabilities. Further demonstrating the diversity and flexibility of our model, we issued $1.1 billion of funding agreements during the quarter, a market in which we continue to gain significant traction.” Athene said shareholders’ equity increased 29 per cent year-over-year to $8.3 billion. Last week, Athene announced a new flow reinsurance treaty with Lincoln Financial Group to reinsure traditional fixed and fixed indexed annuities. 

2017. April 7. Bermuda-based life reinsurer Athene Holding Ltd is on the lookout to expand in Europe, according to a report out of New York. Private-equity firm Apollo Global Management, a major investor in Athene and the manager of about a fifth of its $70 billion-plus investment portfolio, is seeking to raise 2 billion euros ($2.1 billion) to help fund acquisitions for the life reinsurer, Bloomberg reported. Athene, whose shares debuted on the New York Stock Exchange in a successful initial public offering last December, has expanded rapidly to become one of the biggest sellers of fixed annuities in the US market. It also has operations in Europe, through acquiring German firm Delta Lloyd Deutschland in January 2015. Athene’s investment strategy is distinctive. It seeks to make higher returns than competitors by investing more in credit funds and middle-market lending, and less in lower-yielding bonds. Fitch Ratings has described the strategy as “somewhat aggressive” and other analysts have noted the different way Athene is run from others in the same industry. Investors have so far given the company the thumbs-up. Yesterday lunchtime, shares of Athene were trading at $51.59 — up almost 29 per cent from its IPO target price of four months ago. In a regulatory filing last month, Athene flagged up its European expansion intentions. In Europe, “we have come to realize that the opportunity over the next several years is larger than we initially anticipated,” Athene said. “In order to fully capitalize on this opportunity, we would need to commit capital to the European market at a level in excess of our targeted investment size, creating the need for third-party capital to support growth.” Bloomberg, citing a source with knowledge of the plans, said Apollo may complete the fundraising as early as this year. With leverage and co-investments by Apollo clients, the insurer could have flexibility to pursue deals larger than 2 billion euros.

2016. December 9. Shares of Bermuda-based insurer Athene Holding Ltd this morning began trading on the New York Stock Exchange in an initial public offering that raised around $1.1 billion. Existing shareholders of Athene were looking to sell 27 million shares for a price set last night at $40 per share, at the midpoint of the previously announced $38 to $42 target price range. Athene sells fixed annuity products as well as annuity reinsurance. The company was founded in 2009 by James Belardi, the chief executive officer, formerly president of SunAmerica Life Insurance Company. The firm is based in offices in Chesney House on Pitts Bay Road. Athene, trading under the ticker symbol “ATH”, got off to a strong start and the shares closed at $44.05 in New York — 10.1 per cent over the IPO price — on the trading of more than 14.1 million shares. The offering is the third largest IPO in the US this year, according to Bloomberg News. In the space of less than a decade, Athene has expanded into the seventh-largest provider of annuities in the US, through acquisitions as well as organic growth. It has a $72 billion investment portfolio, about a fifth of which is managed by Apollo Global Management LLC, a major alternative investment manager headed by Leon Black. Athene generated $3.8 billion in sales during the first nine months of the year and the offering’s prospectus shows that the company earned operating income net of tax of $476 million during the January through September period. Athene will not receive proceeds from the sale, the filing shows. Selling shareholders include Apollo, a unit of Ontario Teachers’ Pension Plan Board and Teacher Retirement System of Texas. The offering follows another Bermuda IPO in September, when Butterfield Bank shares debuted on the NYSE, Michael Dunkley, the Premier, accompanied the bank’s executives in ringing the opening bell and the Gombeys caused a stir by invaded the trading floor. Goldman Sachs, Barclays, Citigroup and Wells Fargo Securities are acting as joint book runners of the offering.

2015. October 2. Bermuda-based insurance holding company Athene Holding has completed the acquisition of a German life insurance firm. Athene bought Delta Lloyd Deutschland AG (DLD) and its subsidiaries from Dutch-based Delta Lloyd. Athene Holding CEO James Belardi said: “We are pleased that DLD is now a part of the Athene family. “We look forward to DLD contributing to Athene’s profitability and growth objectives while continuing to focus on policy protection and risk management.” DLD, based in Wiesbaden in the German state of Hesse, provides life insurance products in the German market to around 350,000 customers. The firm will begin to rebrand to the Athene name this year. DLD CEO Christof Goldi said: “We will benefit greatly from Athene’s asset and risk management expertise as well as from its strong capital position. “Together, we will focus on further developing our profitable and growing business.” Athene Holding, through its subsidiaries, is a leading provider in the retirement savings market with assets of $80.6 billion at the end of last year and also owns Bermuda-based reinsurer Athene Re, while DLD has assets of around $6 billion.

2015. January 16. The company announced it intended to branch out into the German life insurance market by acquiring Delta Lloyd Deutschland AG (DLD), a German subsidiary of Delta Lloyd NV, an Amsterdam-based financial services provider. Terms of the transaction were not disclosed. Athene's business is focused on the retirement market and on issuing or reinsuring fixed and equity-indexed annuities. James Belardi, CEO. The purchase of DLD provides Athene with an entry point into the German marketplace." DLD is based in Wiesbaden, Germany, and provides retirement savings products to the German market. DLD had assets of approximately 4.3 billion euros ($5.1 billion) as of September 30, 2014. The transaction is expected to close by the third quarter of 2015, subject to regulatory approvals. Athene will retain DLD's employee base and management team and utilize its existing location in Wiesbaden as the headquarters of Athene's German operations. The company also plans to add positions there to support its German business strategy. Athene will operate DLD within DLD's current business model, which has not been selling new business since 2010, and will continue to service its existing customers. DLD will operate under the Athene name after closing, subject to regulatory approvals. Athene was represented on this transaction by Linklaters LLP in Munich and Ernst & Young in Munich.

2018. June 20. Athene Life Re Ltd has donated nearly 100 laptops to 18 public schools through an initiative called “Computers for a Better Education”. The laptops are scheduled to be sent to eight primary schools and 10 preschools. Last year, Chip Gillis, CEO of Bermudian-based Athene Life Re, a subsidiary of Athene Holding Ltd, attended a meeting in which David Burt, the Premier, spoke about the need for wi-fi and computer equipment in Bermuda public schools. Athene said this meeting was the impetus for Mr Gillis to seek donations of used computer equipment from Athene as well as from Bermuda International Long-Term Insurers and Reinsurers company members in an effort to support public education. “This equipment can enhance and empower teachers, improve the learning experience for the students and better prepare the students for a world full of opportunity,” said Mr Gillis. Diallo Rabain, Minister of Education and Workforce Development, said: “This generous donation by Athene will enable public schools like Victor Scott to support their students in their computer education and provide general learning support. These laptops also provide an invaluable resource for students’ STEM education. We are grateful to companies such as Athene for their investment in Bermuda’s students and their future.”

2018. April 19. Bermuda-domiciled Athora Holding Ltd announced that it will acquire Belgian insurer Generali Belgium SA in a deal worth €€540 million ($668 million). Generali Belgium is today the eleventh largest insurer in Belgium and is the Belgium-based subsidiary of international insurance group Assicurazioni Generali SpA. The company serves the Belgian market with a comprehensive product set including single and recurring premium savings; pension and unit-linked life products; motor, homeowners and renters non-life coverage. Generali Belgium has approximately 420,000 customers served by 430 team members, had total gross written premiums of over €€640 million in 2017, and total assets of €€5.3 billion. The transaction is expected to close in the second half of 2018, subject to regulatory approvals. Michele Bareggi, group managing partner at Athora stated: “Since our successful capital raise in April 2017, we have been rapidly expanding our presence in Europe. In addition to launching our business with the acquisitions of Delta Lloyd Lebensversicherung in 2015 and Aegon Ireland earlier this month, this transaction is another major step towards our goal of becoming the premier European insurance consolidator and life reinsurance partner. Belgium is a target market for Athora, where we plan to deploy substantial capital over the next few years, and Generali Belgium is a perfect fit for our strategy and growth plans in the country.” In April 2017, Athora received binding subscriptions through a private placement of common equity securities. The offering involved subscriptions representing approximately €2.2 billion from global institutional investors and is intended to support its existing business lines and capital and reinsurance transactions in the European insurance market.

2018. January 2. Bermuda-based life reinsurer Athene Holding Ltd is spinning off Ager Bermuda Holding Ltd, the holding company of its European operations. Ager’s main subsidiary is Athene Lebensversicherung, based in Wiesbaden, Germany, and it specializes in life run-off business. Athene will remain a minority shareholder in Ager along with other global investors including private-equity firm Apollo Global Management, LLC. Athene will also be “a preferred reinsurer for AGER’s spread liabilities”, the company said, and have representation on its board of directors. Ager will change its name to Athora Holding Ltd, effective mid-January 2018. “The new name and look reflects Ager’s expanded capabilities and the exciting direction the company is taking, conveying a highly efficient, constantly improving business with an analytical approach to success for all stakeholders,” the company stated. Ager raised around €2.2 billion in April 2017, laying the foundation for its European growth plans and furthering its “goal of becoming the premier European run-off consolidator and life reinsurance partner”. In August last year, Ager announced its intention to acquire Aegon Ireland, a Dublin-based insurer, and expects to draw down capital to close the acquisition in the first quarter of 2018.

