- The insurance industry has experienced a turbulent period in recent years, dealing with the challenges of depressed premium rates, high costs, digital disruption, Brexit and Covid-19. Now, for the first time in many years, the non-life insurance sector has been enjoying increasing premium rates in many classes of business. This has brought some new investments from both new and existing capital providers and strong M&A activity.
- Whilst Covid-19 has impacted results in the short-term, the industry has shown its resilience in dealing with both the financial and operational consequences. However, there has been some damage done to the industry’s reputation and public perception, particularly in its response to business interruption claims.
- Non-life insurers are presented with a number of challenges and opportunities which they must respond to in order to survive and thrive:
- Climate change and the ESG agenda: In addition to the obvious impact on insured weather-related events, the global transition to net zero will have a far-reaching impact on insurers as they withdraw from carbon-intensive investments, business lines, and customers. Insurers’ effectiveness at responding to and proactively managing ESG issues will be closely regulated.
- Continued digital transformation: To remain competitive, insurers must undergo major process and systems change. Data excellence will be a prerequisite for successful participants in the sector.
- Capital management: To take advantage of profit opportunities, insurers must be nimble in the marshalling of capital whilst also responding to changing regulatory requirements. This may present opportunities for the legacy sector as insurers look to recycle capital deployed in under-performing portfolios.
- Economic fallout: Whilst insurers may have weathered the initial financial impact of Covid-19, global economies have been protected by government support. As this support is withdrawn, a significant increase in defaults and failures is inevitable, which will trigger increased claims activity on financial lines policies.
- Uncertain loss types: Emerging risks such as cyber are not fully understood and difficult to quantify.
- We advised a global insurance group in relation to its exposure to a UK insurance business.
- Our client needed to fully understand the balance sheet of its debtor and assess contingency options should a planned sale of the business fall through.
- We first reviewed the business’s balance sheets to help our client gain a much clearer understanding of the assets and liabilities.
- We then mobilised a multi-disciplinary team to review and understand the complex dynamics of the firm and its situation and communicate the key risks and alternative options.
- Our work allowed our client to identify a credible alternative which helped pave the way to a successful sale and reduction of their exposure.
- Supported an underperforming PE backed insurance broker who were facing acute cash flow issues and required the design and implementation of a wide-ranging turnaround plan to improve profitability and support a recapitalisation of the business.
- A combined value creation and restructuring services approach was taken, which involved embedding a small senior team into the business to support management in stabilising the cash position, improving cash visibility and forecasting and driving sustainable cash improvement.
- Our team successfully delivered and implemented a turnaround and recapitalisation of the business with the transfer of ownership to a new private equity owner, delivering £50m of run rate savings post-deal.
Business combination & refinance
- Supported two PE houses in consolidating assets into a single co-owned vehicle which would enable the newco to pursue a buy-and-build strategy. In addition, the group was seeking to leverage the assets and refinance existing debt in the various structures by raising a listed bond (requiring regulatory clearance and the alignment of independent timetables under tight PE deadlines).
- Our work included:
- Detailed structural planning;
- Key stakeholder management;
- Supporting preparation of the 5-year plan which underpinned the rights issue and refinancing process; and
- Capital markets support for the listed bond raise.
- Our team successfully delivered the initial business combination, £1bn+ bond raise and structured a 100-day integration plan.
Details of the entity providing services, legal and regulatory information in respect of the Teneo entity are also included in our engagement letters.
Teneo Financial Advisory (DIFC) Limited is authorised and regulated by the Dubai Financial Services Authority for the provision of Advising on Financial Products or Credit and Arranging Credit or Deals in Investment services
Specific information relating to our regulated entities which provide services to clients is detailed below:
|Registered Name||Legal Form||Registration Location and Reference||Registered Office||Data Protection||Regulator(s)||Professional Indemnity Insurance|
|Teneo Financial Advisory Limited||Limited Company||England & Wales, 13192958||5th Floor, 6 More London Place, London, SE1 2DA||UK - ZA920639||The Institute of Chartered Accountants in England and Wales (“ICAEW”) C008873136. All insolvency practitioners are licenced by the ICAEW. ICAEW Designated Professional Body licence for a range of investment business activities.||Details of the professional indemnity insurer can be provided on request.|
|Teneo Securities LLC||Limited Liability Company||USA - Delaware||280 Park Avenue, 4th Floor, New York, NY 10017||N/A||Financial Industry Regulatory Authority (FINRA) #151256. Securities and Exchange Commission (SEC).||Details of the professional indemnity insurer can be provided on request.|
Teneo Securities LLC’s Business Continuity Planning
Teneo Securities LLC has developed a Business Continuity Plan (“BCP”) on how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our BCP.
The Firm has developed and installed a BCP in the case of any business disruption that causes the Firm to have limited or no communications with its employees or customers. Our plan anticipates two types of business disruptions, internal disruptions which affect only our Firm’s ability to do business (such as a fire in our building) and external disruptions that prevent the operation of securities markets or other firms (such as natural disasters or acts of war).
The Firm intends to stay in business during both internal and external disruptions due to the fact that the Firm employees can conduct Firm related business from alternate off-site physical locations and the Firm maintains an alternate location for the maintenance of its books and records. We anticipate that the Firm will recover from internal business disruptions within 24-48 hours. An outage due to an external business disruption may be longer and is beyond the control of the Firm. However, the Firm will endeavor to resume business as soon as it is possible for the Firm to establish business operations from alternate off-site physical locations.
The Firm’s BCP specifically addresses the following areas related to Firm operations:
- Data back-up and recovery (hard copy and electronic);
- All mission critical systems;
- Procedures to test and determine the Firm’s ability to do business (i.e., financial and operational assessments);
- Alternate communications between customers and the Firm;
- Alternate communications between the Firm and its employees;
- Alternate physical location of employees;
- Critical business constituent, bank, and counter-party impact;
- Regulatory reporting; and
- Communications with regulators.
If you have questions about our business continuity planning, you can contact us (212) 886-1600.