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How Chubb Is Navigating Coronavirus and Its Impact on Growth

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Chubb Chairman and CEO Evan Greenberg insists his global P/C insurer has strong fundamentals, but warned at the same time that the ongoing pandemic crisis will spur unpredictable revenue challenges affecting many lines of coverage. Broadly speaking, the insurer will likely take hits on the liability side and earnings via at least a temporary reduction in premium revenues, Greenberg explained during an April 22 investor call held to discuss Chubb’s Q1 2020 earnings. “Our growth momentum, particularly in our commercial [property/casualty] business globally, continued into April, and we continue to experience improved rate to exposure,” Greenberg said. “As we go forward, offsetting that, will be a meaningful impact to growth from the health and economic crisis as exposures in important areas shrink for a time, with the impact varying by country.” Reduced Exposures Consumer-related lines including travel insurance, A&H “discretionary purchases” and automobile insurance will all take hits, as customers ride out stay-at-home orders or quarantines. Commercial lines are also vulnerable, he said, “where exposures are reduced while businesses are closed, or as they reopen and are diminished, or simply go out of business.” He expects trade credit, surety and workers compensation to also be affected by reduced exposures. “It will be pretty broadly based,” Greenberg said, noting the pandemic “has created exposures for clients and industries broadly.” Beyond that, Greenberg emphasized that the company does not give specific forward guidance, and that it is hard to specify how much of a revenue impact it will face in the months ahead. “In this case the degree of revenue impact is simply unknowable,” Greenberg said, though he added that Chubb’s fundamental condition is otherwise solid and thriving. “We are and will continue to benefit in terms of growth from improved technical conditions, as many insurance companies take actions to reduce exposures or improve their rate to exposure to correct for inadequate underwriting,” Greenberg noted. In trying to draw a parallel to past events, Greenberg said that for now, the COVID-19 crisis seems manageable even with its uncertainties. “From what we know now, this will be a manageable, cat-like event,” Greenberg said. “However, from an exposure we really don’t discretely price for … its impact is additive to our normal projected loss exposure. In a sense, it is like terrorism exposure was before 9/11.” Business Interruption Greenberg emphasized multiple times that the insurer’s capital position is “strong,” and insisted “Chubb will continue to operate at a high level.” He noted, for example, that the insurer is working to keep its 33,000 employees around the world safe by way of “aggressive work-from-home protocols” and reiterated that they have secure jobs with no-layoffs during the crisis. He also said the company is maintaining standards about how it supports customers and distribution partners, and also extending payment terms and taking other measures to support clients and others facing pandemic stresses. “We are operating around the globe as a normal company during abnormal times,” Greenberg said. Greenberg strongly opposed the pressure from states and trial attorneys to force carriers to retroactively cover business interruption claims for COVID-19 losses. He spoke on the topic recently. “That is retroactively changing contract and increasing our exposures,” Greenberg said. “That is unnecessary harm and would do great damage.” He had harsh words for trial attorneys seeking to force the change through the court system. “Lawyers and the trial bar would come to torture the language on our standard industry forms and try to prove something exists that actually doesn’t exist, and try to twist the intent when the intent is very clear,” Greenberg said. “The industry will fight this tooth and nail. We will pay what we owe.” https://www.insurancejournal.com/news/national/2020/04/27/566365.htm

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QBE backs down on trade credit controversy

