JLT Aerospace
Airline Group Placings & Airline Consolidation
Presented by Ian Krise
1 October 2010
RAASI XV Aviation and SpaceInsurance Conference
Agenda
AXIOM InRe and JLT Aerospace Airline Group Placings
– What are the Options and Why?– Insurance Benefits– Insurance Drawbacks
Airline Consolidation– A worldwide phenomenon– A merger or an acquisition?– Long term consequences and who benefits
JLT Aerospace
JLT Aerospace handles approximately 15% share of worldwide airline market, over 20% excluding US market. Our share is rising
JLTOther
Marsh
Willis
Aon/ Benfield
JLT Aerospace 2010
2010 Airline wins include :
STC Rossiya
Indigo program including Avia Nova,
Tiger Airways, Spirit Airlines, Mandala and Wizz Air
DHL
NACIL (Indian Airlines /Air India)
Airline Group Placings: 3 Options
Combined Slip
All airlines
Combined Slip
All airlines
Off-slipAirline A
Off-slipAirline A
Off-slipAirline B
Off-slipAirline B
Main slipMain slip
Off-slipAirline C
Off-slipAirline C
Slip for Airline A
Slip for Airline A
Slip for Airline B
Slip for Airline B
Slip for Airline C
Slip for Airline C
A. Combined Slip
B. Main slip and off-slips
C. Simultaneous marketing
Airline Group Placings: Advantages and DisadvantagesInsurance Advantages Obviously Premium volume and
resultant rating levels Coverage benefits - Smaller
Airlines obtain the same or similar coverages as larger airlines
Market presence for any issues that may arise during the placement
Insurance Disadvantages Claims may adversely effect all
airlines in the Group Any claim resultant rise in
premium needs to be subject to an agreed formula for "who pays what"
Difficulty for an Airline to leave an Airline Group placing - Higher Stand alone rates/premium
Group placings can prove restrictive for smaller airlines - Lack of influence
Insurers spread of risks diminishes - Either insurers write one whole group or miss out altogether
Airline Group Placings: Summary
Airline group placings are here to stay and are increasing globally
Only Insurers/Reinsurers & Brokers that have the required size and expertise can handle them
Overall it is a benefit to Airlines Represents a loss of premium income and
underwriting choice for Insurers/Reinsurers
Airline Consolidation
A worldwide phenomenon - why?
A merger or an acquisition?
Long term consequences - who benefits?
Airline Consolidation: Summary
Global mega carriers are not new and are increasing globally
Excluding niche airlines - a matter of survival for airlines
Historically new start ups and LCCs have helped to mitigate the merger and acquisition activity