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Banking giant HSBC said Monday it was in talks to sell its stake in China’s Ping An Insurance Group, the country’s second-largest life insurer by premiums. 

The British-based but Asia-focused lender said in a statement it was “in discussions which may or may not lead” to the sale of its 15.57 per cent stake, which the bank bought in 2002 before Ping An’s listing in Hong Kong.  HSBC is the single-biggest shareholder in Ping An, which has a market capitalisation of HK$186 billion ($24 billion).

It did not reveal the party it was in talks with but Hong Kong Economic Journal newspaper cited sources saying Thai businessman Dhanin Chearavanont, owner of the Charoen Pokphand group, might be interested.

The Hong Kong-listed shares of Ping An fell 2.69 per cent to HK$58.0 at the lunch break. The benchmark Hang Seng Index was 0.65 percent higher.

HSBC has been selling non-core assets as part of a broad restructuring plan designed to boost profitability.

The London-listed bank is also setting aside hundreds of millions of dollars as provision for fines related to possible criminal charges over money laundering allegations in the United States.

Net profits tumbled by more than half to $2.498 billion in the three months to September, compared with a year earlier.

Hong Kong, Nov 19, 2012 (AFP)

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Fitch Ratings has affirmed the Coface group’s major insurance entity, Coface S.A.’s Insurer Financial Strength (IFS) rating at ‘AA-‘. The agency has also affirmed Coface S.A.’s Long-term Issuer Default Rating (IDR) at ‘A+’. The Outlooks on all ratings are Stable. Coface S.A.’s Short-term IFS rating has also been affirmed at ‘F1+’. Coface Holding S.A.S’s Long-term IDR of ‘A’ and Short-term IDR of ‘F1’ have also been affirmed.

The affirmations reflect Coface’s strong worldwide franchise, its high capital levels with shareholder funds totalling EUR1.5bn at end-2011 and its solid underwriting performance as reflected in Fitch’s calculated net combined ratio at 89% in 2011, improving to 83% in H112. Coface reported a EUR68m net profit in H112 increasing by 7% yoy (2011: EUR74m).

The Stable Outlooks indicate the agency’s expectations that Coface will uphold its current capital position and withstand the expected increasing corporate insolvencies as a result of conservative underwriting measures, implemented to limit its risk exposure since mid-2011, in anticipation of increasing insolvencies in light of a weakened macroeconomic environment.

Coface’s decision to convert three of its European subsidiaries into branches to improve capital fungibility within the group led to the ratings’ withdrawal of: Coface Kreditversicherung AG including its holding company Coface Deutschland, in Germany; Coface Assicurazioni Spa in Italy; and Coface Austria Kreditversicherung AG in Austria. Fitch continues to factor the performance of these three newly converted branches into Coface S.A.’s ratings.

Coface’s total financing and commitments ratio – a comprehensive measure of debt-related leverage – fell to 1.9x in H112 from 2.4x in 2011 (2010: 3.3x). Although this indicator remains high according to Fitch’s insurance rating guidelines, most of the debt is operating debt used to support the group’s factoring operations, and is therefore excluded from Fitch’s calculation of Coface’s financial leverage, which is commensurate with the rating level, at just 1% at end-H112. Moreover, the agency considers Coface’s financial flexibility to be strong, with access to external financing demonstrated by the company’s recent EUR250m commercial paper issuance.

Fitch views Coface’s strategic importance to its parent company, Natixis (IDR: ‘A+’/Negative), as limited. Given Natixis’ weaker financial profile, Fitch believes that the ability of Natixis to provide support to Coface would be constrained. Overall, Fitch views Natixis’ ownership of Coface as a neutral to Coface’s ratings.

Although unlikely in the medium term, factors that could trigger a rating upgrade include a new and financially stronger shareholding structure in which Coface’s strategic importance to Natixis increases at the same time as the group’s standalone financial profile remains strong.

The ratings could be downgraded if Natixis’ credit quality deteriorates to the extent that capital is extracted from Coface to support Natixis. The ratings could also be downgraded if Coface’s standalone profile deteriorates as a result of increased insolvencies leading to a combined ratio above 100% for a prolonged period and a material fall from current capital levels.

Coface is the third-largest international credit insurer, with an estimated 25% global market share and gross written premiums of EUR1.4bn at end-2011. The group’s competitive advantages are its strong franchise, consistent strategy and IT systems that facilitate streamlined underwriting under strict guidelines. Coface has a solid standing in the complementary businesses of credit information, factoring and debt collection.

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Independent asset management firm London & Capital has introduced an innovative new proposition for ‘Cell Captives’ i.e. smaller Captive Insurance companies.  The firm’s ‘Managed Portfolio’ solution provides diversified, bespoke portfolios to SPCs (Segregated Portfolio Companies), and enables those companies to tap into investment returns previously accessible only by larger Captives, and to enjoy the economies of scale and benefits of diversification that result from the pooling of a number of separate accounts.

The ‘Managed Portfolio’ solution offers Cell Captives higher targeted returns, a low-risk investment approach, transparency of daily reporting and access to their  own unique account – all delivered at low cost, and managed by an investment manager with more than 20 years of experience running diversified portfolios and deep expertise in the Captive space.

Established in 1986, the London-based firm has been managing Captive assets since 2005 when Partner, William Dalziel – a 30 year veteran of the industry – established its Captive division.  Until now, London & Capital’s Captive mandates have been in excess of $5m, and typically invested in Cash and Fixed Income.  By way of example, the firm’s ‘Balanced Strategy’ for Captives – which is invested 85% in Fixed Income and 15% low-risk Equities – has returned in excess of 9.6% this year (at 30 September 2012).  The Strategy boasts a very low level of volatility, and in line with a typical Captive’s requirements, can be liquidated within just a few days, if required.

