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Catastrophe risk modeling firm AIR Worldwide (AIR) announced that it has released a cyclone model for India. The new peer-reviewed model, which was developed out of AIR’s Hyderabad office, captures the effects of wind and precipitation-induced flooding on insured properties in India, enabling companies to assess cyclone risk in the region more fully and accurately.

“As India’s economy grows and global markets become increasingly interdependent, the insurance industry is turning its attention to the potential for large losses in the region,” said Dr. Praveen Sandri, senior vice president and managing director of AIR Worldwide’s India operations. “We’re confident that AIR’s model will provide clients with the most complete view of cyclone risk in India and that it will become the industry standard for managing the potential losses caused by these high-impact events.”

The magnitude of the risk came to wide attention as a result of Orissa, the 1999 super cyclone, which caused damage in excess of USD 2.5 billion and at least 10,000 fatalities. “While the insured losses from the Orissa cyclone were a fraction of the total damage, the situation is changing as insurance penetration in India grows,” said Dr. Sandri.

Cyclones are four times more likely to form in the warmer Bay of Bengal than over the colder waters of the Arabian Sea. However, the western coast of India is highly industrialized, and insurance penetration is higher there. “On the west coast, the 1998 Gujarat cyclone caused damage of about USD 500 million and insured losses exceeding USD 200 million,” continued Dr. Sandri. “The exposure throughout this region is far more concentrated today, which can result in higher losses, even with fewer storms.”

The AIR India cyclone model covers the entire Indian Ocean basin and includes more than 35,000 loss-causing storms, both landfalling and bypassing. To represent surface winds from cyclones realistically, the model uses the latest high-resolution land use/land cover data to capture the effects of surface friction on wind speed.

Unlike cyclone winds, which generally decrease as storms move inland, precipitation intensity and its related flood hazard can increase. As a result, precipitation-induced flooding can be a significant driver of damage over large areas. The AIR model calculates total precipitation and then reroutes the rainfall distribution based on soil type, land use/land cover, and slope — all of which determines what fraction of precipitation is absorbed and what fraction accumulates to produce localized flooding.

“A relatively weak but wet and slow-moving cyclone coming ashore near the city of Mumbai could dump more than 16 inches of precipitation and produce insured losses in excess of USD 600 million,” explained Dr. Jayanta Guin, senior vice president of research and modeling at AIR Worldwide. “Such an event could produce a flood footprint similar to the devastating 2005 Mumbai floods, which illustrates that any model that attempts to accurately measure India’s cyclone risk must capture the full range of possible outcomes, including high-impact flood events. Even bypassing storms can cause significant damage as they move up the coast, delivering damaging winds to coastal exposures and causing flooding hundreds of kilometers inland.”

As part of the model release, AIR collaborated with local sources to develop a high-resolution industry exposure database (IED) for India that contains counts of all insurable commercial, residential, and industrial properties and their respective replacement values, along with information about occupancy and the physical characteristics of the structures, such as construction type and height classifications. The detailed IED provides a foundation for the model’s industry loss estimates and can be leveraged by companies that lack access to location-specific exposure data to achieve a more accurate representation of their risk.

Separate wind and flood damage functions (how the intensity of the hazard affects different structures) have been developed for a wide range of occupancies and construction types, as well as for buildings under construction — an important line given India’s continuing rapid growth. Damage functions are also available for a wide variety of complex industrial facilities. The model, which accounts for policy conditions specific to India, has been extensively validated against historical hazard and loss data and has undergone peer review.

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Protiviti, a global consulting firm, has appointed Lindsay Dart as a managing director within its London office, where he will lead the UK Internal Audit and Financial Controls (IAFC) team.

With nearly 30 years’ experience in both professional services and the financial services industry, Lindsay has developed and led highly complex projects in the areas of risk-based auditing, systems and controls, and financial reporting for companies both in the UK and internationally.

Before joining Protiviti, Lindsay spent seven years at Deutsche Bank in London, where he had global responsibility for all internal audit work in the finance and risk functions and the global banking business. Previously, Lindsay spent 21 years at PricewaterhouseCoopers, latterly as a partner in London, where he led teams delivering a wide range of audit, operational risk and corporate governance services to international commercial and investment banks, fund managers, funds, brokers and metal dealers. During his time with PwC, Lindsay also spent time working in Central Europe and Portugal.

