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‘Don’t do it again,’ Greek debt negotiator tells Europeans

Industry News

Jun 6, 2012

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A key representative of the private Greek debt holders who agreed to erase part of the country’s huge debt called Wednesday on other countries to avoid the Greek example and instead honour their commitments.

“Don’t do it again, please, in the official sector,” Jean Lemierre of French BNP Paribas bank told a conference in Copenhagen hosted by the Institute of International Finance (IIF), the global banking lobby.

“Once is enough,” he said with a smile as he wrapped up a round table discussion, stressing that Greece’s actions “should not be a lesson for the future.”

“Stick to your word, stick you commitments, and pay back the creditors,” he said, and was rewarded with the audience’s applause.

Negotiations between Greece and creditors from July 2011 to January 2012 allowed the crisis-hit country to write off about 105 billion of the 206 billion euros ($257 billion) in debt the state owed private creditors.

Lemierre, who headed those negotiations alongside IIF chief Charles Dallara, said Wednesday that one lesson to be drawn from the Greek saga was that “negotiation is back.”

Previously, he said, many states seemed to be of the opinion that there should not be negotiations and simply sought to impose their decisions on creditors.

“I’m very grateful to the heads of state in Europe (for having) promoted a negotiated solution,” Lemierre said, adding: “We are not happy about the haircut at the end of the day, of course, but negotiation has great value.”

The good thing about negotiating, he said, was that everyone had a chance to prepare themselves for the conclusion of the talks.

“It is very crucial when you have a process to understand what is going to happen, otherwise you have a systemic crisis,” he stressed, adding: “I hope in the future we shall stick to that principle of negotiation. This is key.”

Before becoming an advisor to BNP Paribas’s president, Baudouin Prot, Lemierre was head of the Paris Club, an informal group of private creditors who negotiate with countries in trouble.

Copenhagen, June 6, 2012 (AFP)

Munich Re : cancelling the UK Olympics would cost USD 5 billion

Good to know

Jun 5, 2012

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The Olympics, which will begin in 52 days, are the world’s largest sports events with more than 10,000 athletes competing in 26 sports. In the event of a terrorist strike or a major natural disaster, reinsurer Munich Re estimates that cancelling the Olympics would cost USD 5 billion.

The bill would cover the costs incurred and revenues lost by companies such as advertisers and media companies, according to the reinsurer. Other forms of cover, including employers and public liability insurance, would add to the industry’s losses. However, policies will not cover cancellation or disruption caused by transport chaos in London.

Andrew Duxbury, London underwriting manager at Munich Re, which has an exposure of about £280m to the games, said: “The revenue exposures between the World Cup in Africa and the London Olympics are similar, so I would expect the overall cancellation exposure to be a similar amount – about $5bn.”

The International Olympic Committee receives billions of dollars in television rights, meaning any disruption would prove extremely costly. “TV companies across the world have committed huge resources to ensure they are able to show the opening and closing ceremonies and broadcast Usain Bolt defending his 100m title,” Mr Duxbury said.

Hosting the Olympics in London will bring different challenges to those posed in China four years ago. “In Beijing, natural catastrophe risks such as earthquakes concentrated insurers’ minds,” he said. “In London, flash flooding from summer storms could cause temporary disruption. However, issues such as terrorism are potentially much more serious.

“One thing that won’t trigger most cancellation policies is general travel dislocation. If 10,000 people fail to get to the stadium on time because they are stuck on the Jubilee Line then that will likely not be covered. The onus is upon everybody to build in extra journey time and hope that London’s public transport network can take the strain.”

The Telegraph

Germany : banks are prepared for any scenario on Greece

Jun 5, 2012

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German banks are “prepared for all possible scenarios” with regard to Greece even if their exposure remains “limited”, the country’s financial watchdog BaFin said on Tuesday.

“We know to what extent German banks have invested in the bonds of the peripheral Eurozone countries,” BaFin president Elke Koenig told the organisation’s annual news conference in Bonn.

“I won’t speculate on future financial policy in Greece. But I am certain German financial institutions are in the meantime prepared for all possible scenarios,” Koenig said.

“In any case, their exposure in Greece is limited,” she insisted. As far as Portugal and Spain were concerned, “I can assure you that we and the Bundesbank are monitoring the situation very closely. It is not at all comparable to Greece. Spain is currently suffering the very specific consequences of a burst real estate bubble, and not the country’s structural over-indebtedness,” Koenig said.

For insurers, too, which had remained relatively unscathed from the recent financial crises, the long-running sovereign debt crisis “is no walk in the park,” Koenig said. Insurers, and life insurers in particular, were being hard hit by the current environment of very low interest rates, since that was making it difficult for them to meet the long-term interest guarantees made to their customers.

Traditionally, insurers and pension funds have invested in the benchmark German 10-year bonds or “Bund”, where yields are at historic lows in view of Germany’s safe-haven status in the debt crisis.

“We will have to wait and see whether insurers turn to other forms of investment so as to be able to offer a better return with an acceptable level of risk,” Koenig said.

Frankfurt, June 5, 2012 (AFP)

Aon Hewitt : survey finds positive shift in employee engagement worldwide

Industry News

Jun 5, 2012

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After years of declining employee engagement levels around the world, a new analysis released by Aon Hewitt, the global human resource solutions business of Aon, showed a positive global shift in employee engagement—or emotional and intellectual involvement in the workplace.

Aon Hewitt’s 2012 Global Engagement report, which analyzed employee engagement trends of more than 3,100 organizations representing 9.7 million employees worldwide, found that 58 percent of employees were engaged in 2011, up from 56 percent from 2010.