The new solution integrates the services of the Investment Manager, Custodian and Insurance Trustee, together with independent portfolio valuation and reporting functions on-line, to provide transparency over portfolio risk, compliance, liquidity and cost.  This enables the Cell to exercise complete control over its assets, achieving the highest standards of corporate governance.

Commenting on the new proposition, William Dalziel said, “The Captive Insurance industry has always been innovative, and continues to develop ways to make its services available to a wider range of potential Captive owners”.  Examples are SPCs; multiple cell structures are today a well-established feature of the Captive landscape, and enable medium-size enterprises to benefit from owning a Captive, while controlling costs.  “We can now also offer Cells the type of portfolios and returns previously only available to larger players, ensuring their capital contributes to offsetting the cost of their insured risks.  We are able to cater for Cells with as little as $200,000 to invest, and deliver a service based upon the very same investment philosophy and asset allocation models as large Captives enjoy.”

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    Power and utility underwriters may be unaware of the extent of the threat major solar flares pose to the world’s electrical generation infrastructure. That was the message from a specialist lawyer and space weather expert to underwriters and brokers at last week’s London Power Forum.

    Jason Reeves from the US law firm of Zelle, Hofmann, Voelbel & Mason LLP said that underwriters’ current wordings were inadequate as far as damage resulting from the geomagnetic-induced currents created by a major solar flare was concerned. Mr Reeves noted some experts and officials believe a major solar event, such as those experienced in 1859 and 1921, could be a civilisation-changing event because of the potential widespread and long-lasting damage to the power grid and power stations. The effects could be particularly severe on the eastern seaboard of the US where geological conditions serve to amplify the effects of a so-called solar storm.

    Mr Reeves said: “While power companies have spent lots of money protecting themselves against lightning strikes, with some notable exceptions, little money has been spent on protecting equipment from solar flares.

    “I haven’t seen any wording that particularly deals with solar flares yet these could create very large scale problems. It can take 14 months to replace a power transformer, assuming lots of other people don’t need them too, and many transformers are bespoke.

     “I don’t think insurance was designed to deal with a major solar event – to rebuild western civilisation. That’s the job of governments. Less dramatically, insurers face attritional losses where infrastructure is prematurely aged as a result of geomagnetically-induced currents.

    “Insurers should consider excluding solar flares, sub-limiting coverage or perhaps offering bespoke solar flare cover. They also need to consider their other risks such as space, telecoms, aviation, and CBI – anything that relies on electricity or GPS.”

    Earlier in the presentation, Bill Murtagh from the NOAA Space Weather Prediction Centre in the US (http://www.swpc.noaa.gov) explained the sun-spot cycle which leads to increases in solar flare activity every 11 years. Even during some of the less severe peaks, notably in 1859 and 1921, very large flares occurred which had a major impact on Earth. In 1859, the flare triggered fires, affected rail signalling equipment and led to the northern lights being visible as far south as the Caribbean.

    Mr Murtagh advised that the planet is increasingly vulnerable to hazardous space weather due to society’s greater reliance on technology and space-based systems, and the interconnectivity and interdependency of infrastructure.

    Following a major solar flare, which could release energy equivalent to 100 million hydrogen bombs, the coronal mass ejection takes 18–100 hours to reach Earth, where it creates electrical currents that can flow into the power grid leading to voltage drops, transformer damage and ultimately grid failure. GPS satellites, used by the power industry and others to coordinate activities, can be affected as can the high frequency communications used by the aviation sector.

    Space weather is defined as the variable conditions of the sun and the space environment that can influence the performance and reliability of space and ground based technology systems, as well an endanger life or health.

    The NOAA Space Weather Prediction Centre issues alerts on increased solar activity on a scale of G1–G5, with G5 being the most intense. Even a moderate level storm can affect power generation equipment.

    Mr Reeves and Mr Murtagh were speaking at the London Power Forum at the East Wintergarden, Canary Wharf on Tuesday 6 November. The event, which began in 2007, is organised by five London insurance market power specialists: AEGIS London, Catlin, Chartis, Torus and Travelers. Its aim is to provide a specialist forum for underwriters, brokers and loss adjusters working in the power utility market.

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    Standard & Poor’s Ratings Services said today that it had assigned its ‘A’ long-term issue rating to the proposed dated callable subordinated fixed- to floating-rate notes to be issued by Hannover Finance (Luxembourg) S.A. (not rated). The notes would be guaranteed on a subordinated basis by Germany-based reinsurer Hannover Rueckversicherung AG (Hannover Re; AA-/Stable/–). The rating is subject to our review of the final terms and conditions.

    Here follows Standard & Poor’s report :

    The rating reflects our standard notching for subordinated debt issues: We have rated the proposed bonds two notches below the long-term counterparty credit rating on the guarantor Hannover Re. The rating is based on our understanding that:

    – The notes will be subordinated to senior creditors of the guarantor.

    – Interest deferral can occur at the option of the issuer, if during the previous six-month period (1) no dividend or other distribution of the guarantor was declared, and no other distribution or payment was made in respect of any class of shares, (2) no payment on account of the balance-sheet profit has been made by the guarantor since the most recent ordinary general meeting of shareholders, or (3) there was no repurchase of shares of the guarantor for cash.

    – Interest deferral is mandatory if a solvency event has occurred and is continuing, if an insolvency event would be triggered by interest payments, or if the supervisory authority prohibits payments on the notes.

