Intercona Re - Nestlé s Captive. The successful use of a captive as a loss prevention enabler

Transcription

1 Intercona Re - Nestlé s Captive The successful use of a captive as a loss prevention enabler Andrew R. Bradley Head of Group Risk Services, Nestec Ltd and CEO of Intercona Re

2 Our World 2

3 Our ambition Enhancing people s quality of life through nutrition health and wellness with science-based innovations 3

4 4 The Nestlé Story

5 Nestlé at a Glance CHF 91.6 billion in sales in ,000 employees in over 150 countries 442 factories in 86 countries Over 2,000 brands 1 billion Nestlé products sold every day 5

6 Sales by Regions Europe, Middle-East and North Africa CHF 29.8 bn Americas CHF 39.4 bn Asia, Oceania and Africa CHF 22.4 bn * Each region includes Zones, Nestlé Waters, Nestlé Nutrition, Nestlé Professional, Nespresso, NHS and NSH 6

7 Contribution to Group Risk Reduction Contribute to achieve objectives and protect company's value Decision support Risk Reduction Prevention Risk Risk size size Prepardness / Recovery Financing Residual Anticipate Prevent Plan Insure Accept 7

8 From "cash box to central risk management tool Risk financing, Captive 8

9 Nestlé s Reinsurance Captive 9

10 Châtel-St-Denis, Switzerland reinsurance captive Established in 1998 C1 Professional Reinsurance License Share Capital CHF 35 mio (2014) / Equalisation Reserves CHF 296 mio (2014) Annual Premiums CHF mio in 2014 (CHF 152 mio in 2013) Diversified portfolio Technical Reserves CHF mio (2014) Combined Ratio 2012 to 2013: 90%, 68%, 85% (Average 81%) Invested Assets CHF 680 mio (2014) AM Best rating A+ (Superior) (2015) 10

11 Intercona Re diversified portfolio in

12 Claims Risk Financing Model Local Policy Local Policy Local Policy Local Policy Pooling Insurer Premiums Intercona Re Catastrophe Cover Risk retained within the Group True Risk Transfer 12

13 Why Loss Prevention? Let s start with a simple approach This is very well aligned with Nestlé's philosophy. 13

14 Our Intercona Virtuous Circle to Loss Prevention 14

15 Why Loss Prevention? Compliance Duty of Care Good Governance Protecting lives and assets Corporate and Social Responsibility Creating Shared Value / Sustainability Quantifying exposure Reputation Operational efficiency Increased robustness / Business Continuity / Loss of Market Cost savings 15

16 Loss Control & Loss Prevention Funded By Intercona RE S.A BELFOR restoration Property Loss Prevention Program Supplementary Safety Audits Business Continuity: BIA/BCP F Manual/ Loss Prevention Manual Schneider Electric pilot studies RISK Virtual Fire Manager Transport/ Marine loss prevention Virtual Fleet Manager/ Driver Safety Thermo Scanning 16

17 The positive Impact of Property Loss Prevention 17

18 Intercona s Mission Statement KPIs Loss Prevention 18

19 Losses Fire Fire losses Benha Feb 2013 Inappropriate design - GRS and ZRE several presentation of the case in 2013 and 2014 Electricity Fire losses Japan Himeji Dec 2014 Inappropriate maintenance - ZRE participation to Nestlé CO-Engineering Global Electrical Workshop Feb 2015 Normal Hot work / Dust explosion Fire explosion Flagstaff USA Inappropriate control Natural Hazards Lost goods Philippines several storms Inappropriate design - GRS Natural Hazards risk assessment workshop Nestlé Philippines April 2015 Exploded 19

20 Solutions Schneider MP4 audit Employee training Greenfield & refurbished sites validated by Zurich Agree on Global Standard Key sites minimum of Good Communicating lessons learned No more Poor sites one fire, is one too many 20

21 What deficiencies do site visits highlight? A few examples Equipment indicated by site as lightning protection. These appeared to be communication antennas. Will this bonding strap effectively dissipate electrostatic charges in this combustible dust environment? Missing wheel handle. What if it must be handled in an emergency? Corroded sprinkler pipe. Will any water come out of it? This dry pipe valve was tested with ZRE and water reached sprinkler in 5min20 instead of 40sec required. Installation of an accelerator will reduce loss estimate from USD 12,5M to 2,5M. 21

22 What deficiencies do site visits highlight? Earthquake resilience i.e. fire fighting sprinkler water piping, adequacy of racks for seismic foces Condition of Waterproofing Membrane and roof Panels 22

23 Loss Prevention Technical Support New construction CatNat studies Improving existing sites Lessons learned Pass the message! 23

24 Road traffic injuries: the FACTS 1.24 million road traffic deaths occur every year #1 cause of death among those aged years 24

25 25 Diverse fleet

26 How can we help? Gap Analysis Virtual Risk Manager Telematics Communication / Training material Benchmarking Country Profile Arrive Alive Game 26

27 VFRM Mexico 27

28 Safe Driving contributes to the well-being of our Employees and Contractors 28

29 Marine Loss Prevention Pre loading / discharge surveys for Equipment valued ~CHF 1 Mio (per conveyance) or key equipments Tracking device for trial shipments 29

30 Project cargo surveys Intercona sponsors preloading/ discharge surveys for equipment with value ~CHF 1 mio or oversized 30

31 Impact on Nestlé Risk Anticipation maturity level Emergent Motor Marine GLPP BCM Wellness Mature Maturity level Emergent 31

32 Conclusion Was Captive a success? Underwriting profit delivered every year since 1996 Millions of profit taken out of Insurance Market P+C Insurance budget reduced by using Intercona and Global Programmes Loss Prevention financed by Intercona drastically improved: - Property grading - Motor Losses - Marine Losses Improved knowledge of exposures EML/PML 32

33 Development of Property & Casualty Premiums 1996 / 2014 (Property, Liability, Marine, Auto, CAR, D&O, excluding workers compensation and employee benefits) (Premiums have declined (-CHF 18 mio) despite increased risks covered) 0.15% % Premiums to Intercona in mio CHF Premiums to third parties mio CHF Premiums on Sales Company s turnover has increased by 50% Property damage / Business interruption loss limit increased from CHF 400 mio to CHF 750 mio Scope of coverage has broadened, e.g. Business interruption, D&O, Construction, etc. New lines of businesses are written, e.g. Pharma Coverage has been expanded to higher risk countries (and businesses thereof) 33

34 Key Messages Insurance Has Never Prevented A Loss It s Nestlé money anyway! Risk Management & Loss Prevention Is Key 34

35 Question? 35