LONDON – 20 January 2020 – AkinovA, the electronic marketplace for the transfer and trading of re/insurance risk, together with Hiscox, Guy Carpenter, and PCS, recently announced that a first of its kind parametric cyber risk transfer had been completed on its marketplace. This trade was transacted electronically with full regulatory oversight from the Bermuda Monetary Authority (BMA), under AkinovA’s Insurance Regulatory Sandbox licence.
The product traded was a quarterly parametric cyber instrument which was purchased by an asset manager in the financial services sector. The coverage focuses on assets which are exposed to cyber related disruption impacting underlying power generation assets in the US.
This innovative product was developed and structured by Hiscox, a leading specialist re/insurer, who worked closely with the broker to address the cover-buyer’s exposure. Hiscox also provided capital for this innovative transaction.
Adam Szakmary, Director of Underwriting – Bermuda, Hiscox Re & ILS, praised the novel nature of the transaction, in addition to the contributions that came from various branches of the Hiscox team:
‘In an ever-changing and rapidly growing market, it’s important to challenge ourselves to find new and innovative opportunities to advance risk markets, especially in areas like cyber where the traditional approach may be falling short. AkinovA’s approach to enhancing electronic trading is a great example of this pioneering spirit, however, to make vision a reality it was a team effort across underwriting, analytics, wording, operations, and finance. We are thrilled to be involved in this transaction and to be early advocates for the expansion of the risk cyber risk transfer market.’
Guy Carpenter, a leading global risk and reinsurance specialist, and a business of Marsh & McLennan Companies, brokered the transaction.
Erica Davis, Cyber Risk Strategy Leader and Managing Director of Guy Carpenter & Company, commented:
‘This first-to-market cyber parametric transaction shows the emergence of innovative structures and triggers to address this quickly evolving risk. By developing a trigger for power outage originating from a cyber event, this deal helps to solve a relevant and substantial protection gap. As a global leader in cyber modelling and placement design, Guy Carpenter was uniquely qualified to execute this market-transforming opportunity. Cyber risk presents distinct quantification challenges and only through creating such solutions can we develop a robust cyber market positioned for sustainable growth.’
The parametric cyber instrument used PCS, a Verisk business, as the reporting agency. The trigger refers to a robust third-party power generation index combined with outage times and disruption levels.
Tom Johansmeyer, Head of PCS, a Verisk business, noted that:
‘PCS has been a strong supporter of exchange-traded risk for years, and we believe that this type of vehicle can be instrumental in helping to grow the cyber market. Demand for cyber cover has grown so quickly that capacity shortfalls have become an important topic of conversation in the market. Relying on traditional practices won’t be enough to support the further expansion of the most important class of insurance business to arise in decades. This latest transaction shows that new ideas can take hold and deliver rapid benefit up and down the risk and capital supply chain. We’re proud to have been part of this process.’
In addition, Horseshoe provided services to AkinovA and its users. André Perez, Chief Executive Officer and Chairman of Horseshoe Group, stated:
‘This first of a kind transaction saw Horseshoe provide important compliance and regulatory services to AkinovA’s participants. Working with AkinovA continues to show Horseshoe’s determination to support the industry innovation, growth and efficiency agendas.’
AkinovA continues to enhance its technology offering by incorporating best in class functionality in its advanced technology stack. To deliver this transaction, AkinovA worked closely with key partners including OpenFin and Aquis Technologies.
The trade was carried out using a standardised insurance contract created in 2019 by Hiscox in conjunction with AkinovA and industry participants. The wording was donated to ACORD, the global standards-setting body for the insurance and related financial services industries.
Tats Hoshina, Former CEO of Tokio Millennium Re and AkinovA Advisory Board Member, commented:
‘In the run up to Monte Carlo 2019, I said that AkinovA is the platform that will pioneer the way the market transacts business in the future: that is now the case with this first of a kind cyber transaction.’
About the Hiscox Group
Hiscox is a global specialist insurer, headquartered in Bermuda and listed on the London Stock Exchange (LSE:HSX). Their ambition is to be a respected specialist insurer with a diverse portfolio by product and geography. They believe that building balance between catastrophe-exposed business and less volatile local specialty business gives them opportunities for profitable growth throughout the insurance cycle.
The Hiscox Group employs over 2,700 people in 14 countries and has customers worldwide. Through the retail businesses in the UK, Europe, Asia and the US, they offer a range of specialist insurance for professionals and business customers as well as homeowners. Internationally traded, bigger ticket business and reinsurance is underwritten through Hiscox London Market and Hiscox Re & ILS.
