Having a Skin in the Game

Transcription

1 Having a Skin in the Game Establishing Maersk Insurance A/S By Lars Henneberg, Vice President Head of Risk & Insurance, A.P. Moller-Maersk A/S

2 Our philosophy In the A.P. Moller Maersk Group we are committed to manage risks in a manner, where the downside of risks is carefully assessed and balanced against the upside potential

3 APMM at a glance Shipping Oil & Gas Maersk Line Maersk Oil APM Terminals Oil Services Damco Svitzer Tankers FPSO DFDS HÖEGH Autoliners Dansk Supermarked

4 Asset heavy risk management owned vessel chartered vessels - 60 terminals - 26 rigs - 626,000 boepd in 6 countries - Exploration in 11 countries employees - Active in 130 countries

5 Where did we come from? - Decentralised organization - Budget hedging mindset - Limited transparency - Substantial premium spend - Benign claims experience - Recent claims experience Question asked: - Why are we insuring?

6 Our theory of value creation * * * To continuously reduce the Group's total cost of risk by 15% p.a. Through insurance procurement, retention management, loss prevention, claims management, insurance governance and insurance advice Being cost effective, fast, competent, transparent and accessible while fully leveraging the Group's position * * *

7 What did we want to achieve? Drive down our cost of risk by - utilising our risk bearing capacity and risk appetite - simplifying our programme structures - avoiding dollar swapping - reducing our exposure to market volatility - drive mindset towards loss prevention

8 Moving from "budget hedging" to active risk management - Leverage Group position - Retention management - Loss prevention - Strategic relation to insurers

9 How did we get there? APMM Project Team and Plan established Presentation for the Executive Board Submission of FSA application Meetings with FSA FSA approval (1 ) Captive capitalization (2 ) Executive Board approval Q1 Q2 Q3 Q4 Q1 Captive feasibility study presented to Executive Board in which proposal to launch a captive project was approved (1 ) Data collection and validation (2 ) Actuarial modelling (3 ) Design of captive programme (4 ) QIS 5 calculations (1 ) Initial meetings with potential lead partner markets (2) Broker selection Presentation to APMM Board (1 ) Approach of lead markets (2 ) Programme marketing Finalise terms, documentation Programme inception 1 January 9

10 The new programme structure $2bn Risks in MIAS: - General: Physical damage and business interruption - Energy: Rigs, platforms, pipelines, wells and FPSOs - Marine: Vessels - Property: Terminals Insurance Market $500m $150m Insurance Market Captive Market Coinsurance Insurance Market BU deductibles Captive Market Coinsurance Captive Market Coinsurance BU deductibles BU deductibles Energy Marine Property Property Damage Hull & Machinery Property Damage Control of Well (OEE) Third Party Liability Business Interruption Business Interruption Third party liability

11 The business case for MIAS - Substantial annual savings due to programme consolidation optimized risk retention loss prevention - Capitalization of USD 90 mio - 3 staff and outsourcing - Why a captive?

12 Working with MIAS EXCESS INSURANCE REINSURANCE Captive Fronter Group Finance & Risk Management (Risk & Insurance) Risk Insurance BU GFRM/Risk & Insurance

13 Supporting loss prevention -Quarterly reports -Annual meeting Review of Safety Performance Loss Prevention Programme Review of Losses Review of Processes and Assets -Analyze incidents -Establish Total Cost of Risk -Asset surveys -Process interviews

14 Developing MIAS as a strategic risk management tool - 3 year strategy plan - Financial drivers - Growth drivers - Business drivers - Operational drivers

15 The lessons learned Project planning and execution are key Importance of stakeholder involvement Availability and quality of data is key Value of actuarial work Be clear on your theory of value creation Recognize and respect programme drivers Work around sub-optimization Importance of transparency Importance of loss prevention