News

Some analysts and insurers believe the turbulence in stock markets, together with the crisis at AIG, could mean that competitive cover is a thing of the past. According to HIM Capital, a specialist fund manager, the events at AIG "will lead to a seismic shift in the property/casualty insurance market. We had been following the windstorm season for a market-changing event; we, like others, would never have guessed that it would have come from within the industry and have such an impact." HIM Capital says one underwriter likened the crisis at AIG to a "reduction in market capacity equivalent to the hurricanes of 2005 [Katrina/ Rita/ Wilma]. However, unlike 2005 there is a limited underwriting capacity to fill this vacuum and the capital markets have seized up."

Financial Times

Somalia-based pirates have captured a fully laden Saudi oil supertanker the Sirius Star in the biggest act of piracy ever. Insurance premiums are expected to soar. Reports suggest the ship is holding $100m-worth of crude oil (£67m).Shipping analysts said that the cost of transporting freight would leap as a result of higher insurance premiums and an increase in charter rates. The Sirius Star is the latest and largest of more than 60 ships seized off the Somali coast this year.

Insurance Times

Scor, the world's fifth-biggest reinsurer, posted a 71.9 percent slump in third quarter net profit on Friday as the global credit crisis and hurricane claims hit its earnings. Net profit fell to 38 million euros ($47.46 million) from 135 million a year earlier. The company said in October that claims from recent hurricanes would cost it around 50 million euros. These claims have hit the world's top reinsurers, as well as writedowns from the financial market crisis. Scor said it had a strong liquidity position although it warned that the financial turmoil could impact its investment portfolio.

Reuters

Zurich Financial third quarter net slumps on storms.

Zurich Financial Services Ag, Switzerland's biggest insurer, said third-quarter profit fell 90 percent after debt writedowns and losses from hurricanes in the U.S. Net income fell to $154 million from $1.51 billion a year earlier, the Zurich-based insurer said today in a statement. That missed a median estimate of $253 million of seven analysts surveyed by Bloomberg. The insurer was hurt by losses of $615 million in debt writedowns following the default of Sigma Finance Corp., Lehman Brothers Holdings Inc. and Washington Mutual Inc. and claims of $595 million from hurricanes Ike and Gustav, which made U.S. landfall in September. The insurer suffered “particularly adverse circumstances during the third quarter,'” including a net capital loss to shareholders of $1.1 billion, Zurich said in the statement. The company is “on track'” to meet a cost-savings target of $800 million for this year and plans to save a further $900 million each year through 2011.

Bloomberg

The UK government has set up two new industry groups to be co-chaired by the Chancellor, Alistair Darling MP to look at the insurance and investment sectors. The co-chair of the insurance group is Aviva CEO Andrew Moss along with representatives of Legal and General, Standard Life, Scottish Widows, RSA, Lloyd's, Tillinghast, Willis and Prudential. Announcing these two groups, the Chancellor said: "It is essential that we consider our longer-term priorities across all areas of financial services, so that as we emerge from the current period of economic turbulence, we are positioned to remain at the forefront of this industry." Mr Moss commented: "I'm delighted to have this opportunity to shape the future landscape of the UK insurance industry. We're facing challenging times, but it's important to focus on the opportunities and build on our learning to ensure that the financial services sector continues to make a vital contribution to the UK economy."

Post Magazine

Property/casualty insurers’ expense growth outpaced their premium growth in 2007, and this gap is expected to continue this year as net written premium growth remains relatively flat, Standard & Poor’s Corp. said in a special report. Because of soft market conditions, net written premiums increased only 1.3% in 2007 while expenses increased 4.4%, according to the report. New York-based S&P had expected the industry’s expense ratio for 2007 to increase to 26.2%, up from 25.6% in 2006. Instead, it increased to 26.4%. In 2006, net premiums written increased 3.8%, while expense growth increased 8.0%.

Business Insurance

Liberty Mutual, the US (re)insurance giant, said that net income fell $6m and $666m for the three and nine months ended September 30, 2008, respectively, compared to $404m and $1.09bn in the same periods in 2007. “Given the circumstances, we are pleased with our results in the third quarter,” said Edmund Kelly, Liberty's chairman, president and CEO. “We absorbed over $800m of pre-tax natural catastrophe losses and approximately $250m of pre-tax investment losses and still reported positive, albeit slightly, results in the quarter. The fundamental strength of our business has never been more apparent.” Net written premium for the three months ended September 30, 2008 was $6.546bn, an increase of $751m or 13% over the same period in 2007.

