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| Please click on the headline for details of each item.Beazley Group H1 pretax profits dip on weakening dollar. Beazley Group PLC, the Lloyd's insurer, said first half pretax profits fell to £28.3m from £35.2m in the same period last year on the weakening dollar. Beazley's US business accounts for 50 pct of the company's total business, meaning that a weakening dollar hurts company profits. 'If the dollar gets weaker in the second half of 2006, we'll continue to have a debit,' Beazley's chief financial officer Andrew Horton told AFX News. Gross premiums written were up 43 pct to £394.3m from £275.4m, above analysts' expectations of £354m, as Beazley profited from increases in premium rates following the 2005 season which cost the insurance industry billions of dollars. There was also a boost for shareholders, who saw their interim dividend increase slightly to 1.6 pence from 1.5 pence previously. AFX
Date 23 August 2006 Most Katrina claimants satisfied: insurance group. An insurance group says about 90 percent of homeowners in Louisiana and Mississippi who filed claims after Hurricane Katrina hit are satisfied with their insurers, but lawyers for claimants in one of the states call this figure "absurd and misleading." Insurers will ultimately pay more than 1 million homeowners in the two states about $16.4 billion for their losses from the hurricane that hit last August 29, the Insurance Information Institute said. "The amount of the settlements shows insurers aren't dodging responsibility," said Robert Hartwig, chief economist for the III, a non-profit group supported by the property casualty industry. But Mississippi lawyers representing flood and wind claimants from Katrina, the largest storm in U.S. history, took issue with the III findings. "That's absurd and misleading," said Don Barrett, a co-counsel with Richard Scruggs, whose law firm represents 3,000 Mississippi policyholders. "The insurance industry has paid out two to three cents on the dollar. Nobody is satisfied with that." Reuters
Date 18 August 2006 Fitch Ratings has affirmed Lloyd's Insurer Financial Strength rating at 'A'. At the same time, the agency has affirmed the Society of Lloyd's Issuer Default rating ("IDR") and its subordinated debt issue rating. The outlooks on the IFS and IDR remain Stable. "The ratings reflect Lloyd's strong capital position, enhanced risk-management framework, prospective strong earnings and strong franchise," said Chris Waterman, senior director in Fitch's insurance group. "Partially offsetting these rating factors is Lloyd's continued exposure to Equitas." Post Magazine
Date 16 August 2006 Australia's QBE lifts insurance margin forecast after solid H1 profit. QBE Insurance Group Ltd, the second largest underwriter in the Lloyd's of London market, said it expects to gain an insurance margin of 17-18 pct in the year to December, up from a previous estimate of 16-27 pct. The blue chip insurance group reported a June half net profit of A$591m, up A$100m from the interim profit reported for 2005, meeting first-half earnings forecasts. It added that December year net earned premium is likely to be A$8.4bn, boosted by premium rate increases, acquisitions and higher customer retention. QBE, which has operations in 42 countries, said it is also considering a number of potential acquisitions of general insurers by the end of this year as it continues to pursue growth through acquisitions. But it said the purchases are likely not to be large as prices for bigger insurance companies have increased significantly in recent times to a level exceeding its valuation criteria in many cases. AFX
Date 16 August 2006 Insurer wins landmark dispute with Katrina victims. A federal judge has ruled in favour of Nationwide Mutual, the insurance company, in a landmark legal dispute with victims of Hurricane Katrina. Judge L.T Senter rejected claims by a Mississippi couple that Nationwide was liable for damage caused by the storm surge brought ashore by Katrina, which hit the US Gulf coast almost a year ago. The closely watched trial involved the first Katrina-related lawsuit against an insurer to reach court. Had the judge ruled against Nationwide it would have set a precedent for the hundreds of other lawsuits filed following Katrina, potentially exposing the insurance industry to billions of dollars in additional losses. Insurers have been at odds with many policyholders along the Gulf coast over the question of whether properties were damaged by wind or water. Most home insurance policies in the US exclude water damage. Homeowners seeking protection from flooding are required to take outa separate policy with the government-backed National Flood Insurance Program. Judge Senter acknowledged that the plaintiffs believed they were covered for water damage but rejected the notion that Nationwide had deliberately misled them. Financial Times
Date 16 August 2006 Reinsurers face negative outlook: Best. The outlook for the global reinsurance sector is negative, as the industry continues to struggle to understand the complexity of its exposure to Hurricane Katrina, said New Jersey-based A.M. Best Co. Inc. in its 2006 annual global reinsurance report. "While there are few negative ratings outlooks on specific reinsurance companies at this time, the underlying stability of the current market remains tenuous," according to the report. The report said, however, that the industry is reacting decisively in anticipation of a long period of heightened storm and catastrophic losses. The report also predicts that reinsurance will become an even more capital-intensive business than it has been traditionally. "Many companies have replenished existing capital or have raised new capital, while simultaneously reducing risk exposure and raising prices," according to the report. Business Insurance
Date 15 August 2006 Aon signs £230m insurance BPO deal. The world's second-largest insurance and risk broker, Aon, has signed a £230m business process outsourcing (BPO) deal with Xchanging for its UK claims processing. The 10-year contract will see Xchanging manage Aon's client operations division, which handles current and legacy insurance claims administrations and processing as well as accounting and settlement for clients of Aon's reinsurance and wholesale units. Aon already offshores some of its UK claims processing through Cambridge Solutions, which will be retained as part of the Xchanging deal. More than 500 Aon employees based at sites in Romford, Leicester and Glasgow will also transfer across to Xchanging. Aon is aiming to create an integrated electronic claims processing platform that can also be sold to rival brokers on the London insurance market and across the wider insurance industry. Silicon.com
Date 11 August 2006 Lloyd's drops plans for admitted status in the US. Lloyd’s of London will not seek to become an admitted insurer throughout the United States, the market’s chief executive has said in an update to the market. The announcement comes eight months after Lloyd’s said it would explore the possibility of gaining admitted status in all U.S. states as part of its three-year strategic plan aimed at helping the market retain corporate investors and maintain its competitive position. Lloyd’s currently has admitted status in Illinois, Kentucky and the U.S. Virgin Islands, and also operates as a surplus lines insurer and reinsurer in the United States. In an update to market participants on Thursday, Lloyd’s CEO Richard Ward said that following a review, the Franchise Board, which oversees the business plans of companies operating at Lloyd’s, had decided not to pursue full admitted status. "The main reasons for this were the associated regulatory burden, limited franchisee interest, and the Lloyd’s distribution profile within the U.S.," according to his statement. Business Insurance