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Insurance giant QBE has made a dramatic U-turn on its sudden decision to withdraw from the trade credit insurance market following major pushback from the construction industry and the federal opposition. On Saturday QBE told customers it would no longer provide trade credit insurance for businesses with a limit of less than $US250,000 ($410,000), in an effort to protect itself from the fallout from the coronavirus crisis. That meant suppliers selling on credit products worth up to $410,000 would not be insured in the event that some customers failed to make the payment. Many suppliers cannot afford to sell on credit without trade credit insurance. But following a flood of complaints and media scrutiny, including in The Australian Financial Review, and amid warnings that the move could bring much of the construction industry to a screeching halt, QBE said it would reinstate around 7000 of the 9000 blacklisted companies. However they would only be covered for 50 per cent of their original limit. A QBE spokesman said those 7000 businesses included “key businesses in the construction industry whose feedback we have heard and responded to”. Debra Bourke, the owner of the Macarthur Frames and Truss factory in western Sydney that supplies the building industry, many of whose customers were blacklisted by QBE, said the U-turn did not go far enough. Ms Bourke learned of QBE’s original decision on Monday morning from her insurance broker. “I went into a panic situation,” she told the Financial Review before QBE announced its backtrack. “Without that cover I would have no choice but to shut up shop.” She said if building suppliers were forced into hibernation, a big part of the construction industry could be forced to shut down. “If we don’t supply frames and truss to sites, there are no bricklayers, carpenters, plumbers, nothing. It all stops. And then you have millions of people lining up for Centrelink,” she said. She tried to negotiate with QBE for a solution, without success. So she wrote to her local MP, who forwarded her complaint to shadow financial services minister Matt Thistlethwaite. Mr Thistlethwaite called QBE, and after some wrangling, the insurer was persuaded to make some concessions for Ms Bourke She said she was concerned other suppliers to the building industry wouldn’t get the same special treatment. “We are one of those industries that is able to function [during the coronavirus crisis] and not put pressure on the government. But they do this to us and we will just be another tragic story of an industry forced to shut down.” Trade credit insurance policies give the supplier payout limits for each of its customers. If a customer limit is $1 million, the policy will cover the supplier for unpaid invoices of up to $1 million for that customer. At the weekend QBE withdrew cover on a large number of businesses with a limit of $US250,000 ($410,000), and massively reduced cover for all higher limits. The decision did not apply to essential services such as food, pharmaceuticals, agriculture and telecommunications. Construction was not considered essential. Ms Bourke said while she had never had to make a claim, she would not supply on credit without insurance. A Brisbane-based supplier of plasterboard and other building materials to the construction industry, which asked not to be identified, said if QBE followed through with its plan, then it would have to stop supplying those blacklisted companies. “Do I want to offer $300,000 credit without any guarantee? Not in the current climate,” a spokesman for the supplier told the Financial Review. He said the loss of business would likely knock 25 per cent off revenue and force the company to lay off employees, adding his customers would be worse off still, and some might fold. “If we withdraw cover on them, I think there is a chance they will go broke.” Also speaking before QBE’s late announcement, Graham Wolfe, managing director of the Housing Industry Association, said it was difficult to quantify the impact of QBE’s decision on the construction industry, but it would “have a significant impact on thousands of businesses in the building industry “There are some businesses out there whose supplier now has given them zero credit. They are either going to have to find the cash to pay upfront, or they won’t order. “A lot of our members are citing years and years of loyalty and partnership, and this. It comes as a tremendous shock to do it across the book.” He said the consequences for the industry would become apparent within a couple of weeks. Minister for Housing and Assistant Treasurer Michael Sukkar did not address the specific issue, but said the government would “continue to work with insurance companies who have a responsibility in this Team Australia moment to help their customers get to the other side”. The Financial Review understands QBE has asked the government for help. Matt Thistlethwaite, Labor’s shadow financial services minister, had earlier urged QBE to reconsider its decision. “Many SMEs may not survive, and more workers will end up needlessly entering the unemployment queue. We’ve asked QBE to recondsider their decision at least until insurance contracts are up for renewal. I can understand if they’re talking about new customers, but to do it it mid contract and leave a lot of these business without cover is pretty poor form,” he said. https://www.afr.com/companies/financial-services/qbe-backs-down-on-trade-credit-controversy-20200402-p54gcj

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Swiss Re Americas Issues Public Comment on Treasury’s Fiscal Service Bureau

