Tokio Marine HCC sees renewable opportunity with GCube acquisition

Tokio Marine HCC, the specialty insurance underwriter and part of the Tokio Marine Group, is aiming to create a ‘centre of excellence’ focused on renewable energy insurance, now that its acquisition of GCube has completed.

GCube is a managing general agent (MGA) and underwriter focused on the renewable energy sector as well as weather risk transfer products and has been writing some business on a parametric trigger basis for a number of years now.

GCube has a track record of underwriting weather risk transfer on a parametric and index basis for clients across the energy sector and had also been linked with use of capital markets backed sources of reinsurance capacity to support its underwriting.

Tokio Marine HCC announced it would be acquiring GCube back in early March and the deal has now completed.

The company said that the acquisition will, “Create a new ‘centre of excellence’ in renewable energy insurance, combining GCube’s 25-year track record supporting renewables developers and asset owners worldwide with Tokio Marine HCC’s global footprint and financial scale.”

Tokio Marine HCC sees significant opportunity in the renewable energy sector, given the size, complexity and financial value of generating assets continue to increase, while the industry continues to expand its reach into markets around the globe.

GCube, being specialist in this sector, is seen as a platform to propel underwriting growth into the renewables sector for Tokio Marine HCC.

The expanding renewables market has changed risk profiles for insureds, with a need for coverage from extreme weather and natural perils, cyber security, supply chain pressures, and evolving mechanical and electrical breakdown issues, Tokio Marine HCC said.

Tokio Marine HCC also noted that after the acquisition, GCube will be well-positioned to expand its presence in key renewables markets worldwide, including Japan and Taiwan, with its help, while continuing to enhance its product offering in other key markets.

Fraser McLachlan, GCube’s Chief Executive Officer, commented, “Becoming part of Tokio Marine HCC is an exciting step for GCube, giving us real impetus as we continue to support the global expansion of renewables. Critically, our shared values mean we can build on the attributes that set us apart in the market, including our drive to share knowledge to the benefit of the sector, our support for new technologies and our integrity in paying claims.”

Simon Button, Chief Underwriting Officer – London Market division of Tokio Marine HCC – International Group, added, “Like GCube, Tokio Marine HCC has committed significant investment to renewable energy insurance in the past decade, and the acquisition recognizes the significant benefit we can jointly bring to this market. As a business, we focus our strategic growth on acquiring partners that offer a unique strength and depth in the insurance marketplace and bringing GCube into the Tokio Marine HCC fold is the natural culmination of that strategy in clean energy.”

GCube is one of the biggest underwriters of risks facing the renewable energy sector around the globe, with a range of underwriting products that include coverage of wind, solar, bio, hydro, wave and tidal projects globally, with weather related risks and natural perils just one area of coverage where projects generation ability can be better protected.

GCube writes global property and liability cover for renewable energy construction and operational risks in 40 countries around the world and has become one of the most significant capacity providers to this market. As an MGA, sources of capacity are key and GCube has long leveraged reinsurance capital providers to aid its growth.

This includes having worked with some alternative reinsurance capital or ILS providers in the past.

Access to robust weather risk transfer solutions is vital for the renewables and alternative energy industry, hence it’s seen as a key growth area and as one of the specialist underwriters that makes GCube a very attractive business at this time.

Whether GCube will need to tap external sources of reinsurance capacity to support its underwriting any more remains to be seen, as Tokio Marine HCC can likely absorb a lot of the risk it produces.

But, as the GCube business expands further, there will be a chance of reinsurance providers backing Tokio Marine HCC taking on some of these risks in future as well.