Date 10 August 2006 Aon to outsource back-office in landmark deal. Aon Ltd is set to announce a landmark £230mn+ deal to outsource its entire back office Client Operations division which could eventually provide the framework for a new London market broker process platform, it has been revealed. The business process outsourcing firm Xchanging, in conjunction with Cambridge Solutions Ltd, has triumphed over short-list rivals Capita Insurance Services and Accenture and has signed a ten-year deal to manage the group’s London market claims administration and processing, together with accounting and settlement. One of the key tenets of the proposal is to create a platform that could be utilised by competing London market brokers who are also willing to outsource their process function. The development comes as London market brokers are examining their cost bases – which include the often heavy burden of embedded legacy costs – and are attempting to unravel the services they provide to insurers which historically have not been separately priced. Insurance Insider
Date 10 August 2006 Two WTC insurers agree to rebuilding plans. Two World Trade Center property insurers have agreed that modified rebuilding plans for the WTC site will not affect their obligations to pay claims for the complex’s Sept. 11, 2001, destruction. In a partial victory for the WTC’s leaseholder and owner, Zurich American Insurance Co. and Employers Insurance Co. of Wausau agreed that their payments will not be affected by the "conceptual framework" that development officials completed in April to coordinate the rebuilding. Under the framework, WTC leaseholder Silverstein Properties Inc. turned over development rights for the site’s planned Freedom Tower and another building to The Port Authority of New York and New Jersey, the site’s owner. Silverstein is also to provide funds for the two buildings from its insurance recoveries. Business Insurance
Date 08 August 2006 Insurance industry breaks taboo around big four accountancy firms. If the Association of British Insurers had been a guest at an accountants' dinner party yesterday, conversation would have shuddered to a halt as it dared to mention the unmentionable. The ABI broke a taboo and suggested the big four accountancy firms - which exercise a stranglehold on the audit market - be forcibly separated from some of their clients. The knee-jerk response of most other groups is to call for a "market-based" response to the big four's dominance so the ABI was going out on a limb. It is likely to find itself in a minority among the 30-odd organisations that responded to a consultation on audit competition and choice run by the Financial Reporting Council, the audit watchdog. But such interventionist proposals - hitherto heard only from radical politicians and academics - are likely to gain added attention now the ABI has weighed in. The ABI's suggestion was that big audit firms "be obliged to divest part of their business" if they built up an "excessive" market share. It said "excessive" was a word that had to be defined by competition lawyers, but many lay observers already regard current concentration levels as extreme. Financial Times
Date 08 August 2006 C.V. Starr targets AIG employees in suit. Three employees of American International Group Inc. were accused by former AIG Chief Executive Maurice R. Greenberg's private insurance broker of trying to "systematically destroy" its business in a lawsuit filed on Monday. Mr. Greenberg's C.V. Starr & Co., which is also an investment company, filed the lawsuit in New York State Supreme Court, the latest volley in an ongoing feud between Mr. Greenberg and the company he ran for more than 30 years. The lawsuit alleges two former employees and the former vice chairman of C.V. Starr & Co.—now employed at AIG—misappropriated confidential information, poached employees from C. V. Starr and attempted to discredit the Starr agencies in the marketplace. The Starr agencies are seeking punitive damages, to recoup funds "illegally generated" by the AIG employees, and an order permanently enjoining those defendants from using confidential information of the Starr Agencies. Reuters
Date 07 August 2006 U.K. buyers to see stable pricing: Lloyd's survey. Brokers expect prices for United Kingdom-based buyers of insurance to remain fairly stable over the next 12 months, according to a survey by Lloyd’s of London. Lloyd’s on Friday released results of a survey of 117 U.K. insurance brokers, which was taken at the annual British Insurance Brokers’ Assn. conference in March. Respondents were questioned about what they believed would happen to insurance rates in several different lines of business during the next year. Almost one-third—31%—of brokers questioned said they thought rates would decrease by 1% to 9% over the course of the year, while 28% said they expected no change in rates. One-quarter of the brokers questioned said they thought rates would increase overall by an average of 1% to 9%, while 4% thought rates would increase by more than 10%. None of the brokers questioned thought rates would decrease by more than 30%, and the remaining 2% of respondents expressed no opinion on rates. Business
Date 04 August 2006 Wellington claims Avian flu policy first. Wellington Underwriting Agencies today announced the launch of a new underwriting product, Avian Influenza business interruption insurance. This product has been designed specifically for broiler farmers in the United States. The product covers business interruption incurred by US broiler farmers following the government slaughter of poultry by order of USDA following the contraction of the H5N1 strain of Avian Influenza on their farms. Wellington claims it is the only Lloyd’s insurer offering specialist H5N1 business interruption programmes for the US broiler industry. The programme will be underwritten within Syndicate 2020's livestock disease portfolio which covers risks such as aquaculture, bloodstock/livestock (breeding and transport) and pet insurance. Post Magazine
Date 03 August 2006 Casino owner sues insurance companies. Casino owner Pinnacle Entertainment has sued three insurance carriers over Hurricane Katrina damage at its former Casino Magic property in Biloxi, Miss. Las Vegas-based Pinnacle claimed the three companies improperly blamed losses on flooding instead of a weather catastrophe of the kind specified in their policies. "Defendants were fully aware that hurricanes cause storm surge and flood," Pinnacle said in a 13-page lawsuit filed Tuesday in U.S. District Court in Las Vegas. It accuses the insurance carriers of fabricating arguments to limit or eliminate their responsibility to pay. Officials at two of the companies - Allianz Global Risks U.S. Insurance Co. in Chicago and Arch Specialty Insurance Co. in New York - did not immediately respond to requests for comment. Dave Leonard, executive vice president at RSUI Indemnity Co. of Atlanta, declined comment. AFX