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WASHINGTON, March 6 — Matthew Wulf, head of state regulatory affairs at Swiss Re Americas, Armonk, New York, has issued a public comment on the U.S. Treasury Department’s Bureau of the Fiscal Service notice entitled “Surety Companies Doing Business with the United States; Request for Information”. The comment was written on Feb. 13, 2020, and posted on March 5, 2020: Thank you for the opportunity to respond to the Bureau of the Fiscal Service’s (Bureau) Request for Information (RFI) on the corporate federal surety bond program. The most important element Treasury and the Bureau can address to modernize and improve the surety bond program is to reconcile the inconsistency between state insurance regulation and the Bureau’s current practice regarding recognized credit for reinsurance and required collateral. Treasury should amend its rules to: (1) allow credit for reinsurance that is provided by reinsurers that meet certain stringent requirements such as those contained in the covered agreements and the recently revised NAIC Credit for Reinsurance models and (2) eliminate collateral requirements for non-US reinsurers from reciprocal jurisdictions that are recognized at the state level as meeting stringent requirements protecting U.S. ceding insurers. The Bureau has a historic view that uncollateralized reinsurance recoverables of a non-US reinsurer may not be counted as an asset for a capital and surplus calculation. This position is out of step with the authoritative sources of reinsurance collateral regulation in the United States, i.e., standards set by the National Association of Insurance Commissioners (NAIC) in 2010 and codified in all states’ laws and regulations. Additionally, it is inconsistent with the purpose of the Dodd-Frank Act, Title V, and recent US-EU and US-UK covered agreements. Thus, the inconsistency exists not only between the Bureau and state law, but also between the Bureau and federal law, and within Treasury itself, between the Bureau and the Federal Insurance office (FIO). A minor change to the application process, data considered, and the analytical methods used in evaluating financial condition will resolve this inconsistency and will not result in diminished protection of US government interests. The Bureau should revise its practices and rules regarding credit for reinsurance to align analysis by Treasury with the analysis conducted by state insurance regulators. Additionally, Treasury’s collateral requirements should be consistent with those it has directed state regulators to adopt and those that Treasury has itself negotiated in the covered agreements. These changes will not negatively affect the ultimate ability of a surety company to carry out its contracts and will not harm the financial interests of the United States or its taxpayers. As the Bureau of Fiscal Service explores ways to modernize and improve how it evaluates the financial condition of companies seeking to underwrite and reinsure federal surety bonds or act as admitted reinsurers, it is important to appreciate that notwithstanding the “doing business with the United States” scope of Treasury’s regulation, it has been historically de facto regulation of both governmental and non-governmental surety bond business. Thus, the scope of consideration must go beyond strictly federal surety interests. Responses to specific RFI questions Because Swiss Re’s comments all center on the treatment of credit for reinsurance, the following should be considered responsive to the RFI questions 1, 3, 4 and 5. The practice by the Bureau of Fiscal Service of not recognizing uncollateralized reinsurance that is otherwise recognized on company statutory financial statements by the states is inconsistent with the primacy of state regulation, inconsistent with public policy enshrined in the US-EU and US-UK covered agreements, punitive to companies complying with state prudential insurance regulation, and it does nothing to further protect the financial interests of the United States or its taxpayers. US public policy on reinsurance regulatory collateral requirements has been clearly articulated by Treasury through the Federal Insurance Office via the covered agreements and establishes that financially sound, well-regulated companies may provide creditable reinsurance to US cedents without the need for 100% regulatory collateral. The decision to move from a 100% collateral system for non-US assuming insurers to a system based on financial soundness, business practice, and regulatory reliability was made after years of debate and has proven to be sound public policy. Since non-US assuming insurers began providing reinsurance without 100% collateral in 2010, there has been no corresponding increase in uncollectible reinsurance. In order to be eligible to provide creditable reinsurance to US cedents, non-US reinsurers must comply with rigorous financial statement/condition filing requirements at the state level and their home country must be vetted and approved by a state as a qualified or reciprocal jurisdiction. A Bureau of Fiscal Service determination of credit for reinsurance on a separate basis than the states undermines the state-based insurance regulatory system in the US and could be the basis for a US state to challenge the preemptive authority of the FIO to enforce the covered agreements. Because the Bureau of the Fiscal Service and FIO both sit in Treasury, the failure of one office to recognize the public policy set by another establishes the argument that an integral purpose of the covered agreements is frustrated and without meaning, and therefore is unenforceable. Further, a second key element of the covered agreements is the recognition of US state regulatory authority and prohibition against local presence and other doing business requirements abroad. If the EU or UK believes a covered agreement is not being enforced, non-US countries will be able to retaliate against US companies doing business internationally. Fiscal Service could accomplish the proper credit for reinsurance recognition solely through the annual letter. However, if a change in regulation for clarity is desired, the following amendment to section 223.9 is recommended (new language underlined): Sec. 223.9 Valuation of assets and liabilities. In determining the financial condition of every such company, its assets and liabilities will be computed in accordance with the guidelines contained in the Treasury’s current Annual Letter to Executive Heads of Surety Companies. However, the Secretary of the Treasury may value the assets and liabilities of such companies in his discretion.

