Global reinsurance capital hit new high of $675bn in 2021 –  Aon

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Global reinsurer capital increased by almost 4 percent through year end 2021 to $675 billion, driven by growth in traditional capital, slightly offset by a decline in alternative capital, according Broker Son.
The year-end 2021 figure from Aon represents growth of more than 2 percentfrom the $660 billion the firm recorded at the mid-year, and is up $25 billion from the end of 2020.
According to Aon, traditional capital increased 4.1 percent in 2021 to a new high of $579 billion, while alternative capital reached $96 billion, which is a slight decline from the end of June 2021 but above the $95 billion seen at year end 2020.
The insurance and reinsurance broker attributes the 4.1 percent growth mainly to retained earnings, as most reinsurance firms produced profitable results in 2021, despite the impacts of the pandemic and above-average losses from natural catastrophes.
“In contrast to 2021, issuances of new equity were modest and there were not any noteworthy start-ups leading up to January renewals. Nevertheless, retained earnings were sufficient to boost traditional equity by $23 billion to $579 billion,” said Aon.
Most companies showed growth, with strong stock markets driving some sizeable increases with above average allocations to equities. The reductions at IRB Brasil, Lancashire, RenRe and Conduit coincided with overall losses reported for the year, while net income of $1.4 billion at Swiss Re was outweighed by a combination of dividend payments, unrealized losses on bonds and adverse foreign exchange movements,” the firm added.
Monsoon preparation: Mumbai Airport to close for 6 hours on May 10

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One of India’s busiest airports, Mumbai’s Chhatrapati Shivaji Maharaj International Airport (CSMIA), will be non-operational for six hours on May 10th.

The airport will be closed for 6 hours as the monsoon season approaching, the airport’s runways need to be prepped for the heavy rainfall that Mumbai witnesses every year.

Continuing with its yearly practice of pre-monsoon repairs and maintenance, Mumbai airport will close its runways from 11:00 to 17:00 on May 10th. CSMIA has posted an official tweet that says that “all operations will resume as usual post 17:00 hrs on the same day.”

Every year ahead of monsoon, Mumbai airport preps its runways for the heavy rains it experiences, particularly from July onwards. CSMIA spokesperson has advised passengers scheduled to fly in and out of Mumbai that day to check with their respective airlines about the change in schedule.

The airport has issued a Notice to Air Missions (NOTAM) to all stakeholders in order to manage flights and reduce passengers’ inconvenience.

The monsoon season can be tough on Mumbai, with the city often coming to a standstill following heavy downpours and the resulting waterlogging. In the past, the city has even had to shut rail and air services as it gets flooded and clogged with water.

Mumbai airport, too, faces the brunt of severe rains, particularly when it comes to its runways. In 2010, the airport had to close its runway after its surface was damaged due to heavy rains.

Landing in Mumbai during the monsoons can also be challenging at times for pilots. In 2019, A SpiceJet 737 coming from Jaipur overshot the runway while landing amid heavy rain. The incident led to the shutdown of the main runway of the Mumbai airport, with flights canceled or diverted to the nearby airports. The aircraft was stuck at the end of the runway for days before it could be pulled out.

Sometimes, just getting to the airport in Mumbai can be a challenge when it rains incessantly. In 2019, passengers were stranded at Mumbai airport for hours, with waterlogging on roads and the subsequent traffic jams making it difficult for ground support staff, cabin crew, and pilots to reach the airport on time.

In the past, the airport has also been flooded when the nearby Mithi River overflowed during heavy rains. In 2021, floodgates were installed at the junction where the river flows into the airport to stop the ingress of water.

This year, monsoon prep is particularly important for Mumbai as domestic traffic picks back up. Mumbai airport was the worst affected among all major Indian airports in 2020-21. While passenger numbers are still below pre-COVID days, the airport also registered the highest growth in passenger numbers in 2021-22.

CSMIA has witnessed steady growth in air traffic and passenger footfall ever since India opened its borders to scheduled international flights in March. In the last month alone, the airport saw more than 600,000 passengers.

Clearly, it needs a fully functional runway in the months ahead, as passengers increasingly take to the skies in India.