Andrew Clinton, Head of Protiviti UK, said: “We are delighted to welcome Lindsay to the team at Protiviti. He brings a wealth of experience within internal audit and financial compliance and will play a major role in driving the firm’s continued expansion within these areas.”

 Commenting on his appointment, Lindsay Dart, said: “I’m delighted to be joining Protiviti’s world-class team, which has an outstanding reputation in the internal audit and risk consultancy market.

The challenges of daily technological innovation, data security, regulatory change and the need to enhance business performance are impacting organisations in almost every sector. Boards, regulators and other stakeholders are placing ever-increasing reliance on the work of internal audit functions to provide them with assurance across these and other risks. The need for internal audit to have access to specialist skills is therefore greater than ever. Protiviti is ideally placed to help clients meet these needs.”

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The Lloyd’s Market Association (LMA), working in conjunction with Lloyd’s and broker trade body LIIBA, is setting out to rationalise the market’s model binding authority agreements, thereby making it easier for managing agents to ensure their contracts remain compliant with regulatory requirements.

The review, which began in March, aims to reduce the number of model agreements used by the market to ensure consistency in having the most up to date provisions and to assist in incorporating future regulatory changes.

Neil Smith, the LMA’s head of underwriting, said: “Following the previous review, the market’s model binding authority agreements are generally very similar with different sections relating to the specific territory and market sector. What we’re aiming to do now is consolidate and reduce the number of model wordings further. One of the key benefits of this is that if regulations change, or amendments are needed, it will be considerably easier to make the necessary changes.”

With 30% of Lloyd’s market business being conducted through binding authorities, changes to these underwriting contracts can have a significant impact on the Lloyd’s community.

Model binding authority agreements in Lloyd’s were last reviewed over six years ago.

The review is being led by the LMA’s binding authority wordings committee including representatives from LIIBA and Lloyd’s.  Draft agreements will be circulated in late summer–early autumn with the intention of completing the review in time for the year-end binder renewal season.

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Thousands of doctors and nurses in Portugal launched a two-day nationwide strike on Wednesday over sweeping cuts in the health budget, in a protest set to cause widespread disruption to patients. 

Unions said they were expecting the biggest turnout in the health sector in over two decades in protest at cuts amounting to 800 million euros ($985 million) introduced to meet the terms of a multi-billion euro bailout deal.

“We have no doubt that the strike will be a resounding success and that the protest will assemble thousands of white coats,” said Mario Jorge Neves, head of the National Federation of Doctors.

The strike will cause widespread disruption to patients with 400,000 appointments and nearly 4,500 operations cancelled, according to estimates from the Portuguese health ministry.

The strike has gone ahead after unions rebuffed an offer of talks from Health Minister Paulo Maceo at the weekend. Doctors said a minimum service across health clinics and hospitals would be guaranteed.

Hospitals in Lisbon were much quieter than usual on Wednesday, although a few patients still waited hopefully for consultations.

“I am due to have an operation today but I don’t know if it is going to happen. I have been told to wait,” said Lidia Goncalves, a Brazilian patient.

“I was supposed to have an appointment with a specialist this morning,” Manuel Silva told AFP.

“I called yesterday but they couldn’t tell me if I would be seen. This morning they told me to go home and that they would contact me soon.”

Portugal is locked into a three-year programme of debt-cutting measures and economic reforms in return for a 78-billion-euro ($103 billion) rescue package from the EU and International Monetary Fund agreed in May 2011.

To meet the requisite cuts from its health budget, the government has reduced overtime, increased prices for prescription medication and even closed certain services.

Unions say the cuts have restricted access to health care for people who can no longer afford to buy medication.

Carlos Braga, head of a patients’ rights group in the capital, has said the numbers of people who can no longer afford to pay for health care is rising fast.

“Thousands of people are now deprived of care because they cannot afford the prices that were put in place in January,” he said.  Overworked doctors and nurses have denounced a “worrying and dramatic” fall in the quality of care in Portugal’s health system — ranked 12th best in the world by the World Health Organization in 2000.

The sector has also criticised the purchase of second-rate or obsolete equipment as a cost-cutting tactic and want the government to drop plans to use cheaper outside service providers instead of hiring additional nursing staff.

On Tuesday, Portugal’s central bank warned that further cross-sector austerity measures may be needed to achieve the target of reducing the public deficit to 4.5 per cent of output, as the country struggles to fix its public finances.