Post Magazine

Broker Jardine Lloyd Thompson (JLT) issued a bullish interim management statement this morning (11 November 2008) predicating strong growth despite the credit crunch. The statement said: “JLT remains on track to deliver sustainable profitable growth in 2008, despite the current circumstances of unprecedented dislocation and uncertainty in the financial sector worldwide.” The broker said its third quarter trading was in line with expectations across its five lines of business - retail, specialty, wholesale, reinsurance and employee benefits. It said it had low debt and “significant headroom” in its bank facilities, hinting that it could seize opportunities to expand. The company also said its future results would benefit from current favourable exchange rates.

Insurance Times

Fallen insurance giant American International Group unveiled an unprecedented $24.47bn third quarter net loss on the day it announced a $150bn revamped bail-out package with the US government it says is a "dramatic step forward for AIG and all of its stakeholders". For the first nine months of the year, the company reported a net loss of $37.63bn, compared to a net profit of $11.49bn at the same stage of 2007. The quarterly loss compared to a $3.09bn profit in the prior-year period and included a further $7.05bn pre-tax write-down of unrealised losses on the super senior credit default swap (CDS) book written by its troubled financial products division (AIGFP).

The Insurance Insider

Berkshire Hathaway net confirms ‘party is over’.

Warren Buffett-led Berkshire Hathaway Inc. said third-quarter net income fell 77% as turmoil in the insurance market and investment losses took a toll on the bottom line. The Omaha, Neb., conglomerate posted its fourth consecutive quarterly decline in profit, essentially delivering on the billionaire's glum prediction earlier this year that "the party is over" for insurance earnings. Net income plunged to $1.06 billion, or $682 per Class A share, from $4.55 billion, or $2,942 a share, in last year's third quarter. At Berkshire's insurance companies, which generate much of the parent's overall results, operating earnings from underwriting tumbled 83% to $81 million from $486 million in last year's third quarter. Insurance-investment income fell 12% to $809 million from $922 million. Income from non-insurance businesses slipped 7.9% to $1.08 billion from the year-earlier $1.17 billion.

Wall Street Journal Europe

AIG is to receive a new $150bn US government bail-out that will allow the troubled insurer to reduce interest payments and give it more time to sell assets and save itself from collapse. The new deal will increase the government’s aid to the stricken insurer from $123bn to $150bn but leave the federal authorities to reap most of the gains if AIG’s troubled assets recover in value. People close to the situation said the new plan – which comes less than two months after the Federal Reserve took an 80 per cent stake in AIG in exchange for an $85bn rescue loan – could be announced on Monday, with the insurer’s third-quarter results. Under the new plan, which was approved by AIG’s board after a weekend of talks between the insurer, the New York Fed and the US Treasury, the government will swap the $85bn two-year loan for a $60bn, five-year loan.

Financial Times

FSA says insurers 'well placed' to deal with market turmoil.

The City watchdog yesterday sought to offer reassurance on the insurance sector's ability to withstand market turbulence while admitting that the regulatory regime in place during the last bear market had been unfit for purpose. Sarah Wilson, the Financial Services Authority's insurance sector leader, said the insurance sector and the regulatory regime had made progress since the solvency crisis that gripped the industry in the collapse of the equity market during 2002 and 2003. "The recent falls and volatility in the equity markets and the continued widening of corporate bond spreads have naturally captured people's interest and attention. But it is also important to remember that ... the insurance industry is ... better prepared to deal with stressed market conditions," she said.

Financial Times

AIG asset sales gather steam.

Struggling insurance conglomerate American International Group Inc is expected to reach deals to sell its U.S. personal lines unit and an equipment insurer by the year end, a source familiar with the situation said on Thursday. New York-based giant AIG is expected to clinch a deal soon to sell its U.S. personal lines business, which one analyst has valued at between $5 billion to $7 billion. It is also close to selling a smaller business, Hartford Steam Boiler Inspection and Insurance Co, the source said. The sales are the first sign that AIG Chief Executive Edward Liddy is progressing with his plans to sell off a large part of its business to repay a massive government loan.

