Aon Plc · NYSE:AON
Aon — Aon Guernsey Master Class: Perspectives in Risk 2015
88 slides from Aon's conference presentation, May 21, 2015
Slide 1: Aon Guernsey Master Class: Perspectives in Risk
Aon Guernsey Master Class: Perspectives in Risk Thursday, 21 May 2015 Aon Risk Solutions Global Risk Consulting | Captive & Insurance Management
Slide 2: Welcome
Welcome Paul Sykes, Aon Cameron Murray, Lloyd’s
Slide 3: About Aon
About Aon Aon Plc Aon Risk Solutions . John Turner Chairman, ARS UK & Americas Aon Global Risk Consulting Rory Moloney CEO, AGRC Aon Captive & Insurance Management Peter Mullen CEO, Captive & Insurance Management Aon Insurance Managers Paul Sykes (Guernsey) Limited MD, Aon Guernsey Aon Risk Solution
Slide 4: Aon Guernsey's game changers
Aon Guernsey’s game changers 1996 1997 2006 2006 2014 2015 August 2011 A&A DHL becomes first training Insurance Bain Hogg kit sponsor Kelvin Re Rated Linked Minets PCCs ICCs for ManU Securities Limited reinsurance June 2010 May 2011 October July 2012 July 2014 Aon begins ManU wins 2011 Aon announces
Slide 5: The Evolving Insurance Market – a brokers perspective
The Evolving Insurance Market – a brokers perspective John Turner, Aon Risk Solutions
Slide 6: The Evolving Insurance Market: A broker's perspective
The Evolving Insurance Market: A broker’s perspective John Turner Chairman, Aon Risk Solutions UK & Americas 21 May 2015 Aon UK Limited Proprietary & Confidential
Slide 7: Global Risk Management Survey 2015
Global Risk Management Survey 2015 Respondents 1,148 Risk Decision Makers 28 Industry Sectors 60 Countries 52% Privately Owned 35% Public Ownership Remainder were Governmental or Not for Profit Organisations Aon UK Limited Proprietary & Confidential
Slide 8: Top 10 risks
Top 10 risks… 2013 2015 1 1 Economic Damage to slowdown/ reputation/ recovery brand 2 3 4 2 3 4 Regulatory/ Damage to Economic Regulatory/ Increasing Increasing legislative reputation/ slowdown/ legislative competition competition changes brand slow recovery changes 5 6 5 6 Failure to Failure to Fai
Slide 9: Projected top 10 risks
Projected top 10 risks… 2015 Projected 2018 1 1 Damage to Increasing reputation/ competition brand 2 3 4 2 3 4 Failure to Economic Regulatory/ Increasing Economic Regulatory/ innovate/ slowdown/ legislative competition slowdown/ legislative meet slow recovery changes slow recovery changes customer n
Slide 10: Observations
Observations • Fully insurable risks in the top 10 have fallen from 6 in the 2009 survey to 3 in the 2015 survey. • By 2018 it is projected that none of the top 10 risks identified will be fully insurable. • Traditionally insurable risks which have appeared in the top 10 since 2009 (Property Damage,
Slide 11: Why is the market where it is today?
