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Brazil Reinsurer IRB Eyes Purchase of Foreign Competitors’ Portfolios: Sources

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Brazilian reinsurer IRB Brasil Resseguros SA is in advanced negotiations to buy rivals’ portfolios in Brazil and elsewhere in Latin America as foreign competitors scale back in the region, two sources close to the company told Reuters.

Any such acquisition would be a bold move for IRB given that the reinsurer revealed last week it was being inspected by the country’s insurance regulator for potential liquidity problems as it fell short of assets to cover technical provisions.

The inspection was the latest headwind to hit the insurer, which earlier this year replaced both its chief executive and chief financial officer after false reports that Berkshire Hathaway Inc’s had acquired a stake.

IRB shares have lost about 80% this year but the sources said it has maintained a cash position of around 4 billion reais, including liquid assets.

With the region’s economy side-swiped by the coronavirus-linked economic crisis, some global reinsurers are leaving or decreasing operations in Latin America to focus on their main markets in the United States and Europe, one source said, without revealing names.

“IRB is negotiating the purchase of portfolios and making alliances with more insurers,” another source said, requesting anonymity, because the matter is not public.

Although there are about a hundred reinsurers authorized to operate in Brazil, IRB holds a roughly 40% market share, with other top players including Munich Re, Swiss Re AG and Chubb Ltd.

In coming weeks, IRB will reveal more details on issues including technical provisions ahead of its first quarter results, scheduled for June 18, according to one of the sources.

IRB said in a statement that “it is constantly assessing possible operations in Brazil and abroad that are in line with its business strategy.”

Asked about potential disclosures about balance sheet-related issues, IRB said “it will timely communicate facts or decisions judged by companies that are of interest to its shareholders, customers and the market.”

(Por Aluísio Alves; editing by Nick Zieminski)

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LP Insurance Services Adds Layne in Employee Benefits in Nevada

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LP Insurance Services LLC has named Chad Layne to the southern Nevada employee benefits sales team.

Layne has been a benefits insurance broker for more than 25 years. Most recently he was president of Layne Insurance Services. He began his insurance career with Sierra Health Services as a sales representative. He also worked for Brown & Brown Insurance.

Reno, Nev.-based LP Insurance Services is a risk management and commercial insurance brokerage firm specializing in property/casualty, surety, workers’ compensation, employee benefits, healthcare professionals, personal and risk management services.

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SelectQuote Raises $350M in IPO; Shares Jump 40% in Market Debut

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Shares of SelectQuote Inc. jumped more than 40% in their stock market debut on Thursday, giving the insurance policy comparison website a market valuation of over $4 billion.

The company’s stellar offering is the latest sign of thawing in the initial public offering (IPO) market, which was shut to most companies when the coronavirus outbreak fueled weeks of stock market volatility in March and April.

In an interview with Reuters, SelectQuote Chief Executive Officer Timothy Danker said he was bullish on demand for the company’s core product in the backdrop of the COVID-19 pandemic that has forced more people to buy insurance online.

“Consumers don’t want folks in their house selling insurance, they’d rather do research online and connect telephonically and we view that as a trend moving forward,” Danker said.

SelectQuote allows customers to compare policies for life, auto and home insurance from providers including American International Group, Prudential Financial Inc and Liberty Mutual.

Its public offering comes at a time when only a handful of biotechnology and blank-check companies went ahead with IPOs during this period.

“These days, investors are more interested in boring CEOs and predictable profits.” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business.

“Buyers remain wary, but SelectQuote is a rare IPO from a company that already is profitable instead of burning hundreds of millions hoping to someday turn a profit in an industry in which nobody has made a profit.” he added.

SelectQuote’s revenue jumped nearly 50% to $390.1 million for the nine months ended March 2020, while net income was up 2.4% to $61.1 million.

The company on Wednesday raised $360 million after it sold 18 million shares as planned, and existing shareholders sold 10.5 million shares.

The shares were priced at $20 each, above the marketed range of $17 to $19.

(Reporting by Abhishek Manikandan in Bengaluru; Editing by Sriraj Kalluvila, Anirban Sen and Anil D’Silva)

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Federal Coronavirus Business Interruption Suits Now Top 100; Many More Expected

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Plaintiffs attorneys say they expect the number to rise into the thousands.

“Ultimately, I think what’s going to happen is small businesses are going to have to come to the table with the insurance companies and the government to figure out a solution for this,” said Richard Golomb, a partner with the Golomb & Honik law firm in Philadelphia.

The 101 cases filed so far — which does not include suits filed in state courts — were tagged by the U.S. Judicial Panel on Multidistrict Litigation because they are related to a petition filed by groups of plaintiffs in Philadelphia and Chicago to assign to a single judge all COVID-19 business-interruption lawsuits filed in federal courts. The panel was created in 1968 to determine whether civil actions pending in different federal districts involve one or more common questions of fact and should be coordinated or consolidated for pretrial proceedings.

