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BMS revenues grow 25% to exceed £100mn in 2018

BMS, the independent specialist insurance and reinsurance broker, today announces that in 2018 annual revenues for the first time exceeded £100mn, one of a number of financial landmarks achieved by the business over the course of the year.

Overall revenue grew by 25%. BMS’s London wholesale business posted particularly impressive results, growing revenue by 32%. BMS’s reinsurance division achieved an 18% revenue increase.

The US reinsurance operation has also been a key driver of BMS’s emergence as a leading independent global broker, with revenue increasing by 28%.

Hires in Australia, Bermuda and London, including a market-leading energy team joining the London wholesale business, contributed to BMS’s headcount swelling to over 390 employees. BMS continued to invest in technology and its Innovation Lab, to drive change within the company and the wider insurance industry. The initiatives have enhanced BMS’s service offering to both clients and markets, which in turn has improved efficiency and increased revenue.

Nick Cook, CEO of BMS, said:

“This remarkable result belongs to BMS staff, who have driven our group success over the past years. BMS’s independent, client-centric and employee-owned business model has proven its worth time and time again, attracting and retaining the market’s finest talent.

We are also investing in our US platform where we see significant opportunity to add value to existing and new clients in the US reinsurance and MGA space. Our independence matters, as US insurers’ options diminish with continued M&A in the reinsurance broking sector.

Our management team has consistently pursued an organic growth plan focused on delivering what BMS is renowned for: client-centric, flexible, independent broking and advice that delivers for our customers.”

March 3, 2019 – Severe Weather Outbreak

The familiar saying is that March can start in one of two ways: like a lion or a lamb. Unfortunately, this year it has come in roaring like a lion, with the occurrence of a very active outbreak of severe weather that has moved across the southeastern U.S., spawning numerous tornadoes (Filter NOAA Storm Reports suggest 39 tornadoes). The hardest hit areas seem to be Beauregard and Smith Station, AL, with initial damage reports suggesting the tornado travels 67 miles with a maximum width of 1 mile and had a maximum intensity of an EF4 tornado with 170 mph winds.  So far this tornado was the cause of all 23 reported fatalities. The Talbotton, GA, tornado could have also experienced a low to mid-level EF4 (166 – 200 mph) tornado and could actully be part of the same tornado that tracked over Beauregard and Smith Station, AL. Cairo, GA experienced an EF2 (120 mph) tornado, but data will continue to be analyzed before finalizing the rating. Overall, reports (only 16) of severe hail and other winds associated damage (62 reports) with this severe weather outbreak were relatively limited, but some insurance loss could result from these perils as well.

BMS iVision ingests filtered National Weather Service Observations of Severe Weather so clients can quickly get a view of impacted risks using one of the many Scenario View tools. After the Weather Service conducts damage swaths these can also be made available in iVision for deeper analysis.

The catalyst for this event was an area of low pressure moving across the Lower Mississippi Valley toward the Mid-Atlantic coast. In fact, if you look at the temperature anomaly from yesterday afternoon, it was a classic signature of a large tornado outbreak, similar to the late-April Tuscaloosa tornado outbreak of 2011. With record cold occurring in the north-central plains and ample warm moist air along the southeast feeding off the above-normal Sea Surface Temperatures (SST) in the Gulf of Mexico, the pattern is set for severe weather.

This is the 2 meter air temperature anomaly on the afternoon of March 3, showing the very cold air (16 degree below normal) over the Central Plains and the 6 degree above normal temperature over the southeast U.S. When the atmosphere air masses clash like this there is bound the be trouble – Source: WeatherBell

 

The National Weather Service Storm Prediction Center in Norman, OK (NWS) had issued a statement prior to the outbreak indicating that, given the buoyancy and intense shear profile in place, tornadogenesis would likely occur within 30 – 60 minutes, with the possibility of a strong tornado occurring after 1:00 p.m. CST.   The Preliminary lead time from the concentrated areas of damage in Smith Station is estimated to be 8-9 minutes.

Sadly, many people lost their lives even with this ample warning. With the death toll currently at 23 and potentially still rising, this tornado outbreak is the deadliest since May of 2013 when 24 people were killed in Moore, OK, and the deadliest day for tornadoes in Alabama since 2011.

Given the rating of the Smith Station, AL tornado is now an EF4, this ends the remarkable drought of an EF4 tornado.  According to the source, U.S. Tornadoes Violent tornadoes have caused 63.1% of all deaths despite the only accounting for 1% of all tornadoes in the historical record.

This chart has been featured in several BMS Insights blog post highlighting the lack of major tornadoes over the last few years.   This chart will now have to be updated given the Smith Station, AL tornado has been rated an EF4 by  NWSBirmingham.  The EF4 tornado drought has officially ends at 672 consecutive days. The longest such streak in the United States since 1950.

It is notable that the prevalence of images of driveways with debris everywhere, but no indication of foundations, suggests a large number of mobile homes were likely in these locations, perhaps contributing to the loss of life. Mobile homes tend to be lighter and have much less stable foundations than a typical single family home.  In fact, data from Stephen Strader and Dr. D.S. LaDue shows there are very few community tornado shelters in the part of Alabama hit by the tornadoes. Mobile homes are a big part of the housing stock across the deep south which is troubling, as even the weaker tornadoes or strong wind storms can destroy such structures. When you combine this with the huge growth in exposure to the tornado hazard across Dixie Alley, the insurance industry is bound to continue to experience loss from events like this into the future, even if it has been some time.

Data show there are very few community tornado shelters in the part of Alabama. In the lower right is a blue box of the approx tornado location and only 1 – 3 tornado shelters exist in the impacted areas. Source: Dr. D.S. LaDue

Some of the counties that had tornado impacts have 23 – 40% mobile home stock.  Source:  Peter Forister

Preliminary overlay of rotation tracks radar data and some ground observations.  However, also provided is the mobile home inventory across the possible tornado swath.   Source: David B. Roueche

Unfortunately, the forecast calls for another storm systems later this weekend and another duing the middle of next week that could lead to more outbreaks of severe weather. In fact, last week the large forecasting company AccuWeather predicted 1,075 tornadoes will occur in 2019. This is a bold prediction that has drawn some scrutiny as being very unscientific.  It is expected severe weather usually occurs across Dixie Alley in the early spring, as this is the climatological peak for storms before the focus shifts to the central plains.  AccuWeather believes warmer-than-normal SST over the Gulf of Mexico will lead to increased moisture transport from the Gulf over the region and, ultimately, a higher frequency of severe weather this season. I think the forecast is, bold, but the insurance industry needs companies and other researchers to push forecasting, but also state the uncertainties in such forecasts as guidance is feasible at longer lead times, but there is substantial variability. A number of factors that influence seasonal tornadoes include the state of the El Niño Southern Oscillation, Pacific and Atlantic SST profiles and seasonal wind shifts like the Madden-Julian Oscillation or the global wind oscillation. For the upcoming season, there is a weak ongoing El Niño event which, typically, implies the unstable conditions favorable to tornadoes are less likely over the Great Plains. But the Gulf of Mexico is exceptionally warm, and I know first-hand the snowpack over the northern plains and Rocky Mountains are healthy, which suggests more instability over the U.S. Only time will tell how this plays out, but the tornado drought appears to be over, and insurance companies are, yet again, facing loss from the raw destruction that can occur from severe weather.