Lisbon, July 11, 2012 (AFP)

 

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Oracle announced the availability of Oracle Insurance Solvency II Analytics, which can help insurers to quickly understand and comply with Solvency II reporting requirements and better assess and manage risk using a single unified platform.

Solvency II requires insurers to prove to regulators that they have enough capital in reserve to remain solvent. As part of the mandate, insurers must provide visibility into how they manage all solvency-related data, as well as how that information is used and incorporated into reporting – creating significant compliance challenges.

The Oracle Insurance application provides extensive out-of-the-box reports and dashboards designed to cover Solvency II Pillar 2 and 3 requirements, enabling insurers to accelerate compliance with pending European Insurance and Occupational Pensions Authority (EIOPA) deadline of January 2014 and gain the visibility required to improve capital management.

Oracle Insurance Solvency II Analytics is designed for life, non-life, health and re-insurance institutions. It delivers insight into business performance, risk profile, technical provision, claims, capital adequacy and other key metrics.

It features ready-to-deploy reports, helping enable insurers to comply with Solvency Financial and Condition Reports (SFCR), Report to Supervisors (RSR) and Own Risk and Solvency Assessment (ORSA) requirements.

Insurers also have the flexibility to create ad-hoc reports and customized dashboards to meet changing business needs. 

The application’s flexible, drill-through functionality enables detailed analysis of capital adequacy and risk results across multiple dimensions – such as solo, group, line of business or legal entity. This can give senior management complete, consistent and multi-dimensional views of various risk and performance measures.  Finance and risk officers can also perform “what if” analysis to support better decision-making around their finance and risk portfolios. 

“Solvency II is putting pressure on European insurers to add a new level of rigor to their finance and risk processes. Oracle Insurance Solvency II Analytics’ extensive reporting and dashboards are designed to cover Solvency II Pillar 2 and 3 requirements, helping insurers to reduce the risk associated with pending deadlines and achieve greater financial results through better management of their capital,” said S. Ramakrishnan, group vice president and general manager, Oracle Financial Services Analytical Applications.

“Decision makers also suggest that selecting a Solvency II system is not just a question of functionality –flexibility is just as important,” said Peyman Mestchian, Managing Partner at Chartis Research. “That means system architecture, ease of integration and an enterprise approach to modeling, analytics and reporting will be important.”

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AA Financial Services has reduced the rate for personal loans to AA members to 6.4% APR representative at a time of growing optimism in the new car market.

The new rate comes as  the Society of Motor Manufacturers and Traders (SMMT) reported the sixth consecutive month of rising new car sales at the end June.  Sales to consumers are up 9.8% compared with the first half of last year.

Mark Huggins, director of AA Financial Services, says:  “Although our own research shows that while more people are expected to change their car over the coming few months than for three years, on the whole they expect to spend less.

“Families appear to be more confident about the future which is reflected in increasing numbers of cars being bought, but they are tempering that confidence by settling for smaller or more economical cars.

“And, although the cost of fuel remains high the recent small price falls to an average of 131.4p per litre for unleaded petrol, will certainly help both the new and used car markets.”

Mr Huggins pointed out that about 13% of car buyers*** look to use a loan to fund part or all of the cost of a car, slightly up on the year before but considerably less than the 20% who planned to borrow to finance a car in 2009.

“By dropping the borrowing rate for AA members we may be helping many to realise an ambition to change their car, perhaps for a new one, sooner rather than later,” he said.  “The 6.4% representative APR is very competitive.  It’s available for loans of between £7,500 and £14,950 over periods of one to seven years.”

He said that he expected the AA’s next Car Purchase Index to show the motor market gaining momentum, particularly with growing interest in hybrid and other fuel-frugal models.

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Further flooding has affected the U.K. during the weekend of July 6 and July 7 following further outbreaks of exceptionally heavy rainfall. The U.K. has been subject to the wettest April to June period on record resulting in saturated ground, high water tables, and full reservoirs and therefore providing ideal antecedent conditions for flooding. The rain over the weekend was associated with a low pressure system that has been causing heavy rainfall since July 5.

This led to more flooding, with the worst affected areas being in the South West of England, especially in Devon, as well as parts of the North East and the Midlands. A total of three severe flood warnings were issued for Devon by the Environment Agency (EA) on Saturday, with some parts of East Devon and West Dorset receiving between 75-120mm of rainfall in a 24 hour period – more than the monthly July average.