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SBA Recognizes FY19 Most Active Surety Companies and Agencies

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WASHINGTON, DC – The U.S. Small Business Administration announced on Wednesday its most active surety companies and agencies for fiscal year 2019, which contributed to increases in the Surety Bond Guarantee (SBG) Program’s activity. “The SBA is very fortunate to partner with sureties and agents with a shared vision of assisting small and emerging businesses,” said Peter C. Gibbs, Director, SBA’s Office of Surety Guarantees. “Every year I am amazed by the level of commitment from our partners to increase opportunities for the small business community.” The SBA’s Surety Bond Guarantee Program, in direct partnership with surety companies and their agents, provides surety bond guarantees for small businesses on federal, state, local and private projects. Commercial construction, service and supply contracts and subcontracts are eligible if the contract requires a surety bond. In FY 2019, the SBA’s guaranteed bid and final bonds were more than $6.4 billion in total contract value. With the work of the SBA’s top-performing surety partners and bond agencies, over 1,900 small businesses were assisted and over 30,000 jobs were supported. The standing of each surety partner and agent was determined by the number of bond guarantees they wrote through the SBG Program. The top-performing surety partners for FY 2019 are: American Contractors Indemnity Company, Calif.United States Fire Insurance Company, PaU. S. Specialty Insurance Company, Calif.Travelers Casualty & Surety Company, Conn.United States Surety Company, Md.Markel Insurance Company, TexasDevelopers Surety & Indemnity Company, Calif.Contractors Bonding and Insurance Company, Wash.Navigators Insurance Company, N.J.The Guarantee Company of North America, Mich. The top-performing bond agencies for FY 2019 are: CCI Surety, Inc., Minn.KOG International, Inc., N.J.Nielson, Hoover and Company, Fla.The Fedeli Group, OhioValley Surety Insurance Agency, Calif.Preferred Bonding & Insurance Services, Calif.Pinnacle Surety & Insurance Services, Inc., Calif.The Surety Place, Ariz.Brunswick Companies, OhioCapstone Brokerage, Inc., Nev. https://www.prnewswire.com/news-releases/sba-recognizes-fy19-most-active-surety-companies-and-agencies-300991626.html

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Chubb Introduces First-of-Its-Kind Financial Institution Fidelity Bond to Address Unique Risks Faced by Asset Managers

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WHITEHOUSE STATION, N.J., Dec. 17, 2019 /PRNewswire/ — Chubb (CB) has introduced a new fidelity insurance solution, the Financial Institution Bond for Asset Managers, to address the unique range of risks faced by today’s asset managers. This new financial fidelity bond provides modernized coverage for a range of risks that can result in loss of customer capital. These types of risks often stem from fraudulent activities of employees, computer hacking and impersonation of executives, clients, and counterparties. Chubb (CB) designed its new fidelity bond in response to the changing risks associated with advancements in technology used by advisers to manage assets. According to a 2017 PwC report on the future of the asset and wealth management industry, assets under management globally are expected to exceed $145 trillion by 2025. “The asset management industry is growing at a rapid pace, and safeguarding customer capital is top of mind for asset managers,” said Michael Mollica, Executive Vice President, Chubb North America Financial Lines. “Given today’s digital environment, it has never been more critical for asset management firms to ensure they have the right coverage in place to address a range of new risks.” According to The Financial Crimes Enforcement Network, since 2016, there have been more than $9 billion in possible losses affecting U.S. financial institutions and their customers as a result of business email compromise schemes Chubb’s (CB) new Financial Institution Bond for Asset Managers solution provides an extra layer of protection for exposures that may not be covered under existing policies, including: financial loss resulting from unauthorized access to the firm’s computer systems by hackers, including the use of malware and viruses; unauthorized access to a firm’s network, including mobile applications and customer web portals; the transfer of the firm’s capital or its customers’ capital through fraudulent instructions over the Internet, email or telephone; and,/ul> impersonation of an employee or known vendor that causes the firm’s funds to be fraudulently transferred by an authorized employee. For more information about Chubb’s (CB) Financial Institution Bond for Asset Managers, contact your local Chubb (CB) agent or broker. http://news.chubb.com/2019-12-17-Chubb-Introduces-First-of-Its-Kind-Financial-Institution-Fidelity-Bond-to-Address-Unique-Risks-Faced-by-Asset-Managers