Why is the market where it is today? Aon UK Limited Proprietary & Confidential
Slide 12: Key Drivers for the Insurers
Key Drivers for the Insurers • Grow shareholder value • Generate sustainable growth Diversification (Products and Territories) Innovation / Product Development M&A Activity • Driving operational efficiency/Cost cutting Reinsurance Costs Capital Management • Attract and Retain Talent • Rema
Slide 13: Current outlook
Current outlook • Very competitive soft market conditions in all lines of business. • Markets are; Keen to retain good risks Being pressurised to think differently Being pressurised to broaden coverage, remove onerous conditions and innovate Now is a great time to ask! • Reinsurance industry
Slide 14: Summary
Summary • Client Risks are becoming more complex and ever evolving with ability to risk transfer reducing. • Insurance marketplace is very competitive with an abundance of capacity. Aon UK Limited Proprietary & Confidential
Slide 15: The role of the Broker
The role of the Broker • Understanding of the clients’ business and risk management goals and objectives • Use of data to best position the client with the market • Innovation – Development of new products / services that are relevant to the changing risk landscape • Look to support the building of
Slide 16: Questions
Questions……. Aon UK Limited Proprietary & Confidential
Slide 17: Global Risk Trends: Captive usage today and in the future
Global Risk Trends: Captive usage today and in the future Peter Mullen, Aon Captive Insurance Management
Slide 18: Guernsey Master Class 2015
Guernsey Master Class 2015 Global Risk Trends: Captive Usage Today and in the Future Presented by: Peter Mullen CEO Aon Captive and Insurance Management Prepared by Aon Risk Solutions Global Risk Consulting
Slide 19: Survey overview
Survey overview Aon’s 2015 Global Risk Management Survey, the fifth of its kind since 2007, is designed to offer organizations the insights necessary to compete in an increasingly complex business environment. Conducted biennially, the survey gathered input from 1418 respondents at public and pr
Slide 20: Respondent profile
Respondent profile Aon Risk Solutions | Global Risk Consulting Proprietary & Confidential 20
Slide 21: Top ten risks
Top ten risks Aon Risk Solutions | Global Risk Consulting Proprietary & Confidential 21
Slide 22: Global Risk Management Survey risk ranking
Global Risk Management Survey risk ranking Aon Risk Solutions | Global Risk Consulting Proprietary & Confidential 22
Slide 23: Global Risk Management Survey all risks ranking
Global Risk Management Survey all risks ranking Aon Risk Solutions | Global Risk Consulting Proprietary & Confidential 23
Slide 24: Risks increasing in prominence
Risks increasing in prominence Aon Risk Solutions | Global Risk Consulting Proprietary & Confidential 24
Slide 25: Lower than Aon expected
Lower than Aon expected Aon Risk Solutions | Global Risk Consulting Proprietary & Confidential 25
Slide 26: Difference in Risk Perception
Difference in Risk Perception Aon Risk Solutions | Global Risk Consulting Proprietary & Confidential 26
Slide 27: Top risks Underwritten in Captives
Top 10 risks Underwritten in Captives 27 Aon Risk Solutions | Global Risk Consulting Proprietary & Confidential 27
Slide 28: Reasons for Captives
Reasons for Captives 28 Aon Risk Solutions | Global Risk Consulting Proprietary & Confidential 28
Slide 29: Projected top risks to be written in captives-next five years
Projected top 10 risks to be written in captives-next five years 29 Aon Risk Solutions | Global Risk Consulting Proprietary & Confidential 29
Slide 30: Changes in retention levels
Changes in retention levels Increased Decreased Stayed the same Please indicate how retentions for your current programs have changed compared to the prior year. (Consider only the retention for any one loss. If multiple retentions apply, chose the one most reflective of your overall program.) Aon R
Slide 31: Changing Safety Culture – Perception vs Reality
Changing Safety Culture – Perception vs Reality Dean Clamp, Wincanton
Slide 32: Changing safety culture: Perception vs reality
Changing safety culture Perception vs reality © Wincanton plc 2015. All rights reserved
Slide 33: Agenda
Agenda • Wincanton business • Changing safety culture • Perception vs reality • Project Opportunity • Framework • Colleague engagement • Measured impact 33
Slide 34: Wincanton today
Wincanton today 15,500 200+ 3,600 13 million employees locations Operating responsibilities Square feet of for vehicles warehousing Financial performance Recent successes Total 13/14 12/13 £m £m Revenue 1098.3 1086.8 + 1.1% Operating profit 48.0 45.3 + 6.0% 34
Slide 35: Our operating segments
Our operating segments Contract logistics Specialist businesses We provide diverse solutions in contract logistics across a range of market Our specialist businesses have leading market sectors. Strong reputation in operational excellence and delivery positions and provide expertise in records manag
Slide 36: What was the problem?