Reuters, 06 November

Munich Re today issued its second profit warning since the summer after impairments and hurricane costs all but wiped out third-quarter earnings. Munich Re, which is one of the world's largest reinsurers by gross premiums along with Swiss Re Co., said after-tax profit, before minorities, "will probably not reach EUR2 billion, or earnings-per-share of EUR10, in view of the considerable share price losses." It said continuing market volatility left it unable to give a reliable full-year profit forecast. Munich Re first warned on full-year profit in late July, saying it expected it to be "well above" EUR2 billion, but lower than its previously estimated profit range of EUR3 billion-EUR3.4 billion.

Dow Jones

U.K. insurers could make around GBP4.4 billion worth of payouts in the next two years to holders of so-called payment protection insurance (PPI) policies as the U.K. economy slows and unemployment rises, an economist said. PPI covers repayments on credit products if the borrower is unable to do so due to loss of earnings as a result of accident, sickness, unemployment or death. "In total, insurers could face total PPI-related payouts of around GBP4.4 billion," said Capital Economics economist Vicky Redwood. Still, Redwood said the figure is "not catastrophic because, although a large absolute number, it's not so big when put relative to the size of general insurers' premiums and other balance sheet indicators." She estimated that the figure forms 13% of annual general insurance net premiums in the U.K.

Dow Jones

Markel Corp. reported a $26.1 million loss for the first nine months of 2008 because of investment and hurricane losses. The loss compares to $312.2 million in profit for the first nine months of 2007. For the third quarter, Markel reported a $142.3 million loss vs. a gain of $92.4 million last year. The Richmond, Va.-based insurer reported $200.2 million in realized investment losses for the nine-month period, compared with $64.7 million in gains for the same period a year ago. It reported $115.1 million in underwriting losses related to hurricanes Gustav and Ike. Net premiums written for the nine-month period decreased 4.4% to $1.54 billion. The insurer reported a 104% combined ratio for the nine month-period, which includes eight percentage points related to hurricane activity. It reported an 88% combined ratio for the same period a year ago.

Business Insurance

Global directors' and officers' liability (D&O) losses resulting from the credit crisis could hit $7.4bn, according to a report. The new figure - the high point of a range from $4.4bn-$7.4bn for the 2007, 2008 and 2009 years - reflects an increase in shareholder and regulator lawsuits, bankruptcy filings and defence costs related to dismissed suits, according to information provider Advisen. The firm noted that the credit crisis had "mushroomed into a global financial calamity" since it released a loss estimate of $3.6bn in February this year, and that the worst-hit sector for D&O losses would be financial institutions (FI).  The estimate does not include errors and omissions (E&O) losses, which many predict will dwarf the D&O figure when they begin to materialise.

The Insurance Insider

Glacier Insurance, headquartered in Liechtenstein and part of the Switzerland-based Glacier Group, has appointed former AIG underwriter Peter Hoffmann as senior underwriter for the group's property division. In his role, Mr Hoffmann will focus on expanding the property, construction and engineering business of Glacier Insurance from its branch office in Cologne, Germany. He joins Glacier Insurance after four years at AIG Europe, where he held the role of deputy profit center manager for the group's property/energy division.

Post Magazine

US insurer the Hartford Financial Services Group saw its battered share price rally 57.75 percent to $16.28 after it sought to clarify its capital position in a Securities and Exchange Commission (SEC) filing. In the filing, the insurer said that, even if the S&P 500 falls to 900 by the year-end - 7 percent below its close at 31 October - its capital margin would be $2bn in excess of the level needed to maintain AA ratings in its property casualty operations.

The Insurance Insider

Hannover Re reported a 395m euro ($512.2m) net loss in the third quarter given investment writedowns and hurricane damage claims, but said it was possible to break even in the fourth quarter. The world's fourth-biggest reinsurer said it had realised losses of about 200m euros in October to reduce its equity exposure which, combined with hedging on the remaining portfolio, meant the company "can no longer be affected" by further financial market volatility. Hannover Re had already abandoned last month its goal of achieving return on equity of more than 15 percent this year, after its investment income was hit by falling equity markets and Hurricanes Ike and Gustav wreaked higher-than-expected losses in the US.  

