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The Scottish private sector economy continued to grow in May, albeit at a reduced rate. This was signalled by the latest Bank of Scotland PMI posting a reading of 52.2, compared to 55.5 in the previous month. Inflationary pressures remained strong overall, but were the weakest during 2011 so far. Meanwhile, firms took on more staff at the fastest rate since February 2008, despite seeing only a marginal rise in the volume of incoming new business during the month.

Activity across Scotland’s manufacturing and services sectors rose for the fifth successive month in May. The rate of expansion was only slightly weaker than the long-run survey average, but the slowest in the current sequence. Manufacturing output and services activity rose at broadly similar rates during the latest period.

Driving the moderation in output growth in May was a much weaker rise in new business levels. Latest data signalled only marginal gains in new contracts in both manufacturing and services. The overall rise in Scotland compared favourably with declines in Wales and Northern Ireland, but was weaker than the rates of growth shown in all English regions except for the South West.

The lacklustre rise in new business during May led to a further decline in the volume of outstanding work held at private sector companies. Backlogs have declined in every month since September 2007. That said, the latest rate of contraction was slower than the long-run trend.

Despite the slower rise in new work, private sector companies added to their workforces in May. Moreover, the rate of employment growth was the fastest since February 2008. Latest data indicated workforce growth in both manufacturing and services.

Cost inflationary pressures remained strong in the context of historic survey data in May. Input prices continued to rise sharply, more so in manufacturing than services, even though the overall rate of inflation slowed to a five-month low. Input cost inflation also remained greater than the UK-wide average.

The easing in input price inflation led to a slower increase in average prices charged for Scottish goods & services in May. Output price inflation remained greater than the long-run trend, but was the slowest since last December. In contrast to the trend for input prices, Scottish firms’ charges rose at a weaker rate than the UK average in May.

Donald MacRae, Chief Economist at Bank of Scotland, said: “The Scottish private sector economy enjoyed a fifth consecutive month of growth in May, although the rate of expansion has moderated. Both manufacturers and service providers are taking on more staff with the fastest rate of job creation since February 2008. Workforce growth was also slightly faster than the UK average for the first time since last September.

As part of Lloyds Banking Group, Bank of Scotland is proud to be an Official Partner of the London 2012 Olympic Games and Paralympic Games.

“New business inflows have increased every month of 2011 so far, however the incoming new business index fell sharply during the latest period, to a level indicative of only a marginal rate of expansion.”

Source : Bank of Scotland

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Germany’s killer E.coli outbreak is the most  serious of its kind recorded in the world to date, authorities said on Sunday.

The death toll from the epidemic currently stands at 35, all but one of  them in Germany.

A total of 3,255 people across 14 countries have fallen sick after being  infected by EHEC (enterohaemorrhagic E. coli) traced to vegetable sprouts  grown in northern Germany. All but five victims are from or had visited the  country.

Many are seriously ill with bloody diarrhoea and potentially  life-threatening conditions such as haemolytic uraemic syndrome (HUS), a  serious kidney ailment.

“This wave of EHEC and haemolytic uraemic syndrome cases in Germany is the  most significant recorded in the world to date,” said Nele Boehme, spokeswoman  for the Federal Institute for Risk Assessment (BfR).

Berlin, June 12, 2011 (AFP)

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AXA, Bharti Enterprises (“Bharti”) and Reliance Industries Limited (“RIL”) announced having reached an understanding on the acquisition by RIL and its associate Reliance Industrial Infrastructure Limited (“RIIL”) of Bharti’s shareholding of 74% in Bharti AXA Life Insurance Co. Ltd (“Bharti AXA Life”) and Bharti AXA General Insurance Co. Ltd. (“Bharti AXA GI”).

This transaction is subject to negotiation and entering into legally binding agreements between RIL, RIIL and AXA and obtaining necessary approvals from IRDA1 and other relevant/applicable approvals.

On completion of the proposed transaction, RIL and RIIL would effectively own respectively 57% and 17% in both insurance companies and would become AXA’s joint ventures partners in India. AXA would retain its current 26% shareholding and would continue to manage the day to day operations of the JVs.

