Dec 11, 2008
SACRAMENTO, DECEMBER 11 —The California Earthquake Authority Governing Board today approved a team of reinsurance intermediaries to work on the CEA’s behalf to meet the reinsurance needs of the nation’s largest residential earthquake insurance provider. Aon Benfield will act as lead intermediary, with Guy Carpenter & Company, LLC and Willis Re Inc. as associate intermediaries, to form a team that will access reinsurance capacity, analyze global reinsurance markets, assess creditworthiness of potential reinsurers, determine and negotiate the lowest possible price for the CEA’s reinsurance cover, and assist the CEA staff and Board in meeting generally all the CEA’s reinsurance needs.
“The CEA considers Aon Benfield, Guy Carpenter and Willis Re to be the three top reinsurance intermediaries in the world,” said CEA Chief Executive Officer Glenn Pomeroy. “This new team positions the CEA to access the broadest worldwide reinsurance capacity, evaluate the financial soundness of potential reinsurance markets and enable us to safely place the CEA’s reinsurance program at the most competitive rates in a cost-effective manner. This team has the experience, skills and global presence to help us meet our reinsurance needs with flexibility and confidence.”
The CEA Governing Board made the selection at its meeting today following an open, competitive bidding process. It sought intermediary firms that could reliably and safely place the CEA’s reinsurance program at the most competitive terms. The CEA released its Request for Qualifications on May 1 and published it on the CEA’s Web site. In addition, the RFQ was published on the California State Contracts Register and advertised in The Wall Street Journal, national edition. Proposals were received from five firms. During the process, Aon began an acquisition of proposer Benfield, and the evaluation panel paused the evaluation process until the merger was finalized. The team will act as brokers under a five-year contract to deliver annually one of the world’s largest reinsurance programs to supply much of the CEA’s claim-paying capacity.
The CEA, historically, has purchased reinsurance from the global reinsurance marketplace as one method to transfer risk to third parties. The CEA currently purchases more than $3 billion in catastrophe reinsurance.
The CEA announcement coincides with the A.M. Best Co., one of the nation’s leading financial rating companies, reaffirming (Dec. 10) the CEA financial-strength rating of A-Minus (Excellent) with a credit rating outlook of “stable.” The rating recognizes the CEA’s excellent risk-adjusted capitalization, financial flexibility, extensive risk modeling capabilities, sophisticated management practices and conservative investment policy.
The CEA, through private insurers, provides earthquake insurance throughout California to owners and renters of condominiums, apartments, mobilehomes and single-family houses. The CEA, which began operating in 1996, has approximately 770,000 policies in force, representing about 70 percent of residential earthquake insurance policies in California.
About Aon Benfield
Aon Benfield is the world’s premier reinsurance intermediary and capital advisor, providing clients with integrated capital solutions and services. The company offers clients access to every traditional and alternative market in the world, through an international network of offices spanning over 50 countries and more than 4,000 professionals. Its worldwide client base is able to access the broadest portfolio of integrated capital solutions and services, world-class talent, unparalleled global reach and local expertise to best meet their business objectives. Aon Benfield is the industry leader in treaty, facultative and capital markets transactions.
About Guy Carpenter
Guy Carpenter & Company, LLC is the world’s leading risk and reinsurance specialist and a part of the Marsh & McLennan Companies. With 50 offices worldwide, Guy Carpenter creates and executes reinsurance solutions and delivers capital market solutions for clients across the globe. The firm’s full breadth of services includes line of business expertise in Agriculture; Aviation; Casualty Clash; Construction and Engineering; Excess and Umbrella; Life, Accident and Health; Marine; Medical; Political Risk and Trade Credit; Professional Liability; Property; Retrocessional Reinsurance; Surety; Terrorism and Workers Compensation. GCFac® is Guy Carpenter’s dedicated global facultative reinsurance unit that provides placement strategies, timely market access and centralized management of facultative reinsurance solutions. In addition, Guy Carpenter’s Instrat® unit utilizes industry-leading quantitative skills and modeling tools that optimize the reinsurance decision-making process and help make the firm’s clients more successful. Guy Carpenter’s website address is www.guycarp.com.
About Willis Group Holdings
Willis Group Holdings Limited is a leading global insurance broker, developing and delivering professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries, with a global team of approximately 20,000 Associates serving clients in some 190 countries. Additional information on Willis may be found at www.willis.com.
If you elect to comment or engage with our content via third-party social media websites, you authorize Aon to have access to certain social media profile information. Please click here to learn more about information that may be collected when using these tools on Aon.com