Allianz, Munich Re insurance solution ‘Cloud Protection’

Allianz Global Corporate & Specialty (AGCS), the corporate insurer of Allianz SE, and Munich Re have jointly developed a new commercial cyber risk insurance solution called “Cloud Protection +.”

This collaboration provides state-of the-art insurance exclusively designed for customers of Google Cloud enrolled in Google’s new “Risk Protection Program.

The Risk Protection Program consists of two components: Risk Manager, a new tool that helps determine a customer’s security risk posture on the cloud, and Cloud Protection Plus + – a new cyber insurance solution built exclusively for Google Cloud customers.

Under Cloud Protection +, clients are offered, subject to underwriting eligibility, a new type of protection against cyber incidents within their own corporate environment as well as incidents related to Google Cloud. Target customers for this solution are US-based Google Cloud users, though this offering may be offered globally at a later date.

Companies are increasingly using cloud-based solutions: according to Gartner Research, by 2024, more than 45 percent of IT spending will shift from traditional solutions to the cloud. Cloud usage comes with many benefits, such as lowered cost, enhanced data analytics and expanded collaboration, but also new potential risk around security, compliance and data privacy.

“As one of the top three global business risks in the Allianz Risk Barometer 2021, cyber risk is complex and ever-changing, and cloud exposures are among today’s most relevant threats,” stated Thomas Kang, North American Head of Cyber, AGCS.

To address a developing market need with Munich Re along with a major cloud platform provider such as Google Cloud is ideal. We not only obtain valuable insights on a company’s security posture, but remain at the forefront of understanding and managing emerging risks associated with cloud architecture and latest client needs.”

The new product allows both carriers to utilize Google Cloud’s proprietary assessment tools to harness stronger underwriting variables, yielding a more data-driven risk evaluation and underwriting process. Each carrier will use the data from Google Cloud’s Risk Manager reports to simplify the insurance application and risk assessment. Conveniently, carriers receive reports directly from the clients through the Risk Manager tool.

“It is optimal for industry peers to establish custom products that move the needle in today’s corporate environment,” added Jody Yee, Managing Director for Alternative Risk Transfer, AGCS. “We are meeting latest coverage needs with viable solutions to meet changing business dynamics.”

Cloud customers, especially those in regulated markets such as financial services and healthcare, are concerned about security and reliability in the cloud as they run the risk of high-profile data breaches and outages. Some have resulted in great financial and reputational loss or even business closures. Whether it stems from an external cyber-attack, human error or a technical failure, the Allianz Trend in Cyber Risk report further points out that business interruption (BI) due to security issues, is the main cost driver behind cyber claims; it accounts for nearly 60% of the value of all claims analyzed, with the costs associated with data breaches ranking second.

AGCS launched its first standalone cyber insurance product in 2013, and has seen steady growth since in all key markets, globally. As the demand for cyber coverage has evolved, Allianz launched its Cyber Center of Competence in 2018. The center, embedded into AGCS, focusses on coordination and alignment of cyber underwriting for the commercial insurance segment within Allianz Group, adopting a prudent approach as both cyber risks and claims are increasing.

Recent priorities include the development of a new underwriting approach to clarify exposures – particularly silent cyber – across commercial property and casualty policies. Product governance and harmonization as well as the further expansion of the global service provider network for cyber policyholders are also key areas under review.

Munich Re records 55% net profit in 2020

Dr Joachim Wenning, chair of the board of management at Munich Re

 

Munich Re reported a 55 percent fall in net profit last year to €1.2bn despite 18 percent growth in ERGO’s contribution to €517m, as the group was struck by €3.4bn of Covid-19 losses.

The group’s reinsurance business saw profit drop 69 percent to €694m in 2020, as the bulk of the group’s heavy Covid-19 losses hit the unit, with primary insurer ERGO reporting just €64m of pandemic claims.

CEO Joachim Wenning said “all the pieces are in place” for the group to return to pre-pandemic profit targets of €2.8bn in 2021. He said Munich Re would have met this target last year without Covid-19.

Munich Re’s combined ratio deteriorated to 105.6 percent last year from 100.2 percent. Major losses in excess of €10m each totalled €4.69bn for 2020 and €1.19bn for Q4.

The group said major loss expenditure at 20.8 percent of net earned premiums exceeded the long-term average of 12 percent. Covid-19 losses together with manmade claims totalled €3.78bn in 2020. But nat cat losses of €906m were lower than expected. Hurricane Laura was the costliest catastrophe of the year for Munich Re at €280m.

The group reported a drop of more than 2 percent in Q4 profit to €212m, on the back of a 35 percent fall in reinsurance to €75m, and an increase at ERGO to €136m.

For full-year 2020, ERGO was close to meeting its pre-pandemic original profit target of €530m after ERGO International saw its profit more than double to €230m from €105m, and its combined ratio improve to 92.7 percent from 94.3bpercent in 2019.

The group’s 2020 operating result dropped 42 percent to €1.99bn, after a 62 percent fall in reinsurance to €984m from €2.6bn in 2019.

Gross premiums written increased almost 7 percent to €54.9bn last year, driven by 10 percent growth in reinsurance business to €37.3bn, while ERGO recorded a drop of 0.5 percent to €17.6bn.

At key renewals in January 2021, Munich Re recorded an 11 percent increase in the volume of business to €11.6bn. Rates were up 2.4 percent across its global portfolio and terms improved, particularly in non-proportional business. Half of Munich Re’s P&C business was renewed in January and the group said it expects further rate hardening in April and July renewals.

Mr Wenning said Munich Re was still able to make a profit and return a dividend to shareholders in 2020, despite the impact of Covid-19. He said the group entered 2021 with confidence.

“Our reinsurance business is ideally positioned to resolutely exploit opportunities for profitable growth in the improved market environment. And ERGO is performing well following the successful conclusion of its strategy programme,” Mr Wenning said.

He added that the group will hold off from the launch of a new share buyback programme. “Our shareholders will benefit more from investments in the attractive business opportunities now emerging,” he said.

Moody’s analyst Christian Badorff said Munich Re performed better than some of its peers and benefited from ERGO as “a good diversifier in 2020”.

“In the recent P&C reinsurance renewals, Munich Re has been able to grow its book by 11 percent also benefiting from price hardening, and we think this will support underlying earnings in 2021. Group Solvency II at 208 percent continues to be strong, but we note a material weakening from the pre-crisis levels of 237 percent at year-end 2019, driven mainly by the growing book of business, low yields and increasing credit risk,” Mr Badorff said.