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Surety Bond Producers Keep Eye Out For Illegal Waivers

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A report from the annual convention of surety brokers and agents The surety bond industry regularly reminds state and local governments, politely, that public works in all states must involve surety bonds That’s the law. And the National Association of Surety Bond Producers, the bond agents trade group, has been letting state and local officials know, in writing. The reminder letters are a small but telling part of the surety industry’s ongoing efforts to defend laws and rules requiring bonds. That also helps the industry hold on to its market share. Since last year, the NASBP has been sprucing up the industry’s image with a media campaign. The campaign and the letters are needed because of inroads by subcontractor default insurance, a competing product, and the tendency of owners to sometimes waive bond requirements. Robert Shaw, outgoing president of the NASBP, reminded his colleagues in a welcome to the group’s annual convention in Austin earlier this month that his theme has been “sell more bonds.” Shaw also made a point of thanking the association staff for reminding state and local governments of their obligations under state and local laws and rules. In addition to project completion guarantees, Shaw said in an interview, surety bonds guarantee payments “and are the only product that provides all the protections.” Just how often state and local governments waive surety bonds on projects isn’t clear. But when the NASBP staff hears about a bond being waived, it issues a letter explaining the risks and issues raised in violating state surety requirements. The surety laws on the books in all 50 states are known as the Little Miller Acts, named for the federal law requiring surety protection on U.S. public works. The Miller Act requires that prime contractors for the construction, alteration, or repair of projects valued at more than $100,000 furnish a completion and a payment bond, according to the U.S. General Services Administration. Federal Acquisition Regulation (FAR) Part 28 requires the bonds only on contracts that exceed $150,000. The payment bond protects subs and material suppliers. Other protections may cover smaller projects. State surety laws vary. Most states require bonds to cover the full contract value, but there are exceptions. Alabama only requires a payment bond at 50% of the total contract value, according to the website of National Surety Services, an agency. The NASBP staff refers to the letters it sends out as comment letters. Mark McCallum, the association’s chief executive, said in an interview that state and local officials may not know about surety requirements or what happens if they are violated. So when the association staff hears about a bond being waived, NASBP’s job “is to educate them.” The letters go out from Martha Perkins, the association’s general counsel. “We’ll put in the actual language of the statute or rule or regulation and say that this basically violates the law and you need to fix it,” she said. There is another type of educational letter that NASBP sends out. It explains to state and local officials that requiring bidders to supply only bonds from sureties with the highest financial strength ratings restricts the pool of competition of among contractors—and is very likely unnecessary. For example, a state or local government that insists that contractors provide bonds only from sureties with an A+ rating may not understand that a rating of A- is considered excellent. Opening up the range of bonds, said McCallum, opens the field of competition to more small or minority contractors while still providing a very reliable guarantee. Some state surety laws or rules do specify that contractors supply bonds of a particularly financial strength rating. A company such as A.M. Best Co., for example, provides a rating (from A+ to D) and a financial size category, according to the Surety & Fidelity Association of America, a trade group. Financial strength ratings “are very important and we should always be mindful of them,” said McCallum. “But if you reach for the moon you are eliminating the opportunity of many contractors to compete for that work as well as increasing the price.” https://www.enr.com/articles/46783-surety-bond-producers-keep-eye-out-for-illegal-waivers

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Sompo International completes acquisition of Lexon Surety Group