Reuters

Risk Management Solutions (RMS) has announced the results of a study analysing the impact of a major earthquake on the Hayward Fault. If a magnitude 7 earthquake ruptured the Hayward Fault it would result in economic losses between $210bn and $235bn, with only up to $30bn likely to be insured, according to the study. The 1868 Hayward earthquake ruptured the southern section of the fault and caused extensive damage. ‘More than seven million people now live in the fault zone and surrounding areas - over 25 times the population at the time of the 1868 earthquake,’ said Dr. Patricia Grossi, senior research scientist at RMS.

Insurance Times

A financial manipulation scheme cost American International Group Inc investors at least $544 million, a judge has estimated, a finding that could mean the five former executives convicted in the fraud will face lengthy prison terms when sentenced. The case is unrelated to AIG's mortgage-related losses that led to a near collapse of the company in September and an $85 billion emergency line of credit from the U.S. Federal Reserve. Four former executives at General Re Corp, a unit of Warren Buffett's Berkshire Hathaway Inc, and one former AIG executive were found guilty by a federal jury in Connecticut in February of fraud and conspiracy. The charges stemmed from a reinsurance deal in 2000 that prosecutors said misled investors about AIG's financial condition.

Reuters

Swiss Re has become the latest (re)insurer to slump to a third quarter deficit, as it booked a SFr304mn net loss for the period, driven by a SFr614mn operating loss in its life and health business. The net loss compared to a SFr1.47bn profit in the third quarter of 2007, as shares in the company traded down 7.39 percent at SFr47 this morning after it suspended its share buy-back programme. But the impact of financial markets turmoil on Swiss Re's capital base appears to have been less severe than feared in some quarters, with shareholders' equity falling 6 percent in the quarter to SFr24.1bn, as the Zurich-headquartered reinsurer highlighted its "prudent investment approach".

The Insurance Insider

Towergate, the insurance broker, is expected to seek fresh private equity capital next year. People close to the situation insisted that the move was separate from negotiations by the broker to reset its banking covenants. Towergate's banks, led by Lloyds TSB and HBOS, have agreed a covenant waiver, and the highly acquisitive broker is looking at options for reducing its £580m of debt during next year. Those familiar with the private equity fundraising plan said the expected additional investment would be aimed at smoothing the path to an initial public offering in about three years' time.

Financial Times

Aon’s third quarter profits dropped by 43% as it became the latest broker to suffer a slowing world economy. The broker posted a net income of $117m, down from $204m for the same period last year. However, earnings per share increased 33% to 69 cents, beating most analysts’ expectations. President Greg Case said Aon had beaten its key performance indicators, adding: “These results were achieved despite soft market conditions globally and unprecedented turmoil in the insurance industry.” UK fees and commissions suffered a slight drop in comparison to last year’s third quarter, down from $193m to $182m.

Insurance Times

Shares in Hartford Financial Services Group have slumped more than 35 percent after the US insurer booked a $2.6bn Q3 loss, lowered its full-year forecasts, and failed to reassure analysts over its capital position. The devastating quarterly loss included £2.2bn in net realised losses, while the net unrealised loss on available-for-sale securities was $3.8bn for the quarter. It added that over 70 percent of its third quarter impairments came from holdings in financials, with economic losses from the likes of Fannie Mae and collapsed bank Lehman Bros.

The Insurance Insider

Assicurazioni Generali SpA (G.MI) said on Thursday that its third-quarter net profit fell 64%, despite a growth of both life and non-life operations in Central and Eastern Europe, as the results were hit by additional impairment charges related to the ongoing deterioration of financial markets  Co-Chief Executive Giovanni Perissinotto said on Thursday that "the company is strongly capitalized, is making profit, has a good financial flexibility and that the announcement of the annual dividend is going to be discussed - as usual - at the board meeting to approve the company annual results in 2009." But shares suffered a round of selling on uncertainty over the dividend payment, analysts said.