2017. January 11. A billionaire’s pledge to give away his fortune, vital for several Bermudian charities, has come at last to its end. Five years ago American tycoon Charles Feeney declared that he would donate the last of his riches by 2017. He founded Atlantic Philanthropies in 1982, making Bermuda its official home to maximize its endowment, and investing millions in local charities. One offshoot was the Bermuda Community Foundation. Managing director Myra Virgil said the foundation owed much of its existence to Mr Feeney’s anonymous largesse. Atlantic Philanthropies helped many local organisations, among them the seniors group Age Concern. “Groups like Chewstick, Two Words and a Comma and the Centre for Justice all received their first grants from a formal foundation, to boost their early stage initiatives, which meant being able to hire staff and develop programmes in a substantive way,” Dr Virgil said. Atlantic funded studies of the educational challenges of Bermuda’s black males, and financed a comprehensive study of the island’s race relations through the Aspen Institute. As of last month, Mr Feeney had given away $8 billion. Atlantic Philanthropies was not the only contributor to implement BCF: Rennaissance Re, Bloomberg Philanthropies, XL Foundation and individual donors also contributed. “We looked at the island’s social issues, the non-profit’s approaches to tackling them and philanthropy’s support for helping address enduring social problems,” said Dr Virgil who channeled her experience from Atlantic into cementing BCF — a charity aimed at developing a permanent fund base. The community foundation is clearly a long-term proposition to build an endowment, which will ultimately yield returns that will become a source of funding for the non- profit sectors, on the basis of the critical needs being presented at a given time — changing times. While we build that endowment, we are growing the other elements of planned philanthropy: producing reliable social issue data, putting in place a shared grant application structure and online giving platforms, publishing better information about which non-profit are doing what types of work — in one central place. This is work in progress but it is really critical to get done in this era of information-driven decision-making and limited resources.”

In 2004, it employed Fordham University to undertake a survey of Bermuda's senior citizens and their needs. It also takes a stand in Human Rights.

See Aurum entities above

2019. May 23. Aurum Fund Management Ltd has achieved remarkable things since it was founded in Bermuda on August 11, 1994. The fund of hedge funds management firm has won more than 50 industry awards for earning its investors steady returns, regardless of market direction, and today has about $2.3 billion of assets under management. Even more impressively, Aurum has spent many years quietly ploughing millions of dollars into high-impact environmental and philanthropic projects and charities. The group has offices in Aurum House, at 35 Richmond Road, Hamilton, as well as a significant operation in London, where most of its 54 employees are based. Key members of its team are based in Bermuda including Dudley Cottingham, the president and co-founder, Adam Hopkin, vice-president, and directors Tina Gibbons, Michael Harvey and Nancy Morrison. Longevity is a feature among the staff and almost four-fifths of employees have been with Aurum for more than five years. Aurum held a group meeting on the island this month, as it does periodically, to make key decisions on the business and its future. Kevin Gundle, chief executive officer of the group’s London operations, and a founding member of the group, stressed the group’s commitment to Bermuda, to its investors and to addressing environmental, social and governance issues. “We were practising ESG long before it became mainstream,” Mr Gundle said. “We have a track record of more than 15 years.” ESG is part of Aurum’s business philosophy on the simple basis that “generating long-term sustainable returns is dependent on environmental, social and economic factors” and that “a business that is not in harmony with the ecosystem within which it functions is doomed to fail”. Aurum’s Impact Investment solution, which launched in 2002, gives investors the chance to earn investment returns and also make a difference. One hundred per cent of the advisory fees support several charities, including Synchronicity Earth, a sustainability-focused charity based in Bermuda whose founder and chairman is Adam Sweidan, Aurum’s chief investment officer. The intention is for these dollars to be directed where they will have maximum impact. “Apple has high ESG ratings, but you won’t have any impact by investing in Apple,” Mr Gundle said. “Synchronicity Earth supports physical research projects looking at things like oceans, fresh water, forests and species regeneration by the most effective non-profits.” Such research can then guide governments or the private sector on pursuing environmental protection or regeneration projects, he added. One local example was a study, funded by Aurum, of Bermuda’s waters based on satellite data from 2013 to 2016, looking for signs of illegal fishing. Aurum also helped to fund the Ocean Risk Summit, an event held in Bermuda last year that brought together representatives of business, government and science to discuss responses to unprecedented changes occurring in the ocean. Aurum also works with Ark (Absolute Return for Kids), an international, education-focused charity cofounded by Mr Gundle. Mr Gundle is also a patron of the One to One Children’s Fund, a charity that aims to rebuild and transform the lives of vulnerable children. Aurum has cemented its ESG credentials by signing up to the United Nations Principles for Responsible Investment, committing to the six UN PRI principles and its reporting framework. Mr Gundle estimates Aurum has given away well over $10 million to environmental and social causes over the years. To mark the 25th anniversary, the group will ramp up its charitable efforts, with beneficiaries including the WindReach facility in Warwick. Aurum has no concerns about economic substance legislation that was brought in at the end of last year to address EU concerns about companies based in low-tax jurisdictions that lacked operational presence. Mr Hopkin said: “We are a shining example of what constitutes economic substance, in the money we spend here, the directors we have based here, the board meetings we hold here and the strategic decisions we make here. We do not do this because of pressure from the EU, we do it, because it’s the right thing to do.” Aurum’s commitment to doing things properly is exemplified by the firm voluntarily jumping through regulatory hoops to acquire an investment business licence from the Bermuda Monetary Authority, when the group is exempt from supervision by the regulator because its investors are “qualified participants”, that is institutions or high-net-worth individuals, under the Investments Funds Act. Aurum manages multi-strategy hedge fund portfolios with the aim of producing returns uncorrelated with the financial markets that cannot be achieved with traditional investments like equities and bonds. The group does not fit the stereotypical image of hedge fund managers, taking big risks in the chase for high returns — just the opposite, in fact. Not only does Aurum drill down deep into the funds and strategies it considers investing in, but it also looks carefully at each fund’s operational risks. Any shortcomings found mean the fund is avoided. The result for Aurum investors has been steady growth, even through the recession following the “dot-com boom” in the early Noughties, and suffering barely a blip during the global financial crisis of a decade ago, when the stock market collapsed. Avoiding what Mr Gundle described as the “capital destruction” of market troughs has led to outperformance in the long run, because, as the CEO added, “when you’re down 50 per cent you have to climb 100 per cent to get back to where you were”. The approach has proved attractive to many pension funds and wealthy individuals among Aurum’s clientele and could also work for Bermuda’s growing cohort of life reinsurers, Mr Gundle suggested. Winning business from property and casualty re/insurers has proved more difficult, because regulators and rating agencies treat “alternative investments” as risky, an approach that seems ironic when Aurum’s track record of successful risk mitigation is considered.

2017. January 31. A satellite study of the island’s Exclusive Economic Zone has revealed little evidence of illegal fishing, according to the Ministry of the Environment. A statement by the ministry said that they had recently received a preliminary analysis of three years worth of Automatic Identification System (AIS) data, which showed the probability of illegal fishing was low. The study was carried out by Satellite Applications Catapult, a UK based company, who reviewed data collected between 2013 and 2016. The data was collected inside Bermuda’s 200 nautical mile exclusive economic zone and a surrounding 100 nautical mile buffer zone, which constituted the Bermuda Area of Interest. The study was funded by Aurum Fund Management Limited — a Bermuda based investment manager. A ministry spokeswoman said: “Catapult analyzed AIS signals broadcast from commercial vessel over 300 gross tons as well as fishing and pleasure vessels. Vessel identification, distribution and speed were examined to determine likely fishing activities in an area. “Preliminary results show that there are no strong seasonal or spatial trends in AIS activity that could potentially be associated with illegal fishing. A total of 12,700 unique vessels were identified during the three-year review period.” The spokeswoman noted that any foreign vessel that was convicted of fishing illegally in Bermuda waters faces a fine of up to $1 million and confiscation of both the vessel and the fish. Cole Simons, Minister of the Environment, described the report as welcome news, thanking Aurum Fund Management for funding the study. “This analysis gives us a much deeper understanding of what is happening in our Exclusive Economic Zone,” Mr Simons said. “The Department of the Environment and Natural Resources, guided by the Marine Resources Board, will now review the report and propose recommendations for the appropriate level of monitoring needed to confirm suspicious fishing activity within our EEZ going forward. “Ultimately, we want to conserve Bermuda’s resources for Bermuda’s sustainable use.” Meanwhile, Dudley Cottingham, president of Aurum, said that the company had made marine stewardship a high priority and supported several conservation projects since being founded in 1994. “We believe that Bermuda is uniquely placed to play a leading role in marine conservation,” he said. “Preliminary results show that this is good news for Bermuda and the study provides an important benchmark that can be used when analyzing future activity.”