The central question binding all of the lawsuits is whether the novel coronavirus amounts to a physical loss of property that triggers insurance coverage for business income lost because of government ordered closures. The federal filings shows that question is being asked by restaurants, taverns, dental practices, day care centers and hair salons all across America.

Golomb said insurers have been giving blanket denial to such claims, while business business owners — especially restaurant owners — are counting on an insurance payout to survive. He cited an estimate by the National Restaurant Association that if no assistance is given, 40 percent of restaurants will not survive the pandemic.

The American Property and Casualty Insurance Association said forcing insurers to pay such claims would undermine the solvency of the industry. APCIA estimated business closures are costing businesses with fewer than 500 employees from $393 billion to $668 billion per month.

What started as a judicial question has moved to the legislative branch. Bills to require insurers to pay COVID-19 business interruption claims have been introduced in eight states, although a bill in the Louisiana state house has been dropped. The U.S. House of Representatives Small Business Committee is holding a virtual hearing on the issue today.

Even the executive branch has chimed in. President Donald Trump pronounced his support for claims made by business owners who purchased insurance policies without any virus exclusions during an April 10 press briefing.

Golomb said he believes eventually insurers will eventually ask Congress for help in paying business-interruption claims. In the end, that might result in a complicated global settlement in which each of the parties — plaintiffs, insurers, and the government, pays a part of the lost income costs.

“The No. 1 goal has got to be to get these businesses open,” he said.

For now, plaintiffs attorneys don’t even agree among themselves whether all of the COVID-19 claims should be heard by the Multidistrict Panel.

A group of plaintiff’s led by the Big Onion Tavern in Chicago in lawsuits against Society Insurance filed a memorandum opposing consolidation of the cases. They argue that each claim involves unique insurance policies in various states with differing laws.

There’s also a question of where to assign the cases. In addition to competing petitions from Philadelphia and Chicago, a third group of plaintiffs in South Florida asked the Multidistrict Panel to assign the litigation to the U.S. District Court in Miami.

Attorney Charles A. Silverman, a sole practitioner in Skokie, Ill., filed his own petition asking that his suit filed on behalf of Sandy Point Dental P.C. against Cincinnati Insurance Co. be heard in Chicago.

Silverman said he doesn’t travel and doesn’t want to hire co-counsel in a distant city. He said he doesn’t oppose consolidation of the cases in principal, although it may be difficult for the court to resolve questions of law that apply to a wide range of policy types across myriad jurisdictions. However, he said some coordination is possible. For example, the court may create consolidated cases for claims in each state, or lump them together by region.

Silverman said he wouldn’t be surprised to see Congress step in with some sort of bailout for either insurers or small businesses, even though he described himself as a “grumpy libertarian” who generally disfavors such interventions.

“This is what people are calling a black swan event,” he said. “Nobody was predicting this. I don’t think anyone was anticipating this degree of shutdown.”

Plaintiffs attorney Benjamin Widlaski, with Kozyak Tropin & Throckmorton in Coral Gables, Florida, said he is hoping litigation, not government intervention, will resolve the coverage question. His firm is asking the the case to be consolidated in Miami, where the hospitality industry makes up a large part of the economy.

“The people who were harmed, they need relief and they need it soon,” he said. “They need that check to stay in business.”

Insurance Defense attorney Steven Badger, with Zelle LLP in Dallas, said the COVID-19 claims don’t belong in a consolidated action, and shouldn’t be resolved politically either.

Badger said breach-of-contract lawsuits involving hundreds of different insurance companies, thousands of different policy forms with 50 different applicable state laws will not serve the purpose of the Multidistrict Panel, which is to expedite and simplify litigation.

“Just the opposite would occur here — with a single MDL judge being overwhelmed by the predictable morass of individual case issues,” he said in an email. “As a result, the insurance industry uniformly opposes a federal MDL.”

Badger said he believes personal injury attorneys are hoping for a modest “hold-up” settlement, but that won’t likely be the result. Settlements will be offered based on the merits of each claim without any expectation of a federal bailout, he said.

“Any plaintiffs’ attorney who believes that the insurance industry is just going to bundle-up thousands of lawsuits and write big checks without specific claim analysis is being shortsighted and doesn’t understand commercial first-party property insurance litigation,” he said.

But Badger the chances of insurers quickly crushing the plaintiffs’ arguments without a substantial expense for attorney fees are also “slim to none.”

“The commercial insurance industry, like it does in all catastrophe events, will litigate individual disputes and make decisions whether to take cases to trial or settle based on the facts of the individual disputes,” he said. “They will also consider the law as it develops on the key coverage questions. Early indications are that the law will be very favorable to the positions being taken by the insurance industry.”

About the photo: Stan’s Bar BQ in Issaquah, Wash. is among 101 litigants seeking business-interruption coverage for COVID-19.

About Jim Sams

Sams is editor of ClaimsJournal.com, the online resource and daily newsletter for property/casualty insurance claims professionals. ClaimsJournal is a member of the Wells Media Group. Sams can be reached at jsams@wellsmedia.com More from Jim Sams

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