Date 28 July 2006 JLT takeover talk scotched by analyst. Broker JLT has been tipped to report less than encouraging first half results next week, with prospect of it being taken over hampered by its pension deficit. The company recently held merger talks with rival Heath Lambert which came to nothing. Market analyst Numis has downgraded the stock from Hold to Reduce. It said: “We expect [first half] earnings to be down on last year, mainly due to dollar attrition and a reduced contribution from the Risk Solutions business. Our H1 PBT forecast is £42.6m (EPS 13.3p) compared to £48.1m (16.1p) reported last year. We do not expect any dividend growth." Numis believes margin turnaround "may be difficult", noting "without the prospect of potentially earnings enhancing acquisition, attention now reverts to the performance of JLT's own business and the need to reverse the recent decline in margins. In conclusion Numis said: "In terms of the main upside risk, speculation about JLT being acquired is bound to resurface, although we consider that JLT's large pension deficit makes a deal hard to envisage at a significant premium to the current share price.” Post Magazine
Date 26 July 2006 AIG ex-chief says he'll stay private, thank you. Maurice "Hank" Greenberg, who built American International Group Inc. into the world's largest insurer only to resign under regulatory fire, says he isn't in any hurry to run another public company. Mr. Greenberg, 81, said in an interview he is dedicated to expanding his private companies, C.V. Starr & Co. and Starr International Inc., which formerly did business exclusively with AIG. Would he ever think about taking those insurers, which have some $18 billion in assets, public? "Not in my lifetime," he told Reuters. New York Attorney General Eliot Spitzer has slapped him with civil fraud charges, which Mr. Greenberg is fighting, and overregulation is a topic close to his heart. "The public arena has become very difficult for everyone," he said. "Why is private equity growing so rapidly? Why did 24 of the 25 largest initial public offerings go (overseas) to London and Hong Kong?" Reuters
Date 25 July 2006 Starr, Berkshire units enter agreement. American International Marine Agency Inc., the managing general agency unit of C.V. Starr & Co. Inc., has a new underwriting partner in Berkshire Hathaway Inc. unit National Liability & Fire Insurance Co. The new agreement, announced by AIMA late last week, fills the void created when AIMA parted ways with American International Group Inc. earlier this year. Under the deal, AIMA, which produces ocean marine insurance for cargo, hull and marine liability risks, can immediately offer $100 million of commercial underwriting capacity to clients, AIMA said in a statement. Business Insurance
Date 24 July 2006 Insurer group says FSA should step in to fees row. The United Kingdom's financial watchdog should step in to force insurance brokers to reveal how much commission they make for arranging cover for risks, an insurers' group said on Monday. Officials from the Lloyd's Market Association, which represents insurers in the 300-year-old market, said the Financial Services Authority should act to break the impasse in the British insurance industry over the disclosure of broker remuneration caused by foot-dragging by many U.K. brokers. "We are pushing the FSA to be more demonstrative on this issue," Andrew Kendrick, Chairman of the Lloyd's Market Association, said at a briefing for journalists. Reuters Date 19 July 2006 Lloyd’s braced for a $65 billion Northeast hurricane hitting New York State. If New York state was hit by a hurricane it could cost the industry $65 billion, warned Wendy Baker, President of Lloyd's America during a conference yesterday. A Northeast hurricane hitting New York State could result in insured losses of $65 billion, Lloyd’s America President Wendy Baker warned today. "The stakes are huge," Baker said in a speech to the Northeast Hurricane Conference here. "Considering Manhattan rail and subway lines often grind to a halt under the burden of three inches rain, it is frightening to imagine how New York City might fare in a Category 3 hurricane." But Baker said insurers should be able to model the impact of natural disasters with some degree of accuracy, so that exposures can be managed and the risks spread. Despite paying out a record $5.8 billion after last year’s US hurricanes, Baker said Lloyd’s believes the vast majority of natural perils are insurable – unlike other insurers who have called for taxpayer-funded emergency pools for natural catastrophes. Lloyds.com
Date 18 July 2006 State Farm to raise insurance rates by 53% in Florida. State Farm, one of Florida's largest insurers, will raise property insurance rates by an average of 52.7% this year under a plan approved on Tuesday by state regulators. The company said that the higher premiums will allow it to keep doing business in Florida despite predictions for more hurricanes. State Farm said that spiralling costs for its own insurance against high claims is driving the increase, following two devastating hurricane seasons and forecasts for more of the same. The state's top insurance regulator said he knew it would be hard for customers, but noted the increase was much smaller than State Farm initially sought. The company had filed plans in May for what would have effectively been an average increase of nearly 80% statewide, but the Office of Insurance Regulation balked at that proposal. State Farm said that by increasing premiums, it will be able to continue to sell policies in Florida, unlike many companies that are dropping policies. Dow Jones
Date 18 July 2006 CNA's CEO says $100B U.S. catastrophe possible. CNA Financial Corp. Chairman and Chief Executive Stephen Lilienthal said on Tuesday a $100 billion catastrophe in the United States may be coming and the property casualty industry should prepare for it. "We believe a $100 billion catastrophic event is possible," Mr. Lilienthal said. "We've seen a steady increase in both man-made and natural disasters." Mr. Lilienthal spoke at the International Insurance Society on the subject of risk management. While hurricane modellers and industry experts have theorised about a $100 billion disaster, CNA's chief executive is among the first insurance executives to actually predict it could happen. Mr. Lilienthal went through the grim statistics about recent catastrophes. Since 1995, he said, there have been 26 hurricanes with winds of well over 100 mph, seven of them since 2003. Those seven have caused more than $104 billion in catastrophe losses, he said. Reuters
Date 17 July 2006 Guy Carpenter hails resilient Lloyd's market. Guy Carpenter has praised the strength, stability and adaptability of Lloyd’s in its fourth annual report on the (re)insurance market. The report found that as a result of enhanced risk management and three consecutive years of significant profit, Lloyd's was well positioned to absorb the substantial claims arising from a second year of unprecedented natural catastrophes in 2005: "Lloyd's continues to be a strong and stable reinsurance market for our clients, despite six of the ten largest insured losses in US history occurring in the last two years," said Geoffrey Bromley, Chairman of Guy Carpenter's European and Asian Operations. In addition to providing in-depth analysis of Lloyd's 2005 results, recent trends in capacity, the market's capital structure and the current ratings in effect, the report examines the role of the Franchise Board and Lloyd's competitive position. Post Magazine