The proposed agreement contemplates an option by which AXA would acquire from RIL and RIIL up to 24% shareholding in both the insurance companies in accordance with the applicable regulations as and when the FDI2 regulations permit such holding by AXA. Upon exercise of such option, RIL will effectively own 45%, RIIL will effectively own 5% and AXA the balance 50% in both the insurance companies.

RIL and AXA will join forces to create market leading Life and General Insurance businesses in India by leveraging their respective strengths and expertise.

In fiscal year 20113, Bharti AXA Life collected premiums of INR 7.9 billion (or ca. Euro 132 million) and Bharti AXA GI collected gross direct premiums of INR 5.5 billion (or ca. Euro 92 million). In the recently concluded India Insurance Awards organised by Indian Insurance Review in conjunction with Celent, the General Insurance entity was rewarded with Personal Lines Growth Leadership Award for 2011.

Source : AXA

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Research from Legal & General Mortgage Club and the Association of Mortgage Intermediaries (AMI), shows that the need for mortgage brokers to actively target borrowers who are not being serviced by high-street lenders.

The research of 2113 current borrowers, conducted by YouGov, reveals that while 81% of borrowers would prefer rather make one attempt at securing a mortgage than trawl the high-street, only 44% actually plan on visiting a broker during their next attempt to secure a mortgage.

3.4m (1 in 3) of the 11.3m mortgage holders in the UK plan on securing a new mortgage over the next twelve months. 1.3m borrowers plan on securing finance to fund a new house purchase while the majority (1.6m) will be looking to refinance their current deal.

However, borrowers are anxious about the mortgage choices available to them, with only 1 in 3 of all borrowers very confident that they could get a new loan if they applied for one. 1.1m borrowers (1 in 10) are worried their credit record may be an issue.  While 2.8m (1 in 4) feel their income level is too low and 2.3m (1 in 5) believe they don’t have enough deposit.

Ben Thompson, managing director of L&G Mortgage Club, said: “Many borrowers don’t realise that chasing the headline rates that high-street lenders advertise may lead them to making multiple attempts at securing a mortgage. At present, more than half of all borrowers say they would apply for a mortgage directly with a high street lender with the majority doing so purely because they have an existing relationship with one rather than because they knew they offered the most appropriate deals. It’s clear that borrowers would benefit from professional, impartial advice that will potentially open up a lot more financing options for them and brokers have a golden opportunity to tap into this part of the market.”

Analysis of the mortgage products available direct shows that many borrowers are likely to be disappointed by high-street lenders. 34% of borrowers have a deposit of 10% or under, yet only 17% of current best buy products are available to these borrowers.  The 2.3m borrowers (21%) with deposits of 5% or less (See Table 1) have only 2% of the market to choose from.  In addition, interest rates at these LTV levels are the highest in the marketplace, averaging well over 5% APR.

When eligibility criteria such as income multiples are considered the choice for borrowers across the entire market is even narrower. The average household income in the UK is a little over £31,000 and the average target property purchase value is nearly £228,000, so for those with a 25% deposit, only a third of the products available on the high-street would be appropriate. And for those with deposits of 15% or less, household income would have to be much higher than the UK average in order to secure a deal on the high-street at all.  (See Table 2)

Robert Sinclair, director of the Association of Mortgage Intermediaries, said: “There is a discernible gulf between the needs of many borrowers and the reality of what is being offered by high-street lenders. Such is the dearth in appropriate products that more people need better advice and a wider choice and this represents a vast pool of potential business for brokers.

“Brokers need to educate the consumer and be more proactive if they are to turn this latent demand into new business. The mortgage market isn’t suddenly going to spring back to pre-down turn levels so it’s up to brokers to make the most of the opportunities out there.”

Table 1: Borrowers’ Deposit Levels vs. Mortgage Product Availability

Deposit level % of borrowers with maximum deposit at this level % Best Buy products available** Average interest rate**
0% 13% 0 n/a
5% 8% 2% 5.20% APR
10% 13% 15% 5.31% APR
15% 8% 19% 4.77% APR
20% 10% 25% 4.33% APR
25% 8% 25% 4.48% APR
40% 8% 2% 2.4% APR
Total below 25% 60%    

** Moneyfacts Best Buy Tables – 47 products – 25.5.11

Table 2: Product Availability Using Average Household Income and Average Target Property Value (£31,036 and £227,895)