Aon Hewitt’s analysis showed improvements in employee perception scores in three key areas in 2011:

– Effective leadership at the business unit/division level was 61 percent, up from 54 percent in 2010

– People/HR practices creating a positive work environment was 53 percent, up from 47 percent in 2010

– Perceiving relationships with customers as rewarding was 75 percent, up from 70 percent in 2010

The analysis also showed a decline in three key perception scores in 2011:

– Effective communication was 42 percent, down from 46 percent in 2010

– Innovation was 52 percent, down from 55 percent in 2010

– Workplace safety and security was 75 percent, down from 78 percent in 2010

“Business leadership as well as HR programs that meet the needs of specific employee segments contributed to the uptick in engagement levels,” said Pete Sanborn, co-president of Global Compensation and Talent at Aon Hewitt. “However, with one out of every four people not engaged worldwide, more needs to be done. As the economy improves, retaining top talent is going to be difficult. Now is the time for organizations to measure and gain insights on engagement drivers and to start doing the work necessary to improve engagement. Our research shows that organizations with higher engagement have significantly higher total shareholder return than the average company, so organizations that focus on what matters most in connecting employees to their work will emerge as leaders, and the others will be left behind.”

Engagement Levels by Region
While overall engagement levels increased, Aon Hewitt’s study found significant variances by region. Improvements in Asia Pacific engagement scores (58 percent in 2011 versus 55 percent in 2010) contributed to the overall upward movement of global engagement. Europe showed an upward shift by one percentage point from 51 percent in 2010 to 52 percent in 2011, while Latin America, the region with the highest regional engagement levels, experienced a slight decline in engagement levels, from 72 percent in 2010 to 71 percent in 2011. Employee engagement scores in North American remained unchanged from 2010 at 64 percent.

Overall Employee Engagement Scores By Region
Region	2011	2010
North America	64 percent	64 percent
Asia Pacific	58 percent	55 percent
Europe	52 percent	51 percent
Latin America	71 percent	72 percent

“Our global clients are becoming increasingly sophisticated in analyzing engagement results by region and business unit,” said Ken Oehler, global practice leader of Engagement at Aon Hewitt. “We are cascading the results and insights further into organizations so that companies can implement targeted actions that will have the most impact on the engagement levels of discrete employee populations.”

Reengaging the Workforce
Aon Hewitt’s report also analyzed which engagement drivers had the most positive impact on engagement and opportunity for improvement. According to the analysis, organizations are likely to get the highest return on investment in employee engagement if they focus on improving the following drivers:

– Career opportunities: For the fourth consecutive year–globally, as well as across all regions–career opportunities remained the top driver to positively impact overall engagement levels. “2012 will be a challenging year for employers in this category as a result of limited career development and advancement opportunities,” said Oehler. “Now, more than ever, organizations must communicate clear career paths, prepare employees for the next role and provide lateral growth opportunities for key employees.”

– Recognition: Aon Hewitt’s analysis shows that recognizing the extra effort employees have given in a tough business climate by providing feedback and positive reinforcement will pay dividends—and it often comes at no cost to the organization. Aon Hewitt found that recognition has a higher impact for employees in Asia Pacific and Latin America than in other regions.

– Organizational reputation: According to Oehler, people want to be part of a respected and winning team. Aon Hewitt’s analysis found that European and North American employees are more concerned about their company’s reputation and what it stands for in the market versus recognition.

“Employees join organizations that have a reputation as a best employer, and they are also engaged by working for a best employer. This driver is about connecting employees to the company, the mission and the work beyond financial business performance, and showing them how their work experience cannot easily be replicated elsewhere,” noted Oehler.

– Communication: Aon Hewitt’s analysis shows that effective and engaging communication resonates with the employee in rationally, emotionally and behaviorally relevant ways.

Oehler added, “Corporate communications is the primary connection point between the majority of employees and executive leadership. We saw that employee perceptions of communication declined in 2011. As companies recovered from the recession, they likely became less focused on clear and consistent communication from leaders. Messages usually break down at the mid-management or immediate manager level so it is important for the leaders to continue to provide clear messages about business objectives, challenges and what is required of employees.”

AXA : lack of regard for road law and safety from Brits driving abroad

Market

Jun 4, 2012

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As half term approaches and the summer holiday season begins, figures suggest an estimated 10 million people plan to drive their cars abroad this summer.

More than one in three of these people will knowingly take risks with the law that they wouldn’t do at home says AXA, one of the UK’s largest car insurers. Meanwhile, millions of others will inadvertently break the law through a lack of knowledge or preparation before they leave.

The research, carried out among drivers planning to take their own cars abroad this summer, showed that just over a quarter (27%) were less concerned about breaking speed limits abroad than at home, while 18% took drink driving less seriously than at home.

A further seven per cent said they were less likely to use seatbelts abroad and four per cent said they were more likely to use a mobile while driving than they would do at home. Only 38% said that none of the above applied to them.

Around one in ten Brits who have driven their own cars abroad have had an accident while doing so.

Meanwhile, statistics showed that those preparing to drive abroad were woefully unaware of other foreign legal requirements with less than half (49%) making any effort to check on the driving rules and regulations that apply before leaving home.

Only 49% will use a GB sticker – a requirement for taking a car abroad. And just 24% will spend time learning what local road signs mean.