Their values define their business, with a focus on people, quality, courage and excellence in execution. They pride themselves on being true to their word and their award-winning claims service is testament to that.
For more information, visit www.hiscoxgroup.com
About Guy Carpenter
Guy Carpenter & Company, LLC is a leading global risk and reinsurance specialist with more than 3,100 professionals in over 60 offices around the world. Guy Carpenter delivers a powerful combination of broking expertise, trusted strategic advisory services and industry-leading analytics to help clients adapt to emerging opportunities and achieve profitable growth. Guy Carpenter is a business of Marsh & McLennan Companies (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people. The company’s 75,000 colleagues advise clients in over 130 countries. With annualized revenue approaching $17 billion, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading companies including Marsh, Mercer and Oliver Wyman.
Verisk (Nasdaq:VRSK) is a leading data analytics provider serving customers in insurance, energy and specialized markets, and financial services. Using advanced technologies to collect and analyze billions of records, Verisk draws on unique data assets and deep domain expertise to provide first-to-market innovations that are integrated into customer workflows. Verisk offers predictive analytics and decision support solutions to customers in rating, underwriting, claims, catastrophe and weather risk, global risk analytics, natural resources intelligence, economic forecasting, and many other fields. Around the world, Verisk helps customers protect people, property, and financial assets. Headquartered in Jersey City, N.J., Verisk operates in 30 countries and is a member of Standard & Poor’s S&P 500® Index. In 2018, Forbes magazine named Verisk to its World’s Best Employers list.
For more information, please visit www.verisk.com
Horseshoe is a leading financial services company, providing insurance management, risk transformation, fund administration, advisory and corporate services to the insurance-linked securities (ILS) market.
As a subsidiary of Artex Risk Solutions (Holdings) Ltd., owned by Arthur J. Gallagher & Co. (AJG), Horseshoe is the largest ILS service provider globally.
Powered by the talent of our people, outstanding client service and innovation, we are leading the way with integrated ILS solutions and we have become the partner of choice for many prominent ILS managers, institutional investors and reinsurance brokers.
We service over 170 clients and administer in excess of $32 billion, from our operating offices in Bermuda, Cayman Islands, United States, Ireland, London and Guernsey.
For more information, please visit www.horseshoeglobal.com
ACORD (Association for Cooperative Operations Research and Development) is the global standards-setting body for the insurance and related financial services industries. ACORD facilitates fast, accurate data exchange and efficient workflows through the development of electronic standards, standardized forms, and tools to support their use.
ACORD currently engages more than 8,000 participating organizations spanning over 100 countries, including insurance and reinsurance companies, agents and brokers, software providers, financial services organizations, and industry associations. ACORD maintains offices in New York and London.
For more information, please go to www.acord.org.
About Aquis Technologies
Aquis Technologies is the software and technology development division of Aquis Exchange PLC. It creates and licenses cutting-edge, cost-effective matching engine and trade surveillance technology for banks, brokers, investment firms and exchanges.
Aquis Exchange PLC is an exchange services group, which operates pan-European cash equities trading businesses (Aquis Exchange) and develops and licenses exchange software to third parties (Aquis Technologies). Aquis Exchange PLC (AQX.L) is listed on the London Stock Exchange’s AIM.
Move Fast. Break Nothing. OpenFin is the financial industry's operating system, enabling rapid and secure deployment, native experience and desktop interoperability. Used by the largest industry players through to the newest of FinTech innovators, OpenFin deploys more than 1,000 desktop applications across 200,000 desktops in more than 1,500 buy-side and sell-side firms in 60+ countries. OpenFin investors include Bain Capital Ventures, Barclays, DRW Venture Capital, NEX Euclid Opportunities, J.P. Morgan, NYCA Partners, Pivot Investment Partners and Wells Fargo among others. The company has offices in New York and London.
For more information, please go to: https://openfin.co
AkinovA is an independent electronic marketplace for the transfer and trading of re/insurance risk which is regulated in Bermuda. The marketplace is a regulated electronic environment where insurance and reinsurance risks can access new sources of capacity as well as increase the efficiency of transferring and trading re/insurance risks in the primary and secondary markets. AkinovA also offers re/insurance service providers an additional channel to share their models, data and expertise with market participants. AkinovA is working with the existing re/insurance value chain to grow the overall market.