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Bermudian property and casualty (P/C) re/insurer Sompo International Holdings (SI) has acquired Lexon Surety Group (Lexon), the second largest independent surety insurer in the United States. Lexon is comprised of Lexon Insurance Company, Bond Safeguard Insurance Company and Fortress National Group. The acquisition is expected to positively impact the subsidiaries’ financial strength ratings. Lexon staff and office locations are to be integrated with SI’s Surety business under the leadership of Christopher Sparro, Chief Executive Officer (CEO) of U.S. Insurance Brian Beggs, Executive Vice President (EVP), Sompo International Surety will lead the combined operation and will relocate to Lexon’s headquarters in Mt. Juliet, Tennessee. SI is to continue offering the same array of commercial and contract surety bonds, court and probate bonds, and U.S. Custom bonds products Lexon has offered since 2001. Commenting on the acquisition, Sparro said, “We are very excited to welcome Lexon into our U.S. Insurance operation. They have an excellent reputation and their technical underwriting proficiency is closely aligned with our corporate culture. The combined organization will be one of the ten leading insurers in the U.S. surety market, significantly contributing to our strategic expansion in the U.S.” Beggs added, “Lexon has a reputation for quality products and strong distribution relationships which are highly complementary to our current surety capabilities. Their nationwide network of agents and brokers coupled with expertise in specialty niches such as energy will enable us to substantially accelerate the growth of our primary surety portfolio.” https://www.reinsurancene.ws/sompo-international-completes-acquisition-of-lexon-surety-group/

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Chubb: Our willingness to roll up our sleeves sets us apart

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There are very few insurance carriers willing to “roll up their sleeves” and “dive head first” into a complex surety deal. The surety marketplace can have fierce competition and small profit margins. Insurer Chubb has an integrated global surety division under the leadership of Stephen Haney. Chubb’s surety team brings a “can do spirit” to the marketplace, and works hard to help enable a deal, explained Craig Gortner, Senior Vice President of Commercial Surety at Chubb. Chubb’s team of experienced professionals were recently involved in the execution of a complex surety bond for Altán Redes – a consortium backed by US-based Morgan Stanley Infrastructure Fund and the International Finance Corporation – which went on to win an international bidding process and contract to set up a nationwide shared wholesale 4G LTE telecommunications network in Mexico. Once completed, the open access wholesale wireless network is set to cover 92.2% of Mexico and 112 million people in less than seven years, using 4G LTE technology. Putting a surety bond in place for the project was no easy task. It required Chubb to draw on several different departments throughout its organization, within and outside of Mexico, all working towards a shared objective of finding the best possible surety solution for the project. From the outset of its involvement, Chubb worked closely with teams assigned by Altán Redes. Achieving a successful surety outcome required clear communication and cooperation between teams in various areas including commercial, underwriting, operations, legal, finance, accounting, and global accounts. “Chubb’s multinational identity and platform, as well as its financial strength and stability, helped accomplish this objective,” according to Gortner. “When it comes to a complex deal for a US-based investor who wants to get involved in a project outside the US, teaming up with the right surety company and broker is very important,” Gortner told Insurance Business. “Many carriers approach surety underwriting by simply looking at the four corners of a document. They want a deal that’s already done and dusted. “At Chubb, we’re willing to sit down, roll up our sleeves and dive head first into the details of a transaction to figure out whether or not a surety bond is feasible. Our willingness to get involved sets us apart from our competition. Our clients respect and appreciate that Chubb is willing and able to invest the time and resources to help them make their deals happen.” https://www.insurancebusinessmag.com/us/chubb/chubb-our-willingness-to-roll-up-our-sleeves-sets-us-apart-98332.aspx

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Sompo International U.S. Insurance to Acquire Lexon Surety Group