Nearly two thirds (63%) will set off without checking that they have the necessary and valid driving documentation with them (e.g. proof of vehicle ownership, international driving permit). A third of drivers don’t know whether their car insurance covers them for driving abroad and two thirds of these make the potentially disastrous assumption that it does.

The most common destination for British drivers taking their cars abroad is France followed by Spain then Germany.

Yet nearly a third (30%) of those heading to France are unaware that carrying high visibility vests are a legal requirement, while 38% of those heading to Spain are unaware of the fact that using a mobile phone even when pulled over at the side of the road is an offence. And 29% of drivers heading to Germany do not know that running out of fuel on the autobahn is punishable by law.

Sarah Vaughan, motor director at AXA insurance said: “A combination of inexperience and disregard for the laws of driving abroad is a recipe for disaster for British drivers. It is shocking to see so many people willing to take risks that they wouldn’t take at home such as speeding and drink driving.

“Add to this unfamiliar roads, driving on the other side of the road and unknown road signs and holidaymakers could find their holiday ends in tragedy – made even worse for those who have wrongly assumed they have adequate insurance in place.

“We would urge all drivers to prepare properly before heading away and to drive with more, not less, care than they would at home.”

AXA’s tips for driving abroad

– Check what equipment you are required to carry in your car by law. This varies by country but, for example, you may be required to have warning triangles, reflective jackets or petrol cans.

– Get some international breakdown cover – being stranded in a country where you don’t speak the language is no fun.

– Brush up on local driving laws for the country you are travelling to – speed limits, regulations around child seats, seat-belt requirements, minimum driving age etc.

– Don’t drink and drive. Many countries have stricter drink drive rules than the UK. The safest bet is to avoid alcohol completely if you’re behind the wheel.

– Get your car serviced or at least checked over before you leave – both for safety and to make sure you are not breaking any laws on wheel tread etc.

– Adjust your lights for driving on the right hand side of the road. You may be stopped if you ‘dazzle’ other drivers.

– If you don’t have an EU plate with a GB sign on it, get yourself GB stickers.

– Check the paperwork you may need with you: e.g. driving license, insurance documentation, proof of vehicle ownership, international driving permit. Your insurer or a motoring organisation should be able to provide these details.

– Talk to your insurer to find out what cover your policy offers for driving abroad.

– Plan your journey – check the map before you leave, take drinks and snacks and stop regularly to get enough rest.

Europe : unemployment rate at 11% in April 2012

International

Jun 4, 2012

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The euro area(EA17) seasonally-adjusted unemployment rate was 11.0% in April 2012, stable compared with March. It was 9.9% in April 2011. The EU27 unemployment rate was 10.3% in April 2012, compared with 10.2% in March. It was 9.5% in April 2011.

Eurostat estimates that 24.667 million men and women in the EU27, of whom 17.405 million were in the euro area, were unemployed in April 2012. Compared with March 2012, the number of persons unemployed increased by 102 000 in the EU27 and by 110 000 in the euro area. Compared with April 2011, unemployment rose by 1.932 million in the EU27 and by 1.797 million in the euro area.

These figures are published by Eurostat, the statistical office of the European Union.

Among the Member States, the lowest unemployment rates were recorded in Austria (3.9%), Luxembourg and the Netherlands (both 5.2%) and Germany (5.4%), and the highest in Spain (24.3%), Greece (21.7% in February 2012), Latvia (15.2% in the first quarter of 2012) and Portugal (15.2%).

Compared with a year ago, the unemployment rate fell in eleven Member States, increased in fifteen, and remained stable in Ireland. The largest falls were observed in Estonia (13.6% to 10.8% between the first quarters of 2011 and 2012), Lithuania (16.0% to 13.8%) and Latvia (16.8% to 15.2% between the first quarters of 2011 and 2012). The highest increases were registered in Greece (15.2% to 21.7% between February 2011 and February 2012), Spain (20.7% to 24.3%) and Cyprus (7.1% to 10.1%).

Between April 2011 and April 2012, the unemployment rate for males increased from 9.7% to 10.9% in the euro area and from 9.4% to 10.2% in the EU27. The female unemployment rate rose from 10.2% to 11.2% in the euro area and from 9.6% to 10.3% in the EU27.

In April 2012, 5.462 million young persons (under 25) were unemployed in the EU27, of whom 3.358 million were in the euro area. Compared with April 2011, youth unemployment rose by 268 000 in the EU27 and by 214 000 in the euro area. In April 2012, the youth unemployment rate was 22.4% in the EU27 and 22.2% in the euro area. In April 2011 it was 20.9% and 20.4% respectively. The lowest rates were observed in Germany (7.9%), Austria (8.9%) and the Netherlands (9.4%), and the highest in Greece (52.7% in February 2012) and Spain (51.5%).

In April 2012, the unemployment rate was 8.1% in the USA and 4.6% in Japan.

Law Society : supports solicitors’ request for insurance broker commission details

Industry News

Jun 3, 2012

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The Law Society has published its 2012 PII Buyers’ Guide, which provides detailed guidance to all solicitors in choosing brokers and insurers when renewing their professional indemnity insurance (PII) cover. The Guide provides invaluable assistance to solicitors at renewal time.

This year the guide provides a particular focus on the relationship between solicitors and the intermediaries they use to help them choose the right insurance partner and explains the level of service solicitors should expect. It also advises solicitors about their rights under Financial Services Authority (FSA) rules, which require brokers to reveal all commission they receive, if asked.

Law Society chief executive Desmond Hudson said: “The FSA created the requirement for brokers to reveal, if asked by their client, commissions and fees that they receive to promote transparency. We are eager to help in that aim and will be providing all of our members with the tools required to do this.