Africa Re, ATI can explore underwriting AECOP – AKI boss, Gichuhi

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African insurers and reinsurers have a chance to individually weigh commercial and ethical interests in deciding whether to underwrite the controversial East African Crude Oil Pipeline (EACOP) project even as major players steer clear.
But Africa Re and African Trade Insurance Agency (ATI can explore a way to cover the project, according to Association of Kenya Insurers (AKI) chief executive Tom Gichuhi
Seven reinsurers including Munich Re, Allianz, Hannover Re, Swiss Re, Axa, Zurich and SCOR have all publicly committed that they will not underwrite the pipeline over environmental and social concerns.
More than 15 banks have also renounced the 1,445 kilometres project which when completed, will be the world’s longest crude oil pipeline.
But local insurers in the east African economies and reinsurers in Africa are being asked to individually assess what the continent stands to benefit from the project instead of following the “blanket blackout” that western banks and underwriters are giving the project.
The shareholders of the EACOP, also called Hoima-Tanga Pipeline, are TotalEnergies (62 percent) Uganda National Oil (15 percent), Tanzania Petroleum Development (15 percent) and China National Offshore Corporation (8 percent)
The Association of Kenya Insurers (AKI) chief executive Tom Gichuhi says insurers and reinsurers on the continent, backed by the likes of Africa Re and African Trade Insurance Agency (ATI) should explore the possibility of underwriting EACOP.
Mr Gichuhi adds that underwriters on the continent must be alive to the fact that the switch from hydrocarbons to renewable energy is not going to be an overnight thing.
“It is a balancing act. It cannot be an overnight thing. The switch has to be gradual otherwise it will strangle the growth prospects of the continent. Africa Re and ATI should be able to lead the pack,” said Mr Gichuhi.
“Even though we may want to move to green energy, we cannot move from hydrocarbons overnight. We will still need to use this to power our economies even as we transition.”
Both Uganda and Tanzania are signatories to the Paris Climate Agreement which seeks to limit global warming to below 2 degrees Celsius over the long term.
The agreement doesn’t however outline specific commitments for each country, leaving room for each signatory to set its own emission targets depending on the level of development and technological advancement.
A manager at Kenya Re, Linus Kowiti, a Nairobi-headquartered reinsurer with operations in Uganda, Zambia and Ivory coast – says reinsurers should view the EACOP project as “an African asset” as they decide whether to reinsure it or not.
“As an African asset we will always be willing to participate up to the level our limit permits. we should not be compelled to not insure,” says Mr Kowiti.
Kenya Re owns a 19.15% stake in Zep-Re and 11.5% in Uganda Re, making it one of the key voices on the direction such a project could go.
Mr Kowiti says Tanzania and Uganda economies can also support the project by insuring part of the risks.
EACOP opened the search mid-last year for a reinsurance and insurance programme covering the project. Tender documents showed insurance policies to cover risks in Tanzania and Uganda would be issued by Tanzanian or Ugandan insurers or a consortium of insurers. Part of the role would be servicing insurance policies during all the project phases.
TotalEnergies, a French energy company, this year announced a $10bn investment decision for the nearly 900-mile oil pipeline. The pipeline will run from Kabaale, Uganda, to a peninsula near Tanga, Tanzania from where the oil would be exported overseas.
But the project will first have to overcome local and international opposition despite TotalEnergies and its partner, China National Offshore Oil Corporation (CNOOC), forging ahead. Critics say the $3.5bn project will displace at least 14,000 households in the two countries, disturb wildlife habitats and that it could emit as much as 36 million tonnes of carbon annually.
About 260 community groups from Uganda, Tanzania, along with international organisations have teamed up under #StopEACOP to halt the project through activism. The resistance has seen many banks and reinsurers publicly declare they would not be involved in the project that is now being reduced into a roll call of who is for or against the sustainability agenda.
“We have to make a commercial decision on every project and every company should have a right to make an independent commercial decision,” says Kowiti.
There is growing activism in east Africa and the continent at large as it plays catch-up on sealing infrastructural gaps.
In Kenya, the largest economy in east Africa, the government had to reroute the Standard Gauge Railway project around concerns that the $3.6bn project would disturb wildlife habitat. The rerouting did not achieve much in silencing critics.
Kenya is also in the race to construct an 821km pipeline that will transport around 80,000 barrels of oil per day from the Lokichar oilfields in Northern Kenya to the Lamu seaport.
With all the promises such projects carry for the local economies and the continent, steering clear could also mean retarded economic growth.
Estimates by TotalEnergies and its partners for instance showed the EACOP project will create over 60,000 direct and indirect jobs during the construction and production phase. Local contractors are also expected to get $1.7bn worth of business opportunities, while the foreign direct investment of the two countries is expected to rise by 60%.
Western economies have been at the forefront in pushing for environment-friendly investments but Africa, with a huge development deficit, is posting mixed signals.
For instance, some analysts say since Uganda and Tanzania have not contributed to carbon emissions in the past compared to say the US, China and India, they should be excused to develop their economy using fossil fuels just like the west did.
In any case, there are many key projects outside Africa that are being linked to carbon emissions but have not been discredited as much as EACOP.
Australia for instance has $56bn worth of gas pipelines in development that, if all built, would pump greenhouse gases equivalent to 33 coal-fired power stations, according to analysis by the Global Energy Monitor.
The San Francisco-based research group says there are more than $1.3trn worth of oil and gas pipeline projects on the books globally.
Australia ranks fifth on a list of countries planning new pipelines, behind China, the US, India and Russia, with nearly 8,500km at pre-construction stage.
The US wants more oil from Canada and is caught between exploring a new pipeline and appeasing environmentalists who have for more than a decade opposed the controversial Keystone Pipeline.
Leaving African oil in the ground will mean turning to renewables as sources of energy, a move that looks like a high bar for a continent that heavily relies on the west for oil imports.
But while African insurers and reinsurers may want to endure the reputational hit that come with underwriting such a controversial project, there is another challenge.
The nightmare is that many of the local insurers in the region are reinsured by the likes of Munich Re and Swiss Re as backup security and may therefore struggle to offload excess risks to the international market.
“But African insurers are not necessarily limited to just these reinsurers that want to steer clear the EACOP. They can widen their net,” says Mr Gichuhi.
Both TotalEnergies and CNOOC hold licences to extract oil in Uganda and will require the pipeline to export oil out of the landlocked country.