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Airline Group Placings & Airline Consolidation

Airline Group Placings & Airline Consolidation . Presented by Ian Krise 1 October 2010. RAASI XV Aviation and Space Insurance Conference. Agenda. AXIOM InRe and JLT Aerospace Airline Group Placings What are the Options and Why? Insurance Benefits Insurance Drawbacks

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Airline Group Placings & Airline Consolidation

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  1. Airline Group Placings & Airline Consolidation Presented by Ian Krise 1 October 2010 RAASI XV Aviation and Space Insurance Conference

  2. 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

  3. JLT Aerospace • JLT Aerospace handles approximately 15% share of worldwide airline market, over 20% excluding US market. Our share is rising

  4. JLT Aerospace 2010 • 2010 Airline wins include :

  5. Off-slip Airline A Off-slip Airline B Main slip Off-slip Airline C Slip for Airline A Slip for Airline C Slip for Airline B Airline Group Placings: 3 Options Combined Slip All airlines B. Main slip and off-slips A. Combined Slip C. Simultaneous marketing

  6. Insurance 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: Advantages and Disadvantages

  7. 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

  8. Airline Consolidation • A worldwide phenomenon - why? • A merger or an acquisition? • Long term consequences - who benefits?

  9. 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

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