“We consider that by requesting this information solicitors will have a better understanding of the relationships between insurers and intermediaries, as different brokers provide different types of services which will necessarily be reflected in their remuneration.

“This is part of the Society’s longstanding campaign to encourage both greater transparency in the PII renewal process and to equip our members to make well informed decision about the use, service standards and the price paid by solicitors for broker service and PII cover.

“We are also aware that, while it may appear to some solicitors that their broker is dealing directly with qualifying insurers, in some instances, the broker forms part of a chain of sub-brokers who access insurers via other brokers. We want to help solicitors understand what services they are buying and make informed choices.

“Transparency is important and we hope that our members will ask more of their brokers this renewal. Knowing what level of service to expect can help solicitors to choose an appropriate broker to meet their requirements. Equally, it may help solicitors to see the benefits of continuity in the broker they use.”

As part of the Law Society’s member support initiative, in addition to the Buyers’ Guide, a template letter for solicitors to send to their broker is available along with other guidance on the Law Society’s PII website.

DUAL Corporate Risks : two new product extensions – E-VAC and Cyber Liability

Market

Jun 1, 2012

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DUAL Corporate Risks is offering two new product extensions – E-VAC and Cyber Liability – from 1 June.

With 40% of cyber attacks in 2010 directed at small and medium sized businesses and 36% of data breaches caused by companies’ own employees, Cyber Liability is perceived as a necessary protection as part of good risk management.

DUAL, in partnership with London-based emergency rescue and evacuation specialists, Northcott Global Services (NGS), has developed a unique E-VAC product aimed at companies with expatriate, overseas-based employees or business travellers. The policy provides fast, responsive, non-medical removal of employees and their families when staying in their current location becomes too dangerous. NGS has effected rescues in as little as two hours from countries around the globe using their worldwide network of on-the-ground assets providing secure, point-of-incident capability 24 hours a day.

E-VAC complements the protection that employers have a duty to provide to their overseas-based expatriate employees and business travellers.

“We developed these extensions to help our customers deal with the 21^st century threats faced by their businesses.” said Russell Kilpatrick, DUAL Corporate Risks’ executive chairman. “We have had a lot of demand to develop a Cyber Liability extension to our range of business-critical covers. In addition, political and civil unrest is also a serious problem for companies with overseas-based personnel and not just in developing countries. E-VAC coverage can initiate a rescue in as little as 15 minutes anywhere in the world.”

U.S. : New York mayor Michael Bloomberg to ban super-size sodas

Good to know

Jun 1, 2012

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New York’s billionaire Mayor Michael Bloomberg extended his war against unhealthy habits Thursday with an unprecedented proposal for banning super-sized sweet drinks.

The ban, possibly taking effect by next March, would target what Bloomberg, already a leading crusader for clean living, calls a fatness “epidemic.”

“There’s an epidemic in this country of people being overweight, bordering on obesity. The percentage of people who are obese is skyrocketing,” Bloomberg said in an interview on MSNBC television.

The prohibition, which would not need city council approval, would restrict soda drink servings to no more than 16 ounces. That’s more than a normal can, but only half the size of the biggest, bucket-like container that patrons commonly guzzle from in cinemas, sports arenas and other outlets.

The measure would target fast-food and other restaurants, delis, and places of public entertainment like stadiums. It would not cover drinks sold in supermarkets, or any diet, fruit, dairy or alcoholic drinks.

There was an immediate backlash against what Bloomberg critics see as an attempt to turn America’s largest city into a nanny state. Smoking has been banned in Big Apple offices, bars, parks and beaches, while mass transport is plastered with gruesome advertising against unhealthy diets. Artificial trans-fat is also outlawed and all bars and restaurants have been forced to display sanitary inspection grades in their front windows.

“There they go again,” the New York City Beverage Association said in a statement.

“The New York City Health Department’s unhealthy obsession with attacking soft drinks is again pushing them over the top. The city is not going to address the obesity issue by attacking soda, because soda is not driving the obesity rates,” the industry organization said.

“These zealous proposals just distract from the hard work that needs to be done.”

New York magazine complained of “heavy-handed” assaults on “many of life’s most enjoyable vices.” Comedy Central’s www.indecisionforever.com site posted a blog titled: “Mike Bloomberg, Soda Jerk.”

But the mayor, a former smoker, was not apologizing. “Sitting around and doing nothing and watching our kids getting fatter and fatter… that’s just not something we should do as a society,” he said.

He insisted New Yorkers could still down any quantity of sugar-laden drinks, but they would consciously have to buy a second cup.

“We’re not taking away anyone’s right to do things, we’re simply forcing you to understand that you have to make the conscious decision to go from one cup to another cup,” the mayor said.

The polarizing idea was first aired in an interview with The New York Times this week, but Thursday marked the start of a publicity blitz. Bloomberg spoke about it at a conference, on television and on Friday was set again to take the message to TV and radio stations.

City Hall even provided journalists late Thursday with a compilation of positive responses from around the country.

The Obesity Society lauded Bloomberg’s initiative, stating that “two-thirds of American adults and over half of Canadians are overweight or obese.” Former New York mayor Edward Koch said: “I pray it works.”

In his interviews, Bloomberg noted that as a result of ever-tightening rules on smoking, tobacco-related deaths have dropped.

However, in a country where the average size of soft drinks 30 years ago was just six ounces, diet-related health problems are the new enemy.