The rainfall and flooding resulted in the cancellation of many events across the south-west, such as the Dunsford show in Dartmoor and the Liskeard agricultural show. On Saturday, motor-racing fans were warned not to drive to Silverstone in Northamptonshire due to many car parks rendered useless by the flooding, resulting in long traffic queues near the circuit. York and parts of North and East Yorkshire were also impacted by heavy rainfall and minor flooding, with some events for the York 800 festival being cancelled and properties in Snaiton and Cloughton in East Yorkshire being damaged.

The EA has issued a further nine flood warnings for the South West of England as of Monday, with the rivers Stour and Frome being most at risk of flooding. A flood warning is also in place for parts of York and Selby for today and tomorrow due to the River Ouse potentially bursting its banks. A total of 66 flood alerts have also been issued across the U.K..

“Unsettled and showery weather is expected to continue to affect the U.K. over the next few days. A broad area of low pressure is situated over northwest Europe which will bring thunderstorms to the east of the country and persistent rain in the north,” said Neena Saith, director of catastrophe response at RMS. “Long-term weather forecasts also indicate that the unsettled weather may continue into August with below average sunshine amounts expected and higher likelihood of wet conditions, particularly in the south. If this holds true, then the risk of flooding may remain high over the next month or so, however it should be noted that long term weather forecasts are extremely uncertain.”

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UK life insurers are expected to increase pension exposure from corporates looking to offload risks in their existing defined benefit schemes as well as from a new government initiative to automatically enrol all employees in a company pension scheme, according to Fitch Ratings.

Pensions are an opportunity for growth for life insurance companies, in an industry that has seen net outflows every year for the last 10 years. The retail distribution reform, which bans insurers paying independent financial advisors a commission, is likely to trigger a further drop in sales in other savings products.

Pension deficits at UK corporates are increasing because of low interest rates. The actuarial consultant Lane, Clark and Peacock is expected to say tomorrow that the cumulative deficit of 83 of the FTSE 100 companies more than doubled to GBP41bn from GBP19bn in 2011, according to the Financial Times.

Life insurance companies’ involvement in pension funds has largely been through either buying out the scheme and transferring all the assets and liabilities to the insurer or simply insuring the liabilities. In addition to these methods we expect to see an increase in corporates insuring particular risks, the most important being exposure to increases in life expectancy.

Pilkington, ITV, Rolls Royce and AkzoNobel have all hedged their exposure to increases in life expectancy through longevity swaps. Banks compete with insurance companies in this sector because the transactions are large enough for banks to syndicate the risks to their clients. We expect insurance companies to write more of this directly as average contract size shrinks and pricing becomes more uniform.

The longevity swaps offer significant administration fees and premium for insurers. This is usually shown as an immediate increase in the corporate pension fund’s liabilities. For example, when ITV entered a longevity swap on GBP1.7bn of its pensions, the result was an increase in liabilities of GBP50m – or about the equivalent of a one-year change in life expectancy.

Insurers’ involvement in the UK government initiative to offer a defined contribution pension scheme to all UK employees is likely to involve significantly larger volumes of assets but be only marginally profitable. The number of people in the UK with a defined contribution pension scheme is expected to rise to 16 million from 7 million as a result of the initiative, according to the Pensions Policy Institute. Most of these schemes are likely to be simple and pay a minimal fee to a third party for running the pension.

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Assurant Solutions has announces the appointment of John Miles as the newest member of its European compliance team.

John joins Assurant Solutions from Allianz, where he held the position of Senior Business Standards Consultant.  With his strong background in both consumer finance and general insurance compliance management, he brings a wealth of experience in addressing the current regulatory challenges that face the creditor and extended service contract market.

In his role as Compliance Officer John will play a key role in supporting both the Intermediary business and extended warranty and creditor client development teams.  He also will be responsible for ensuring regulatory compliance across all Assurant Solutions’ product distribution channels in Europe.

Mike Balsley, President and CEO of Assurant Solutions in Europe commented: “Assurant Solutions is committed to setting a high standard for compliance management in everything we do, and we see this commitment as a valuable asset for our partners. The regulatory environment today is exceedingly complex. Our team of experts help ensure distribution arrangements are constructed and delivered to provide the highest levels of compliance..  John’s talent and experience will further strengthen our team as we continue to deliver on our commitment to compliance excellence. ”

John commented “I am delighted to have joined the team at Assurant Solutions.  Robust compliance management is integral to the company’s business strategy and I believe that Assurant Solutions is well positioned to meet the challenges presented by today’s regulated insurance landscape”.

