NEW YORK--(BUSINESS WIRE)--Marsh Inc. today announced the creation of MaRI (Marsh Risk Innovations), a first-of-its-kind insurance facility designed to provide additional capacity to the depleted property catastrophe insurance market this year. This new facility is unique in that it delivers capital market capacity through an A+ rated* insurer with admitted paper directly to major corporations in need of additional property catastrophe coverage.
The additional capacity will be made available through reinsurance provided by MaRI, Ltd., a newly-formed Bermuda-based reinsurer, to ACE, a leading Bermuda-based insurance company. Marsh collaborated with ACE and Morgan Stanley, which served as structuring advisor and placement agent, to create MaRI. This new facility provides large corporate clients of Marsh with exclusive access to insurance capacity intended to fill gaps that are creating instability and shortfalls in property catastrophe risk coverage.
Traditionally, this form of extra risk capital – commonly referred to in the industry as a “sidecar” – allows reinsurers to offer more capacity to their clients, the retail insurers. What makes the MaRI structure innovative is that it provides Marsh clients with direct access to the capital markets through a highly-rated ACE delivery vehicle.
“In the wake of the 2005 U.S. hurricane season and growing concerns about natural disasters in the years ahead, obtaining sufficient insurance coverage for catastrophic loss has been extraordinarily difficult for many of our clients,” said Brian Storms, Chairman and Chief Executive Officer of Marsh. “The capacity MaRI provides could only be produced by a firm with deep intellectual capital, an integrated approach, and excellent industry relationships – as evidenced by our important collaboration with a highly-rated carrier like ACE.”
In some regions of the U.S., property catastrophe insurance rates have quadrupled since the 2005 U.S. hurricane season. Marsh expects the ACE / MaRI program to deliver $400 million in extra capacity to its clients during the next three months. Depending upon client demand, market conditions, and other factors, Marsh believes this approach could provide more than $1 billion in total extra capacity over the next year.
"The diversity and composition of Marsh's extensive portfolio of clients allowed us to create an attractive opportunity for investors, but more importantly, a great option for our clients," said Philip V. Moyles, Jr., Executive Vice President of Marsh. "This is a case where we used both our intellectual capital and market presence to deliver the kind of solution large corporate clients have historically grown to expect from Marsh."
MaRI joins a proud lineage of important innovations Marsh has brought to the insurance market, dating back to the creations of ACE and XL in the mid-1980s, Mid-Ocean Re in the 1990s, and AXIS Specialty Ltd. in 2001.
“In addition to the direct access it provides investors to the catastrophe risk component of large U.S. commercial property policies, MaRI includes several other important innovations over previous sidecar structures,” said Ken Pierce, an Executive Director in Morgan Stanley’s Insurance Products Group responsible for sidecars and the MaRI transaction.
Investors in MaRI include affiliates of Lehman Brothers, Marsh & McLennan Risk Capital Holdings and several funds with expertise in insurance and risk-linked securities.
Marsh, the world's leading risk and insurance services firm, has 26,000 employees and annual revenues approaching $5 billion. The firm provides advice and transactional capabilities to clients in over 100 countries. Marsh is a unit of Marsh & McLennan Companies (MMC), a global professional services firm with approximately 55,000 employees and approximately $12 billion of annual revenues. MMC also is the parent company of Guy Carpenter, Kroll, Putnam Investments, and Mercer. MMC’s stock (ticker symbol: MMC) is listed on the New York, Chicago, Pacific, and London stock exchanges. MMC’s Web Site is www.mmc.com. Marsh’s Web site is www.marsh.com.
ACE USA is the U.S.-based retail operating division of the ACE Group of Companies, headed by ACE Limited (NYSE: ACE) and is rated A+ (Superior) by A.M. Best Company and A+ (Strong) by Standard & Poor’s. ACE USA, through its underwriting companies, provides insurance products and services throughout the U.S. Additional information on ACE USA and its products and services can be found on www.ace-ina.com. The ACE Group of Companies provides insurance and reinsurance for a diverse group of clients around the world.
About Morgan Stanley
Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management, wealth management and credit services. The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 600 offices in 30 countries. For further information about Morgan Stanley, please visit www.morganstanley.com.
Forward Looking Statements
This press release contains "forward-looking statements," as defined in the Private Securities Litigation Reform Act of 1995. These statements express management's current views concerning future events or results, and thus are subject to inherent risks and uncertainties. Factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements include:
The factors identified above are not exhaustive. Marsh operates in a dynamic business environment in which new risks may emerge frequently. Accordingly, Marsh cautions readers not to place undue reliance on its forward-looking statements, which speak only as of the dates on which they are made.
Marsh undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date on which it is made. Further information concerning Marsh and MMC’s other businesses, including information about factors that could materially affect results of operations and financial condition, is contained in MMC's filings with the Securities and Exchange Commission.
* A+ rating by A.M. Best & Co.