What was the problem ? Although Wincanton has been through many years of progression in safety, we had started to slow down due to a number of factors but mainly that we had achieved as much as possible through process and it was now time for a step change. • Leadership recognition that there was li
Slide 37: Our Safety vision
Our Safety vision Our UK & Ireland Health & Safety vision: “To achieve a ‘Zero Accident Target’ culture where every colleague values safety through their everyday behaviour” 37
Slide 38: Our STAR values for Health & Safety
Our STAR values for Health & Safety To work in a recognised safe way that keeps myself and my colleagues safe To challenge unsafe acts and behaviour Stop To show real safety leadership by the way that Think I act (lead by example) Assess Always strive for continuous React improvement in safety Adopt
Slide 39: The challenge: a journey we need to make
THE CHALLENGE….there is a journey we need to make ? By Natural Instincts Injury Rate Driven by ? Management ? Driven by Self Driven by Teams ? Reactive Phase Dependant Phase Independent Phase Interdependent Phase Compliance Driven Behaviour Driven Unlocking potential 39 www.wincanton.co.uk 6
Slide 40: Our culture ladder
Our culture ladder Fully Engaged •Inclusive approach H&S is how we do business •Safety seen as a profit centre round here •New ideas are welcomed •Challenging targets set by colleagues Pro-active •Resources are available to fix things before an accident we work on the problems that •Colleagues getti
Slide 41: Project opportunity – 10 point plan
Project opportunity – 10 point plan Create a ‘Site Initial site visit and Safety Pledge’ that visioning session all sign up to Devise a risk Safety questions in Safety performance profiled ‘Site ALL interviews discussed in Safety Plan’ all appraisals Group HSE Site GM to attend All managers given co
Slide 42: Behavioural change: Lift experiment
Behavioural change Lift experiment • As Leaders we control the climate in our H&S culture • Never under estimate the power of non spoken communication • Making perception reality 42
Slide 43: Slide 43
Slide 44: Opportunity
Opportunity • We now deliver an improved programme called opportunity that focuses on the concept of perception vs reality and encourages managers to validate what they believe is happening. • Through workshops that challenged the barriers to working safely and were aimed at solutions. • Colleagues
Slide 45: Colleague Engagement
Colleague Engagement ICH DOOR WILL YOU GO THROUGH? THE CHOICE IS YOURS! |
Slide 46: Colleague engagement
Colleague engagement Safety Wheel of Strike it Rich Variation on Near Miss Bingo Fortune Bingo “What's a HOT SPOT NOT “ Aim Aim is to create a safety conscious workforce & environment 46
Slide 47: Impact
Impact • The impact of Opportunity and our step change in our approach has been significant • 40% reduction in lost time accidents 13/14 to 14/15 from 495 to 270 • 1,700 less days lost resulting in a benefit of approx £215k • Claims at an all time low with high expectations of better performance • P
Slide 48: Thank you
Thank you Thank you © Wincanton plc 2015. All rights reserved
Slide 49: Captives – Emerging Regulatory & Fiscal Trends
Captives – Emerging Regulatory & Fiscal Trends Clive Hassett, ACE
Slide 50: Captives – Emerging Regulatory & Fiscal Trends
AON GUERNSEY MASTERCLASS 2015 Captives – Emerging Regulatory & Fiscal Trends May 21 2015
Slide 51: Captives under the Microscope
Captives under the Microscope Strong belief by ACE that captives will remain a major vehicle for risk management A more intrusive and aggressive regulatory environment is developing around the conduct of multinational companies Fronting Insurers have full responsibility for regulatory and fiscal com
Slide 52: Captives under the Microscope: OECD BEPS
Captives under the Microscope OECD – Base Erosion & Profit Shifting (BEPS ) Permanent Establishment (PE) Country by Country Reporting (CBCR) Transfer Pricing (TP) Diverted Profit Tax (DPT) ACE Multinational Risk
Slide 53: Diverted Profit Tax (DPT)
Diverted Profit Tax (DPT) Interim Guidance issued by HMRC – March 2015 v1 Specific section on Captives ( Page 52 with examples and diagrams) “Do the non-tax financial benefits ….outweigh the financial benefit of the tax reduction ?” “As the group has not reinsured externally, it is reasonable to ass
Slide 54: Regulatory Activity – Premium Tax Developments
Regulatory Activity – Premium Tax Developments Premium tax audits of European Insurers companies are now routine Premium tax audits of our clients are now routine Premium allocations starting to be questioned Growing cooperation between EU tax authorities ACE Multinational Risk
Slide 55: Captives under the Microscope: 831(b) captives
Captives under the Microscope 831(b) captives labelled a “charade” by IRS and adds to “Dirty Dozen” hit list …….creating and “selling” to the entities …. poorly drafted “insurance” …policies to cover ordinary business risks or esoteric, implausible risks for exorbitant “premiums..,” FATCA - USA sour
Slide 56: Summary
Summary Much more attention must be paid to basic insurance transactions Captives arrangements should be viewed in a wider corporate context, beyond insurance Is the time right to consider alternative risk retention strategies that do not involve captives ? 28/05/2015 ACE Multinational Risk 56
Slide 57: Thank You
AON GUERNSEY MASTERCLASS 2015 Thank You May 21 2015
Slide 58: UK Economics – Uncertain times ahead
UK Economics – Uncertain times ahead Fabrice Montagné, Barclays plc
Slide 59: UK Economics: Uncertain times ahead
UK Economics Research Fabrice Montagne Chief UK and Senior European Economist +44 (0)20777 33277 [email protected] UK Economics Uncertain times ahead May 2015 PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 32.