2029. January 17. Reading through 100 or more pages of engineering surveys in a matter of minutes, and extracting knowledge and insights in the process, might sound fantastical — but it is a reality for Axa XL. Its risk consultants are able to gain rapid access to such information by using artificial intelligence that automates parts of the review process. Axa XL Risk Consulting is working with Italian software company Expert System, that develops cognitive computing software based on AI algorithms. The company’s platform Cogito, uses AI to identify the correct meaning of words and expressions in context, and understands the relationship between different concepts. This is helping the Axa XL risk consultants to assess property site surveys. “When assessing our clients’ risks, our property risk engineers carry out site visits and review internal and third-party risk survey reports. On average, they go through more than 10,000 of these reports every year,” said Jonathan Salter, head of property risk engineering at XL Catlin, which is now part of Axa XL. “By automating parts of that review process, engineers have more time to understand our clients better and advise our underwriters, who can in turn provide better solutions and faster quotes to our brokers and clients.” Steven Walden, director of strategy operations for global property at XL Catlin, said: “Our risk engineers deal with an increasing amount of data; a trend that keeps accelerating. As a result, the industry is turning to technology to help analyze it. Delivering enhanced data and analytical capabilities, both internally and externally, is an essential element of our journey, and the work completed in partnership with our risk consulting team and expert system adds to the Axa XL tool kit.”

2018. November 19. Bermuda-based New Ocean Capital Management Ltd is now wholly-owned by Axa XL. New Ocean was created in 2013 by XL Group and American-based private equity firm Stone Point Capital, with a focus on providing third-party investors access to insurance-linked securities and other insurance and reinsurance capital market products. In 2016, Japan’s Mitsui & Co took a 15 per cent stake in New Ocean. Axa XL’s reinsurance operation has now completed the acquisition of all third-party ownership interests in the asset management company to make it a wholly-owned subsidiary within Axa XL’s alternative capital business. During a transition period, Chris McKeown, the founding chief executive officer of New Ocean, will continue to serve as an advisor to Axa XLs alternative capital business. He will also continue to serve as a director of certain New Ocean managed funds. Greg Hendrick, CEO of Axa XL, said: “Alternative capital is a core component of our strategy, as we seek to create strategic partnerships matching the risks we initiate with third-party capital alongside our own. Our decision to acquire the outstanding shares of New Ocean demonstrates our strategic commitment to the alternative capital space and represents the latest step towards becoming the partner of choice for investors seeking to access ((Re)Insurance risk globally.” He added: “We’d especially like to thank Chris whose dedication and 30 years of experience helped launch and grow New Ocean and bring it to this point where we can start our next chapter in alternative capital management.” Charles Cooper, head of Axa XL’s global reinsurance operations, said: “Under this consolidated structure, the alternative capital business will offer investors a full suite of underwriting, that will leverage Axa XL’s world-class risk origination and underwriting franchise: ILS asset management, utilizing New Ocean’s proven track record and fiduciary experience; and fronting activities/insurance management services for transacting business through Axa XL’s balance sheet, directly supported by our experienced risk and structured finance experts.” Daniel Brookman is Axa XL’s head of alternative capital. He joined the company in early 2016 as senior vice-president of alternative capital and was last year promoted to lead the team. Mr Cooper said: “As a key source of risk origination for our alternative capital activities lie within our reinsurance operations, Dan will join our global Reinsurance Leadership Team. The new alignment will help accelerate our alternative capital activity and provide greater flexibility for our underwriters and ultimately our brokers and clients.”

2018. September 12. French insurance giant Axa has completed its $15.3 billion acquisition of XL Group, a deal that was announced in March. As a consequence XL’s shares were de-listed from the New York Stock Exchange and the Bermuda Stock Exchange before the start of trading today. The combination of Axa’s and XL Group’s existing positions is said to have moved the group to the top global position in P&C Commercial lines. Thomas Buberl, chief executive officer of Axa, said: “The completion of this transaction marks a significant milestone in our strategic ambition to further improve the balance between technical and financial margin. This transaction accelerates our transformation, allowing us to deliver enhanced solutions and services to a greater number of clients, and provides opportunities for significant long-term value creation for our stakeholders, with increased risk diversification, strong underwriting discipline, higher cash remittance potential as well as reinforced growth prospects. Today, as Greg Hendrick steps up to lead Axa XL as its CEO and joins Axa Group’s management committee, I personally welcome him and all XL Catlin colleagues to the Axa family. With the enthusiasm and shared vision of Axa and XL Catlin teams, extensive preparatory work has already been conducted to ensure a smooth integration of our businesses within the Axa Group.” Greg Hendrick said: “This announcement marks the culmination of a great deal of work and vision. We have our sights focused on success and together with Axa, our offering is truly compelling: we have the right geographical footprint, expert teams, and a culture that constantly strives for innovation. And innovate is what we will continue to do, so that we can be the partner of choice for our clients today and well into the future.” XL Group has also announced its intention to voluntarily de-list its outstanding debt securities from the New York Stock Exchange. The series of securities being de-listed are: 2.3 per cent senior notes due 2018; 5.75 per cent senior notes due 2021; 4.45 per cent subordinated notes due 2025; 5.25 per cent senior notes due 2043; 5.5 per cent subordinated notes due 2045; and the fixed to floating rate subordinated notes due 2047.

2018. July 31. XL Group Ltd posted improved net income of $319 million for the second quarter, but earnings fell short of Wall Street’s expectations. The Bermuda-based insurer and reinsurer, which is in the process of being taken over by French insurance giant Axa Group, achieved top-line growth of more than 10 per cent in April through June period. The company reported rate improvement in its main businesses, with insurance rates up by 3.8 per cent for the first six months of the year and reinsurance rates for the year to date through July, up 3.7 per cent. XL made an underwriting profit, recording a combined ratio of 95.8 per cent for the quarter, compared to 92.3 per cent for the corresponding period of 2017. Mike McGavick, XL’s chief executive officer, said: “In the second quarter we have continued our progress towards a strong and diversified book, particularly as rate conditions improved across most lines. We grew top line by 10.6 per cent, maintained underwriting discipline and continued our shift of our book towards lower volatility business. Partially offsetting these positive trends was non-catastrophe large loss activity from the current quarter as well as prior-year development from short tail lines in insurance. Our investment results continue to improve as active portfolio rotation allows us to take advantage of rising interest rates. Overall, we are pleased with the results and look forward to continuing to realize the full potential of what we have built when we become part of Axa Group.” Net income of $319 million, or $1.21 per share, compared to $301.6 million, or $1.14 per share, in the second quarter of 2017. Operating net income of $220.3 million, or 84 cents per share, fell short of the 93 cents per share consensus forecast of analysts tracked by Yahoo Finance. P&C gross premiums written grew 10.6 per cent year over year and 7.8 per cent when the impact of currency exchange rates is stripped out. Natural catastrophe pre-tax losses net of reinsurance, reinstatement and premium adjustments for the quarter totaled $76.8 million, down from $92.1 million in the prior-year quarter. Net favourable prior-year development was $8.9 million during the quarter, compared to $86.7 million in last year’s second quarter. Investment returns positively impacted by ongoing portfolio rotations capitalizing on rising interest rates and a gain on the sale of one operating affiliate. Net investment income was $231.8 million, compared to $208.7 million in the second quarter of 2017. US tax reform has kicked in this year but there was no obvious negative impact evident in XL’s results. In its earnings report, XL said income tax expense was $27 million, down from $29 million in the second quarter of last year. The company said the decrease “is primarily attributable to the mix of profit by jurisdiction”. Axa’s $15.3 billion deal to acquire XL is expected to close in the second half of this year.

2018. July 11. XL Catlin’s operations will become part of new division of French insurance giant Axa, to be named Axa XL. Details of the rebranding and operational combination of the two companies comes after the announcement of Axa’s $15.3 billion acquisition of Bermudian-based XL Group four months ago. Axa XL, which will be dedicated to large property and casualty commercial lines will operate under three main lines, Axa said in a statement today:

• XL Insurance, which will comprise XL’s insurance business and Axa Corporate Solutions; and will include XL Art and Lifestyle, the combination of XL’s Fine Art and Specie business and Axa Art offerings.
• XL Reinsurance, which will incorporate XL Group’s reinsurance business.
• XL Risk Consulting, which will incorporate Axa Matrix and XL Group’s Property Risk Engineering GAPS.

In addition, XL Group’s primary Lloyd’s syndicate will continue to be known as XL Catlin Syndicate 2003. Thomas Buberl, chief executive officer of Axa, said: “We are very pleased to announce another important milestone in the integration planning process with XL Group, which will see Axa become the #1 global P&C commercial lines insurer. “Behind this new common branding and naming, I am excited to see the future creation of Axa XL, a division based on Axa’s and XL Group’s shared culture around people, operational excellence, and innovation. The combination of these attributes will position us perfectly to establish an even stronger brand leadership and bring a unique value proposition to our customers.” Greg Hendrick, president and chief operating officer of XL Group, said: “We recognize the opportunity we have ahead to take the unique mix of elements that make XL a success — our talent, our approach, our tools — and bring them into the Axa family. I believe we will be stronger together and will be ambitious. We are going to continue to put our clients and brokers at the heart of what we do, while staying firmly focused on the future of risk and the solutions needed to advance.” Last month XL shareholders approved the sale of the company to Axa. The deal is expected to close in the second half of this year, subject to conditions, including regulatory approvals, which remain pending. Until the acquisition closes, XL and Axa remain two separate companies.