Dow Jones

AIG has raised funds from a new Federal Reserve lending facility to repay part of a $123bn Fed loan that is keeping the stricken US insurer alive, in a move that could aggravate the political backlash over its use of taxpayers' money. AIG said yesterday that it had tapped a Fed lending window designed to kick-start the flagging market for commercial paper and used some of the proceeds to pay back part of the government loan. Fed figures showed that as of Wednesday, AIG owed the government $83.5bn, down from $90bn a week ago. The company has repaid $6.5bn of the $72bn it had drawn down from the original $85bn government loan.

Financial Times

Troubled insurer American International Group (AIG) is not cutting its insurance prices in order to hang on to skittish customers, a company spokesman said Wednesday. "We are not sacrificing rate to retain market share," said AIG spokesman Peter Tulupman in an email. "In fact, since mid-September, our U.S. commercial insurance operations have had several points of rate improvement compared to [year-to-date] results.” His remarks come after rival property insurers said they had seen signs of stress in the market, including some insurers that have drastically cut prices in order to keep business.

Dow Jones

Ironshore Insurance Ltd president and chief underwriting officer Les Rock has resigned from the Bermudian insurer for “personal reasons”. Rock was part of the founding management team when Bob Clements launched Ironshore at the start of last year as a $1bn property cat insurer. It is thought that the former underwriting chief at Lloyd’s insurer Heritage was unsettled on Bermuda, and had been seeking a return to London.

The Insurance Insider

RenRe slumps to $231 mn net loss.

RenaissanceRe slumped to a $231mn net loss for the third quarter as it was hit by the double impact of net realized investment losses and hurricanes Gustav and Ike. The Bermudian reinsurer reported a $143.4mn operating loss, compared to operating and net profits of $167.8mn and $133.4mn respectively in the three months ending 30 September 2007. The company's book value per share fell 10.1 percent to $38.94 in the quarter, as it was hit by $276mn of net negative impact from hurricanes Gustav and Ike, and negative investment results of $93.3mn.

The Insurance Insider

Zurich has confirmed it expects aggregate claims payments related to hurricanes Gustav and Ike of approximately $600m before tax, based on preliminary estimates. The insurer said the figure is net of reinsurance recoverables and includes reinsurance reinstatement premiums. Hurricanes Gustav and Ike respectively hit the US Gulf Coast on September 1 and September 13 of this year, affecting large areas of Texas, Louisiana and parts of the Midwest.

Insurance Times

Ace Ltd.'s (ACE) third-quarter net income fell 92% as the commercial insurer saw major investment losses in both its credit and equity portfolios coupled with significant catastrophe losses. The insurer reported net income of $54 million, or 16 cents a share, down from $656 million, or $1.95 a share, a year earlier. Ace recorded realized and unrealized after-tax losses of $1.3 billion. Operating income, which excludes net realized investment gains and losses, fell to $1.51 a share from $2.06 a share a year earlier. Earlier this month, Ace forecasted operating income of $1.44 to $1.48 a share.

Dow Jones

Transatlantic Re’s determination to protect its interests as its embattled majority shareholder seeks to sell its stake is deterring potential buyers. According to well-placed sources, Transatlantic Re’s refusal to yield on its strict non disclosure agreements has led to bidders reconsidering their interest, at a time when American International Group’s (AIG) need to realise cash becomes increasingly pressing. The property & casualty reinsurer, which is 59 percent owned by AIG, the equivalent of $1.6bn, asked potential buyers earlier this month to enter into non disclosure agreements which provide a narrow time frame for negotiations while also laying down strict non-solicitation terms, according to one source.

The Insurance Insider

The Bank of England will today flag up the potential threat to insurance companies from the impact of the credit crunch. In its twice yearly Financial Stability report the bank will point to insurers, hedge funds and emerging market economies as three areas of concern. The report is to outline that a recession as severe as the 1990’s would lead to credit losses of up to £130bn for Britain’s six biggest financial institutions and possibly wipe out the entire government backed funding package.