Slide 60: Global Outlook
Global Outlook 6% BARCLAYS 60
Slide 61: Global Economic Outlook
Global Economic Outlook The weakness in other key EM Real GDP Consumer prices economies where falling commodity % annual change % annual change prices play a role in the significant downward revisions are risks. In 2014 2015 2016 2014 2015 2016 particular, we now forecast recessions in Russia and
Slide 62: Global bond yield forecasts
Global bond yield forecasts 62
Slide 63: Global FX forecasts
Global FX forecasts Foreign Exchange 1 Apr 2015 Spot reference Q2 15 Q3 15 Q4 15 Q1 16 Developed Economies EUR/USD 1.07 1.05 1.00 0.98 0.95 USD/JPY 120.17 121.00 121.00 121.00 118.00 GBP/USD 1.48 1.42 1.39 1.38 1.36 USD/CHF 0.97 1.03 1.07 1.08 1.11 USD/CAD 1.27 1.28 1.30 1.32 1.36 AUD/USD 0.76 0.77
Slide 64: The euro area
The euro area 6% BARCLAYS
Slide 65: The recovery should gain momentum in 2015-16
The recovery should gain momentum in 2015-16 (1) • A stronger boost from oil as the savings rate rises less than expected. Household consumption is now expected to grow by 1.6% in 2015 and 1.3% in 2016, a pace not achieved since 2007. • In addition to the favourable effect of lower oil prices, the e
Slide 66: UK 2015 General Election
UK 2015 General Election Government to resume fiscal consolidation and call a EU referendum * Please see out full report published on 23 February 2015 66
Slide 67: UK 2015 General Election
UK 2015 General Election Government to resume fiscal consolidation and call a EU referendum • Conservative beat projection while SNP wins all but 3 seat in Scotland • Conservatives win 331 seats (+28 vs previous; 8 seats majority); Labour and Lib Dem face major upsets with only 232 (-25) and 8 (-48)
Slide 68: UK 2015 General Election: fiscal consolidation
UK 2015 General Election Government to resume fiscal consolidation • Balance the structural current budget in 2017-18; • Deliver £30bn of spending cuts in the next 2 years (reduce welfare spending by £12bn; Cap overall welfare spending; Cap the amount of benefits per household to £23k); Raise health
Slide 69: UK 2015 General Election: EU referendum
UK 2015 General Election Government to call a EU referendum Current polls on an EU referendum • EU referendum seems unavoidable as it was one of Cameron’s red line during the campaign. 60 Remain in EU Leave EU Undecided 55 • Plan is obtain concessions from Brussels and campaign 50 on the base of thi
Slide 70: The UK
The UK Uncertain times ahead 70
Slide 71: Key messages
Key messages Weak recent data fuel uncertainties amid medium term policy risks • Macroeconomic outlook: We expect 2015 GDP growth to come in substantially lower (2.3% vs 2.8%) than last year. Mounting uncertainty in the run up to the election may have prompted household to save extra income. • Infla
Slide 72: Macroeconomic outlook
Macroeconomic outlook Surprisingly weak Q1 data challenges optimist outlook GDP to recover after weak Q1… …but growth set to slow in 2016 • Our forecasts show activity around 0.5-0.6% q/q this 4 year and next pushing annual growth down to 2.2% 2 next year. 0 -2 • Intensification of fiscal austerity
Slide 73: Macroeconomic outlook
Macroeconomic outlook Consumption and Investment drive the recovery Consumption Investment • Household consumption has increased for 15 • Investment has posted 8 consecutive quarters of consecutive quarters, growing 6% since its low positive growth to Q3’14, up 12%. in Q1 11. • Since 2009, Investmen
Slide 74: Macroeconomic outlook
Macroeconomic outlook Household and business remain at elevated levels Business sentiment and investment Business 20% 65 60 • Business sentiment rebounded on output, new 10% orders and employment 55 0% 50 • Surveys point to ongoing strong recovery in -10% 45 investment and activity, even though conf
Slide 75: Macroeconomic outlook
Macroeconomic outlook UK continues to lose market share Don't blame the EA for weak exports Shift in export country composition (% of Total) 2000 2013 Change 2013/2000 • UK export performance has been poor and market Americas 22.0 22.5 0.4 Asia 13.5 18.4 5.0 share loses have been substantial over th