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Liberty Mutual Insurance, the commercial lines division of Liberty Mutual Insurance Europe Limited and part of Liberty Mutual Insurance Group, has created new underwriting capacity to increase its Midlands presence.

LMI has recruited Jo Hunt, who will fill the newly-created position of commercial combined underwriter based in Birmingham. In her new role, Jo will work with Midlands-based brokers to develop LMI’s commercial combined capability.

Jo brings 14 years of underwriting experience to her new role and is Dip CII qualified.  She will report directly to northern development manager and Birmingham branch manager Neil Findley.

Commenting on the continued commercial lines expansion, LMIE CEO, Sean Rocks, said: “Our new commercial offering has been very well received in the Midlands and we’re keen to capitalize on that reception. Jo’s arrival will add to our momentum and really strengthen our relationship with local brokers.”

Jo’s experience and expertise in commercial combined underwriting will complement the skills of the existing team members and broaden our capabilities in this area.”

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The Insurance Fraud Bureau (IFB) has signed a new intelligence sharing agreement with NAFN Data & Intelligence Services, which will see intelligence on known fraudsters shared between the insurance industry and local authorities.

NAFN works as a central hub for councils and other public sector members to share fraud intelligence and gather evidence to support criminal investigations. Users include Trading Standards, housing benefit departments and corporate fraud teams.

The pilot project will initially see the IFB working alongside local authorities from north London boroughs.

Stephen Dalton, Head of Intelligence at the IFB, said:

“The IFB’s strength has always been built on the power of the collective. Intelligence sharing agreements grant the IFB access to a wealth of new data from partners who are fighting financial crime in other sectors across the UK.

“IFB fraud analysts use world-leading software to interrogate over 130 million insurance records, building evidence against and convicting fraudsters. Of course, fraudsters targeting our industry are likely to be involved in criminal activities affecting other sectors and visa-versa. By sharing intelligence across sectors and geographical boundaries, we close the net on criminals abusing the system.”

Jeremy Frost, Intelligence Manager at NAFN, said: “Our new close relationship with the IFB will help move us into a new era of data sharing, an area that is heavily endorsed by the Cabinet Office and the National Fraud Authority.

“We have known for some time that criminals do not just target one organisation; better sharing of data with others will make their life harder and ultimately lead to reductions in fraud loss.”

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Crisis management assistance company red24 has strengthened its senior management team with the appointment of Robert Peasgood as Head of Business Operations.

Robert, who will be based in London, will help to develop and direct red24’s strategic plan, in addition to managing all commercial, operational and general business functions for the company.

Robert began his career with the British Army, where he completed army officer leadership training at the Royal Military Academy Sandhurst. He was subsequently commissioned as an officer, served for nine years, and finished his service in the role of company commander.

He joined the private security sector in 2004, where he initially worked as a consultant. Robert was involved in designing, developing and implementing a recruitment selection and retention process for a company with a US$100 million turnover.

Prior to joining red24, he was Director of Business Operations for international security management group Blue Hackle.

red24’s CEO, Maldwyn Worsley-Tonks, said: ‘We are very pleased to appoint Robert to our team, where he will play a critical role in helping to develop and guide the strategic direction of red24. His extensive experience and skills will be invaluable in ensuring that we achieve our objectives and continue to build on our success in providing expert advice, support and emergency response services to businesses and consumers worldwide.”

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Mitsui Sumitomo at Lloyd’s has appointed Martin Burke as Chief Risk Officer. Most recently Finance Risk Manager within the Enterprise Risk Management team at Catlin, Burke has worked within the Lloyd’s and company markets for 15 years.

In his new role, he will be responsible for the Actuarial and Risk Management functions supporting risk identification, quantification and management.

Burke has also been joined by Mark West, previously of Navigators, who becomes Chief Corporate Actuary and Melanie Cooper, previously of QBE, who has joined to become Chief Actuary – Underwriting.

A further role, Head of Risk Management, was recently filled by Ayan Man who joined from PwC.

John Roome, Chief Financial Officer at Mitsui Sumitomo at Lloyd’s said: “Risk management has always been a key element of our management responsibilities.  However, by investing in recruiting four more experienced market practitioners, Mitsui Sumitomo at Lloyd’s has created a robust team that will be make an even greater contribution to the growth and profitability of the business going forward.”

