March 13, 2003 by Canadian Underwriter
Just a year after it was started up by a group of insurers, a specialty terrorism insurance operation is closing shop due to lack of demand.
Specialty Risk Insurance and Reinsurance (SRIR), formed by Allianz, Hannover Re, SCOR, Swiss Re, XL Capital Ltd. and Zurich Financial Services, will cease writing new business and plans to liquidate the company by 2005.
In a press release from major shareholder Allianz, “insufficient market demand” is given as the reason for the decision. SRIR CEO Alan May says that although there is greater awareness of terrorism risks, demand does not match this awareness. “The syndrome ‘I am not a terror risk’ certainly prevails,” he comments.
The increasing availability of terrorism coverage in the market and the institution of government programs to support terror cover were also listed as reasons.
Allianz says the closure should not have a significant effect on its own earnings. “It’s regrettable that there wasn’t sufficient client demand” says Steve Schleisman, CEO of Allianz Global Risks and chairman of SRIR’s board of directors. “Our own strategy at Allianz dictates a strict course toward profitability. The decision to close SRIR underlines this.”