Insurance Times

Loews Corp, a conglomerate run by the billionaire Tisch family, will inject $1.25 billion into its CNA Financial Corp commercial insurance unit after soured investments and hurricane claims led to third-quarter losses at both companies. CNA suspended its common stock dividend in exchange for the injection, after losing $331 million, or $1.23 per share, in the third quarter. CNA operating profit excluding investments fell 61 percent to $83 million, or 31 cents per share. Results were hurt by falling prices on insurance policies and the worst U.S. hurricane season since 2005, including storms Gustav and Ike.. CNA's third-quarter net loss compared with a year-earlier profit of $174 million, or 64 cents per share. Loews' net loss compared with a year-earlier profit of $555 million, or 77 cents per share.

Reuters

Lancashire Holdings Limited has seen its loss ratio deteriorate to 152.5% in the third quarter of 2008, due largely to Hurricanes Gustav and Ike. Its investments also suffered in the third quarter, with a total annualised investment loss of 1.7%. In the third quarter the fully converted book value per share stood at $6.33 at 30 September 2008, compared to $6.91 at 30 June 2008, a reduction of 8.4%; gross written premiums were $124.6 million and net written premiums $120.3 million. The insurer had a net operating loss of $105.7 million, or $0.61 diluted operating loss per share; and net loss after tax of $119.4 million, or $0.69 diluted loss per share.

Insurance Times

AIG is to freeze about $19m in compensation payments to Martin Sullivan, the former chief executive of the stricken insurance group, it was revealed last night. Andrew Cuomo, the New York attorney general, said the group, which was rescued by the US government last month, has also agreed to freeze about $600m of deferred compensation and bonuses due to executives of AIG Financial Products, whose losses precipitated the group's collapse. Joseph Cassano, former head of AIG Financial Products, has a share of about $69m of the $600m pool, while five others have a combined share of about $93m, Mr Cuomo said.

Financial Times

Special charges and integration costs took a bite out of Willis Group Holdings Ltd.’s net income for the first nine months of 2008, while revenues grew slightly. The London-based broker on Wednesday reported $241 million in profit for the nine-month period, down 23.3% from the year-earlier period. Willis attributed the decline to $95 million in pretax charges it took during the first three quarters relating to its previously announced 2008 expense review. Of the charge, $24 million relates to severance costs associated with 350 positions that either have been or will be eliminated, it said.

Business Insurance Europe

Travelers, the US (re)insurance giant, said that third quarter net income tumbled to $214m from $1.198bn the year before after the company was hit by $682m worth of after-tax catastrophe losses. Net income for the first nine months of the year to end-September dropped 34% to $2.1bn, down from $3.58bn in the period earlier. Operating income in the current quarter was $330m, compared to $1.198bn, in the prior year quarter. Net earned premiums for the quarter rose mildly to $5.44bn, up from $5.41bn this time last year.

Reinsurance

US P&C industry statutory surplus set to decline £42bn at end of Q2.

Marred by the clash of equity and credit-related losses on their asset portfolios, catastrophe losses resulting from an active hurricane season and an anticipated spike in directors and officers liability (D&O) claims, the US property & casualty industry’s reported statutory surplus at the end of the third quarter is projected to decline as much as $42bn, or 8%, from the beginning of the year, according to estimates from global professional services firm Towers Perrin. “Buyers of commercial insurance will need to pay more attention to insurance purchasing decisions, and consider contingencies in renewal planning,” said Stephen Lowe, managing director of Towers Perrin’s global P&C insurance practice.

Reinsurance

Hannover Re abandons profit target after writedowns.

Arch Capital Group Ltd is close to launching a new Dublin-based reinsurer that will act as a hub for its European reinsurance operations. Arch Reinsurance Europe Underwriting Ltd (Arch Re Europe) will be capitalised with around $400mn and will be the main European reinsurance platform for the Bermudian-headquartered company.  Headed by CEO Søren Scheuer, Arch Re Europe will write business from the office in Ireland and through the existing Zurich operation, which currently underwrites as a branch office of the firm's Bermudian reinsurer, Arch Reinsurance Ltd.  According to sources, the firm is awaiting final approval from the Irish Financial Regulator which, once granted, would enable the reinsurer to begin underwriting in time for the key 1 January renewals.