    We understand that the instruments will have a tenor of at least 30 years, but will be callable at the option of the issuer about 10 years after issuance and on any quarterly interest payment date thereafter. The coupon is fixed until the first call date. After that, the interest rate will convert into a floating rate based on the three-month Euro Interbank Offered Rate, plus a margin (including a 100 basis point step-up), and be payable quarterly.

    We expect to classify the bonds as having “intermediate equity content” under our hybrid capital criteria. We include securities of this nature up to a maximum of 25% of total adjusted capital, which forms the basis of our consolidated risk-based capital analysis of insurance and reinsurance companies. Such inclusion is subject to the bonds being considered eligible for regulatory solvency treatment and the aggregate amount of included hybrid capital not exceeding the total eligible for regulatory solvency treatment.

    We understand that Hannover Finance plans to issue these instruments for general corporate purposes of the Hannover Re group and to take advantage of current financing conditions. Including this transaction, we estimate that the Hannover Re group’s financial leverage (debt plus hybrid capital, divided by the sum of economic capital available, debt, and hybrid capital) and fixed-charge coverage (EBITDA divided by senior and subordinated debt interest) will remain in line with the rating level at about 17%-19% and 7x-8x, respectively, in 2012 and 2013.

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    UK motorists will waste nearly £50 millionof fuel this winter by leaving their cars to idle with the engine running in order to defrost them, a new study of regular drivers by Direct Line Car Insurance has discovered.

    The fuel wasted equates to over 300 million road miles and would enable someone to drive an average size car more than 13,000 times around the world.

    This large amount of money going up in smoke is despite the average person taking only three minutes to defrost their car; with high fuel costs, even the smallest amount of waste can cost motorists dear.  The study also found that five per cent of motorists admitted to letting their engine run for ten or more minutes before setting off on their journeys, making them responsible for £2.45 million of the total wasted on fuel.

    Wasting money on fuel is not the only thing motorists should be worried about. Of those questioned, 42 per cent admitted to leaving their cars unattended with the keys in the ignition, making them a perfect target for thieves and risking invalidating their insurance should the car be stolen.

    Steve Price, head of Direct Line Car Insurance, said: “With fuel prices having risen more than 40 pence per litre since 2007, it makes more sense than ever to consider alternative methods of defrosting your car on icy days.

    “It is really important that drivers never leave their cars unattended with the keys in the ignition under any circumstances, but particularly when defrosting their cars. Many of us are pressed for time in the mornings and so leaving your car to warm up whilst running back indoors to tie up some loose ends can seem like a clever use of our time. However, if a theft occurs under these circumstances policyholders may not be covered.”

    Direct Line de-icing tips

    – Prevention is better than cure. Where available, park your car in a garage overnight in order to drive away frost-free, and without any scraping, in the morning

    – Alternatively, invest in a windscreen frost guard for around £6.99 or a car cover from £27.99 to £34.99, depending on the size of your vehicle

    – Night before aerosol sprays are available (£2.99) as another preventative measure. You spray your car’s windows when leaving it overnight and the ingredients prevent the ice from building on the glass

    – For quick and easy ice removal, invest in a cheap de-icer aerosol, available for £1.99, coupled with a scraper for 99 pence, remembering to clear all the windows around the car. Failure to fully de-ice your windscreen could land you with a fine and even points on your license

    – If you do not want to purchase a car cover, an old blanket will do the trick. Lift the windscreen wipers up, stretch the blanket across the windscreen and secure it in place by closing it in the front passenger and driver doors, then lower the windscreen wipers. In the morning, remove the blanket to reveal an ice-free windscreen.

    – You should allow an extra ten minutes in the mornings to de-ice your car and sit in it whilst it is warming up, only setting off once all windows are clear and you have full visibility

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    Creating a simple and easy way for pension pots to automatically follow employees when they move jobs is critical to the success of auto-enrolment, Aviva has said.

    Aviva has strongly supported the ‘pot follows member’ approach throughout the Government consultation process. It argues that automatic transfers between schemes will make it easier for employees to manage their pension in one place, see the total value of their savings, and prevent money being lost or forgotten.

    The financial services industry should now put their support behind the Government’s proposals for ‘pot follows member’ and agree a set of industry standards. Aviva acknowledges that safeguards need to be put in place to avoid employees giving up valuable benefits, but disagrees with criticisms that ‘pot follows member’ could be impractical or risky.

    ‘Pot follows member’ has clear benefits

    Criticisms of ‘pot follows member’ fail to recognise the clear benefits for employees in allowing automatic transfers between auto-enrolment schemes. The benefits include:

    – The value of total retirement savings can be seen in one place, encouraging improved levels of ownership and engagement.

    – Easy on-line access to monitor investment performance and track progress.

    – Always having employees’ savings in an up-to-date product operated by an active scheme provider.

    – Modern, low-cost charging structures over the duration of an employee’s working life.

    – Better deals at maturity – having one pension pot with which to purchase an annuity is simpler and cheaper as there are fixed costs to converting savings to retirement income, and these would apply to each pot.

    ‘Traffic light’ code to safeguard transfers

    Employees’ retirement savings may also be further protected by establishing a set of specific industry standards or a ‘traffic light’ code to carefully manage the automatic transfer process. A simple, clear set of rules will ensure that pension pots cannot automatically transfer if there is a possibility of significant detriment, and a traffic light approach will flag such schemes.

    Aggregator approach comes with risks

    Aviva has concerns that if an aggregator scheme is created it will result in a lack of diversity and competition with millions of employees’ pension savings managed in a single scheme – a significant risk for Britain’s workers and the UK economy as a whole.

    David Barral, Chief Executive Aviva UK and Ireland Life said:

    “We think the industry needs to work together on automatic transfers, as creating a simple way for employees to manage their savings is at the heart of auto-enrolment.

