The fallout from Transamerica exiting the bond business has now hit Australia: Completion Bond Co.’s rep here, the First Australian Completion Bond Co. (FACB), has merged with Motion Picture Guarantors.
That leaves Oz with only two guarantors — Film Finances is the other — which has already triggered an increase in rates.
Effective July 1, FACB started using MPG’s reinsurance arrangements: Underwriting from a group of insurance companies, led by the Toronto-based Wellington Insurance Group, supplemented by various European concerns.
It’s understood that MPG’s Melbourne-based Australian rep, headed up by Christine Suli, wasn’t directly using those arrangements but instead came under a deal via Entertainment Bonding Services. Thus FACB effectively will become MPG’s Australia/New Zealand rep. Suli will continue to service her clients via the new venture.
FACB is owned and operated by Rob Fisher, who will head up the joint venture.
Set up three years ago to rep CBC, FACB has acted as a guarantor on $ A100 million ($ 67 million) worth of projects to date. A plus for MPG is that Fisher is the only Aussie bonder to work the Southeast Asian market (he set up a Tokyo office last year and has reps in Singapore), and has a majority slice of the New Zealand market.
Film Finances, however, remains Australia’s biggest guarantor. Topper Sue Milliken stressed that despite the recent problems at Lloyd’s, it’s “business as usual,” with reinsurance still being placed through Lloyd’s and other groups.
Since FACB’s arrival in the market, and with a contracting production industry, Milliken said, there has been “disastrous” discounting in the bonding sector, with rates dropping from the traditional 6% to just under 2%, with usually no rebates available.
As in the U.S., Aussie rates are now increasing again as premiums increase — Fisher said by as much as 50%– and market choice diminishes. “They’re going back to what they were,” he noted. Both players say that means 5%-6% rates, with 3% rebates.
Fisher added that the transition period between Transamerica’s decision and this new arrangement saw one feature and three docus go over to Film Finances.