In New York, “we’re going to have more deaths from obesity than smoking,” he said.

New York, May 31, 2012 (AFP)

Parabis : integration of adjusting businesses completed

Industry News

May 31, 2012

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The specialist property adjusters Carmichaels, which has been part of the Parabis Group since 2010, becomes Argent Property Adjusters with effect from 1^st June. Argent Adjusters will now comprise two divisions – Argent Liability Adjusters and Argent Property Adjusters, as Parabis’ integration of its adjusting businesses continues.

Argent Property Adjusters will be led by Keith Curling, who is currently Managing Director of Carmichaels. It will continue to service its expanding client base from offices in London, Birmingham, Leeds, Manchester, Bristol and Maidstone, specialising in high value and complex claims in the property arena, involving both commercial and domestic property, major and complex losses, business interruption and environmental claims.

The news comes hot on the heels of a raft of recent hires, including Nigel Lambert and Chris Sheard from Garwyns and the launch of a new Major, Complex and Speciality Loss practice last year.

Neil Ventris, Managing Director of Argent Liability Adjusters, commented: “The conversion of Carmichaels to the new Argent Property Adjusters brand has been a natural evolution flowing from the integration of Carmichaels into the Group. Carmichaels has been a quality brand in the market. We believe now combining property and liability adjusting under the single Argent name will strengthen our market position and give us a better platform for business growth.”

Keith Curling, Managing Director of Argent Property Adjusters, said: “This step demonstrates the value of being part of the Parabis Group. For our existing clients, it will be business as usual with the same high quality service and expertise from our adjusters but this development provides momentum to build for the future.”

Transport Committee : OfT decision to refer car insurance market to the Competition Commission welcomed

Industry News

May 31, 2012

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Louise Ellman welcomes OfT decision to refer the car insurance market for investigation by the Competition Commission.

Responding to publication by the Office of Fair Trading of its market study examining the private motor insurance sector, Chair of the Transport Committee, Louise Ellman MP, said today,

“I welcome this report which follows on directly from the work the Transport Committee started with our Autumn 2010 inquiry into the escalating cost of car insurance.

“The OFT’s provisional decision to refer the highly dysfunctional UK market in private motor insurance and related goods or services to the Competition Commission for full investigation is a major step forward.

“Like the OFT, we found evidence to support the view that various features of the private motor insurance market prevent, restrict or distort adequate competition in ways that do not deliver a fair deal to motorists.

“I will propose to the Transport Committee that we participate in the consultation announced today to make the strongest possible case for the referral.

“I now expect car insurers and the other firms involved to co-operate fully with all stages of this process.

“I look forward to the Competition Commission driving a process of market reform that will start to deliver a fair deal for motorists. However, this investigation will only tackle part of the problem created by the way in which many insurers, claims management firms, solicitors and others exploit every opportunity to generate revenues through referral fees and personal injury claims that inflate the premiums all motorists have to pay.”

ARAG : a helping hand for our broker partners

Industry News

May 31, 2012

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In the market ARAG is known for providing a high standard of service to both the intermediaries and their customers. With this reputation backed up by the accolade of “best legal expenses insurance provider” (Insurance 360 Report), we are determined to remain ahead of the game. It is with this in mind that we created our comprehensive broker training packs.

Designed to maximise the opportunities for both intermediary and ARAG, the training packs have recently launched to all of our clients. The training can take on a number of forms, from face-to-face sessions with our Business Development Executives, to training materials supplied to a broker so that they can conduct training in-house.

The training packs themselves are a bespoke offering, brokers can have own-branded materials and can select from a number of resources, including:

– PowerPoint presentations

– Training slides

– Point of sale documents

– Quick glance cribsheets

– FAQs

– Question and answer tests

– Training certificate for the members of staff that participate.

The driving force behind creating the packs is to build a strong partnership with clients, whilst ensuring that they receive the latest information on our products. This increased understanding benefits both ARAG and the broker with visible results; after a recent training session with Endsleigh, sales made by front-line staff increased by 15%.

Head of Sales, Andy Talbot adds, “We are keen to offer intermediaries the opportunity to learn more about our products so that they can promote the full features and benefits with total confidence. So far the feedback has been excellent and we have seen some impressive tangible results. Our plans now are to roll out the training to more brokers throughout the remainder of 2012.”

RMS : comments on Italy earthquake

International

May 30, 2012

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At 07:00 UTC on Tuesday, May 29 a Mw5.8 (moment magnitude) earthquake struck the Emilia-Romagna region of northern Italy, just over a week after a Mw6.0 earthquake struck the region. According to the USGS the epicenter of today’s earthquake is around 6 miles to the west-northwest of Sunday’s earthquake, and approximately 24 miles north-northwest of Bologna; 36 miles east of Parma, and over 200 miles north-northwest of Rome. Reports of damage are beginning to emerge and fatality figures have been reported. It is still within six hours of the earthquake having struck and RMS will continue to monitor emerging information and will update accordingly.

According to the USGS PAGER, the maximum intensity of ground shaking in the vicinity of the epicenter was VII (very strong) on the Modified Mercalli Intensity (MMI) scale. This level of shaking can be expected to cause moderate damage to resistant structures and moderate/heavy damage to vulnerable structures. The USGS PAGER reports that an estimated 60,000 people were exposed to this level of shaking – to include the municipalities of San Felice sul Panaro (population ~10,000), Camposanto (~3,000), Medolla (~6,000), Mirandola (~22,000), Cavezzo (~7,000) and San Prospero (~4,000) –while over 1 million were exposed to intensity V or stronger shaking, where there is potential for damage to structures to occur.