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MGM Advantage, the retirement income specialist, has entered the Guinness World Records by achieving the most tandem parachute jumps in 24 hours, in aid of Alzheimer’s Society.  The old world record stood at 130 tandem jumps, while the company managed to tandem jump 160 people on the day.

The challenge was held on the 5th of July at Hinton Airfield, near Oxford with the help of Skyline, a company specialising in beginners and parachute jumping across the UK.  The world record attempt was overseen by an official Guinness World Records adjudicator on the day alongside friends and family of the participants.

The first tandem jumper of the day was Chris Evans, Chief Executive of MGM Advantage, who said: “I feel immensely proud to have played a part in breaking the world record, but even more pleased to have helped raised a significant amount of money for a very worthwhile charity.  Alzheimer’s society supports people with dementia which many, if not most of us have been affected by through relatives or friends living with the condition.

“As a company which marks its 160th anniversary today while being the longest registered company in the UK, we are rightly proud of our heritage.  This world record in aid of charity will provide a legacy which will hopefully help the fight against dementia.”

The skydivers were waved off by Only Fools and Horses actress and Alzheimer’s Society supporter, Sue Holderness.

Sue said: ‘What a fantastic day and what a brave bunch of people who were willing to do something quite crazy in order to help people fight dementia and raise vital funds for Alzheimer’s Society.”

Jeremy Hughes, chief executive of Alzheimer’s Society, said: “Well done MGM Advantage and each of the brave skydivers who took part in the record break. The money you have raised for Alzheimer’s Society will make a real difference to the lives of people with dementia and their carers. As a charity, we rely on the generosity of companies and individuals to help us continue the fight against dementia, and jumping out of a plane in a truly exceptional way to raise vital funds.”

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Following today’s review of the NHS from the Institute for Fiscal Studies for the Nuffield Trust think tank, Jelf Employee Benefits’ commercial director, Ronjit Bose said:

“Even the mere talk of NHS services not being free at the point of use, could mean that employer-funded schemes begin to look more attractive to employees.

“We are at the beginning of one of the biggest shake-ups in health and social care and employees will look to their employer for guidance about how to best provide for themselves and their families.

“PMI can be overlooked by some groups, such as younger staff that don’t always see the value in the product and are therefore not receptive to usual communications. However, as the strain on the NHS becomes increasingly apparent, we anticipate an uptake in PMI in traditionally more reluctant groups.

“We are also likely to see employers and employees using PMI as a bargaining tool during the recruitment process, particularly during times of economic uncertainly and widespread salary freezes.”

Key findings of the Institute for Fiscal Studies review:

– Rationing of care and charging for services in the NHS should be considered as NHS faces at least a decade of austerity: the toughest since dental and prescription fees were introduced.

– The NHS alone accounts for nearly a quarter (23%) of public spending – and therefore decisions made about the NHS and social care will also have a knock on effect to other public services.

– Even if the NHS received an extra 2.4% in settlements over the period 2015-2022, it would not be enough to keep pace with the demands of an aging population.

– Radical steps that should be considered include charging for services, stopping doing some care considered less of a priority and raising taxes.

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Standard & Poor’s Ratings Services has raised its long-term counterparty credit and insurer financial strength ratings on Ireland-based insurer Irish Life Assurance PLC (ILA) to ‘BBB+’ from ‘BBB-‘. We also raised the rating on the €200 million junior subordinated notes issued by ILA to ‘BBB-‘ from ‘BB’ and removed all ratings from CreditWatch with developing implications.

Standard & Poor’s report :

The upgrade reflects our view that the sale to the Irish government on June 29, 2012 has significantly reduced ILA’s risks and exposures relating to the weaker Permanent TSB Group Holdings PLC, its former parent. The ratings on ILA are now aligned with its stand-alone credit profile.

The ratings were originally placed on CreditWatch with negative implications on Nov. 26, 2010, to mirror the CreditWatch placement on Ireland’s sovereign rating. Issues relating to its parent bank caused us to lower the ratings to ‘BBB-‘ from ‘BBB’ on Feb. 2, 2011, and keep them on CreditWatch negative. We revised the CreditWatch to developing on April 5, 2011, when the bank announced that it would sell ILA (see “Irish Life Assurance PLC CreditWatch Implications Revised To Developing On News Of Separation From Parent Bank,” published on April 5, 2011).

