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ORIMS members chat with Wellington executives.

ORIMS Members Chat With Wellington Executives

Earlier this year, Ontario RIMS members met with Wellington Guarantee executives to learn more about this infant division of Wellington Insurance Co.

Formed in September 1989, Wellington Guarantee is financially backed by the property/casualty insurers' CAN$250 million in capital and surplus and more than CAN$200 million in annual premium volume. The division maintains offices in Toronto and Montreal, staffed by 11 and eight employees, respectively, and plans to open a branch in Vancouver. During 1990, the division expects to write CAN$11 million in gross premiums.

Marketing is done strictly through a network of brokers distinct from those used for other lines by Wellington Insurance. Wellington Guarantee has adopted the stance that "it will not buy its business." Division underwriters intend to underwrite risks based on their merits and charge what they believe are reasonable premiums. When a quoted premium turns out to be higher than the competitions', they will not compromise what they believe is reasonable and engage in cash flow underwriting.

Wellington Guarantee is a foreign affiliate of the Surety Association of America. This membership provides the division with information on developments in the United States which may impact the Canadian fidelity and surety marketplace.


Wellington Guarantee offers directors' and officers' liability, fidelity and surety coverages. Its D&O policy, with limits up to $10 million, is intended for commercial profit and non-profit entities and financial institutions. The policy covers all the usual areas, but it is a "pay-on-behalf" policy rather than an indemnity agreement, which leaves defense and related costs up to the insured until final adjudication or settlement of a claim.

Munich Re Canada is a main lead on the reinsurance treaty. The treaty has no Lloyd's of London participation. Major competitors are American International Group, Chubb, Lloyd's and the Guarantee Co. of North America.

Wellington Guarantee also considers U.S. D&O risks, but cautiously. It will also write the coverage on an excess basis for larger companies.


In terms of fidelity, Wellington Guarantee offers all commercial forms, including 3D forms A and B and blanket position, commercial blanket and individual bonds. It also offers all financial institution forms, including bankers, brokers and insurance company blanket bonds, registered mail and excess securities. Capacity in this area is $15 million on a layered excess of loss treaty basis.

The division is working on excess bond capacity. It does not provide any in-house loss adjusting services but contracts them out to a well-known national firm.


Wellington Guarantee also offers surety contract bonds for bids and consent, performance and payments, maintenance, supplies, liens and advance payments. Capacity for each bond is $20 million. Miscellaneous surety bonds are also available through the division for obligations related to customs and excise taxes, licenses, the Securities Act, tax administration, estates and lost documents. Capacity for these bonds is $2.5 million each.

There are seven participants in Wellington Guarantee's surety reinsurance program. Major participants include SCOR, Hanover and Canadian Re.

Weldon Wheeler is manager of corporate risk and insurance for Royal Trustco Ltd. in Toronto. He chairs Ontario RIMS' Industry and Business Liaison Committee.
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Title Annotation:Wellington Guarantee
Publication:Risk Management
Date:Aug 1, 1990
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