SIAS Global In Action

The Power of SIAS Global's Kairos and Advanced Analytics

George W. Thompson   •   July 26, 2024

Issue No. 2

Navigating a multi-billion dollar book of reclamation-bond exposure

Underwriting Scenario

Our client, a domestic surety company, ranked among the top 25 U.S. surety companies, via its foreign parent company, acquired a multi-billion-dollar book of reclamation-bond exposures. This recent acquisition represented $113 million in premium and an environmental exposure base of over $15 billion. The book was heavily concentrated in reclamation bonds across a wide spectrum of commodities and jurisdictions in the United States. The acquired portfolio, while historically profitable, had recently seen a shift of several of its accounts into high-risk underwriting scenarios. SIAS was tasked to analyze the book of business and assist in setting a portfolio risk management strategy to "right size" the exposure and identify any significant underwriting concerns and vulnerabilities.

Our Recommendations

The SIAS team suggested undertaking a complete exposure confirmation. Utilizing Kairos data, satellite imagery, and our proprietary Advanced Analytics, we were able to validate, on an account, permit, and bond basis, the status of all the exposure among the reclamation bonds and where our client faced significant exposure risks. Each permit was evaluated and ranked based on reclamation status, water management issues, and permit violation history. Our analytics determined the exposures by site and account, classifying each permit in terms of asset status (Ex. active mining, quality reserves, concurrent reclamation) versus liability status (Ex. inactive mining site, deferred reclamation, perpetual water management concerns, significant notices of violations), and prioritized those that needed to be addressed quickly.

Outcome

Within a few months, our client began to selectively reduce its exposure while retaining the favorably rated sites and accounts, thereby minimizing expense and potential loss activity while retaining premium. Within a year of using SIAS Global analytics and assessments, our client had entirely reevaluated the acquired book and was able to negotiate favorable terms and conditions on the renewal of their Surety Reinsurance Treaty.

SIAS Global . . . your “eyes” in the sky and “boots” on the ground, experts in remote analytics.

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