2018. March 6. The impact on jobs at XL Group is expected to be limited after it is acquired by French multinational insurance company Axa in a $15.3 billion deal. Although no figures have been mentioned, Mike McGavick, chief executive officer of XL Group, believes staff at both companies will be affected “less than ordinarily expected in such advanced integration” because there is little overlap in operations. Axa is buying Bermuda-based XL Group in a deal that will be completed in the second half of the year, subject to shareholders’ and regulatory approval. The XL Catlin brand is set to continue under the Axa umbrella, however it is intended that XL Group will be de-listed from the New York Stock Exchange. Axa is transitioning from being predominantly focused on life insurance and savings to becoming the number one global property and casualty commercial lines insurer based on gross written premiums. The integration of XL into Axa will achieve that shift. Insurance accounts for two-thirds of XL’s operations, with the remainder reinsurance. The transaction will give Axa access to capital markets through the reinsurance sector, while XL will have the opportunity to take its specialty products to a greater client base through Axa’s extensive market reach. Gérald Harlin, deputy CEO and group chief financial officer of Axa, at a press conference in Paris yesterday, responded to a question about cost savings and the impact on jobs. Referencing the intention to de-list the company, he said: “XL is a listed company, which means a lot of [that] structure and infrastructure will be no more needed.” Mr McGavick said XL has a staff of 7,400 globally, with more than 30 offices and a presence in 50 countries. It writes $15 billion in premiums each year, and has grown rapidly since the $4.1 billion merger with Catlin in 2015. He said: “In terms of key business lines, we are a premier specialty platform. We think of the specialty business as an important strategic element. The reality is that change is coming to the insurance market, change is accelerating. Nothing in life is standing still and our clients’ risks don’t stand still either. Being a leader in specialty and a leader in reinsurance is precisely how you drive that change forward.” Referring to the transaction, he said: “In terms of immediate benefits, the ability to sell the products we have across the Axa platform will be one of the quickest sources of growth and additional profit.” Mr McGavick and Thomas Buberl, chief executive officer of Axa, have known each other for a number of years having met through the Geneva Association, an international think tank on insurance and risk management issues. In November, they met at Mr Buberl’s office in New York and discussed the direction of the industry. That meeting and follow up discussions paved the way for yesterday’s announcement. Mr McGavick drew a parallel with the position XL Group and Bermuda-based insurer Catlin found themselves in before they merged. He said: “It was the recognition that scale matters more and more in insurance operations. Operating globally is essential and that is a very expensive infrastructure to maintain. And second, capital is made very dear by Solvency II and other regulatory pushes around the world. If you think about those two things alone, you realize that scale makes a huge difference in competitive position. We gained greater scale through Catlin, but the reality was that we were not in the final group, the top group in the world. While our board was not looking to sell, when Thomas came forward and outlined a vision for maintaining the brand, maintaining the strength and accelerating its progress from being part of this more powerful group, it was a very compelling vision.” Mr McGavick said the deal was exciting as it was a complementary fit between companies with similar approaches to customer service, similar cultures and focus on innovation. “When you add that together and realize that the overlaps are not that large, so the impact on XL people and Axa people will be less than ordinarily in such an advanced integration, this is incredibly exciting for all of us. That convinced our board and management this was the right thing to do,” he said. The merger agreement has been unanimously approved by the boards of Axa and XL Group. XL will be combined with Axa Corporate Solutions, with Greg Hendrick, XL president and chief operating officer, to be appointed CEO of the combined entity. Mr Hendrick was also at the Paris press conference. He said there were a number of synergies between the companies, such as the opportunity for XL’s specialty products, such as those in professional, environment and cyber lines, to be “combined with the power house that Axa is in the small commercial market space and sell to a whole new customers and distribution that we have not had access to before — particularly the smaller brokers in Europe and even some of the Axa agents. Axa Corporate Solutions has a great franchise in Europe; the benefit from the US underwriting expertise that we will bring to the table will only enhance the positions that ACS has with its customers and really move forward to a lead position.” Mr Hendrick expects opportunities to leverage XL’s footprint in the US and bring AXA’s expertise to more potential clients. Regarding the future of the XL Catlin brand, he said: “We are still working together on how exactly the brand should go. We have said the XL name and the Catlin name will move forward within the Axa organisation. We have to work out the specifics of how we are going to do that best.” In an earlier statement, Mr Buberl said: “The transaction offers significant long-term value creation for our stakeholders with increased risk diversification, higher cash remittance potential and reinforced growth prospects. The future Axa will see its profile significantly rebalanced towards insurance risks and away from financial risks.” At yesterday’s press conference, he said it was intended to de-list XL Group “if possible” and create an internal advisory board. Mr McGavick will become vice-chairman of the entity created by the combining of Axa Corporate Solutions and XL Group, which will be a “sixth pillar” of the Axa group. Mr McGavick will also be special adviser to Mr Buberl, with regard to integration-related and other strategic matters. Commenting on the deal, Ross Webber, CEO of the Bermuda Business Development Agency, said it “continues to show how attractive the Bermuda market and its companies are. Bermuda has yet again proven itself to be a domicile where companies can grow from the seeds of necessity-driven innovation in the mid-1980s to highly desirable multi-billion-dollar targets more than 30 years later. Larger, stronger companies — in this case creating one of the world’s largest P&C carriers — are beneficial for both the market and the industry. We continue to see new companies launching in Bermuda, and we expect this to continue.” XL shareholders will receive $57.60 per share under the terms of the transaction, which represents a 33 per cent premium on Friday’s closing price.

2018. March 5. XL Group is being bought by French multinational insurance company Axa in a $15.3 billion deal. The merger agreement has been unanimously approved by the boards of Axa and Bermudian-based XL Group. XL shareholders will receive $57.60 per share under the terms of the transaction, which represents a 33 per cent premium on Friday’s closing price. Mike McGavick, chief executive officer of XL Group, said: “Today marks an unrivalled opportunity to accelerate our strategy with a new strength and dimension. With every confidence in how we have positioned XL Group for the future, it is a substantial testament to Axa’s leadership and commitment to maintaining the XL Group brand and culture that we have come to an alignment. We are excited at the opportunity to build the scale, geographical footprint, product portfolio, and the unmatched commitment to innovation that relevance in the global insurance industry requires. In Axa we have found like-minded partners committed to the absolute necessity to innovate and move this industry forward.” In a statement outlining the agreement, the companies said the combination of Axa and XL Group “will propel the group to the number one global position in property and casualty commercial lines with combined 2016 revenues of €30 billion and total P&C revenues of €48 billion”. Thomas Buberl, chief executive officer of Axa, said: “This transaction is a unique strategic opportunity for Axa to shift its business profile from predominantly L&S business to predominantly P&C business, and will enable the Group to become the number one global P&C commercial lines insurer based on gross written premiums. The transaction offers significant long-term value creation for our stakeholders with increased risk diversification, higher cash remittance potential and reinforced growth prospects. The future Axa will see its profile significantly rebalanced towards insurance risks and away from financial risks. “XL Group has the right geographical footprint, world-class teams with recognized expertise and is renowned for innovative client solutions. Our combined P&C commercial lines operations, will have a strong position in the large and upper mid-market space, including in specialty lines and reinsurance, and will complement and further enhance Axa’s already strong presence in the SME segment. The two companies share a common culture around people, risk management and innovation, positioning Axa uniquely for the evolving future of the P&C industry.” When the transaction is complete, the combined operations of XL Group, Axa Corporate Solutions, which is Axa’s large commercial P&C and specialty business, and Axa Art will be led by Greg Hendrick, currently president and chief operating officer of XL Group, who will be appointed CEO of the combined entity and join Axa Group’s management committee, reporting to Mr Buberl. Mr McGavick will become vice-chairman of the combined P&C commercial lines operations and special adviser to Mr Buberl, to advise on integration-related and other strategic matters. Completion of the transaction is subject to approval by XL Group shareholders and other customary closing conditions, including the receipt of required regulatory approvals, and is expected to take place during the second half of the year.