As of 12:00 UTC on Tuesday, May 29, local media are reporting 10 fatalities. Italian media are reporting that some buildings damaged by the earthquake on Sunday, May 20 have suffered further damage, particularly in Cavezzo and Mirandola – including the Mirandola Cathedral. An industrial facility is reported to have collapsed in Medolla , which resulted in three of the fatalities and reports are emerging that a facility in San Felice has been damaged which is contributing to the fatality figures reported.

FSA : regulatory fees and levies confirmed for 2012/13

Industry News

May 30, 2012

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The Financial Services Authority (FSA) has published a policy statement confirming its regulatory fees and levies for 2012/13.

On 2 February 2012 the FSA launched a consultation (CP12/3) on its proposed fees, which cover its Annual Funding Requirement (AFR). Following that process and finalisation of its annual accounts, the FSA has reduced the amount firms will be required to pay.

The overall AFR has been reduced by £18.6m (3.2%) from the proposed figure of £578.4m to £559.8m. This compares to £500.5m for the 2011/12 year, which now represents an increase in annual funding of 11.9%, compared to the 15.6% increase proposed in the original consultation. This reduction will flow through evenly to all fee-payers, except for those that only pay the minimum regulatory fee.

The reduction has been achieved by internal cost controls which reduced potential IT spend and the return of contingency monies set aside for use only in event that the FSA needed to deploy extra resources to deal with extreme macro-economic and regulatory events.

In addition, the Financial Penalties Discount (FPD) has also increased. Financial penalties received for 2011/12 totalled £70.7m, compared to an estimated £58.7m. The enforcement fines the FSA imposes during the previous year are returned to the industry by way of discounts to the AFR in the following year. Therefore, the actual amount invoiced will be £489.1m.

The FSA recognises the difficult economic circumstances for many firms and is committed to keeping any essential cost increases to a minimum. Fees are determined on the basis of activity based costing. In consequence the overall increase in fees will be borne mainly by larger firms, reflecting the resources applied to the intensive supervision of high impact firms. For instance, for their core business such as deposit taking and investment banking activities large banks will pay on average £20m, general insurers will pay on average £2.4m for their general insurance activities and life insurers will pay on average £5.0m for their life insurance activities.

Medium sized firms will see a proportionate increase reflecting the type of business they conduct. Currently 42% of the FSA’s authorised firms need only pay the FSA minimum fee and for the third year running the gross minimum fee for firms will remain unchanged at £1,000.

Appointment : HSBC Bristol and Bath Commercial teams reinforced

Industry News

May 29, 2012

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HSBC has made a number of key appointments to its Bristol and Bath Commercial Centre, bringing in Nick Stork and Chris Jones as Area Commercial Director and Deputy Area Commercial Director respectively.

In addition, the team has been bolstered by Paul Williams’ appointment as Senior International Commercial Manager and Lee Newman as Senior Commercial Manager.

The appointments strengthen HSBC’s presence in the region, ensuring the bank offers comprehensive support to businesses trading internationally and domestically. Nick will manage HSBC’s commercial banking operations in the region and report to Gary Burton, Regional Commercial Director for the South West and Wales. In his new role, Nick will focus on supporting businesses with a turnover of between £2m and £30m, and ensuring that HSBC continues to meet the needs of its commercial clients.

Nick has been with HSBC for seven years, most recently as Divisional Invoice Finance Manager for the South West and Wales. Nick is a chartered accountant, having trained with PwC, and held group accountant and financial controller roles prior to joining HSBC. He is married with three children (two girls and a boy), and was a semi-professional rugby player, having had spells with Cardiff and Aberavon.

Commenting on his new role, he said: “I’m looking forward to providing both new and existing customers in Bristol and Bath with the support needed to achieve their domestic and international growth plans. This team has a strong deal background and has many years’ experience of working on transactions that have helped businesses achieve their goals. It was important that we brought people in who have solid deal experience and can help and guide customers and I’m confident that the Bristol and Bath business community will feel the benefit.”

Gary Burton, Regional Commercial Director for the South West and Wales, welcomed Nick and his colleagues to the region. He said: “These appointments bolster an already impressive team in the Bristol and Bath area and demonstrate HSBC’s commitment to providing excellent service to its customers. We are growing our international presence in the region to help local businesses open up overseas markets.”

Chris Jones has been with HSBC for 35 years and joins the centre from a senior role in the Cornwall area. Chris has spent the majority of his HSBC career working with SME customers and within the South West and Wales regions, including a spell as Head of Commercial for the Bath area in the mid-2000s. Chris is married with four daughters and enjoys all sports, supporting Everton FC and the Wales national rugby team, walking and reading.

Paul Williams has been with HSBC for 16 years, predominantly in Commercial roles throughout Wales. Paul will focus on supporting businesses with a turnover of between £2 million and £30 million trading, or aspiring to trade, internationally. HSBC is doubling its number of International Commercial Managers in the South West to 27 and Paul’s appointment brings the number of International Commercial Managers in Bristol and Bath to four. Paul is from Wales, married with two children and has an interest in all sports, but particularly rugby.

Lee Newman takes the role of Senior Commercial Manager, focussing on supporting domestic customers. Lee has been with HSBC for 24 years and has spent the majority of career in Wales working with SME-sized businesses.

LGP : three new lettings with TK Maxx

Communication

May 29, 2012

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Legal & General Property announces three new lettings with TK Maxx, the fashion and homeware retailer, across three of its funds, representing circa 51,000 sq ft of space and providing in excess of £2 million of added value.