Date 14 July 2006 Catlin Group opens New York office. Catlin Group Ltd. has opened an underwriting office in New York as part of its plan to increase its presence in the United States. Hamilton, Bermuda-based Catlin’s new office—which consists of 11 former executives of Quanta U.S. Holdings Inc.—is expected to underwrite various classes of professional liability and directors and officers liability insurance for financial institutions, accountants, real estate agents and lawyers, among others. John Van Decker, who most recently served as president of Quanta U.S. Holdings’ professional liability division, will serve as head of Catlin in New York. Rupal Parekh, Business Insurance
Date 13 July 2006 Heath pulls plug on JLT talks claiming deal not in "best interests of staff and clients". Heath Lambert Group has this morning ended talks with Jardine Lloyd Thompson. Discussions had been taking place for a number of weeks with the view to JLT buying Heath Lambert. Group Chief Executive, Adrian Colosso commented: “We began discussions with the aim of combining our increasingly successful business model with the additional resources of JLT. As discussions progressed we became less confident that we would be able to continue with this model and therefore less confident of achieving the objective. Proceeding would not have been in the best interests of our staff or our clients. The Heath Lambert way of doing business, focusing more on clients and empowering our people to get on with things, is what has led to our turnaround. We will continue to build on our success and to grow and will remain a strong independent for as long as it is in the best interests of all our stakeholders.” Post Magazine
Date 11 July 2006 Swiss Re to cut up to 2,000 jobs by end 2007. Swiss Re said it plans to cut up to 2,000 jobs by end-2007. The Swiss reinsurer said jobs will be cut through a combination of layoffs and attrition, amid the restructuring of its global operations following the $7.4bn takeover of US-based GE Insurance Solutions. Significant job cuts are planned at the firms larger sites including Zurich, London, Armonk, Kansas City and Munich, Swiss Re said. AFX
Date 10 July 2006 July renewals show steep increases for short-tail lines. The capacity shortages for catastrophe reinsurance meant rates were up by around 60 percent on average at the key 1 July renewals with some placements left unfulfilled, according to research by investment house, Keefe, Bruyette & Woods (KBW). 1 July is a key date in the reinsurance calendar with around 20 percent of the $160bn global reinsurance premiums renewing with a particular focus on casualty and US lines. On the direct side, KBW estimate that average property rates were up by 30 percent at 1/7 accelerating from 20 percent at the first quarter, although the bank also noted that political factors were reigning in price increases for personal lines. Inevitably, it is the recent changes in the catastrophe and rating agency models which were identified as major drivers for the upwards pricing pressure. Insurance Insider
Date 07 July 2006 Leading Lloyd's (re)insurer parts company with senior management. Liberty Syndicates - one of the largest Lloyd's (re)insurers - has parted company suddenly with its managing director Sean Dalton and head of underwriting Andrew Elliot. According to sources, Dalton and Elliot left the (re)insurer earlier this week. Liberty Syndicates is one of the largest carriers trading on the Lloyd's platform with capacity of over £900mn. Their departures come in the wake of the parent company, Boston-headquartered Liberty Mutual Group’s, heavy storm losses of $949mn in 2005. Insurance Insider
Date 07 July 2006 Wellington credit rating downgraded. AM Best has downgraded the issuer credit rating of Lloyd's (re)insurer Wellington Underwriting (WU) to “bbb” from “a-”. At the same time, AM Best said it has assigned debt ratings of “bbb-” to the $27,000,000 floating rate subordinated notes due 2036 and the €7,000,000 ($9,000,000) floating rate subordinated notes due 2035, both issued by WU in May 2006. The outlook for all ratings is stable. The agency said its downgrade of Wellington’s ratings reflects reduced diversification in its earnings following the disposal of 67% of its total shareholding in Aspen Insurance Holdings Ltd. In addition, Best said the rating reflects the newly assigned Best’s Syndicate Rating of A (Excellent) and ICR of “a” to Lloyd’s Syndicate 2020, which is Wellington’s principal source of income. Post Magazine
Date 06 July 2006 UK insurance brokers fear Spitzer-style scrutiny by Brussels. British insurance brokers fear a Spitzer-style rout of the industry, after Europe’s Competition Commissioner demanded that they divulge comprehensive details of their revenue streams. Neelie Kroes, the Dutch politician who had headed the EU’s competition inquiries since 2004, turned up the heat on insurance brokers across Europe with a 56-page questionnaire. Eric Galbriath, chief executive of the British Insurance Brokers Association, said yesterday: “I’d be concerned if the entire focus of this investigation turns in to a Spitzer-style inquiry.” All of the UK’s major insurance brokers are believed to have received the survey, which is due to be completed this week. Christine Seib, The Times
Date 03 July 2006 AIG sets up marine and energy unit. American International Group (AIG) has established AIG Global Marine and Energy, a new division of the AIG property and casualty insurance subsidiaries. The AIG Companies' North American marine insurance underwriting operations have historically been handled by a managing general agent, American International Marine Agency, Inc (AIMA), a subsidiary of CV Starr & Co. The AIG Companies have cancelled the agency arrangement with AIMA, issuing a notice of termination effective December 31, 2006. While AIMA will continue to be available as the AIG Companies' managing general agent until that time, North American marine insurance clients are now free, if the client prefers, to work directly with AIG Global Marine for their underwriting, claims and all other needs. Insurance Times
Date 03 July 2006 JLT shares leap on Heath deal; jobs cuts likely. Shares in UK broker Jardine Lloyd Thompson Group plc (JLT) have leapt almost ten percent yesterday in the light of its expected acquisition of rival Heath Lambert Group plc. In a note, Morgan Stanley analyst David Collins said a possible deal could lead to the loss of up to 400 jobs in a combined entity, saving £16mn a year, and boosting JLT’s earnings per share by a quarter. The broker’s shares have risen over nine percent this morning, or 33.75p, to 405.75p and over 11 percent since news broke of the deal last Thursday morning (29 June). Collins said that, if the deal is 100 percent debt funded, and the estimated 4,000 combined UK workforce of the two companies is reduced by 10 percent, EPS accretion could be as much as 25 percent by 2007, taking account of upfront redundancy costs of £8mn. The Insurance Insider
Date 29 June 2006 JLT close to £130mn Heath Lambert buy-out. Jardine Lloyd Thompson Group plc is close to securing its rival Heath Lambert Group plc in a £130mn deal which promises to create a dominant UK regional player. According to sources, Jardine Lloyd Thompson is entering the final stages of due diligence over the broker and has agreed a fee close to £130mn with Heath’s two largest shareholders, Royal Bank of Scotland and Credit Suisse, and the broker’s management team. The imminent acquisition comes as JLT was forced to issue a statement earlier this month following a sharp rise in its share price. The broking group – which itself has been thought of as a potential target by larger rivals such as Willis – said in a 15 June statement to the London Stock Exchange that it is “not aware of any reason for this movement”. The Heath acquisition would cement JLT’s position as the largest UK (re)insurance broker by revenues with Heath Lambert’s pro forma 2006 revenues of around £150mn. Insurance Insider