    “The ‘pot follows member’ approach makes it simple for employees to see in one place the value of the pension savings they’ve accrued with different employers.  We believe this will encourage employees to take more interest in choosing investments and in tracking performance, particularly given how easy this is online.

    “The industry should work together to agree common standards to avoid employees losing valuable benefits from previous schemes.  However, there is no doubt in our minds that ‘pot follows member’ has clear advantages for the vast majority of the British workforce.”

    Summary of Aviva’s recommendations:

    –        Allow automatic transfers between small auto-enrolled pension pots to enable members’ retirement savings to “follow members” when they change jobs.

    –        Implement agreed industry standards or a code to manage the automatic transfer process between auto-enrolment schemes.

    –        Avoid a single aggregator approach – the lack of competition and diversity will be a significant risk for individuals and the UK economy.

    –        Aviva’s preferred model for auto-enrolment schemes is a central clearing house to match the old scheme with the employee’s new scheme.

    –        Limit automatic transfers to between automatic enrolment schemes only – as they will meet minimum suitability standards and ensure adequate protection and broadly equal suitability for the consumer.

    –        Legislate, and apply it retrospectively, to allow for automatic transfers from the start of auto-enrolment (October 2012) to smooth the way for simplifying the overall process for transferring non-auto-enrolment pension pots in the future.

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    German insurance giant Allianz announced that net profit soared nearly seven-fold in the third quarter, because year-earlier figures had been hit by heavy writedowns on holdings of Greek bonds.  But its estimates of the cost of hurricane Sandy were uncertain at this stage, it noted. 

    On the back of the strong performance, Allianz upheld its full-year forecast for operating profit of more than 9.0 billion euros ($11.5 billion).

    Allianz said in a statement it booked bottom-line net profit of 1.344 billion euros in the period from July to September, compared with 196 million euros a year earlier.  Operating profit grew by 32.8 per cent to 2.532 billion euros on a 4.7-percent increase in revenues to 25.2 billion euros, the statement said.

    “In the third quarter, we continued momentum from the first half of the year,” the company boasted, saying that all three business segments — property and casualty, life and health and asset management — saw improvements.

    “Following the strong operating performance, we expect full-year operating profit to exceed 9.0 billion euros, assuming no adverse developments during the remainder of the year,” Allianz said.

    “Net income development will continue to be influenced by balance sheet strengthening including investment de-risking and restructuring activities,” it said.

    Allianz cautioned that its forecasts took into account only very preliminary estimates regarding the impacts of hurricane Sandy that slammed into the United States.

    The forecast could change, since “as common with such large catastrophes, comprehensive and reliable loss estimates from all affected clients across various business segments and operating entities can only be made weeks or even months after the event,” it said.

    Earlier this week, Munich Re, the world’s biggest reinsurer, estimated its the losses would be “in the mid three-digit million-euro range,” or around 500 million euros.

    Chief financial officer Oliver Baete said Allianz was “very happy that the situation on the financial markets has eased,” pointing to the anti-crisis measures by the European Central Bank and the different measures taken by governments to create a Europe-wide banking supervisor.  Investors appeared unimpressed by the third-quarter earnings and Allianz shares shed 1.64 percent on the Frankfurt stock exchange on Friday in a generally slightly softer market.

    Frankfurt, Nov 09, 2012 (AFP) 

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    Even as civil authorities work to open its office at 199 Water St. in lower Manhattan, Aon Risk Solutions continues to help organizations recover following Post-tropical Cyclone Sandy.

    Before Sandy made landfall, Aon enacted its business continuity plan, which was designed and tested to allow the global organization to remain fully functional during such weather-related events.

    “With our strong network of offices in the New York area, colleagues are using Aon facilities in midtown Manhattan, Jericho, N.Y., Stamford, Conn., and Morristown, N.J., to serve clients,” said Tom Fitzgerald, CEO of Aon Risk Solutions U.S. Retail Operations. “We are the world’s largest insurance broker and risk adviser. Our size and global network give us the flexibility to be nimble and respond to client needs without missing a beat.”

    “Our breadth of talent enables us to support clients immediately after disasters like Sandy,” said Fitzgerald. “It has been remarkable to see how quickly the team adapted and is working with colleagues around the globe to serve clients,” said Fitzgerald.

    Aon anticipates not being able to return to the 199 Water St. location for a number of weeks.

    Aon this week announced the creation of Flood Secure, a new insurance facility providing replacement coverage to U.S. organizations that have impaired aggregated flood limits on their property policy.

    Aon’s Rapid Response teams are working closely with clients surveying damage, taking steps to begin the claims process and getting businesses up and running again.

    Clients have access to Aon’s expertise via the Aon Situation Room, a resource that is updated with information and videos as well as a 24/7 client hotline (+1.866.283.7122) that directly connects clients to Aon account executives, brokers and claims experts.

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    Munich Re said it was raising its full-year profit forecast, despite the expected claims losses from superstorm Sandy that battered the United States last week. 

    “The result for the first three quarters is more than pleasing. Despite Hurricane Sandy, we are very optimistic of realising a profit in the region of 3.0 billion euros for 2012,” said chief financial officer Joerg Schneider.  At the beginning of the year, Munich Re had envisaged a full-year profit of around 2.5 billion euros.

    Schneider said it was still difficult to quantify the “substantial” insured losses caused by Sandy.

    “The high number of individual losses and the vast extent of the storm make loss estimation very difficult. Based on a provisional estimate characterised by a high degree of uncertainty, we anticipate Munich Re’s share of the losses to be in the mid three-digit million-euro range,” he said.