The Insurance Insider

Lloyd’s, the world’s leading specialist insurance market, announced today its provisional loss estimate for Hurricanes Gustav and Ike. In line with analysts’ estimates of an aggregate $20-25 bn industry loss, it is expected that Lloyd’s will face net claims of £1.3bn. This covers on and offshore claims across both windstorms. Based on current estimates it added there will be a negligible impact on Lloyd's capital and no Central Fund exposure. Lloyd’s CEO Richard Ward said: “While industry losses from Hurricanes Gustav and Ike are likely to exceed initial forecasts, the claims to Lloyd's will be manageable and in the normal course of business. These exposures are in line with expectations and reflect our strong competitive position in the lines of business affected”

Post Magazine

Amlin expects that the market insured loss for Hurricane Ike will be in excess of $16bn which is higher than modelling agents' current estimates. This is due to the far reaching impact of the storm both on offshore energy installations and on the mainland. The group's own estimated claims from Hurricanes Gustav and Ike are $285m, net of reinsurance and reinstatement premiums. This figure is comprised of $137m for Syndicate 2001 and $148m for Amlin Bermuda. Amlin estimates that these events will reduce its forecast 2008 profit after tax by approximately £45m.

Post Magazine

Flagstone Reinsurance Holdings Ltd has ended its search for a Lloyd's platform with an agreement to buy Marlborough Underwriting Agency Ltd from Berkshire Hathaway, as it becomes the eighth Bermudian to establish a Lime Street presence since the start of 2007. The transaction sees Flagstone acquire the agency - which manages short-tail specialist (re)insurance Syndicate 1861 - but not the existing Lloyd's corporate member or liability for business written in 2008 or prior years. The Bermudian will capitalise the Syndicate from the 2009 underwriting year onwards and said it is in the process of licensing its own corporate capital vehicle.

The Insurance Insider

ING, The Dutch financial services giant, last night became the latest large European bank to turn to its government for an injection of capital. The bank, the biggest in the Netherlands, announced it would sell an 8.5 per cent stake to the Dutch government for €10bn (£7.8bn), as it attempts to improve its capital funding. The capital boost followed a weekend of talks with the Dutch government following ING's announcement on Friday that it had lost €500m in the third quarter of the year, the first such loss in its history, after making €2bn of writedowns on investments. That revelation, and a 27 per cent fall in ING's share price on Friday, rang alarm bells with the Dutch authorities, which had already set aside €20bn to provide funds as and when needed to the country's banking system.

The Independent

Fitch revises outlook on insurance industry to 'negative' from 'stable'.

US ratings agency Fitch Ratings has revised its outlook on the insurance industry to 'negative' from 'stable’. “Balance sheet pressures for insurance and reinsurance companies globally are becoming more severe as insurers experience greater unrealized market value losses, and take impairments, on their investment portfolios. As such, Fitch said it expects a noteworthy ramp-up in such losses to be reported by many insurers in the third quarter," it said. Accordingly, Fitch has revised the rating outlook to 'negative' from 'stable' for 12 insurance and reinsurance sectors globally, reflecting primarily the fall out from significant deterioration in the global financial markets, and its impact on insurers' balance sheets and financial flexibility.

Post Magazine

American International Group (AIG) has agreed to hand over details of all compensation paid to senior executives to New York attorney general Andrew Cuomo as he looks to recover “illegal expenditures” from the beleaguered insurer. Cuomo had earlier written to the US insurer warning that it must recover “improper bonuses” and other payments and perks from its former executives, or his office would do so under New York law. Meanwhile the fallen giant also revealed it has ended its long search for a new CFO, with the internal promotion of comptroller David Herzog, who replaces outgoing Stephen Bensinger and will work closely with chief administrative officer Richard Booth in an “enterprise-wide review of expenses and practices”.

The Insurance Insider

London-listed insurer Catlin Group said it expected to take a $200 million hit from hurricanes Ike and Gustav. In a statement, Bermuda-based Catlin said the figure was based on an estimate that the two storms, which swept through the Gulf of Mexico in September, would cause a total insured loss of $15 billion. Catlin also said it had made a negative investment return over the first nine months of the year, as financial market turmoil reduced the value of debt-backed securities it holds by $118 million. The total investment return -- the sum of investment income and changes in the value of investments held in the portfolio, divided by total assets -- was minus 0.9 percent for the nine months to Sept. 30, Catlin said.

