Henrico-based Elephant Insurance gets stronger [Richmond Times-Dispatch, Va.]

Jan. 19--Elephant Insurance, the Henrico County-based company that is a subsidiary of a British insurance giant, has signed deals that give it even more financial muscle.

The company said yesterday that it has signed reinsurance contracts with Munich Re and Hannover Re, two of the world's largest firms in the business of insuring insurers.

Under the unusual deals, the two reinsurers each agreed to take responsibility for claims on a third of the auto insurance policies Elephant sells. Munich Re agreed to do so for up to 15 years and Hannover Re for up to 10 years.

Reinsurance deals usually run for much shorter periods. Such deals also are more typically structured so that the reinsurers start paying claims only after an insurance company's claims hit a specific level.

"This is a huge thing for us," said Andrew Rose, Elephant Insurance's president and chief executive officer. "We've got some of the biggest people in the business with us for the next 10, 15 years."

Munich Re is one of the biggest financial firms in the world, with revenue just from its reinsurance business of about $32 billion. Hannover Re's gross revenue exceeds $13 billion.

Elephant's parent company, Admiral Group PLC, Britain's third-largest car insurer, has used similar reinsurance arrangements there.

Reinsurance deals generally reduce the insurer's risk, at the cost of giving up some profit, because of the fees paid to the reinsurer.

Admiral itself has invested more than $10 million of capital in Elephant to help it break into the U.S. market.

Admiral reported revenue for the first half of 2009 of more than $700 million.

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Contact David Ress at (804) 649-6051 or [email protected].

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