    In the third quarter, Munich Re’s net profit nearly quadrupled, rising to 1.13 billion euros in the period from July to September from 286 million euros a year earlier.  Operating profit jumped 70.9 per cent to 1.434 billion euros and gross premium income rose by 8.3 per cent to 13.236 billion euros.  Profits were driven not only by positive underwriting business but “also by a high investment result,” Schneider explained.  Taking the first nine months, net profit amounted to 2.718 billion euros, compared with just 75 million euros a year earlier.  Operating profit was up more than nine-fold at 3.738 billion euros and gross premium income grew by 5.3 per cent to 39.133 billion euros.

    Frankfurt, Nov 07, 2012 (AFP)

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    Aon Benfield has launched a new flood model for Switzerland and Lichtenstein to quantify financial losses caused by riverine and lake flooding.

    Flooding in Switzerland over the last two decades has caused human and financial losses across the entire country, for example in 1999, 2000, 2005 and 2007. As such, flood is considered to be the most significant natural peril in Switzerland.

    In response, Impact Forecasting, Aon Benfield’s catastrophe model development centre of excellence, has created a model to calculate both probabilistic and historical loss estimates and in turn help insurance and reinsurance markets to better understand the risks they write in Switzerland.

    The new tool reflects both locally-sourced data and the latest developments in hydrology and flood model development. Key features include:

    – Some 12,000km of the river network is modeled, which covers nearly all property exposed to flooding from rivers and lakes

    – Data of daily flows and water levels were taken from 200 lake gauging stations managed by FOEN (The Federal Office of Environment). On average, 57 years of data has been collected from the stations and up to 119 years in one case.

    – A LiDAR (laser screen) based Digital Terrain Model (DTM) built by Swisstopo (Swiss Federal Office of Topography) is used to create flood maps with a very granular cell size of 5×5 metres (by comparison, DTM resolution in earthquake models is normally in kilometres)

    – The probabilistic event set consists of 120,000 possible floods or 12 events per year for 10,000 years

    – The use of Flowroute-iTM, a highly efficient 2-dimensional hydrodynamic flood model from Ambiental, a leading international flood risk assessment consultancy. Flowroute-i was used to improve the speed and efficiency of digital flood map creation using Ambiental’s advanced computing and data processing capabilities.

    Petr Puncochar, flood model developer at Impact Forecasting, said: “The hazard component of the Swiss flood model is based on advanced hydrodynamic modelling, which describes the real physical behaviour of floods with improved accuracy. In particular, this approach enables better understanding of the complex Swiss topography which includes various hydrological regimes from low land to alpine.”

    Markus Hauswirth, CEO of Switzerland for Aon Benfield, added: “What makes this model unique is that it is a true Swiss model created with local hazard and loss data from our clients, Swisstopo and the FOEN. This ultimately means insurers can more accurately model historical events and future events, in addition to analysing per-location inputs or portfolios aggregated by postal code or canton.”

    Alan Gregory, co-CEO of Europe, Middle East and Africa for Aon Benfield, commented: “Insurers and reinsurers are demanding more sophisticated and open tools to quantify and manage the risks facing their businesses. There is a growing desire for transparency driven by regulatory requirements and rating agency recommendations and the Swiss flood model meets these crucial criteria. It is an invaluable tool for both insurers and reinsurers, enhancing both the understanding and evaluation of flood risk in Switzerland.”

    The model is integrated in ELEMENTS – Impact Forecasting’s proprietary loss calculation platform – which allows the application of insurance conditions at varying levels and also quantifies different sources of uncertainty.

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    Employee skills – or the lack of them – in general insurance have a direct impact on broker and insurer fortunes, according to the latest Skills Survey from the Chartered Insurance Institute (CII).

    The sixth annual survey conducted among CII members and employers, which provides a clear picture of the insurance skills landscape, has revealed the lowest proportion (67% – a drop of 10% on 2011) of companies experiencing skills shortages since the survey began. A comprehensive analysis of the findings is featured in a special supplement in this month’s CII Journal, produced in conjunction with Allianz.

    Despite the year-on-year improvement in available skills, nearly three-quarters (73%) of the 2,300 CII respondents who participated in the survey still identified skills gaps in their organisations. And this has a material effect on business performance, with service quality, increased talent expenses and the inability to achieve growth the top three problems when skills are most scarce.

    Year-on-year changes to the level of skills shortages vary across the different market disciplines, with the London Market, underwriting and broking seeing an improvement in skills of 16%, 6% and 5% respectively while claims remained stable.

    Daniel Pedley, CII public affairs manager, said: “For the first time we delved into the impact of these shortages and found quality and service standards had been detrimentally affected, which offers food for thought.”

    Neil Clutterbuck, director underwriting and technical, Allianz Commercial, added: “In a highly competitive market with limited sources of differentiation, Allianz has recognised that having the very best combination of technical, trading and business management skills is critically important to our future business performance and can help set us apart from our competitors.”

    Similar to the Allianz view, 42% of the CII’s general insurance members feel the sector should focus its efforts on improving technical skills with soft skills and business competence also rated important by a fifth or more of members. But the fact that only 10% of members believe that attracting new talent should form part of the industry’s focus suggests a greater emphasis on developing the capabilities of existing staff.

    Obtaining professional qualifications remains an important part of members’ views on staff development across all levels within a business, with 89% in support. As Neil Clutterbuck of Allianz writes in the Skills Survey supplement, the company has “launched a new scholarship programme for brokers, which enables scholars to achieve their CII Diploma in Insurance in 18 months”.