Date 29 June 2006 Rating agency lowers two syndicate ratings and raises two others. Rating agency Standard & Poors today said that its latest Lloyd's Syndicate Assessment review showed "mixed results". Based on annual results published for the first time on an annually accounted basis, the review also incorporates publicly available information and news flow up to 27 June 2006. "Following two years of positive movements in the assessments, the 2006 review has seen mixed results reflecting increased earnings volatility and capital strain for those syndicates writing significant amounts of catastrophe exposed business and generally strong results elsewhere," said Standard & Poor's credit analyst Peter Grant. At review, two syndicates were raised, and two lowered, in addition to the two assessments previously lowered following the hurricane season. "The extremely testing conditions caused by the higher frequency and severity of the natural catastrophe losses have resulted in substantial losses and capital strain at the hardest hit syndicates," added Mr Grant. "Despite the earnings volatility, Standard & Poor's does recognize the increased robustness of syndicates since 2001, and notes that no syndicates ceased trading as a result of the losses incurred in 2005." Post Magazine
Date 26 June 2006 Catlin to underwrite kidnap and ransom. Catlin Group is to form a crisis management underwriting team that will write product recall and kidnap and ransom coverages from 1 July 2006. Catlin said the product recall coverage will cover companies in the food, drink and consumer goods industries for accidental contamination of products, malicious tampering incidents and product recalls. Paul Brand, Catlin’s chief underwriting officer, said: "Underwriting this class of business will not only expand Catlin’s product offerings to brokers and their clients, but will also further diversify the portfolio of business underwritten by the Group." Insurance Times
Date 23 June 2006 Chaucer plans to increase 2007 capacity. UK-listed (re)insurer Chaucer Holdings plc has announced a £40mn increase in capacity for next year. The company submitted its 2007 business forecasts to Lloyd's today (22 June), which include plans to increase capacity on two syndicates. Chaucer Syndicate 1084 is to set to increase its stamp by £35mn to £485mn, while the Nuclear Syndicate 1176 will raise its capacity by £5.1mn to £27.5mn. The company said: "These are very early plans and are dependent on market conditions nearer the time and on Lloyd's consent." The pre-emption is the latest in a growing trend that is seeing capital flowing into London again in readiness for the 2007 underwriting year. Insurance Insider
Date 23 June 2006 Lord Levene talks on future of Lloyd's. Lord Levene, chairman of Lloyd’s, today addressed the ALM annual conference, outlining the future of Lloyd’s. He outlined the organisation’s new three-year strategic plan called Building The Optimal Platform, adding that it was focused on implementing a more flexible capital structure and a reduction in the costs of doing business for their members. He also talked about the challenges faced by the industry as a whole after last year’s season: “Two successive storm seasons have had a major impact on profitability, and exercising discipline is a must if we are to get back on track. 2005 proves that insurance is still a cyclical business. Prices had been steadily falling during the first half of 2005, and while the hurricanes made a difference to pricing of some lines, we would be foolish to plan on that being anything other than brief respite. We cannot afford to go back to the boom and bust cycles which members have been subject to in the past.” Sarah Veysey, Business Insurance
Date 22 June 2006 Hardy forming second Lloyd's syndicate. Hardy Underwriting Group P.L.C. plans to set up a multiline Lloyd’s of London syndicate to begin underwriting in 2007. Hardy, which already operates multiline syndicate 382, said the new non-marine syndicate likely would have capacity of up to £75 million ($138.0 million). Patrick Gage, currently active underwriter of syndicate 1301, which is managed by Chaucer Syndicates Ltd., will become active underwriter of Hardy’s new syndicate. The move is subject to regulatory approval from Lloyd’s and from the Financial Services Authority, the United Kingdom’s insurance regulator. Sarah Veysey, Business Insurance
Date 22 June 2006 Government announces audit of FSA effectiveness. The Government has announced that it is to carry out a wholesale audit of how effective the Financial Services Authority has been. The Economic Secretary to the Treasury Ed Balls said the National Audit Office has been invited to carry out a review of the economy, efficiency and effectiveness with which the Financial Services Authority has used its resources, when discharging its statutory functions. This review will be the first to be carried out under Section 12 of the Financial Services and Markets Act - the Act that established the FSA, five years ago. The NAO will start work in July and the Treasury plans to lay a report before Parliament in the first half of next year. The topics to be covered by the review - which have been arrived at following consultation with key stakeholders of the FSA - will address five broad areas of the Authority’s work: internal performance management; external joint-working within the UK; influencing and representation internationally; financial crime; and financial capability. Post Magazine
Date 21 June 2006 FSA rule proposals will help insurers. The Financial Services Authority is to help the London insurance market take on the threat from Bermuda, with proposed rules for the creation of more exotic capital structures. The proposed regime for the creation and supervision of special insurance vehicles potentially opens the door to a wider range of reinsurance structures in the UK, akin to catastrophe bonds and companies set up to underwrite for a limited period only. It will enable London insurers to take advantage more easily of market opportunities, such as a sharp increase in premiums. HM Revenue & Customs is also seeking industry views on whether the special insurance vehicles should be brought within the scope of a new tax regime for special purpose vehicles involved in the securitisation of financial assets. Currently, a special insurance vehicle would be regulated on the same basis as a traditional reinsurer, and would be subject to a full authorisation process. However, the FSA is proposing a less onerous authorisation regime, while ongoing supervision of the vehicles would also be lighter. The FSA said it would continue to ensure adequate consumer protection, by requiring a company that had laid off risks to a special insurance vehicle to hold more capital if the vehicle could not meet its liabilities. Andrea Felsted, Financial Times
