Alea closes Canadian branch

Reinsurer Alea Europe Ltd. is closing its Canadian branch and will stop writing reinsurance here as of August 1.”This decision was taken because of the branch’s diminishing premium volume and the continuing inadequate level of profit available for Canadian reinsurance business,” states an Alea release.Alea Europe Ltd. CEO Gilles Meyer says the move was not a reflection on Canadian staff, and credited chief agent Pat King and the rest of the staff for their performance “under difficult circumstances”. “The decision is based purely on market factors and the desire to leverage capital in more favorable global markets,” the release goes on to say.King confirms that it was an economic decision for the company to withdraw from Canada and concentrate on countries that stand to produce better returns. He notes that the parent company is in a strong position, with no asbestos/environmental exposures worldwide and having sold its equities portfolio at the height of the market. “It’s a global company, it’s a global market. The rates of returns in other countries are better than here in Canada.” Canada’s extremely competitive reinsurance market, with its high number of players, meant that the company could not attain the volume it sought. “They want to leverage their capital where they can best do so.” For 2002, Alea’s Canadian branch posted an underwriting loss of $7.39 million, and a combined ratio of 203.8%, with return on equity of 3.70%. It saw negative growth in net written premiums (NPW) of 70% and its marketshare in terms of NPW was 0.01%. King says there are just five staff members at the Canadian branch. He was already prepared to retire at the end of this year, but notes that the company is still deciding how best to run-off its business, including whether this will involve Canadian staff or not. The main concern at this stage is to provide brokers and clients with a consistent and high level of service on outstanding claims despite the branch ceasing to write business, he stresses.