    But members’ opinion of the quality of talent entering the industry is at all-time low since the CII’s Skills Survey began, with only eight per cent thinking the latest entrants are “very well” equipped in terms of basic literacy and numeracy. Consequently, it is unsurprising the proportion of members that consider “education serves financial services well” has fallen from 54% to 49%.

    As a result, members’ desire UK education and skills policy to focus on the basics: literacy and numeracy, soft skills and science, technology, engineering and mathematics (STEM) subjects.

    But despite members’ reservations about skills levels among industry entrants, there is a question over how much firms are doing to capture the best talent at the earliest stage. This year’s findings show the number of insurance businesses offering internships or work placements has fallen by two per cent year-on-year, while those definitely willing to taking on an apprentice (41%) has remained static since 2011.

    Daniel Pedley of the CII says: “The work done by the CII in recent years – namely the Discover Risk activity aimed at attracting a higher calibre of young candidates to insurance – has brought together countless students and industry practitioners. This suggests there is a disconnection between what general insurance firms are trying to achieve by appealing to the best talent and what they are actually achieving in reality.”

    Daniel adds: “There is a clear appetite from our members to get involved in the skills debate and, as the world’s largest professional body for insurance, we will continue to make that voice heard. Our survey provides the most extensive insight into employer skills needs within general insurance.”

    The CII Skills Survey 2012 also contains industry viewpoints from Aviva, Zurich, Sterling, LV and Towergate, plus analysis by GI sector journalist, Sam Barrett, about the proliferation of – and benefits gained from – sector organisations investing in training and development.

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    Hundreds of pharmacies closed in eastern Spain on Monday in a strike to demand the government step in because indebted regional authorities cannot pay them their bills. 

    Two thirds of the 2,200 pharmacies in the Valencia region joined in the first day of a rolling strike with just over 700 of them open, a spokesman for the regional College of Pharmacists said.

    The open-ended strike aimed to draw attention to the “dramatic situation that pharmacies in Valencia are suffering,” he told AFP, adding that no incidents were reported during Monday’s strike.

    He said the regional government owed the pharmacies 450 million euros ($575 million) for prescription medicine issued under the public health system between May and September.

    “Five hundred pharmacies could be seized in a few months” if the money is not paid, he said.

    Spain’s autonomous regions, which control budgets for health and education, have seen their debts soar since the collapse of a real estate boom in 2008 that has driven Spain to seek Eurozone bailout funds for its banks.

    Valencia and eight of the other autonomous regions have requested rescue funds from the central government to help finance their deficits.

    Pharmacies were “demanding from the central government the kind of rescue that the banks have had, to get out of this situation, because the Valencia region says it has no cash,” the pharmacy group’s spokesman said.

    This year’s regional fund has almost been exhausted but the budget ministry said Monday the government would renew it in 2013, with conditions obliging the regions to pay pharmacies and other service providers.

    Madrid, Nov 05, 2012 (AFP) 

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    According to catastrophe modeling firm AIR Worldwide, Tropical Cyclone Nilam began crossing the Tamil Nadu coast at about 4:30 PM local time (11:00 UTC) with maximum wind speeds of about 80-90 kilometers per hour, gusting to 100 km/h. Landfall took place about 40 miles south of Chennai, the capital of Tamil Nadu state, between the town of Mahabalipuram, an historic port and temple site, and Kalpakkam, the site of a nuclear power facility that supplies electricity to the region and is home to several other nuclear installations and research agencies.

    According to AIR, extensive damage to traditional housing (thatched roofs and huts), which are not insurable, is expected, and to standing crops and power lines. Minor damage to power and communication lines by uprooted trees has been reported, as noted above, but by the onset of nightfall there have been no reports of significant damage to large or otherwise insurable structures.

    The Indian Meteorological Department (IMD) has reported that the storm’s central pressure at landfall was about 992 mb. It also reported that as much as 25 cm (10 inches) of rainfall has fallen along most of Tamil Nadu’s northern coastal districts and coastal southern Andhra Pradesh, the state to Tamil Nadu’s north, over the past 24 hours. A storm surge of 1-1.5 meters (3.2 to 5 feet) over the astronomical tide has been reported in some places, which is high enough to inundate low-lying areas of Chennai, Kanchipuram, and Tiruvallur in Tamil Nadu and parts of Nellore District in Andhra Pradesh.

    “Tropical Storm Nilam formed on Sunday, October 28, when an area of deep convection developed and transformed into a depression in the southwestern region of the Bay of Bengal,” according to Dr. Peter Sousounis, senior principal scientist at AIR Worldwide.  “The system was upgraded to a deep depression on October 29, and after further intensification it was declared a tropical cyclone the next day, yesterday. Influenced by upper-air circulation, the system started moving to the northwest at a speed of about 18 km/h after remaining nearly stationary northeast of Sri Lanka for some time, where about 4,000 people have been dislocated by flooding caused by the storm.”

    In Mahabalipuram, trees have been uprooted and lamp posts have blown over. Several areas of the town have power outages. In addition, the Chennai Mass Rapid Transport System—an elevated metropolitan railway line—has been shut down in anticipation of Nimal’s winds causing problems with overhead wires.

    Dr. Sousounis concluded, “Nimal’s low level circulation center over land is becoming elongated, causing the storm to weaken as it continues to track generally northwestward across southern India. The IMD expects Nimal to dissipate below a tropical cyclone threshold intensity of about 65 km/h (40 mph) over the next 24 hours. However, the IMD continues to warn of heavy to very heavy rainfall over that time period, with extremely heavy precipitation of 25 cm (10 inches) or more in some isolated locations along the northern Tamil Nadu, southern Andhra Pradesh, and Puducherry coasts, and, in interior Tamil Nadu, for the next 48 hours.”