Deposit level % of borrowers with maximum deposit at this level No. of mortgages available***
0% 13% 0
5-15% 29% 0
20-30% 25% 388 – 650
40% 6% 944
50%+ 28% 1300+

***Moneyfacts High-street mortgage availability 27.5.11

Table 3: Borrower Credit Record Issues

Credit Issue % Borrowers No. Borrowers
Up to 2 defaults on unsecured (non mortgage) loans (up to 1k in total) – 3% 340,000
One month’s mortgage arrears in the last 12 months 2%

 

 226,000
CCJs of over £500 in the last 3 years 2% 226,000
More than 2 defaults on unsecured (non mortgage) loans 2% 226,000
An IVA to pay back debts 2% 226,000
CCJ up to £500 in last 3 years 1% 113,000
More than one month’s mortgage arrears in last 12 months 1% 113,000

 

Source : Legal and General

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In the past 12 months, over 1.2 million people admit to having driven while under the influence of illegal drugs according to research from Direct Line Car Insurance. Over 7% of these, or 2.8 million admito have done so in their lifetime, representing a huge danger for other motorists, passengers and pedestrians.

The survey also highlighted drug-drivers have a distorted perception of their driving ability, even when they haven’t taken drugs.  Over a third (36 per cent) of those who drive whilst under the influence of narcotics rated their driving ability as very safe or quite safe, with just 20 per cent admitting they were a danger on the road.

Almost one-in-ten (eight per cent) admitted they drove while under the influence of drugs, as they didn’t think they would get caught.    Other excuses include; drugs impairing their decision-making process (seven per cent), inability to find or afford a taxi (six per cent) and a lack of available public transport (four per cent).

Drivers under the influence of drugs are literally ‘speeding,’ with one-in-twenty (six per cent) exceeding the speed limit.   A further six per cent were involved in accidents with other vehicles or incidents such as crashing into walls, while the driver was ‘smashed’ on drugs.

Andy Goldby, Direct of Motor Underwriting at Direct Line Car Insurance, said: “Drug driving is as irresponsible as drink driving.  The dangers of drug drivers on our roads are becoming increasingly apparent, with thousands admitting they have been involved in an accident while ‘high’ or stoned. The effects of drugs can often leave people feeling overly confident or extremely relaxed, both of which are known to lead to dangerous driving behaviours.  We strongly support the Department for Transport’s (DfT) decision to clamp down on drug driving and would welcome further investment in effective roadside drug tests to screen drivers the police suspect are under the influence of illegal or strong prescription drugs.”

In the last 12 months, over a third of drug drivers (35 per cent) admitted to being under the influence of cannabis/skunk, which can significantly impair perceptions of distance and reaction times.  More than one in six (15 per cent) admitted to driving after snorting cocaine, which can make drivers overly aggressive on the road, race at high speeds and lack control**.  One in ten admitted to being high on ecstasy pills while driving, while a further 11 per cent admitted having taken MDMA (the purest form of Ecstasy).

Drugs that motorists have been under influence of whilst driving

  1. Cannabis (35 per cent)
  2. Cocaine (15 per cent)
  3. Ecstasy tablet (11 per cent)
  4. MDMA (11 per cent)
  5. Temazepam / valium / diazepam (9 per cent)
  6. Ketamine (7 per cent)
  7. Magic mushrooms (7 per cent)
  8. Legal highs (e.g salvia) (7 per cent)
  9. Speed (7 per cent)
  10. MCat / Meow Meow (4 per cent)

Andy Goldby commented: “Driving under the influence of narcotics is extremely dangerous, as it can severely impair the ability of a driver to physically operate a vehicle as well as their perception of the environment beyond the windscreen.  The influence of THC (the active ingredient in marijuana), in the blood can negatively impair drivers’ attentiveness, perception of time and speed.”

Source : Direct Line

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Next week is Men’s Health Week (June 13- June 19) and Bupa offers an online solution for doctor-shy men to consult online.

Every day during Men’s Health Week Bupa will be hosting live, free men’s health clinics on its Facebook and Twitter channels.  Between 12-2pm, Monday to Friday, Bupa’s medical team will answer the health questions that are concerning men and their partners and offering free medical advice and support.

Each health session will focus on a specific area of men’s health, but questions about all aspects of men’s health and wellbeing will be taken and anonymous postings and direct messages are welcomed.