Slide 76: Labour market: Improving fast but wage growth subdued
Labour market: Improving fast but wage growth subdued • The pick-up in activity has translated into improvements in both employment and unemployment, although earnings growth remains subdued. • The ILO unemployment rate fell to 5.5% in March, and we now expect further drop in unemployment to be marg
Slide 77: Labour market: low unemployment but subdued wage growth
Labour market: low unemployment but subdued wage growth UK: Unemployment rate and wage growth Inflation outpaced AWE during 7 years %3m/ y 6 6 Real Core AWE (deflated by CPI inflation) 3.5 Unemployment rate (%, rhs, inverted) 4.0 5 4 4.5 5.0 4 2 5.5 6.0 3 0 6.5 7.0 2 -2 7.5 8.0 1 -4 8.5 9.0 0 -6 9.5
Slide 78: Policies: BoE rate call tilted towards a later take-off
Policies: BoE rate call tilted towards a later take-off but • Consensus among MPC Members (9-0) highlights short-term downside risks to inflation and medium-term upside risks to activity and wages. But GBP appreciation against the Euro could pose a threat to inflation recovery. Also disappointing gr
Slide 79: Fiscal policy: structural slippage
Fiscal policy: structural slippage • The OBR revised public borrowing needs higher as Disappointing budgetary execution (% of GDP) receipts consistently fall short of expectations (low wages, low inflation, week housing activity…) 4 40 • Spending also benefits from lower inflation and interest 2 38
Slide 80: Policy Mix: fiscal policy to tighten first
Policy Mix: fiscal policy to tighten first • According to current projections, both monetary and fiscal policies are set to become less accommodative in the coming years. • Most of the effort though is expected to take place on the fiscal side, while monetary policy expectations are fairly subdued.
Slide 81: Greece
Greece Liquidity stress reignites solvency concerns 81
Slide 82: Greece: Liquidity stress reignites solvency concerns
Greece: Liquidity stress reignites solvency concerns Public finances: short-term: increasingly cash strapped • 2014 primary balance was reportedly 1.2pp below target at just 0.3%. First two months of budget execution data show ongoing underperformance, likely owing to political uncertainty, househol
Slide 83: Greece: Repayment timeline and key events
Greece: Liquidity stress reignites solvency concerns Repayment timeline and other key events for Greece Date Event Total repayment Issuance of a T-bill to roll that maturing on April 17 worth 15-Apr-15 €1.0bn (maturity was 3 months) 20-Apr-15 Deadline to send amended reform list to the Brussels' gro
Slide 84: Greece: Complex negotiations of a third aid package
Greece: Liquidity stress reignites solvency concerns Complex negotiations of a third financial aid package to follow • We believe Greece will have to ask for another bailout worth at least €25-30bn, but will be no trivial task (reform fatigue from the Greek population, negotiations with the institut
Slide 85: Analyst Certifications and Important Disclosures
Analyst Certifications and Important Disclosures Analyst Certification(s) I, Fabrice Montagne, hereby certify (1) that the views expressed in this research report accurately reflect my personal views about any or all of the subject securities or issuers referred to in this research report and (2) no
Slide 86: Disclaimer
Disclaimer This publication has been prepared by the Corporate and Investment Banking division of Barclays Bank PLC and/or one or more of its affiliates (collectively and each individually, "Barclays"). It has been issued by one or more Barclays legal entities within its Corporate and Investment Ban
Slide 87: Disclaimer (continued)
Disclaimer (continued) Barclays Bank PLC, Hong Kong Branch is distributing this material in Hong Kong as an authorised institution regulated by the Hong Kong Monetary Authority. Registered Office: 41/F, Cheung Kong Center, 2 Queen's Road Central, Hong Kong. Information on securities/instruments that
Slide 88: Closing Comments
Closing Comments Paul Sykes, Aon Insurance Managers (Guernsey) Limited
Aon — Aon Guernsey Master Class: Perspectives in Risk 2015 on 6ix