Date 20 June 2006 Royal & Sun Alliance to cut over 1500 jobs; shares rise. UK general insurer Royal & Sun Alliance has unveiled plans to cut over 1500 jobs in an efficiency drive that will save the group £130mn in annual costs. Shares in the group rose 4p, or 3.25 percent, to 127p on the news which also include a number of growth initiatives plans in its three trading regions, the UK, Scandinavia and International - primarily Latin America and Canada. The insurer said 1000 jobs would go in the UK, 350 in Scandinavia and 160 in its other overseas operations. There would also be 40 job losses from its Corporate Centre, taking the total to 1550. The group's growth plans include growing its UK affinity business by more than 50 percent, doubling premiums in the Baltics and annual double digit growth in its international units. Insurance Insider
Date 19 June 2006 White Mountains ups hurricane loss estimates. White Mountains Insurance Group Ltd. is increasing by more than $200 million its loss estimates for the 2005 hurricanes, the company said on Friday. In a statement, White Mountains said new claims data relating to hurricanes Katrina, Rita and Wilma caused its Folksamerica Reinsurance Co. unit in New York to increase its gross loss estimates for the storms by $203 million, net of reinstatement premiums. "We received some recent claims information that indicated the offshore energy and marine accounts were eventually going to go to limits," said David Foy, executive vp and chief financial officer of Bermuda-based White Mountains. The company did not release a total loss estimate stemming from the string of hurricanes. Rupal Parekh, Business Insurance
Date 19 June 2006 Industry still ignoring corporate governance requirements. Accountant and consultancy Moore Stephens has said the need to comply with corporate governance requirements is still being underestimated or ignored by large sectors of the insurance industry in spite of the very visible interest being taken by the regulators. Writing in the firm’s Insured Interest newsletter, Moore Stephens partner Simon Gallagher said: “It has been argued that there are too many codes covering corporate governance. But this should not be seen as a barrier, rather a source of useful guidance to the development of a firm’s very own code. Companies should be creating principles that fit their own corporate profile and at the same time satisfy the regulators. Appropriate internal and external challenges need to be put in place to ensure the efficient long-term and day-to-day running of the business.” Gallagher concluded: “The insurance industry needs to think seriously about corporate governance, and about getting the right procedures and the right people in place. It needs to address internal policies and systems.” Insurance Times Date 12 June 2006 Liquidator of HIH set to sue General Re. The liquidator of HIH, the Australian insurer that collapsed in 2001 with estimated debts of A$5.3bn (US$4bn), looks set to take court action against General Re, the reinsurance group controlled by Warren Buffett’s Berkshire Hathaway, over a A$400m claim. McGrath Nicol, HIH’s liquidator, informed General Re last month it intended to pursue the claim in court after a breakdown in negotiations, McGrath confirmed yesterday. The claim relates to financial reinsurance contracts issued by General Re that, according to a 2003 Royal Commission, helped FAI, an insurance business taken over by HIH, overstate its profits. This helped push up the price HIH paid for the business. The A$300m takeover of FAI was one of the triggers for HIH’s collapse, Australia’s largest ever corporate failure. Virginia Marsh, Financial Times
Date 12 June 2006 Axa interested in buying Winterthur. Speculation mounted last night about an imminent trade sale of Winterthur, the insurance subsidiary of Credit Suisse, as preparations for the group's expected IPO near completion. People close to Axa said the leading French insurance group was looking at acquiring Winterthur at a price of SFr10bn to SFr12bn ($8.1bn-$9.7bn). Axa refused to comment, as did Credit Suisse and Winterthur. An approach by Axa would be ironic, as the French group is believed to have walked away from an attempted Winterthur sale two years ago when Credit Suisse said its insurance activities were non-strategic. Axa is believed to have been prepared to have then offered around SFr8bn, below the vendor's expectations, and to have attached various unspecified strings, in the form of ongoing guarantees on certain lines of business that were unacceptable to Credit Suisse. Since then, Winterthur's performance has improved under the leadership of Leonhard Fischer, chief executive. Haig Simonian and Martin Arnold, Financial Times
Date 09 June 2006 Insurers not obligated to pay Silverstein fees. Most of World Trade Center lessee Larry Silverstein's insurers aren't obligated to cover his legal costs in a series of lawsuits springing from the 2001 terrorist attacks, a federal judge said Thursday. In a 41-page opinion, U.S. District Judge Alvin K. Hellerstein said the evidence shows, with the exception of one excess-loss insurer, that Silverstein's insurers refused to extend coverage for defense costs in negotiations and issued binders or final policies that explicitly excluded those costs. "The rewriting urged by the Silverstein entities would give them a coverage that they were not able to obtain in negotiations, but which they continued to aspire to obtain, and would give them an unwarranted windfall for which they did not pay a premium," the judge said in reference to the primary policy. Silverstein had sought defence costs from Zurich American Insurance Co., which provided the primary and umbrella insurance for the World Trade Center, in about 300 lawsuits filed on behalf of persons killed or injured in or near the World Trade Center's twin towers. Zurich American had provided insurance coverage in binder form prior to the terrorist attacks. Silverstein also obtained seven layers of excess insurance above the primary and umbrella policies, with about half of the excess insurers issuing final policies prior to Sept. 11, 2001. Chad Bray, Dow Jones
Date 09 June 2006 Backbench MPs issue ultimatum on asbestos payouts. Legislation requiring insurers to pay compensation to thousands of asbestos-related cancer sufferers will be brought forward by Labour backbenchers unless the government comes up with its own plans for assistance. Labour backbenchers are threatening to amend the compensation bill currently passing through parliament to overturn a recent law lords' judgment that will cut payments to mesothelioma victims and their families drastically. The MPs want to ensure that sufferers receive full and swift compensation from former employers. Last month, the law lords ruled that where a worker was exposed to asbestos dust by several employers, he would have to seek a proportionate share of compensation from each. Following a case in 2002, victims had been able to seek full recompense from one of several employers, without proving which had caused the fatal exposure. The ruling might save the insurance industry tens of millions of pounds. But trade unions and MPs have demanded a change in the law on behalf of the 2,000 people who die every year from the disease. Ben Halland and Michael Peel, Financial Times
Date 09 June 2006 New Lloyd's agency born as Chaucer strikes Quanta deal. Lloyd’s insurer Chaucer this morning announced that it has signed heads of agreement with Quanta Capital and the senior underwriting team of Syndicate 4000 to establish a new managing agency, Pembroke, to manage the syndicate. The agreement provides for Chaucer to hold a majority interest in Pembroke. Under the terms of the heads of agreement, Quanta’s capital remains committed to the syndicate, while Chaucer and Quanta said they would work together to diversify the provision of capital to the syndicate to ensure an orderly transfer of the business management to Pembroke. Chaucer will agree to provide up to 10 percent of the secured capital to support underwriting capacity for 2007. Syndicate 4000, which has an underwriting capacity of £82m for 2006, underwrites a portfolio of specialist lines products, namely, financial institutions, management liability, professional liability, fine arts and kidnap and ransom. Post Magazine