Reuters

Europe's largest insurer by premium income, Wednesday said it is "well capitalized" and won't need to tap the German government's rescue package. "We see no direct need to tap the government's rescue fund," an Allianz spokesman said. Earlier Wednesday, Hannover Re AG, one of the five largest reinsurers in the world, also said it doesn't see any need to tap the German government's rescue fund. Hannover Re has "sufficient liquidity," a Hannover Re spokeswoman said, pointing to the company's premium income. However, the financial crisis will have a negative impact on Hannover Re's investment result, the spokeswoman said, echoing recent comments by a spokesman of German financial services regulator BaFin.

Dow Jones

CVC Capital, the private equity group, is in talks to take a controlling stake in Royal Bank of Scotland's insurance assets, according to people familiar with the situation. RBS initially shut private equity groups out of the bidding for its insurance assets, originally put up for a sale with a £7bn price tag, but has been forced to reopen the auction to private equity after a lack of competitive tension. Allstate was the only insurer to table an offer for the businesses, which include Direct Line and Churchill, in August. A number of other bidders - including Warren Buffett's Berkshire Hathaway Group, Zurich Financial Services, and Generali of Italy - walked away.

Financial Times

Fortis, formerly the biggest Belgian financial-services company, fell to the lowest since it was formed 18 years ago in Brussels trading after selling most of its operations to three governments and BNP Paribas SA. Fortis, which resumed trading after a six-day suspension, declined 78 percent to 1.22 euros, the lowest since the Brussels- and Amsterdam-based firm was formed in a 1990 merger. That values the company at 2.86 billion euros ($3.91 billion). Following the sale of its Dutch and Belgian insurance and banking businesses, Fortis is left with a 66 percent stake in a portfolio of structured products and its international insurance unit.

Bloomberg

XL Capital Ltd. announced an estimated third-quarter net loss to ordinary shareholders of between $1.65 billion and $1.67 billion, and said that the company’s chairman had involuntarily sold about 80% of his XL common shares to meet a margin loan call. In announcing its preliminary results for the third quarter, XL said the loss was caused partly by a $1.4 billion charge related to the Aug. 5 deal with Syncora Holdings Ltd., formerly Security Capital Assurance Ltd. The company also said it had net losses of $27.4 million and $195.4 million from Hurricanes Gustav and Ike, a charge of $41.7 million related to a streamlining of corporate functions, and a charge of $22.5 million arriving from the redemption of XL America Inc.’s $255.0 million guaranteed senior notes.

Business Insurance Europe

Beazley has reported gross written premiums of £595.4m for the nine months to 30 September 2008, down 1% year-on-year. The Lloyd’s insurer also said that its net profit impact from Hurricanes Gustav and Ike was estimated to be around £20m. Beazley also reported an investment loss of £26m in the third quarter, derived from mark-to-market losses. The insurer said it expected rates to rise in the coming months. It said in a statement: “The past three months have presented significant investment management challenges, combined with an increase in hurricane-related insurance and reinsurance claims. Core underwriting activity remains robust and we continue to see healthy growth in the business underwritten by our US operations.”

Insurance Times

Berkshire Hathaway is restructuring its London market operations with a view to selling its Lloyd's insurer Marlborough Underwriting Agency. Marlborough, which underwrites through Syndicate 1861, is one of two Lloyd's underwriting platforms controlled by Berkshire Hathaway. According to sources, Berkshire has had a number of approaches - reflecting the continuing interest in owning a Lloyd's underwriting platform - and is believed to be mulling at least one serious offer. “If we do decide to sell, it reflects the market enthusiasm for Lloyd's and should not be construed as a negative comment," said a senior Berkshire Hathaway executive.

The Insurance Insider

Hank Greenberg, former Chief Executive of American International Group Inc will soon release a plan outlining an alternative way to save the stricken insurer that was rescued by the U.S. government last month, the Financial Times said. Greenberg, who left AIG in 2005, is expected to file his proposal with U.S. securities regulators and is also expected to present it to U.S. Treasury Secretary Hank Paulson and key members of Congress, the paper said. The details were unclear but the plan could involve modifications to the deal with the U.S. government, which extended an $85 billion loan to the insurer last month.

Reute