Bupa’s Men’s Online Health Clinic Schedule – live on facebook.com/BupaUK or @BupaUK:

– Monday 13 June, 12-2pm, men’s fitness with physiotherapist, Simon Fairthorne

– Tuesday 14 June, 12-2pm, men’s sexual health with Dr Sneh Khemka

– Wednesday 15 June, 6-8pm, men’s nutrition with dietitian, Sweta Bhasin

– Thursday 16 June, 12-2pm, general men’s health with Dr Peter Mace

– Friday 17 June, 12-2pm, men’s mental health with Dr Layla McCay

Messages requiring a confidential response can be sent to experts@bupa.com within the allocated hours.

With over a third (37%) of men admitting that they don’t do anything to check their health, Bupa is keen to understand if social media channels are an effective way to engage with men about their health.

Dr. Layla McCay, assistant medical director, Bupa said:  “Bupa is delighted to be a partner for Men’s Health Week 2011 and we fully support its aim to get more men accessing quality health information online.

“It’s well known that men are less likely than women to go to the doctor when they have a problem, so with our online health clinics we’re looking to bring medical information directly to them to help them make health decisions.  As well as paying bills or placing a bid on eBay during their lunch break, we hope that more men will start using the Internet to help improve their health.”

Source : Bupa

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The British Insurance Brokers’ Association (BIBA) has welcomed the Financial Services Authority’s (FSA) guidance consultation for insurance comparison websites. The FSA has stated that it has found failures to comply with its rules which could result in the consumer not being treated fairly.

BIBA first highlighted the issue of consumer detriment from comparison websites in 2008 and is delighted that the points raised have been recognised in this consultation.  The proposed guidance means that comparison websites may need to review their disclosure documentation, sales procedures and terms and conditions in order to comply with all relevant regulatory requirements.  These include customer eligibility, status disclosure, advice suitability and providing a proper statement of demands and needs.

Eric Galbraith, BIBA Chief Executive, said: “Our concerns from 2008 have focused on the gap developing between the pace of technological change and the regulations which were written in 2005. We are pleased that the FSA recognise the price comparison website activities to be more than simply introducing and we trust that the steps that they are taking will close this gap.”

Graeme Trudgill, BIBA Head of Corporate Affairs, commented: “For the FSA to say that comparison websites are falling short of their regulatory requirements is of great concern and we strongly believe that these recommendations must be implemented by the sites without delay. We think it is particularly important that the FSA has highlighted a concern that we share, where in many cases questions are pre-populated with default answers.”

In its letter to comparison websites, the FSA said consumers may be being misled about the services they are receiving from these sites.  It also said that consumers may be unable to claim benefits against a policy through a lack of opportunity to disclose all material facts and that there could be confusion about which firm to complain to and whether they have the right to go to the Financial Ombudsman Service.

Steve White, Head of Compliance and Training, added: “This is a really important step in consumer protection. This should lead to greater clarity for customers in terms of who they are dealing with and the policy that they are purchasing.”

BIBA is fully aligned with the FSA’s proposal to deliver less chance of consumers purchasing unsuitable products or products that do not provide them with the full level of cover they need.  The consultation closes on the 8th August 2011.

Source : BIBA

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Southern Cross, Britain’s biggest private retirement home operator and which is struggling to meet its rent payments, said on Wednesday that it plans to cut up to 3,000 jobs.

“Southern Cross … has today announced plans to address levels of staff effectiveness across its homes, proposing a reduction of up to 3,000 jobs,” the company said in a statement.

The group is cutting roughly seven percent of its 44,000-strong workforce.

“The process of consultation and the proposed reduction in staff numbers will not jeopardise the continuity or quality of care provided to the  company’s 31,000 residents,” Southern Cross insisted.

The company is slashing rental payments to landlords by a third for the next four months as it struggles to meet a £230 million (262 million euros,  $378 million) annual rent bill on its 750 care homes.

British Prime Minister David Cameron was last week forced to step in and offer a “guarantee” that Southern Cross residents — representing one in 10 of  all elderly people in care — would not lose out if the firm collapsed.

London, June 8, 2011 (AFP)

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The European Commission vowed Tuesday to  put up more money to aid vegetable farmers reeling from a bacteria outbreak  after EU states dismissed a first offer of 150 million euros as insufficient.

