MARKETS: Exec Risk, Aetna rework D&O deal

SIMSBURY, Conn.-Executive Risk Inc. is restructuring its relationship with Aetna Casualty & Surety Co.

Executive Risk now will underwrite and issue directors and officers liability insurance on Aetna policies on a non-exclusive basis.

Simsbury, Conn.-based Executive Risk now is reinsuring, on a 100% quota-share basis, all such Aetna D&O business, paying Aetna a ceding commission that approximates actual costs. Executive Risk previously had a 50% quota-share participation of this business.

In addition, Aetna will no longer reinsure a 12.5% quota share of Executive Risk's direct D&O business.

Under the new agreements, Aetna no longer has rights to representation on the boards of Executive Risk and its subsidiaries.

The restructured relationship will continue through Dec. 31, 1999, though Executive Risk and Aetna have agreed to meet in the future to discuss the possibility of another D&O insurance agency relationship beyond that date.

MGA arrangement

HOUSTON-An arrangement between a managing general agent and syndicate managers at Lloyd's of London will shorten some of the distance between insurance buyers and underwriters.

Three Lloyd's syndicate managers purchased a minority stake last month in BCC Underwriters Inc., an MGA and Lloyd's of London coverholder writing energy risks from offices in Houston and New Orleans. The shareholders are Methuen Underwriting Ltd., Catlin Underwriting Agencies Ltd. and Wellington Underwriting Agencies Ltd.

While BCC previously held authority to bind risks for the syndicates managed by those agencies, the deal expands that authority. Now, BCC can negotiate directly with U.S.-based brokers who previously traveled to London to iron out contract details in some cases.

"We had the authority to act on behalf of the underwriters with their constant consent," said James Brooks, president of BCC. "Now we are acting as deputy underwriters for the syndicates. We are operating under the same constraints and non-constraints as the syndicates."

Mr. Brooks said he thinks the arrangement is the first in which Lloyd's syndicate managers have taken a stake in a U.S.-based MGA writing energy business.

Policyholders eventually may see savings because the arrangement means underwriters will have lower costs related to acquiring and servicing business, Mr. Brooks explained.

Under the new arrangement, BCC will work on a fee basis rather than collect commissions as it did under its old structure.

The shareholders have the option of increasing their stakes in five years.

Buck opens office

NEW YORK-Buck Consultants Inc. has opened a consulting office in San Juan, Puerto Rico, headed by Hector Gaitan.

The address of the San Juan office is 530 Ponce de Leon Avep., Suite 240, San Juan, Puerto Rico 00901.

The telephone number is 787-289-7824, and the fax number is 787-289-8779.