Allianz Global Corporate & Specialty (AGCS) has named James Stack as Pacific CEO, as the business prepares to cease underwriting professional indemnity and directors’ and officers’ cover in Australia and New Zealand
Mr Stack, Head of Market Management AGCS Pacific for the past four years, will take over next month from Willem Van Wyk, who is leaving to pursue other opportunities.
Previously, Mr Stack was with Zurich Financial Services Australia.
The appointment follows a decision by AGCS to leave financial lines and liability business in the region from September, amid a surge in class actions and a deteriorating legal environment.
AGCS will also close its operations in New Zealand, with lines such as engineering, property, energy, entertainment and alternative risk transfer to be written out of Australia.
“In Australia and New Zealand, we have experienced different challenges: we have a profitable short-tail portfolio, but an altogether different position in long-tail lines, despite the team’s best efforts,” AGCS board member and Chief Regions and Markets Officer Sinead Browne told insuranceNEWS.com.au.
“Large corporate risks are very much exposed to the alarming increase in class action suits and litigation funders.”
Class action numbers tripled between 2013 and last year, with a surge in 2015 and 2016, when there were 35 actions each year.
The trend has been compounded by average settlements increasing above $60 million over that period, the insurer says.
AGCS is an embedded team within Allianz Australia, which is unaffected by the changes and will continue to offer long-tail risks.
AGCS’ long-tail financial business in Australia registered €42 million ($68 million) of gross written premium last year and accounted for 0.5% of its €8.2 billion ($13.3 billion) global revenue.
In New Zealand it has a branch with a team of four, writing €9 million ($14.6 million) of GWP last year.
The change does not affect other Allianz global line entities in New Zealand, including Euler Hermes and Allianz Partners, while Allianz also retains Hunter Premium Funding, along with specialist agencies Club Marine, Allianz Marine & Transit, and Primacy.
“As a global insurer focused on large corporate risks, we will continue to invest and expand our engineering, property, entertainment, energy and alternative risk transfer portfolios in the Pacific,” AGCS Regional CEO Asia-Pacific Mark Mitchell said.
“We will also continue to support global clients with exposures in Australia and New Zealand for all lines of business through our Allianz Multinational network.”