Additionally, on behalf of a further fund, LGP has purchased the long leasehold interest in two retail units in Southampton which trade as a TK Maxx and Card Factory.

Acquisition

60/66 Above Bar Street in Southampton has been acquired from UBS Global Asset Management on behalf of the Managed Fund for circa £12.5 million, reflecting a net initial yield of 7.84%. The property which comprises just over 48,000 sq ft is located on Southampton’s principal retail thoroughfare and traditional prime pitch. The larger of the two units is arranged over three floors and let to TJX UK Ltd (trading as TK Maxx on a lease expiring in 2022, whilst the other unit is let to Sportswift Ltd (trading as Card Factory) on a lease expiring in 2020.

Lettings

At Colney Fields Shopping Park, London Colney, Hertfordshire, LGP has surrendered an existing lease with SportsDirect and re-let Unit 2 to TK Maxx on a new 15 year lease, subject to a tenant only break at year 10, at a rent of £61.76 per sq ft, with 10 months’ rent free. The property, which comprises 11,415 sq ft of space, is held in 50:50 joint ownership between the Life Fund and Linked Life Fund, and was previously let to SportsDirect until December 2019. Other occupiers at the park include Next, Monsoon and New Look.

At Highbridge Retail Park, Waltham Abbey, LGP has secured the surrender of Mothercare’s lease, simultaneously re-letting the 17,000 sq ft unit to TK Maxx on a new 15 year lease, subject to a tenant only break at year 10, at an average rent of £13.99 per sq ft, with three months’ rent free and £400,000 capital contribution. This latest letting continues the transformation of this retail park by the Linked Life Fund towards a predominantly open A1 led scheme.

At 92 Pydar Street in Truro, Cornwall, TK Maxx are an existing tenant. LGP completed a nine year reversionary lease from March 2013 at a reduced rent of £313,600 pa and 12 months capital contribution. The property, which is held by the Linked Pensions Fund, comprises 22,697 sq ft of GIA.

Michael Barrie, Director of Fund Management at Legal & General Property, said:

“These transactions demonstrate the significant advantages of the depth and breadth of LGP’s platform. Owing to its size, diversity and penetration, along with its wealth of in-house skill and expertise, LGP boasts an almost unrivalled network of contacts. These enable us to not only get close to major occupiers, fully engaging with and understanding their strategic requirements, but also provides us with first class knowledge of localized markets and sub-sectors.

“Furthermore, the lettings highlight our ability to actively manage our portfolios with in excess of £2 million of added value on day one.”

Arista : five years in business with 2011 results success

Communication

May 28, 2012

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Commercial lines underwriting specialist Arista Insurance marked five years in business with another successful set of results. Arista recorded an EBITDA profit of £1.334m during 2011, which rose from £683,000 in 2010, and, for the first time, achieved a trading profit before the further welcome benefit of underwriting profit sharing arrangements.

The full year figures, released today, confirmed Arista’s profitability for the second successive year with an increase in gross written premiums of £7m to £74m, while turnover improved by almost £1.5m. The figures also demonstrate the effort invested in renewal business with renewal income as a percentage of GWP rising to 72% in 2011.

These figures record an improvement right across the business. They were achieved while continuing to invest in resources across all Arista’s regional offices in order to support its 370 select broker partners and by focusing on achieving a prompt return on that investment.

The results are in line with the expectations of chief executive Charles Earle who commented: “2011 marked Arista’s fifth year of trading, and saw the company achieve a profit for the second consecutive year. The improvement is the result of the hard work of Arista people as we continue on our journey to achieving market leading performance for all our stakeholders.

Despite challenging underwriting market conditions in 2011 we have achieved this success while maintaining underwriting discipline and control and delivering a service that is valued by our select panel of broker customers. There is still much more we intend to do and opportunity for that improvement is recognised within our plans. In 2011 we have continued moving steadily in the right direction.

The UK SME insurance market remains a challenging underwriting and pricing environment and success requires the maintenance of our strong and insightful discipline around pricing, risk acceptance and portfolio management. Arista’s experienced and committed teams are equal to that challenge and our progress demonstrates the demand among independent brokers for high service and focused alternatives to the large insurers

With this performance, Arista modestly exceeded its 2011 targets and is well on its way towards the previously announced 2014 target of £120 million GWP.”

Fitch Ratings : rating actions on Japanese insurers on sovereign downgrade

International

May 24, 2012

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Fitch Ratings has revised Nippon Life’s outlook to stable from Positive and affirmed its insurer financial strength (IFS) rating. The ratings for Daido Life Insurance Company (Daido Life) and Mitsui Sumitomo Insurance Company, Limited’s (MSI) were also affirmed. A full rating breakdown is at the end of this comment.

The rating actins follows Fitch’s downgrade of Japan’s Long-Term Local-Currency Issuer Default Rating to ‘A+’ from ‘AA-‘ with Negative Outlook on 22 May 2012.

In Fitch’s view, each of these Japanese insurers’ ratings are underpinned by their strong franchise, prudent capital and liquidity and, therefore, would not be impacted by the sovereign rating downgrade. None of these ratings are linked to direct or indirect government support.

In addition, Fitch does not expect the sovereign downgrade to have any significant impact on Japan’s capital market or economy.

Japanese government bond (JGB) yield has thus far remained low despite deteriorating sovereign creditworthiness. This is mainly supported by on-going strong demand from domestic investors. Fitch therefore does not expect a significant decline in JGB prices due to the sovereign downgrade and, consequently, substantial impairment to the insurers’ capital adequacy position.