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    Hill Dickinson Fraud Unit calls on the industry to set common standards and treat ‘go away’ data as a key fraud indicator.

    Although claims which ‘go-away’ are typically seen as a positive result by individual insurers, Hill Dickinson Fraud Unit [HDFU] believes there is a significant hidden cost to the industry when the potential fraud implications are considered.

    Over 50% of closed cases handled by HDFU for its insurer client base in 2011 were classified as ‘go-aways’ with fraud alleged or suspected; and an associated cost implication of over £54million.   Although these claims disappeared from HDFU’s clients’ radars, it does not mean the claimants have not moved on to attack other insurers with weaker fraud defences.  In a sample of 100 proven fraud cases, HDFU identified over 28 ‘go-away’ claims previously made by these proven fraudsters, with a collective value of £693,995.

    Hill Dickinson’s Netfoil database flags ‘go-away’ claims in the same manner as proven fraud, in order that its clients can be made aware of a claimant’s risk profile and repeat offenders can be readily identified. This activity is fully ICO compliant and in line with Treating Customer Fairly (TCF) requirements.

    Peter Oakes, Head of Fraud, Hill Dickinson says: “It stands to reason that the industry should be evaluating ‘go-away’ data as a key fraud indicator.  The challenge is that insurers define and treat ‘go-away’ claims differently and not all insurers record or interrogate ‘go-away’ data.  As an industry we should be considering common standards for defining and handling ‘go-away’ claims and exploring how we can collectively benefit from sharing ‘go-away’ data.”

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    The British Insurance Brokers’ Association (BIBA) has visited the Prime Minister’s office to raise a number of key broker issues. 

    Visiting Number 10 Downing Street last week, BIBA’s CEO Eric Galbraith and BIBA’s Head of Corporate Affairs, Graeme Trudgill, met with Tim Luke the Prime Minister’s Business Advisor and discussed BIBA’s top level Manifesto issues including the cost of regulation, signposting, the value of brokers, flood, motor insurance and business continuity.

    Galbraith said: “As part of the financial sector, the value insurance brokers bring to sustainable growth, innovation and competition has been forgotten by government in the wake of the banking crisis.  Presenting our concerns and highlighting the opportunities will, I hope, be a further step to enable us to forge closer relations with Number 10.”

    During the meeting, BIBA outlined the significance of the 1% contribution that brokers make to the UK’s GDP along with the unfair and disproportionate cost of regulation which is three times more expensive than other European states. BIBA also discussed the current Financial Services Compensation Scheme consultation, highlighting its concerns and alternative model.

    Trudgill added: “”Members want BIBA to get their voice heard at the highest levels of government and meeting with the Prime Minister’s Business Advisor, in Downing Street, to discuss key member manifesto issues was an important appointment. We were pleased with the recognition given to the broking sector.”

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    Aon Benfield has launched a flood model for Thailand to help global insurers gain a better understanding of their exposures in this growing market.

    Thailand is one of the most flood-prone countries in the world but had not experienced any major flood insurance losses before 2011. The unprecedented 2011 loss, estimated to be in excess of USD15 billion, was due to a rapidly changing land-use pattern, record rainfall in the northern region and seasonal high tides in the Gulf of Thailand, in addition to man-made factors in managing the floods.

    In response, Aon Benfield invested in a fully probabilistic Thailand flood catastrophe model, developed by Impact Forecasting – its catastrophe model development centre of excellence.

    Key features include:

    – Improved understanding of the key drivers of flood risk in Thailand

    – Ability to make more informed decisions on reinsurance purchase and pricing

    – Identification of the amount of capital needed to satisfy regulatory and rating agency requirements

    – Modelling for residential, commercial and industrial lines of business

    – Damage functions based on 2011 claims data and international experience

    Malcolm Steingold, Chief Executive Officer, Asia Pacific for Aon Benfield, said: “Aon Benfield has provided vital support for insurers and reinsurers in Thailand and the wider Asia region by securing renewal of crucial reinsurance capacity in the aftermath of the largest ever catastrophe loss in Asia outside Japan.  As we move towards the next reinsurance renewals, the new model – based on numerous site inspections – will help us to better assess the vulnerability of risk concentrations to natural perils and to address the issue of unmodelled perils.”

    Adityam Krovvidi, head of Impact Forecasting, Asia Pacific, added: “Flood is one of the most difficult perils to model due to complex geophysical phenomena, ever increasing human interventions and potential climate variability impacts. The record flood insurance loss in Thailand provides a learning opportunity to further investigate the potential impact of this hazard. This in turn has enabled us to create a solution that lies in a rigorous analytical and scientific approach, while taking into account the location of exposures and flood defences.”

    The Thailand flood model is integrated in ELEMENTS – Impact Forecasting’s proprietary loss calculation platform – which enables insurers to more easily customise catastrophe models and gives access to 30 catastrophe models spanning over 20 territories and six key perils.

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    Commercial lines underwriting specialist Arista Insurance has launched an initiative to work more closely with brokers to develop schemes that target insurance needs in particular locations or classes of business.

    The launch is marked by a trio of recently completed deals with brokers CRK Commercial Insurance based in Leicestershire and Bury-based Prestige Insurance.

    The CRK scheme -HVAC – is designed for heating and ventilation contractors and associated trades. CRK, which is an established specialist in contractors business, chose to partner with Arista to develop the scheme due to its understanding of CRK and its customers’ needs and its ability to develop products and process that suited CRK and its clients quickly. The scheme cover is based on Arista’s Contractors Combined policy with bespoke terms and limits for HVAC scheme policyholders.