018. March 4. NEW YORK (Bloomberg) — Axa SA is in advanced talks to buy Bermuda-based XL Group Ltd, people familiar with the matter said. A deal could be announced in coming days, said the people, who asked not to be identified because the matter isn’t public. Property and casualty insurer XL has also attracted interest from insurers including Germany’s Allianz SE, Bloomberg reported last month. A final deal hasn’t been reached and another bidder may yet emerge or talks may fall apart, the people said. Representatives for XL Group and Axa didn’t respond to several requests for comment. A spokesman for Allianz declined to comment. Buying XL, which sells insurance to other insurers, would bolster Axa’s casualty coverage business in the US, and mark the biggest insurance deal since 2015, according to Bloomberg data. Such firms have become ripe takeover targets as policy prices begin to increase after firms booked heavy losses last year due to a spate of natural disasters. Some $17.5 billion in deals have been stitched together so far this year, according to data compiled by Bloomberg. The biggest of the takeovers so far has been American International Group Inc’s January agreement to buy Validus Holdings Ltd for more than $5 billion in cash. XL shares have advanced 23 per cent this year in New York, giving the Hamilton, Bermuda-based company a market value of about $11 billion. Axa has gained 1.3 per cent in Paris so far this year, valuing the company at €61 billion ($75 billion). XL’s chief executive officer Mike McGavick, who expanded the insurer in 2015 with the $3.9 billion deal to buy Catlin Group Ltd, last month said he was optimistic about “where we are going” on the back of a solid capital position and growth in premiums. Still, catastrophe losses might spur more consolidation for Bermuda reinsurers this year, while the US tax overhaul has diluted the pricing advantage the companies enjoyed with Bermuda’s low rate, according to a Fitch Ratings report. Axa’s chief executive officer Thomas Buberl, who took the post less than two years ago, has said one of his preferred areas for growth is P&C commercial lines segments. Europe’s second-largest insurer is shedding some assets as it plans to focus its expansion on fewer countries, with scale being an important factor as he seeks to simplify the business. The Paris-based insurer plans to list a minority stake in its US businesses, including its Life & Savings unit and its 64 per cent stake in AllianceBernstein, in the first half of this year. Proceeds from the initial public offering will be used to fund acquisitions or returned to shareholders.

Axis House, Waterfront complex, Pitts Bay Road. 

2020. January 31. Axis Capital Holdings booked full-year net income of $282 million in 2019, having ended the year with a fourth-quarter loss of $10 million. The Bermuda-based insurer and reinsurer was hit with estimated pretax catastrophe losses of $140 million in the October through December period. Axis reported that “pricing momentum continues to build across substantially all lines of business”. The fourth-quarter loss of $10 million narrowed from $198 million in the corresponding period of 2018. Operating income for the quarter, which strips out one-off items, was $4 million, or five cents per diluted common share, in line with estimates of analysts tracked by Yahoo Finance. Albert Benchimol, chief executive officer of Axis Capital, has an upbeat outlook. “With pricing momentum accelerating, we believe that favourable market conditions will sustain through 2020, driving more lines of business to pricing adequacy and providing us with more opportunities to leverage our market position to generate profitable growth,” Mr Benchimol said. Looking back on the previous year, he said: “We did not deliver the financial results we expected in 2019, as our performance suffered from a record typhoon season in Japan, poor crop conditions in the US, as well as high loss activity in property and aviation lines. Notwithstanding these headwinds, our actions still enabled us to reduce our current year ex-cat loss ratio by over a point this year, bringing the reduction in our ex-cat loss ratio to more than three points over two years, with progress in both our insurance and reinsurance businesses. With the additional portfolio remediation that we executed in 2019, we entered the new year with a stronger book that has less inherent volatility. We have brought down PMLs (probable maximum losses), decreased limits, and exited or reduced our participation in under-performing businesses while pushing for more rate across the board. At the same time, we’re focused on driving growth in our most attractive lines. We’re also working with our partners in distribution to use our expanding digital capabilities to create new business growth in desirable smaller accounts.” Adjusted for dividends, book value per diluted common share increased by $7.47, or 15 per cent, over the past 12 months. Investors welcomed the earnings report today: Axis’s shares gained more than 4.5 per cent by 1.37pm Bermuda time on New York’s Nasdaq Stock Exchange.

2019. October 30. Axis Capital Holdings Limited suffered a “disappointing quarter” as its income was impacted by typhoons in Japan, Hurricane Dorian and some losses in its credit and aviation lines of business. The Bermuda-based insurer and reinsurer made a profit of $28 million, or 33 cents per diluted share, in the third-quarter, which was down from $43 million, or 52 cents per share, a year ago. It made an operating loss of $33 million, or 39 cents per share, compared to operating income of $79 million for the same quarter last year. “This was a disappointing quarter, where our performance was marred by catastrophes that impacted our industry, coupled with mid-size losses in our credit and aviation lines,” Albert Benchimol, president and chief executive officer of Axis, said. “These losses obscure positive underlying trends that reflect our progress in building an organisation that will consistently deliver strong results. Specifically, even with higher mid-size loss experience, within our insurance segment, the current year ex-cat loss ratio is down more than a point this quarter versus the prior year. In our reinsurance segment, while the ex-cat loss ratio is higher this quarter, this same ratio is down over a point year-to-date, reflecting the continued execution of our strategy to improve risk adjusted returns. We remain focused on continuing our progress and are confident that these positive underlying trends can be sustained. Axis has leading positions in the markets that are experiencing the most significant pricing improvements which, combined with our underwriting actions and investments in digital capabilities, put us on a strong pathway towards long-term profitable growth.” The company’s combined ratio for the quarter was 109.4 per cent, compared to 97.9 per cent for the same period last year. Gross premiums written were down 1 per cent, or $17 million, at $1.4 billion. Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums were $160 million, compared with $92 million in 2018. Book value per diluted common share was $56.26, an increase of 27 cents, or 0.5 per cent.

2019. October 17. A shift away from underwriting and investing involving dirty energy has been announced by Axis Capital Holdings Limited. It follows a report that the company had dropped out of bidding to provide insurance coverage for the Carmichael coalmine, a major project in Australia. The new policy was announced yesterday and addresses thermal coal and oil sands-related underwriting and investments. The Bermuda-based company said it is a component of a broader corporate citizenship programme led by its general counsel Conrad Brooks, and overseen by president and chief executive officer Albert Benchimol and the Corporate Governance and Nominating Committee of the Axis board. The programme focuses on four key areas: environment, diversity and inclusion, philanthropy and advocacy. The new thermal coal and oil sands underwriting and investment policy, which becomes effective on January 1. On the underwriting side, Axis said it will not provide new insurance or facultative reinsurance for the construction of new thermal coal plants or mines and their dedicated infrastructure or oil sands extraction and pipeline projects and their dedicated infrastructure; or to companies that generate 30 per cent or more of their revenues from thermal coal mining, generate 30 per cent or more of their power from thermal coal, or hold more than 20 per cent of their reserves in oil sands. In addition, renewals will be considered on a case-by-case basis until the beginning of 2023. Exceptions to the policy may be considered on a limited basis until January 1, 2025 in countries where sufficient access to alternative energy sources is not available. Axis also said it will not make new investments in companies that generate 30 per cent or more of their revenues from thermal coal mining, that generate 30 per cent or more of their power from thermal coal, or that hold more than 20 per cent of their reserves in oil sands. “We believe insurers have an important role to play in mitigating climate risk and transitioning to a low-carbon economy,” said Mr Benchimol. This policy is in line with our broader strategies such as reducing investments in lines that do not align with our long-term approach; investing in growth areas, such as renewable energy insurance where we are a top-five global player; and growing our corporate citizenship programme, a core focus of which is creating a positive environmental impact.” While Mr Brooks said: “We strive to ensure that every business decision we make is guided by our corporate values, and we believe this new thermal coal and oil sands policy is the right thing to do for our planet and our business.” A United Nations report has found that phasing out coal power worldwide by 2050 could limit global warming to 1.5C through reduced carbon emissions. A number of insurance companies in Europe and Australia have stepped up efforts to pull away from the coal industry, including Axa, the parent of Axa XL, Chubb, Allianz and Zurich Insurance Group. While Swiss Re was named as the best insurer in terms of policies on coal insurance, divestment and climate leadership in a survey of 24 major insurers by Unfriend Coal campaign last year. Peter Bosshard, co-ordinator of the Unfriend Coal campaign, said: “With Axis Capital, reinsurers controlling 45 per cent of the non-life market have now adopted coal exit policies. No longer covering coal is quickly becoming the global norm for responsible insurers and reinsurers, and the laggards in the United States, in East Asia and on the Lloyd’s market must quickly follow suit.” In a statement, the campaign noted that Axis’s policy includes exemptions for “countries where sufficient access to alternative energy sources is not available” over the next five years, which it believes could allow it to cover the majority of the 800-plus coal-fired power plants currently proposed globally, effectively postponing action until 2025. Since the launch of the Unfriend Coal campaign two years ago, 17 insurers and reinsurers have adopted policies restricting coal insurance and four have adopted policies on tar sands insurance. More than half of these policies were adopted this year.