The ratings on ILA reflect its strong competitive position, a diversified distribution base, and very strong risk-based capital adequacy. These factors are partially offset, however, by the company’s lack of geographic diversity. This is especially relevant given its reliance on the weakened Irish economy, and its relatively volatile operating performance, which leaves revenues sensitive to equity market conditions.

According to our government-related entity criteria, there is a “limited” link between ILA and the Irish government and we view ILA’s role to the government as being of “limited importance.” Accordingly, we consider the likelihood of extraordinary government support to be low. This view is consistent with the government’s stated intention to sell ILA as soon as market conditions allow it to do so at a suitable price. The timing of any sale is uncertain, but in our opinion is unlikely to occur before 2014.

The negative outlook is aligned with the negative outlook on the Irish sovereign rating. Any downgrade in the Irish sovereign rating will likely trigger a similar rating action on ILA. A significant worsening of ILA’s stand-alone credit profile may also result in negative rating action. However, an improvement in ILA’s stand-alone characteristics would not lead us to raise the rating, unless we were also taking positive action on the Irish sovereign. ILA’s rating is currently constrained by that on the Irish sovereign, reflecting its exposure to sovereign investments, even though this risk is partly mitigated by being shared with policyholders. It also incorporates the risks of having an entirely Irish customer base, given the current economic environment in Ireland.

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GlaxoSmithKline was socked with $3 billion in fines by US authorities Monday over charges it marketed drugs for unauthorized uses, held back safety data, and cheated the government’s Medicaid program. 

The Justice Department said GSK was fined over misbranding its drugs Paxil and Wellbutrin, and for holding back data while making unbacked claims for its diabetes drug Avandia.

GSK pleaded guilty and agreed to the fines in what the department called the largest health care fraud settlement in US history.

GSK, one of the world’s largest health care and pharmaceuticals companies, admitted to charges that it had promoted antidepressants Paxil and Wellbutrin for uses not approved for by US regulators, including treatment of children and adolescents.

The British drug maker also conceded charges that it held back data and made unsupported safety claims over its diabetes drug Avandia. Altogether it will pay $1 billion in criminal fines and forfeitures over charges relating to the three drugs.

In addition, the company will pay $1.7 billion in civil fines for illegal promotion of those drugs as well as others; paying kickbacks in their marketing; and making unsubstantiated claims about Avandia’s safety and efficacy. And separately, GSK is being fined $300 million to settle charges it underpaid rebates it owed to the US Medicaid program.

“Today’s resolution is significant not just because GSK’s conduct was egregious or because it is the largest health care fraud settlement in the Department’s history,” said acting assistant attorney general Stuart Delery.

“For far too long, we have heard that the pharmaceutical industry views these settlements merely as the cost of doing business. That is why this administration is committed to using every available tool to defeat health care fraud.”

GSK chairman Sir Andrew Witty said in a statement that the problems originated in a “different era” and that the company has now “fundamentally” changed its procedures for compliance, marketing and selling its products, and has removed employees involved in misconduct.

“On behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made.”

“We have a vital role to play in bringing innovative medicines to patients and we understand how important it is that our medicines are appropriately promoted to healthcare professionals and that we adhere to the standards rightly expected by the US government.”  Investors appeared to shrug off the record settlement. US-traded GSK shares were up 1.3 percent in midday trade on the New York Stock Exchange.

New York, July 2, 2012 (AFP)

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Merlin has been selected by the Chartered Institute of Loss Adjusters (CILA) to support its newly launched internship programme. 

Merlin will be providing a paid summer placement to one of six undergraduates selected by the CILA, the Financial Skills Partnership and loss adjusters.

Merlin’s intern will receive a comprehensive induction to gain an understanding of the industry and the services the company provides, including loss adjusting, building surveying, subsidence, liability and the Merlin contractor network.  The undergraduate will also be given a business project to deliver for the senior management team.  Merlin’s plans for its intern include coaching them to apply their skill sets to the commercial environment, supporting them in linking their studies to the business world.

Merlin welcomes the initiative from the CILA and the opportunity to engage in this way with the graduate community to encourage new, young talent to consider loss adjusting as a career.

Malcolm Hyde, CILA Executive Director explains: “Many loss adjusting companies competed for the six places available to support the CILA internship programme.  Merlin was selected because they surpassed our expectations with their offerings and plans for an intern.”