    Arista has launched two schemes with Prestige,  a tenant’s liability scheme and a retail scheme. The tenant’s liability scheme was developed exclusively for Prestige’s growing number of residential lettings clients via its website, Complete Lettings Solutions. The retail scheme encompasses high street shops but provides bespoke covers for Prestige’s specialist areas, including DIY, hardware and fishing tackle retailers.

    Arista chief executive Charles Earle commented: “The schemes already developed and Arista’s desire to develop and launch further schemes underlines our ethos of working with brokers as partners. This pooling of joint expertise to create tailored insurance solutions, in a timely manner, at the same time addressing the needs of specific insurance buyers is a proven concept and one we are keen to maximise. All of Arista’s regional teamsare poised to build and deliver more schemes with brokers they work closely with so we will be making further announcements in due course.”

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    According to catastrophe modeling firm AIR Worldwide, As forecast, Hurricane Sandy intensified overnight and its path began to turn toward the U.S. East Coast. As of 11 a.m. EDT, Sandy has maximum sustained winds of 90 mph and is moving north-northwest at 18 mph. Although the NHC’s latest advisory indicates that Sandy’s sustained winds have achieved 90 mph, some weakening is likely to occur before landfall tonight and Sandy is expected to arrive on the south Jersey shore with winds of about 75 mph.

    As indicated in the National Hurricane Center (NHC) wind extent map, the impacts of tropical storm force winds have already been felt on the East Coast. The storm has impacted barrier islands off North Carolina, making several homes and businesses almost inaccessible.

    “Later today, wind and surge will become more significant from Long Island Sound to Chesapeake Bay, with some of the strongest impacts being felt this evening, prior to the actual storm landfall,” said Dr. Tim Doggett, principal scientist at AIR Worldwide. “One caveat regarding the interpretation of the NHC track maps is that as Hurricane Sandy gets closer to landfall, the extent of the cone is decreasing. This reflects the increased forecast certainty in the track and is not an indication of the extent of damaging winds. For example, while New York City is not actually in the NHC cone any more, that does not mean they will not be impacted strongly by this event.”

    “The NHC track forecast is still largely unchanged, and the intensity forecast is still calling for Hurricane Sandy to have hurricane force wind speeds as it makes landfall close to midnight tonight. The highest wind speeds will most likely be experienced along coastal exposures, where winds have less interaction with land and thus experience less surface friction. However, the associated area of damaging winds will be more uniform and more widespread than with a typical tropical cyclone (and extend farther inland), due to the transition of the storm to an extratropical cyclone system.”

    The NHC track forecast projects landfall a little farther south along the New Jersey coast than yesterday.

    Dr. Doggett concluded, “This is a subtle change and does not alter the overall expectations regarding the storm’s impacts. NHC also forecast the storm system to slow down before landfall, so it will linger over Pennsylvania longer than it was expected to yesterday. However, the greatest remaining uncertainty in the system revolves around what happens in the days after landfall. The storm’s impacts will diminish over that time, but some tropical storm force winds could linger in Washington, D.C., Philadelphia, and New York City well into Wednesday night.”

    According to AIR, the entire Eastern Seaboard is bracing for Hurricane Sandy. In Delaware, hundreds of people fled to shelters, and water was already covering some roads. The public transportation system in the Washington, D.C., area has been shut down, including Metro, Virginia Railway Express, and the Maryland Transportation System. Baltimore has opened six shelters, and several city intersections are closed due to the threat of flooding.

    In New York City, the evacuation of Coney Island and Lower Manhattan has been ordered. The school and subway systems have both been shut down, and floor trading on the New York Stock Exchange is closed, although the electronic system remains open. People living along Long Island Sound have also been ordered to evacuate, and many heeded the warning.

    In Rhode Island, mandatory evacuations have been ordered in many communities, and many schools closed today. Flooding is expected along Narragansett Bay, which runs through the middle of the state. Residents were told to be prepared to be without power.

    Thousands of flights to and from cities in the eastern part of the U.S. have been canceled, and there are predictions that as many as 10 million people could lose electricity. In Virginia, 5,000 Dominion Virginia Power customers had no power on Sunday, and it was estimated by the company that the number could rise to 1 million during the next few days.

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    Jubilee Managing Agency (Jubilee) has become the latest Lloyd’s insurer to automate their bordereaux processing and management using software from insurance specialists VIPR.

    The multi-niche Lloyd’s insurer has installed the Intrali bordereaux management platform within its Global Property Franchise, to enable them to improve their overall service to their coverholders.

    Conor Finn, Head of Global Property at Jubilee, said: “It is vital for Jubilee to be able to demonstrate value, rather than just providing capacity to our cover holders; this system is the first step in this regard.

     “We chose VIPR as they offer, and are able to deliver, a solution tailored specifically to our needs within a challenging timescale.”

    Bob Brown, CEO of VIPR said: “We are delighted that Jubilee has chosen VIPR to help streamline its bordereaux management processes. We know from our existing customers who have already adopted the VIPR Intrali solution that it will deliver tangible benefits and free up valuable resource.”

    Brown added, “Our knowledge and expertise in the Lloyd’s market means we understand the needs of Managing Agents and Brokers. Our client list and reputation in the industry has not gone unnoticed and has seen our order book grow rapidly during the last six months.”

     “We recognise that the Lloyd’s market is pushing insurers to demonstrate that they have robust and adequate systems in place for identifying, measuring and managing risk in order to meet the requirements of Solvency II.”

    Conor Finn from Jubilee added: “We were delighted with the implementation and ‘can do’ attitude of the VIPR technical team.”

     “We’ve already seen Intrali deliver a positive impact on the data management of our cover-holder business, enabling us to significantly improve our reporting and analysis.”