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Sompo International, a Bermuda-based specialty provider of property and casualty insurance and reinsurance, announced today that its U.S. Insurance platform has reached an agreement to purchase the operating subsidiaries of Lexon Surety Group LLC (Lexon). \ Lexon, the second largest independent surety insurer in the U.S., is comprised of Lexon Insurance Company, Bond Safeguard Insurance Company, and Fortress National Group LLC. The group has been offering a broad array of commercial and contract surety bonds, court and probate bonds, and U.S. Custom bonds through a nationwide network of agents since 2001. Mr. Christopher Sparro, CEO of U.S. Insurance at Sompo International, who will be appointed Chairman of the Lexon Board, commented, “Lexon has a strong reputation in the surety market, and this acquisition will position us to substantially accelerate the growth of our U.S. primary surety portfolio and our presence in this specialized market. Lexon’s team brings to the table strong distribution relationships with a nationwide network of agents and brokers as well as specialty expertise across their surety and bond offerings, which are highly complementary to Sompo International’s existing product capabilities.” Mr. Jack Kuhn, CEO of Global Insurance at Sompo International, added, “This acquisition is another step in the ongoing expansion of our U.S. Insurance capabilities into markets that complement our current operations. Lexon’s culture and business mix will be an excellent addition to our existing surety insurance group, allowing us to provide additional product capabilities to our valued customers, and creating value for our combined operations and our business partners. We look forward to welcoming the Lexon team to Sompo International.” Mr. David Campbell, President of Lexon, stated, “The Lexon Surety Group employees are very pleased to join the Sompo International organization. Lexon’s organic growth to a top ten surety insurer was made possible by Lexon’s highly experienced staff and my cofounders, Brook Smith and PVM Ventures. Combining Lexon’s proven customer-oriented service and Sompo International’s financial strength will provide Lexon and Sompo International with a formidable platform in the surety insurance industry.” Lexon’s staff and office locations will be retained. Mr. Campbell will continue in his role as President of Lexon and will be appointed Vice Chairman of the Lexon Board. Mr. Brian Beggs of Sompo International will become the Chief Executive Officer of Lexon. The transaction is expected to close in March of 2018, following regulatory approvals. TigerRisk Capital Markets & Advisory served as financial advisor and Cadwalader, Wickersham & Taft LLP served as legal advisor to Sompo International. Hales Securities, LLC served as exclusive financial advisor and Bingham Greenebaum Doll LLP served as legal advisor to Lexon. http://www.sompo-intl.com/news/sompo-international-us-insurance-acquire-lexon-surety-group

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Trisura Reviews Construction Lien Act (Bill 142)

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Canadian Surety Brokers and Bill 142 TORONTO, Dec. 8th, 2017 /insPRESS/ – The Construction Lien Act, Bill 142, which recently passed after an 87-0 vote in the Ontario Legislature brings about several long awaited improvements for the Ontario construction industry. While the new legislation is limited to Ontario, it has the potential for national ramifications as other provinces continue to update their lien acts which include grappling with prompt payment. The new legislation presents a significant opportunity for brokers to assist their clients in understanding and navigating some of the potential impacts that the new legislation may have. Here is a basic rundown of Bill 142: Long overdue updates to 35 year-old legislation that includes payment protection throughout the construction pyramid Contractors and sub-contracts now have security and assurance regarding timelines for payment Mandatory performance and payment bonds on publicly funded projects over a threshold contract price (similar to the Miller Act in the United States) The adjudication process will now provide an opportunity for resolution of construction disputes without disruption of project schedule and will assist in avoiding costly legal battles No-exceptions rule to hold-back release deadlines means a no-exceptions rule to when contractors and sub-contractors get paid Mandatory payment protection for sub-trades Not only does this present an opportunity for brokers to lead the discussion with existing clients on how the above will impact their business but it will result in a new group of contractors reaching out for brokers support and advice in preparing to provide bonds where they otherwise may not have been required in the past. This is a generational opportunity that has the potential to increase the Ontario surety premium pool in a material way. Early in the lien act review process, The Surety Association of Canada commissioned a report by The Canadian Centre for Economic Analysis (CANCEA) which provided an impartial look at the value of surety bonds in Canada. The findings strongly supported the economic value of surety bonds in protecting the construction process and the wider economy. This report was instrumental in demonstrating the value of our industry’s primary product. Throughout this process, Trisura has had members of various working groups participating in discussion and development related to the surety bonds and their role in the lien act review. We are certainly excited at the outcome and look forward to further developments as regulations are crafted, as this is where all the details will be contained about the new act. As the construction landscape continues to shift, Trisura continues to innovate with new offerings like our e-bond Platform which was launched in 2017 to provide Trisura brokers and contractors access to a free online platform to procure their electronic bonds. We’ve also developed the Contractors Bond Program which provides brokers with the ability to obtain modest surety credit for their clients through a streamlined, online process. As always, we remain committed to you, our broker partners, and the Canadian construction industry as a whole and look forward to supporting you through this transition. https://www.canadianunderwriter.ca/inspress/trisura-reviews-construction-lien-act-bill-142/

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