Val Barlow, Head of Employee Development at Merlin comments: “Merlin is passionate about identifying and supporting the adjusters of tomorrow and the CILA internship, along with our internal employee development programmes, demonstrate our commitment to the future of this profession.  We are proud to be one of the CILA’s selected companies and see this as a testament to our commitment to develop the knowledge and skill sets of all our staff, through structured and challenging programmes.”

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Tidjane Thiam has been nominated by the Board of the Association of British Insurers to become its next Chairman, with effect from July 3. Mr Thiam, Group Chief Executive of Prudential plc, takes over from Tim Breedon of Legal & General who will be stepping down having completed his two-year term of office.

Mr Thiam has been an executive director at Prudential plc since 2008, having previously spent six years in executive positions at Aviva plc. He is a member of the Prime Minister’s Business Advisory Council.
Mr Thiam said: “I am honoured to be chosen as Chairman of the ABI, particularly in succession to Tim Breedon, who has done an outstanding job in refocusing the organisation to face the challenges of a changing world. I am looking forward to working with Otto Thoresen, who has brought a wealth of experience and leadership skills to the ABI.

“Insurance is one of Britain’s business success stories and it continues to provide jobs, security and much of the long-term investment that drives economic growth. It remains one of our most important invisible export earners.

“Insurers need to continue working together in close partnership with government and regulators to find solutions to the challenges we collectively face – supporting our customers in a time of unprecedented austerity and developing practical policies that will promote sustainable growth.”
Otto Thoresen, Director General of the ABI, said: “Tidjane Thiam is a globally recognised business leader whose understanding of the opportunities and challenges facing the global insurance industry will be a huge asset to UK-based insurers.

“I am looking forward to working with him to deepen the impact of the ABI as the authentic voice of an industry that is such a critical part of the UK’s economic well-being.

“On behalf of the ABI’s members, I would like to place on record their appreciation for Tim Breedon’s outstanding leadership and record of achievements over the two years of his chairmanship. Tim has refocused and re-energised the ABI and has played a key role in both the public leadership of the UK industry and ensuring the ABI is equipped with the strategic direction, consumer perspective, member engagement and key staff to deliver for its members in this challenging environment. Tim has brought unwavering commitment to the task and his passion for the social and economic value of insurance has made a significant impact on ministers, regulators and industry leaders.”

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BIPAR brings together leading political figures in European Parliament on dawn of insurance and financial intermediaries’ revised legislation.

European Commissioner Michel Barnier told the insurance and financial intermediary sector that the revision of the Insurance Mediation Directive (IMD II) is “an important step in restoring consumer confidence in the financial sector” and that “every financial operator must be regulated and monitored in an appropriate, effective and intelligent way.”

While addressing the European Federation of Insurance and Financial Intermediaries (BIPAR) conference at the European Parliament last week, Commissioner Barnier recognised that the insurance sector is not at the origin of the financial crisis and must be differentiated from the banking sector.

Ahead of the publication of the revised IMD I and the proposed packaged retail investment products (PRIPs) regulation, Commissioner Barnier said that he wants a “proportionate approach” and assured that proposed rules will be balanced and take into account the specificity of the sector.

BIBA is pleased that Commissioner Barnier said that the scope of the IMD II will include all those who sell insurance as consumers are entitled to the same information and protection wherever they buy their cover.  He also said that the world had changed since the original IMD so that there was going to be a “real breakthrough on transparency and conflicts of interest”.

Responding to Commissioner Barnier, Paul Carty, BIPAR Chairman, welcomed the approach to enhance consumer protection and said: “We need the legislation to be proportionate, allow choice and not distort competition.  Achieving a level playing field for consumers and intermediaries is very important to us.  The insurance sector did not start the financial crisis and we are different to other sectors of financial services, but we are willing to play our part.”

Eric Galbraith, BIBA Chief Executive, added: “We are pleased that the scope of the revised IMD will include all those selling or advising on insurance but have concerns that changes to the process of transparency will lead to additional costs, and no benefits to consumers or small businesses.

“I would urge our new regulator, the FCA, and the UK government to work with the sector and to engage with the European Insurance and Occupational Pensions Authority (EIOPA) in order to ensure the UK maintains its world leading position on risk management and insurance protection.

“60% of the costs of EIOPA are paid by member states and we have to question the value of this to the UK. There must be cost oversight and accountability. Regulatory costs in the UK are already disproportionately high.”

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