2019. February 3. Axis Capital Holdings Limited made a net loss for the fourth quarter of $198 million, or negative $2.37 per diluted common share, compared to loss of $38 million, for the same period in 2017. The combined ratio increased to 117.3 per cent, a rise of 16.6 points year-on-year. Gross premiums written increased by $76 million, or 7 per cent. The Bermuda-based company’s profit for the full year was $400,000, which compared to a loss of $416 million in 2017. The combined ratio was 99.9 per cent, down 13.2 points compared to 2017. Gross premiums written were $6.9 billion, up $1.3 billion, or 24 per cent, year-on-year. Commenting on the fourth-quarter results, Albert Benchimol, president and chief executive officer, said: “In 2018, we delivered improved full-year underwriting performance, both with and without cats. Following three quarters in which we achieved tangible progress towards delivering on our financial goals, however, heavy attritional property and catastrophe activity led to unsatisfactory results in the fourth quarter. Throughout the past year, we took a number of significant actions to strengthen our portfolio and, over the past few months, we’ve accelerated these initiatives. Additionally, we anticipate that recent improvements in pricing and market discipline will also have a positive impact on the pace of our improvements.” Mr Benchimol said Axis has made significant progress in advancing its strategy and in strengthening our business. He added: “We furthered our relevance and positioning in key markets, including transitioning our London operations to a leading position at Lloyd’s with the integration of Novae, and we scaled up a transformation programme that is improving our efficiency and our agility in a rapidly evolving market.” The book value per diluted common share of Axis Capital in the fourth quarter was $49.93.

2018. December 27. Axis Capital president Albert Benchimol has been appointed to the Lloyd’s of London council. He will be an external member from February 1. Mr Benchimol, is also chief executive officer of Bermudian-based Axis Capital Holdings Ltd, and has led the company since 2012. Lloyd’s has appointed Victoria Carter as a working member of the council, and said that Michael Watson, currently on the council, has been re-elected as an external member.

2018. October 26. Axis Capital made a profit of $43 million, or 52 cents per share in the third quarter, compared to a loss of $468 million for the same period in 2017. Its operating income was $81 million, or 96 cents per share, which easily beat analysts’ estimates of 69 cents. Gross premiums written were $1.4 billion, a rise of 20 per cent. There was a 49 per cent increase in the insurance segment, mostly as a result of Axis’ acquisition of the Novae Group last year. Adjusting for the impact of Novae, Bermudian-based Axis had a $92 million, or 8 per cent, decrease in gross written premiums. Albert Benchimol, president and chief executive officer of Axis Capital, said: “In the third quarter, we continued to see positive momentum, as our efforts to optimize our business and invest in growing our market leadership have generated real traction. We advanced our positioning and relevance in key markets requiring our specialist expertise and are seeing ongoing benefits from the further integration of Novae into our business. We also continued to drive forward the implementation of our transformation programme, which is helping to improve our efficiency and position Axis to be profitable under a wide range of market conditions.” Axis’ combined ratio was 97.9 per cent, down from 152.9 per cent year-on-year. Adjusted for dividends, book value per diluted common share increased 62 cents, or 1 per cent, compared to the end of June.

2018. February 8. Axis Capital Holdings made a loss of $38 million, or 46 cents per share, in the fourth quarter, down from a profit of $131 million, or $1.48 per share, a year ago. The combined ratio for the quarter rose to 100.7 per cent, compared to 96.7 per cent, for the same period in 2016. Pre-tax catastrophe and weather-related losses, net of reinsurance and reinstatement premiums, were $133 million. Albert Benchimol, president and CEO of Axis Capital, said the fourth quarter brought “significant catastrophe activity, higher attritional property losses, the ongoing effects of the Ogden rate change in the UK, and the cumulative impact of several years of intense competition”. For the full year, Axis made a loss of $416 million, or $4.94 per share, compared to a profit of $465 million in 2016. Mr Benchimol said: “Although our loss for the year is clearly disappointing, we operate in an industry that experiences occasional high-severity events. To balance against this, we manage our risks to ensure we remain strong and able to provide the seamless, high-quality protection our clients and partners in distribution have come to expect of us. The actions we have taken over recent quarters to reduce earnings volatility have helped to temper the impact to our financial results in a period where industry catastrophe losses were in excess of $100 billion.” Noting the 7.5 per cent decrease in diluted book value per share of $53.88 at the end of the year, he said that was not unreasonable when compared to the scale of market losses observed during the period. “Notwithstanding the industry backdrop, it was a very successful quarter and year from an organizational development perspective, as we closed on the acquisition of Novae and made further progress on strategic initiatives, all of which have contributed to the delivery of a much stronger platform with differentiated positioning and leadership positions in key markets. This was the first quarter in which we included Novae in our financial reporting and, as such, there are a number of moving parts in our results. We remain pleased with the progress we have made thus far in integrating this business into Axis and laying the groundwork to realize significant value from the transaction. Our experience to date indicates the strategic and financial benefits from the acquisition of Novae will exceed our initial expectations.” Mr Benchimol added: “As we look ahead, our stronger industry positioning and increased relevance in our core markets have allowed us to take advantage of improving market conditions at recent renewals, and establish positive momentum as we move past the 1/1 renewals and deeper into 2018, to deliver enhanced profitability.” During the fourth quarter, Axis’s net premiums written increased to $729 million, up 57 per cent, while for the full year net premiums were $4 billion, a rise of 7 per cent. For the year, the company’s combined ratio rose from 95.9 per cent to 113.1 per cent.

2017. October 18. Bermuda-based Axis Capital Holdings Ltd has completed its acquisition of Lloyd’s insurer Novae Group after the takeover received clearance from regulators including the European Commission. The acquisition creates a $2 billion insurer in London and a top ten re/insurer at Lloyd’s, with total global gross written premiums of $6 billion, based on 2016 actual results. Novae originally agreed in July to be bought by Axis for $604 million. But a shareholder revolt halted that deal, with many saying the price undervalued Novae. The deal was struck after Axis increased its offer to $611.4 million. Matthew Fosh, Novae’s chief executive officer, will become Axis Capital’s executive chairman, Europe, and will report to Albert Benchimol, the CEO of Axis. Novae will adopt the Axis brand and its insurance business will be merged into Axis’s international insurance division, led by its CEO, Mark Gregory, who reports to Pete Wilson, CEO of Axis Insurance. Alistair Robson, chief underwriting officer at Axis Insurance International, will become CUO, property and casualty, in the combined organization, and Robert Forster, CUO at Novae, will be CUO, specialty lines. Novae’s reinsurance business will be merged into Axis Re and will form the core of the firm’s London reinsurance business, led by Richard Milner, CUO of AXIS Re London and APAC. Mr Benchimol said: “Acquiring Novae greatly adds to the scale and breadth of our international business and also underscores our commitment to London and to Lloyd’s, which continues to be the pre-eminent market for specialty risks. Novae is known for its market-leading underwriting talent, which we expect will thrive at Axis. Our goal is to bring out the best in both firms as we become one organization that is even stronger together.” Mr Fosh said: “Both companies share similar values and priorities — we are specialty businesses that place a high priority on our clients and employees. Our culture fosters innovation and entrepreneurial, and I expect that to continue as we bring together the best of our two companies.”

2017. July 3. A $350 million catastrophe bond that will boost underwriting capacity for Bermudian insurer and reinsurer Axis Capital Holdings has been admitted to listing on the Bermuda Stock Exchange. The BSX also announced on Friday that a €40 million cat bond, issued through Windmill I Re Ltd to cover European perils, was also listed. Growth in the booming $29 billion insurance-linked securities market is showing no signs of slowing and 2017 is on target to be a year of record issuance. Bermuda is at the epicentre of the global business and more than three-quarters of global issuance was listed on the BSX as of the end of the first quarter, according to a Bermuda Monetary Authority report. According to the Artemis.bm website, a keen ILS market observer, Axis was originally looking to sell $250 million of cat bonds through its Bermuda special purpose insurer Northshore Re II Ltd. But strong demand from investors led to the offering being upsized to $350 million. The Northshore Re bonds will pay investors a 7.5 per cent coupon, Artemis reported. The cat bonds will provide cover for Axis and its subsidiaries against industry losses from US named storms, US earthquakes and Canadian earthquakes, on a per-occurrence basis and across a three-year term. The Windmill I Re Ltd name first appeared in the cat bond market in January 2014. Sponsored by Dutch reinsurer Achmea Reinsurance, it was an indemnity catastrophe bond for European windstorm coverage, particularly related to the Netherlands.

2016. October 27. Axis Capital’s three businesses all achieved improved results in the third quarter as the Bermuda insurer and reinsurer recorded a double-digit operating return on equity. Operating earnings soared to $161 million compared to $51 million in the same quarter of 2015. And earnings per share of $1.78 trounced the $1.05 consensus forecast of analyst tracked by Yahoo Finance. The operating return on average common equity was 12 per cent. Net income for the July-through-September period was $177 million, down from $248 million in the same period of 2015, when the results were boosted by $280 million of termination fees from the derailed merger agreement with PartnerRe, offset by $46 million in re-organization expenses. “We are pleased to report continued improvements in our operations and results, culminating in quarterly operating earnings of $1.78 per diluted share and book value per diluted share of $59.77,” Albert Benchimol, Axis chief executive officer, said. “This represents growth in diluted book value per share, adjusted for dividends, of 4 per cent in the quarter and 14 per cent over the last 12 months. Our results speak to optimizations we’ve made across our businesses to build a more resilient portfolio. All three of our businesses — Axis Insurance, Axis Re and Axis Accident & Health — delivered improved year-over-year results, and ongoing positive performance indicators reaffirm we are on a strong path forward and focused on delivering consistent, attractive returns to our shareholders. We continue to take tangible actions to position Axis for accelerated growth in a transformed insurance marketplace, and are seeing attractive opportunities, notwithstanding a challenging environment. Our efforts to further strengthen Axis’s position as a leading specialty insurer and reinsurer were highlighted by the successful launch of Harrington Re with The Blackstone Group this past July, our continued expansion in international markets, and the investments we are making in our marketing and client services.” Estimated catastrophe and weather-related pre-tax net losses totaled $22 million, compared to $43 million in 2015. The combined ratio improved to 92.6 per cent from 96.6 per cent last year, aided by $76 million of net favorable reserve development benefiting the ratio by 8.1 points. At September 30, diluted book value was $59.77 per share, up 4 per cent for the quarter. The company spent $126 million on buying back its own shares.