In the case of Nippon Life, the change in Outlook reflects the remote prospect of an upgrade given its current rating is now at the same level as the sovereign’s Local Currency IDR, which is on Negative Outlook. Fitch does not rate the insurers more than a notch above the sovereign rating due to its concentrated business portfolio in Japan.

Tokio Marine & Nichido Fire Insurance’s (TMNF) rating (IFS ‘AA-‘/Stable) is not affected by this sovereign downgrade. Its rating can exceed Japan’s sovereign rating by a maximum of two notches due to its solid capitalisation, liquidity and franchise as well as Tokio Marine Group’s on-going global diversification.

Fitch may take negative rating action on the Japanese insurers if there is significant domestic capital market volatility and a severe recession. The ratings actions are as follows:

– Nippon Life Insurance Co : IFS rating affirmed at ‘A+’; Outlook changed to Stable from Positive

– Daido Life : IFS rating affirmed at ‘A+’; Outlook Stable

– MSI : IFS rating affirmed at ‘A+’; Outlook Stable Long Term Issuer Default Rating affirmed at ‘A+’; Outlook Stable

– USD1.3bn subordinated notes with deferral options due 15 March 2072 affirmed at ‘A-‘

Fitch Ratings : Italian, Spanish insurers are the most exposed to a Greek exit from the Eurozone

Industry News

May 24, 2012

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Italian and Spanish insurers are most exposed to a Greek exit from the Eurozone – through the contagion effect it could have on Italian and Spanish sovereign and bank debt – while most German and UK insurers are well-insulated from rising risks in the Eurozone periphery, says Fitch Ratings.

Future rating actions on Italian and Spanish insurers are more likely to be driven by the macro-economic environment and sovereign rating than the idiosyncratic credit fundamentals of a particular insurer.

A Greek exit is not Fitch’s base-case scenario; but if it were to happen, Italian and Spanish insurance companies would most likely be placed on Rating Watch Negative or experience limited downgrades following a similar action on the sovereign ratings – even if the exit were accompanied by an effective EU policy response, and relatively orderly. There would be a heavier hit to sovereign and insurance ratings in the event of a disorderly exit with material contagion to peripheral countries.

Italian insurers have considerably more exposure to their own sovereign debt than is the case with Spanish insurers. However, Spanish insurers are more exposed to the domestic banks, some of which may be reliant on the sovereign for support.

New business for both Italian and Spanish life insurers is tailing off because of banks’ efforts to attract more deposits to shore up their financing, and reduced available income for households. The reduction in business has had the greatest impact on insurers that use a bancassurance model – in which they partner with a bank to sell their products – but the increasingly attractive deposit rates offered by the banks means the effect has spread to most companies as well.

Of the other major insurance markets, the UK and German life insurers are largely sheltered from the sovereign debt crisis, at least in the event of a relatively orderly Greek exit; while the French companies have a more material, albeit manageable, exposure. Still, each country has at least one notable exception.

In the UK, the notable exception is Aviva, which has significant exposure to Italy via its subsidiary. In Germany, most life insurance companies have only a domestic exposure as their modest size precludes international operations. However, the larger companies do have such exposure – the most significant of which is Allianz, which through Allianz Italy is the second-largest life insurer in Italy, and consequently holds a large portfolio of Italian sovereign debt. In France, the exception is Groupama, which recently announced a loss of EUR1.76bn for 2011. The loss stemmed primarily from write-downs on Greek debt and losses on holdings of equities.

Insurance companies have tried to ensure that their assets largely reflect the geographical location of policyholder obligations and debt, to minimise possible mismatches in international subsidiaries that could be at risk.

UK : Government should act on IMF warning

International

May 23, 2012

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Finance Secretary John Swinney has called on the UK Government to take heed of the IMF warnings on the lack of growth in the economy and increase infrastructure investment.

The Scottish Government has been calling for some months on the UK Government to increase capital investment to boost economic growth, employment and aid recovery. Finance Secretary John Swinney said indications of a change in direction were a positive move as he urged the UK Government to fund the list of £300 million shovel-ready projects First Minister Alex Salmond has given to the Prime Minister.

The reported shift in emphasis from the UK Government comes the day after the IMF called for policies to boost demand in the UK economy.

Finance Secretary John Swinney said: “The Scottish Government is using every lever available to improve our economy, leading to a higher employment rate and a lower rate of economic inactivity in Scotland than in the UK economy as a whole. We have long argued that our approach needs to be reinforced by increased investment in infrastructure which is the key to growth.

“There is a growing consensus across Europe, the G8 and now the IMF that we need to invest in growth. The UK Government must now act on these warnings and recognise that additional capital spending is the route to support economic recovery.

“With growth flat in the economy, it is now a matter of real and pressing urgency that the UK Government increases capital investment levels in a way that the Scottish Government has long been calling for. This is the moment to act decisively to stimulate the economy and the UK Government must not be an obstacle to recovery in Scotland.”

Cabinet Secretary for Infrastructure and Capital Investment Alex Neil added:

“Earlier this month, the First Minister wrote again to the Prime Minister calling on him to invest in the list of £300 million ‘shovel-ready’ projects across Scotland we provided to him, to boost growth and support thousands of jobs.

“It is imperative that the UK Government takes urgent action, and in particular that they green light the list of shovel-ready projects across Scotland we submitted at the Prime Minister’s request more than two months ago.”

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