Date 05 June 2006 Inaction over climate change could leave industry bust. The insurance industry must face up to the growing threat of climate change or risk being swept away, according to a report released today by Lloyd's. A new report, ‘Climate Change, Adapt or Bust’, warns that insurers must act now to understand and actively manage risks from emerging threats such as greenhouse gases and rising sea levels. With recent scientific evidence suggesting that climate change is happening faster than previously thought, investment in research and a change in industry behaviour is long overdue. The report marks the launch of Lloyd’s 360 Risk Project which aims to generate debate about today’s key risk issues and how best to manage them. Post Magazine Date 01 June 2006 Ex-Tyco seeks documents in legal fee dispute. A lawyer for former Tyco International Ltd. CEO Dennis Kozlowski is asking a state court to force insurance broker Willis Group Holdings Ltd. to turn over documents in a spat over the $25 million in legal fees the executive has spent on his defence. Kozlowski, who was found guilty in June 2005 for his role in looting $600 million from Tyco, argues in court documents that insurers should pay his legal bills under a 2001 directors and officers liability policy. The former chief executive needs the Willis documents to "present a complete case" in arbitration proceedings in London against Corporate Officers and Directors Assurance Ltd. (CODA), according to court papers filed in New York Supreme Court last week. CODA issued the policy to Kozlowski's former employer, Tyco, the papers added. The Bermuda-based unit of Willis, which was the broker for the policy, has so far not responded to Kozlowski's requests for the documents. Reuters
Date 01 June 2006 Rating agencies look at hurricane season "what ifs". The 2006 hurricane season got off to a generally quiet start on Thursday, but no one expects that to be the case for long. Insurers anticipate a season that could be even more costly than last year's record of $56 billion in insured hurricane losses. The stakes are also high for the ratings agencies that issue financial strength and credit ratings for insurers and reinsurers, and assess overall risk to the industry. An A.M. Best report issued on Thursday estimates that 3% to 7% of all insurers with catastrophe exposure, or around 20 to 40 insurers, could be vulnerable to failure in the event of a hypothetical "mega-hurricane" that has landfall either north of Atlantic City, N.J., or at Miami. If the hypothetical New Jersey hurricane swept north through New York, it could cause $146 billion in insured losses, while a Miami hurricane that swept up the Florida coast could cause $118 billion in insured losses. Lavonne Kuykendall, Dow Jones
Date 01 June 2006 Lloyd’s Marine Intelligence Unit (LMIU) has launched what it claims is the "largest and best marine database in the world" at www.lloydsmiu.com. Lloyds Marine Intelligence Unit said the new site is widely regarded as “the” ultimate marine information portal and an invaluable online tool for the insurance profession. Subscription to this upgraded website allows the Insurers to access the precise whereabouts of the world’s merchant fleet (120,000 merchant vessels) at any given time as well as an indication of their next port of call and historical movement details. Insurers can also now purchase online credit reports thus helping to mitigate any potential underwriting risk. Insurance Times
Date 01 June 2006 China insurance sector needs to open up further. China's insurance sector undergo further reform by opening it up to outside participation, the official Xinhua news agency reported, citing Premier Wen Jiabao. Wen said pushing forward with insurance reform, including opening up the sector and optimizing management structures, will be a government priority. Wen added insurance firms must make more efficient use of capital. AFX
Date 26 May 2006 Quanta enters run-off, Lloyd's syndicate remains. The Quanta board has decided to cease underwriting or seeking new business and has placed most of its remaining specialty insurance and reinsurance lines into orderly run-off. The company's Lloyd's syndicate and environmental consulting business, ESC, are not in the run-off plan and will continue to seek new business. The decision includes the run-off of all of Quanta's remaining US specialty lines, as well as its Bermuda reinsurance operations, and its Quanta Europe subsidiary. The remaining US specialty insurance lines placed into run-off consist of the program business including the HBW program, professional liability, environmental, fidelity and crime, and structured products. The decision follows previous exits from property, casualty and marine and aviation reinsurance, technical risk property insurance, surety, trade credit and political risk insurance. Insurance Times
Date 25 May 2006 Japanese regulators imposed a temporary business suspension on Sompo Japan Insurance Inc., the country's second-biggest casualty insurer, on Thursday for a series of violations, including padding its sales by paying premiums on behalf of clients. The Financial Services Agency banned Sompo from selling casualty insurance for two weeks or recruiting new clients for life insurance products for one month from June 12. Sompo will not be allowed to introduce new products for three months from May 26. According to the FSA, Sompo admitted that 280 employees had paid insurance premiums on 431 life insurance policies in a bid to hit sales targets, violating Japan's Insurance Business Law. An FSA official said the impact on the company's earnings from the distorted sales was likely to be small. Reuters Date 24 May 2006Kiln writes less for more premium as rate rises accelerate. In an AGM statement specialist Lloyd’s (re)insurer Kiln has said trading conditions have shown considerable improvements year on year and this trend, which began immediately after the 2005 hurricanes, has continued and accelerated as 2006 has progressed. Kiln said that for its flagship Syndicate 510, rates are up 13% when compared to the same period last year, with reinsurance and marine pricing up 19% and 32% respectively. The company added that premium income for the year to the end of April 2006 is up by over 17% compared with the same period last year, with the marine and property divisions showing particular strength. Kiln also said that the risk count in Syndicate 510 is over 11% lower than it was at this point last year. Post Magazine
