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ACE Limited Message Board

  • newuseratlast newuseratlast Jan 29, 2006 9:45 PM Flag

    CV STARR

    Any idea what types of business ACE and Berkshire Hathaway will transact with CV Starr?

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    • The question remains: did Evan consult the ACE Board of Directors before agreeing to go into business with MRG? He had to know that this would antagonize Spitzer, and ACE has yet to reach a settlement with him. So why aggravate someone you are going to have to settle with? I can't imagine the BOD saying that the benefits of such an arrangement outweigh its risks. If they were asked.

    • Hey Respect:

      <<It never ceases to amaze me how such a class of business can consistently prove to be priced unattractively and loss generating, yet still attract what are otherwise sound underwriters>>

      That is an extremely good point and there's no rhyme nor reason to why aviation insurers do this year after year after year.

      Frankly I think its the Reinsurers who keep providing the fuel to keep this fire burning ad infinitum. In turn these Reinsurers are backed by the biggest institutional lenders and banks.

      Back in the mid 1980's Reinsurers wavered when banks/institutions threatened to cease backing them. The result was utter chaos for aviation policyholders - higher limits that these operators needed were either totally unavailable or astronomically expensive. Premiums at all levels of aviation rocketed up and resulted in a bonanza for aviation insurers who still had enough net capacity to keep writing the business. Then, 18 months later, the banks/institutions were back and premiums plummeted. This caused enough angst that it has not since been repeated (excepting the period just after "9/11").

      One would think that savvy Reinsurers would learn not to perpetuate this behavior (i.e.: depressing premiums by providing too much security) but they just don't seem to get the message.

      Meanwhile I take your point about ACE only participating in USAIG's general aviation pool...you're right and I stand corrected, if they participated across all USAIG pools they would be poaching on Ariel's turf which would bring howls of protest out of Lloyd's - not just Ariel. However, that tends to add weight to my previous theory - i.e.: if ACE won't let their participation in USAIG compete with their Ariel Syndicate writings why would they want to write CV Starr's business in competition with their participation in USAIG's general aviation pool?

      Perhaps, to answer my own question, ACE is thinking of pulling out of their agreement with USAIG. If so, then it would make sense for them to cosy up to CV Starr.

      However my gut feeling is this won't happen in the foreseeable future. Even with Spitzer's attention being drawn away from AIG, ACE and the rest of the Insurance Industry as he focuses on his run for Governor of NY, there are plenty of State Insurance Commissioners who have piled on in Spitzer's wake and they'll be looking for anything that even looks like it might smell a little fishy to aid their own political agendas. IMHO Ace management will not want to risk such unwelcome attention at this time for so little likely reward.

      Colvin

    • Amen. As always, Respect you have spot on insight regarding this state of affairs as well as a practical and a propos comeback.

    • Aviation and Energy.

      • 1 Reply to garhighway
      • Don't know about Energy but I sincerely doubt that it'll include Aviation.

        ACE is currently a member company of USAIG (a Berkshire Hathaway unit) which is the largest Aviation Insurer in North America.

        ACE USA also has a seperate Airport & Special Risks Division - specializing in U.S. municipal airports & aircraft risks - this division competed "head on" with those AIG Aviation Underwriters that deserted to join CV Starr.

        ACE also writes international Aviation Insurance and Reinsurance business - including Airline and Aircraft Products Manufacturers risks - through their Syndicates at Lloyd's, London.

        There's really no room for any more Aviation without ACE competing with itself for the business which, of course, doesn't make any sense!

        Colvin

    • Mostly rigged bids and phoney quotes. Starr will toss em a bone now and then to make it look legit.

 
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