Miller and Aon looking for Zurich replacement on Intl Group 5% private placement

Zurich is not renewing its 5 percent multi-year private placement on the International Group of P&I Clubs’ $3.1bn reinsurance program, while Sompo and Hannover Re are seeking to renew their 10 percent positions with updated terms following the Baltimore bridge loss, The Insurer can reveal.

Market sources have told this publication that Miller and Aon, the co-brokers of the International Group’s excess of loss program, are now out in the market trying to find a replacement for Zurich.

There are three private placements that sit within the $650mn excess $100mn layer on the latest iteration of the International Group’s vast XoL program.

Of those, Zurich’s 5 percent private placement is the smallest of the three. The other two 10 percent private placements are placed with Sompo and Hannover Re.

All three multi-year private placements will expire on 19 February 2025 at the end of the mutual P&I market’s 2024/25 policy year.

But while sources said Sompo and Hannover Re are currently in negotiations to renew their respective 10 percent private placements, Zurich will not be renewing its participation on the program.

Zurich took on the 5 percent private placement on the program at the beginning of the 2023/24 P&I policy period for two years.

In response to Zurich not renewing the 5 percent line, Miller and Aon are currently trying to drum up interest to replace the European insurance giant ahead of the program’s renewal on 20 February next year.

While the International Group’s 2023/24 XoL program renewed following what the organisation – which provides reinsurance coverage to 12 P&I-focused mutual members – described as a “relatively benign” prior 12 months for claims within its pool, the environment is markedly different heading into 2025.

The industry is still trying to establish a likely quantum for its loss from the Baltimore bridge collapse.

And the renewal of Sompo’s and Hannover Re’s 10 percent private placements are expected to reflect that uncertainty, with sources indicating the two companies have pushed for higher rates to take into account the Baltimore bridge loss, a claim that has been described as potentially the largest to ever hit the marine insurance market.

At present, questions over the loss quantum await the verdict from litigation by the vessel’s owner and manager in an effort to limit their liability to $43.67mn under an 1851 maritime law.

Definitive estimates have also been muddled by legislation from US representatives that may alter this act. If passed, the legislation would increase liability for foreign-flagged ships to 10 times the value of the vessel and its cargo, minus expenses. Critically, it would also apply retrospectively to the Baltimore bridge claim.

Miller and Hannover Re declined to comment. The International Group, Zurich, Aon, Sompo had not responded to a request for comment at the time of publication.