2016. September 14. Reinsurance pricing is not sustainable, Axis president and CEO Albert Benchimol warned yesterday. Mr Benchimol said, however, that the subject was not being discussed as much as he would like at Monte Carlo industry conference Rendez-Vous. He added: “If I had one point to make, I wish there was more discussion about how the current pricing environment is really not sustainable and we really need, as an industry, both the primary and reinsurance industry, to look to ways to improve the profitability of our industry. I think people are being very polite — they are not addressing the subject.” Mr Benchimol was speaking to AM Best TV at the Monte Carlo conference. He said that the industry, without reserve releases, was “probably a mid-single digit return on equity proposition. That is not acceptable. We need to do better and I think that, at the end of the day, it within ourselves to be able to make sure that we focus on the right risks and charge the appropriate pricing for the risk.  I wish we were talking more about that. Major changes had affected the industry since last year’s conference. If I were to focus on three things, I would say number one is increasing use and interest in data analysis by industry. Investment in financial technology — fintech — was $800 million two years ago, but $2.8 billion last year and that it would continue to affect all parts of the industry, particularly distribution. Third, I would say efforts by many parts of the industry at disintermediation, trying to short-circuit previous distribution channels to try and get closer to the business. Axis had been an early investor in data and analytics in the specialty commercial sector. Certainly, data and analytics have been very large, very big, in personal lines and life insurance — less so in specialty commercial, but that is really picking up steam.” Axis, had upped investment in the area over the last three years and worked on improving the way we look at our books of business." On fintech, Mr Benchimol said: “It’s still very early. There will be opportunities to partner with different start-ups in that area to make sure we’re abreast of developments in that area.”

2016. February 3. Insurance and reinsurance company Axis Capital Holdings yesterday posted profits of $135 million for the final quarter of last year. The figure was down $29 million on the same time period in 2014. For the full year, the firm made a profit of $602 million — $6.04 per share — down $169 million on the $771 million, or $7.29 per common share, reported for 2014. The latest quarterly figures are equal to income per common share of $1.39 compared with $1.60 per share for the last quarter of 2014. Operating income for the fourth quarter of last year totaled $120 million — $1.23 per common share — compared with the same figure, but $1.18 per share for the last quarter of the previous year. Axis beat the $1.13 per share forecast of analysts tracked by Yahoo Finance. Albert Benchimol, president and CEO of Axis Capital, said the firm was pleased to report growth in diluted book value per share of 9 per cent, after adjustment for dividends. He added: “While 2015 was a challenging year on many fronts, it was also a year of powerful maturation across our organization, resulting in a stronger more focused Axis. Over the year we steered the company towards a future of enhanced profitability and stability. Importantly, we are executing on the right actions for the current challenging market conditions — improving the quality of our book of business, growing the scale and profitability of recent initiatives and tightening expense control and capital efficiency. Normalizing for the unusual frequency of mid-sized energy losses this year, our results for the quarter and for the year demonstrated progress on all these fronts.” Gross premiums written for the final quarter of last year were up 5 per cent, 6 per cent on a constant currency basis, to $800 million. Estimated catastrophe and weather-related pre-tax net losses of $10 million were recorded for the last quarter — mostly related to US weather events — compared to $21 million for the same period last year.

2016. January 26. Bermuda-based Axis Capital Holdings Ltd has launched a new insurance policy to cover hospitals against deadly pandemics. The coverage — a first for the industry — will cover hospitals in US and Canada against major outbreaks of contagious diseases, including known illnesses and those yet to surface and also diseases which could mutate into a pandemic in the future. Kimber Lantry, head of Axis’ healthcare, said the new coverage was sparked by cases like the Texas hospital which saw a massive drop in income in 2014 as potential patients were scared away following the admission of an individual suffering from the killer Ebola virus. The Texas Presbyterian Hospital lost $20.3 million in revenue over a two-month period, with a fall of 22 per cent in inpatient days and a near-50 per cent drop in emergency room visits. Mr Lantry said: “Our new medical catastrophe business interruption and extra expense coverage serves a critical need in the healthcare marketplace that has thus far gone unaddressed by the insurance industry. Pandemics represent an especially serious risk for healthcare providers.” During the severe acute respiratory syndrome (SARS) outbreak in 2003, hospitals were identified as a major source of the spread of infection, which resulted in the partial or complete shutdown of three hospitals in Canada. Mr Lantry said, however, that using data the frequency of pandemics could be estimated, with bubonic plague, the Black Death of the Middle Ages, breaking out every 10 to 30 years since it first surfaced around 1350 until modern medicine found a cure. Similarly, serious outbreaks of influenza have occurred 31 times over the last 300 years. He explained: “Pandemics have a surprising parallel with earthquakes when it comes to predictability. We built a model that looked at frequency, how long they lasted and the severity — the impact on revenue for hospitals.” Mr Lantry, however, said there were unknowns, including the impact of worldwide air travel on how fast diseases traveled and the development of super bugs, which are resistant to antibiotics. He added: “The real issue, the ultimate fear, is a disease, a pandemic, which is transmitted airborne and has a high level of mortality.” Mr Lantry said that the coverage would be triggered by four eventualities — a government quarantine of a hospital, if 25 per cent of staff do not turn up for work, if there is a 25 per cent or more reduction in inpatient stays or a 25 per cent or more fall in emergency room visits. Coverage, however, will be limited to a total of $50 million in any major metropolitan area and to a maximum of $750 million across the country. Hospitals which want coverage will also have to undergo an Axis assessment of their pandemic preparedness, carried out by an Axis expert in the field. Mr Lantry said: “We have to protect ourselves and our reinsurers against risk aggregation. Other insurers had offered more limited products in the past, but that the Axis coverage was the most comprehensive. We’ve gotten a lot of interest as we’ve been putting this out in the marketplace. Hospitals have recognized, when they saw the hits to this hospital in Dallas, they have to take patients in — they can’t turn them away. Talking to doctors and healthcare professionals, there is a view that pandemics will become more prevalent.” Peter Wilson, president of Axis Insurance operations in the US, said: “The healthcare industry is an important market for Axis Insurance and we are committed to applying our specialty underwriting expertise, service capabilities and capital strength to provide innovative and competitive solutions like this one.”

2015. October 28. Axis Capital Holdings yesterday reported net income of $248 million for the third quarter — down $31 million on the same quarter last year. The figure represents net income available to shareholders of $2.50 a share, compared to the $279 million and $2.68 a share recorded for the same period in 2014. Operating income for the third quarter amounted to $51 million (51 cents per share) compared to $103 million ($1.27 per share) recorded in the third quarter last year. That missed expectations, with three analysts surveyed by Zacks Investment Research having earlier estimated earning of 93 cents per share. Axis CEO Albert Benchimol said that the firm had been hit by volatility in its investment portfolio and “unusually high” offshore energy losses. Mr Benchimol added: “We are confident that our actions to accelerate attractive new initiatives. optimize our portfolio, prune business challenged over the long term and enhance the efficiency of our platform, position us to continue to deliver shareholder value against the backdrop of an increasingly competitive market. Our results in the quarter include the benefits of targeted portfolio enhancements, particularly in the insurance property and professional lines which were commenced prior to this year. The firm’s investment performance and losses in the offshore sector were well understood and not unexpected given the performance of the equity markets and the high level of marine market losses this year.” Gross premiums written by Axis increased by four per cent, equivalent to six per cent on a constant currency basis, to $937 million. The insurance segment saw growth of nine per cent — 11 per cent on a constant currency basis — but was partially offset by a decrease of three per cent, two per cent in constant currency terms, in Axis’ reinsurance segment. Estimated catastrophe and weather-related pre-tax net losses of $43 million included the Tianjin port explosion in China in August, which cost the firm $30 million, and losses related to US weather claims. That compares to losses of $22 million for the same quarter last year. During the quarter, Axis received a total fee of $315 million following the termination of the merger agreement with Bermuda-based PartnerRe.