Date 24 May 2006 Court allows Lloyd's syndicate liabilities transfer. The High Court in London on Wednesday sanctioned a so-called Part VII transfer of the business of a Lloyd’s of London syndicate to an outside company, the first time such a mechanism has been used at Lloyd’s. Part VII transfers, which were introduced in the Financial Services and Markets Act 2000, allow the transfer of some or all of the policies of one company to another, subject to court approval. In the Lloyd’s case, the High Court gave approval for the business of Lloyd’s syndicate 982, which is in runoff, to be transferred to Sterling Life Ltd. Syndicate 982, formerly managed by Crowe Syndicate Management, wrote mainly short-term life business. The syndicate was placed into runoff in 2002 and transferred to Spectrum Syndicate Management Ltd. The move marks a break from conventional Lloyd’s practice where syndicates were placed in runoff and eventually shut-down through the purchase of reinsurance-to-close contracts with other syndicates. Sarah Veysey, Business Insurance Date 23 May 2006US braced for another battering by storms. US government forecasters yesterday warned of another “very active” tropical storm season in the Atlantic Ocean, with an above average eight-10 hurricanes expected to form over the next six months. The US, Central America and the Caribbean are still recovering from last year’s savage storm season, when a record 15 hurricanes caused heavy loss of life and billions of dollars in losses to the insurance industry. The US National Oceanic and Atmospheric Administration (NOAA) said the Atlantic was in a period of elevated storm activity caused by unusually warm ocean temperatures and other factors that could last for decades. Conrad C. Lautenbacher, US undersecretary of commerce for oceans and atmosphere, predicted there would be 13-16 named storms during the June 1-November 30 season, with eight-10 becoming hurricanes. Both ranges exceeded the long-term average of 11 named storms and six hurricanes. Mr. Lautenbacher warned that four to six storms could become “major” hurricanes of Category 3 strength – involving sustained winds of at least 111 miles an hour (180 kph) – or higher. Last year’s hurricane season included a record seven major hurricanes, including Katrina, which flooded New Orleans and devastated a large part of the US Gulf coast, killing almost 1,600 and causing an estimated $80bn (€62bn, £42bn) of damage. Andrew Ward, Financial TimesDate 20 May 2006GM brings Royal & Sun lawsuit dispute to U.K. court. U.S. auto giant General Motors filed a lawsuit in London's High Court against U.K. insurer Royal & Sun Alliance on Saturday, the latest step in a long-running dispute about personal injury claims linked to asbestos. GM's complaint alleges that RSA is liable for insurance policies sold by its U.S. subsidiaries and that the UK-based group wrongfully caused its U.S. subsidiaries to breach their contracts. The auto maker said the amounts involved were "substantial", and UK media reports said the claim could be for about $1 billion. GM filed a lawsuit against RSA in a U.S. court in January 2005, seeking payment of all legal claims from asbestos-related lawsuits and additional damages. The Michigan lawsuit claimed RSA breached its contract with GM and failed to pay legal liabilities from personal injuries and property damage from asbestos claims. The auto maker said in a statement that as the RSA group said the U.S. court lacked jurisdiction over it, the London courts were the more appropriate place for the case. It is believed to be concerned that RSA's U.S. arms do not have sufficient reserves after running down its operations there. Reuters Date 18 May 2006Goshawk results further delayed. Goshawk Insurance Holdings PLC said the release of its results for 2005 has been further delayed. It had planned to issue its preliminary results by May 19. Goshawk said its shares will remain suspended from trading until the company is in a position to report its preliminary results and the company will update the market as to that date in due course. Insurance Times
Date 17 May 2006AIG adopts first policy on global climate change. American International Group Inc. this week became the first major U.S. insurer to adopt a policy on climate change, saying it would develop projects to keep greenhouse gases out of the atmosphere. The policy doesn't use the controversial term "global warming," but AIG, the world's largest insurer, said scientific consensus showed "human activities" are the likely cause of greenhouse gases. AIG put up the policy on its Web site on Monday with no publicity. Company officials acknowledged it was a new initiative but declined to elaborate. AIG's stance came only two days before its annual meeting on Wednesday, at which investors are likely to raise the issue. AIG, one of the world's largest property casualty insurers, said it would address the problem of climate change through "market-based solutions" such as an investment strategy that would combine financial value with reducing greenhouse gases. Reuters Date 16 May 2006M&A activity came back strong in 2005. Merger and acquisition activity among insurers increased last year to its highest level since 2001, and the trend is expected to continue and perhaps accelerate, according to a study by Conning Research & Consulting Inc. “Public offerings, including secondary offerings, were strong in property/casualty but declined everywhere else,” according to an executive summary of the study. “In contrast, private equity appears to be taking an increased role in all sectors, whether providing capital to fund a startup or in facilitating acquisitions or privatisations. This is often a precursor to more M&A activity.” In the property/casualty sector in particular, the number of transactions more than doubled in 2005 to 49, from 22, while their value increased to $9.26 billion in value from $425 million, although the 2005 total "is heavily influenced by the $6.8 billion valuation of Swiss Re’s announced plans to acquire GE Insurance Solutions," said the study. Judy Greenwald, Business Insurance Date 16 May 2006Insurance industry cannot manage terrorism risks alone. A large scale Chemical, Biological, Radiological and Nuclear (CBRN) terrorist attack on New York could cost the insurance industry as much as US$778bn, according to the American Academy of Actuaries. The academy published the finding in a response to President Bush’s working group on financial markets which, among other things, is looking into how insurers would cope with terrorism claims in the absence of a government-backed scheme. Stephen Ashwell, terrorism and political violence underwriter at Hiscox, said: “Currently, a loss of this type and magnitude would be covered by the US government. I’m not sure the US insurance industry would have the capability to respond to this sort of loss.” Lloyd’s paid out more than $3 billion to help rebuild lower Manhattan after 9/11. Since then, Lloyd’s underwriters have continued to rank among the most active writers of terrorism insurance for property in the United States, covering conventional weapons based attacks. Lloyd’s.com Date 16 May 2006Jardine Lloyd Thompson eyes bid for Heath Lambert. Jardine Lloyd Thompson, the largest UK quoted insurance broker, is considering making a bid for Heath Lambert, its smaller rival. Contact is understood to have been made between JLT, which has a market capitalisation of £780m and Heath Lambert, which could be valued at about £130m. However, discussions are thought to be at a very early and informal stage. JLT has already acquired most of Heath Lambert's Latin American and aviation operations. JLT and Heath Lambert refused to comment yesterday. Neil Manser, analyst at Fox-Pitt, Kelton, said a deal between JLT and Heath Lambert made sense as it could generate cost savings. It could also be a defence against a possible approach to JLT that "seems to be very keen on staying independent, so bulking up is a good defence," he said. Shares in JLT fell 14p to 367½p yesterday. Andrea Felsted, Financial Times Date 9 May 2006Hurricane fear damps interest in Munich Re.Munich Re notched up a record profit ratio in |