2015. October 8. Bermuda-based Axis is to cut “a small number” of jobs at its Bermuda office as part of a global streamlining. But Albert Benchimol, the company’s chief executive officer, stressed yesterday that the insurer and reinsurer remains committed to the Island and has renewed the lease on its Hamilton waterfront headquarters for another ten years. The company plans to reduce its global headcount of 1,254 staff by about 100 — with the brunt of the cuts being borne by the Australia retail insurance operation, which is to be wound down. In an interview with The Royal Gazette, Mr Benchimol declined to reveal how many employees would be let go in Bermuda, but he said it was a small number. Those affected work in business and support functions. “This is a very competitive market,” Mr Benchimol said. “We are aligning our resources with the best growth opportunities we have and we must make sure we are delivering our products in the most efficient way possible. Unfortunately, sometimes that will lead to a reduction of personnel. It was a very difficult decision to make. I’m saddened that good and dedicated employees will be losing their jobs through no fault of their own. We have 68 employees in Bermuda and the vast majority are Bermudians, spouses of Bermudians and PRCs. We are committed to Bermuda, it’s where our head office is. It’s where we have our board and executive meetings. We bring a lot of people here.” The company had donated more than $5 million to charitable causes in Bermuda over the last five years alone, he added. And the decade-long lease renewal for Axis House, which is in the Waterfront complex on Pitts Bay Road, was testimony to the company’s belief that Bermuda remains the best place from which to run an international insurance and reinsurance company. In a memo sent to staff yesterday, Mr Benchimol wrote: “All affected employees will be provided with severance packages commensurate with their time with the company, along with outplacement services. It is extremely important to me personally that each and every departing Axis employee be treated with fairness and sensitivity.” Worldwide, Axis said it expected “a workforce reduction of approximately 100 positions, primarily in its corporate and select insurance operations”. It is understood that around half of the positions to go will be in Australia. As well as Bermuda, Axis has offices in Bermuda, the US, Europe, Singapore, Canada, Australia and Latin America. The company is aiming to achieve cost cuts of $30 million a year, from next year. Axis said it would first take a one-off charge of around $51 million, related to staff severance costs, the write-off of some information technology assets and lease cancellation costs. Axis stated: “These reductions are consistent with the company’s previously announced effort to reduce its expense level and position itself to more effectively deliver greater value for its customers, brokers, and shareholders.” Last month, Axis announced an accelerated share repurchase plan, aimed at buying back $300 million of the company’s equity by the end of this year. Earlier this year, Axis’ agreement to merge with Bermuda rival PartnerRe was derailed by Italian investment firm Exor, which eventually struck a $6.9 billion deal to buy the reinsurer. Mr Benchimol said PartnerRe had come to Axis with a merger offer that was initially attractive. But as the terms changed, it had become “less interesting to us”, he added. The focus since then had been on seizing growth opportunities while maximizing efficiency. “We continue to be absolutely convinced of our ability to generate profitable growth on a stand-alone basis,” Mr Benchimol said. “Most of that growth will be organic, but if there is an interesting inorganic growth opportunity, we will certainly consider it.”

2015. August 4. Axis Capital failed in its bid to merge with rival PartnerRe after Italian investment firm Exor won a bidding war — but the firm is $315 million better off as a result of a massive break fee. The firm accepted defeat after PartnerRe’s board yesterday announced a U-turn and backed the $6.9 billion cash offer from Exor, controlled by the billionaire Agnelli family, over the $11 billion merger deal with Axis. Axis CEO and president Albert Benchimol said: “Our proposed transaction with PartnerRe stood to create a powerful mix of two financially strong and independent companies with compelling insurance/reinsurance franchises. While I am disappointed that the merger will not proceed, I have no doubt that the best days for Axis Capital our employees, clients, brokers and shareholders lie ahead. We have built a powerful global platform on which to continue to advance our hybrid insurance model with three diversified businesses in specialty insurance, reinsurance and accident and health.” Shares of Axis yesterday closed up 3.8 per cent at $59.77. Axis also announced that, in the wake of the failed merger, it will restart its share repurchase programme, which has nearly $750 million authorized by the board and which runs to the end of 2016. A $300 million accelerated share repurchase is expected to start in the near future and continue through to the end of this year. Mr Benchimol said: “We are prepared to move ahead with our fiscally disciplined growth strategy and a commitment to return excess capital to shareholders in the form of dividends and stock repurchases. Since becoming a public company, we have repurchased approximately 92.8 million shares of Axis Capital stock for a total of $3.3 billion. As we go forward independently, I would like to thank our employees for their diligent efforts over the past several months and for their ongoing focus on the ‘business-of-the-business.’ We have learned a great deal from this process and we intend to apply what we have learned to make Axis Capital a better company in the months and years ahead.” Axis chairman Michael Butt said: “Prior to PartnerRe reaching out to us last December to discuss a combination of our companies, we were confident in continuing with our strategy as a stand-alone company, building our three strong businesses incrementally. We will now proceed with that strategy, with strengthened resolve. We have been very conscious of our responsibilities to our shareholders throughout these negotiations and believe we have demonstrated prudence and financial discipline in our approach.” Axis was previously linked to a buyout by rival insurer Arch and reports said the firm was prepared to offer at least $65 a share. Axis yesterday declined to add any further comment on its future.

2015. January 26. Axis Capital Holdings Ltd and PartnerRe Ltd agreed to merge. The deal between two of the five biggest companies in the Bermuda insurance and reinsurance marketplace will create a group with a market capitalization of nearly $11 billion and the worlds fifth-largest property and casualty reinsurer. The combined entity will boast $10.7 billion in annual gross premiums, an investment portfolio of $33 billion and total capitalization of some $14 billion. Axis chief executive officer Albert Benchimol will lead the enlarged company, while PartnerRe chairman Jean-Paul Montupet will serve as its non-executive chairman. The combination has been described as a merger of equals and the deal is expected to close in the second half of the year. Costas Miranthis stepped down yesterday as CEO of PartnerRe and as a member of the reinsurers board, in connection with the deal. PartnerRe director David Zwiener will assume the position of interim CEO of PartnerRe until the completion of the transaction. The companies said they expect to make annual savings of at least $200 million, suggesting that jobs are likely to go. The companies headquarters are in neighboring buildings on Pitts Bay Road and the statement confirms that the combined company will be based on the Island. Both also have offices in London, New York, Zurich and Ireland. PartnerRe shareholders will own about 51.6 per cent of the combined company, while Axis investors will hold 48.4 per cent, the companies said. PartnerRe shareholders will receive 2.18 shares of the combined companies common shares for each share of PartnerRe they own, while Axis shareholders will receive one share of the enlarged entity for each of their Axis shares. PartnerRe writes only reinsurance, while Axis writes primary insurance too. The new company will derive around two-thirds of its premiums from reinsurance. This transformational combination will leverage the complementary strengths of both companies and create an organization with the size and breadth to enhance product and service offerings, maximize growth opportunities, optimize portfolios, and deliver both economies of scale and capital efficiencies, Mr Benchimol said in a joint statement from the two companies last night. The combined company will have three strongly positioned businesses a top-five global reinsurer, a $2.5 billion specialty insurance underwriting business, and a highly successful and growing life, accident and health franchise all with increased strategic flexibility. As a top five global reinsurer with leading positions in a number of specialty lines, we will be strongly positioned to turn the challenges presented by the structural changes in the reinsurance market into opportunities. PartnerRe was formed in 1993, after a spike in reinsurance rates prompted by the 1992 Hurricane Andrew. Axis was formed in late 2001 after the September 11 terrorist attacks of that year also caused insurance rates to rise. Mr Benchimol has worked in senior roles for both companies. Before he joined Axis in January 2011, he had served as chief financial officer at PartnerRe for ten years. Last night's joint statement adds: "Given the similar disciplined underwriting cultures of both organizations, the combined entity will draw on the talented group of leaders from both companies." Some of the top positions have already been decided. Emmanuel Clarke will be CEO, Reinsurance, while Peter Wilson will be CEO, Insurance. Chris DiSipio will be CEO, Life, Accident and Health; and John Jay Nichols will be responsible for strategic business development and capital solutions. Joseph Henry will be chief financial officer and Bill Babcock will be deputy CFO and lead integration officer. Mr Babcock will assume the role of CFO on Mr Henry's retirement in July 2016. PartnerRe chairman Mr Montupet paid tribute to the companies exiting CEO. "On behalf of the entire board of directors, I want to express my appreciation to Costas Miranthis for successfully leading PartnerRe for the past four years and positioning the company to be able to move into this exciting new phase. PartnerRe has benefited greatly from his leadership and guidance and we wish him well in his next endeavor. This is an exciting opportunity that offers tremendous potential with many benefits for PartnerRe, our clients, brokers and shareholders." Axis chairman Michael Butt, who will continue to serve on the board of the combined company as chairman emeritus, said: "I have for a long time, since 1993, been an admirer of PartnerRe and what it has achieved. I am delighted therefore that we can now combine our businesses and people to create an even more exciting future." Shortly before the merger statement came out last night, both companies gave preliminary estimates of fourth-quarter results. Axis, which is due to announce earnings on February 3, said it made operating income of between $117 million and $123 million, or between $1.15 and $1.21 per share, compared to the consensus estimate of $1.21 per share of analysts tracked by Yahoo Finance. PartnerRe, which will report on February 4, said its operating earnings were between $210 million and $230 million, or between $4.20 and $4.60 per share, easily beating the Wall Street expectation of $3.04 per share.