Spain and France said the figure presented by the EU’s executive arm was  well short of the losses suffered by growers whose lettuce, tomatoes and  cucumbers have been shunned by frightened consumers and banned by Russia. European agriculture commissioner Dacian Ciolos made the offer at an E. coli crisis meeting of farm ministers in Luxembourg and came out of the talks  pledging to write a “substantially” bigger cheque.

He indicated he would come up with a new figure as early as Wednesday, but  warned that it would be difficult to meet demands for full compensation after  he proposed to cover 30 percent of losses.

“I am ready to raise this 30 percent level, but I don’t think that the  budget will allow us to reach 100 percent for all goods and all producers,” he  said, noting that the funds would come from the EU’s common budget.

Warning that consumers are losing confidence every day that the outbreak  remains a mystery, Ciolos urged German authorities to quickly find the real  source of the outbreak that has killed 24 people and whose epicentre is in  Hamburg.

Spain, fuming after German authorities wrongly blamed its cucumbers for the  outbreak, says the crisis is costing its growers 225 million euros ($330  million) a week. Spanish Agriculture Minister Rosa Aguilar said several nations signed a  document calling for producers to be compensated for 90 to 100 percent of the  losses depending on the product.

“Spain is not the only one that will say no to 30 percent,” she said.

“It would be very bad for Spanish producers if we entered into a numbers  war, which will get us nowhere,” she said, adding that Madrid wants any funds  to be released immediately. French counterpart Bruno Le Maire saw the commission’s offer as “just a  starting point.”

French producers “are not responsible for what is happening and are taking  a direct hit in the crisis,” he said. “They have a right for compensation to  the last euro.”

The European farmers group, COPA-COGECA, says the crisis is costing the  sector 417 million euros per week.

Authorities have yet to identify the source of the outbreak, which has left  more than 2,300 people ill in at least 14 countries.

German consumers are  advised to avoid raw sprouts, cucumbers, tomatoes and lettuce. “I hope that the authorities will be able to give an answer on the source  of the infection as quickly as possible,” Ciolos said.

“Without this answer, it will be difficult to regain the trust of  consumers, which is essential for the market to regain its strength,” the  commissioner said.

Hopes that the source of contamination had finally been located suffered a  setback Monday when initial probes carried out on a farm growing a variety of  organic sprouts in the northern state of Lower Saxony proved negative.

Luxembourg, June 7, 2011 (AFP)

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Statistics from the French Association of Insurance (AFA) shows an 8% drop in insurance premiums by the end of April, for the French market.

This poor performance is mainly due to a decline in life insurance since the beginning of this year compared to last year (-13% compared to April 2010).

These poor results cause a decrease in personal insurance (-12%). However, there was a stabilisation in health insurance premiums “due to the transformation of the CMU in tax contribution from 1 January 2011, ” said the AFA.

Rising property insurance and liability

Unlike life insurance and persons, property insurance and liability rose early this year (8% in late April). This increase is the result of rising car coverage (+4%) and housing (+6.5%) characterised by an increase in prices since the beginning of the year.

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Children from four Tower Hamlets’ schools teamed up with Bupa employees at the O2 to set a new hopscotch Guinness World Record.

As part of Bupa’s Global Challenge 2011, children from Marion Richardson, Manorfield, Kobi Nazrul and Our Lady’s primary schools set a new Guinness World Record for the most people playing hopscotch simultaneously alongside Bupa chief executive Ray King and Tower Hamlets co-director of public health, Esther Trenchard-Mabere.

The worldwide Bupa initiative aims to get more than 35,000 people moving across the globe during June to raise awareness the benefits of exercise in helping to reduce the risk of developing long term diseases.

Leading provider of healthy lifestyle programmes for children, families and adults in local communities, MEND (Mind, Exercise, Nutrition, Do it!) ran sessions on healthy eating during the morning and helped the children warm-up with a series of activities before the world record attempt took place at lunchtime. The world record was set when 358 people – 176 children, 20 teachers and 162 Bupa employees – simultaneously played hopscotch for 10 minutes.

The O2 event is the start of new commitment  between Bupa, public health in Tower Hamlets (part of NHS East London and the City), Tower Hamlets council and MEND to work together to reduce the high levels of obesity in the borough. An innovative new partnership between the organisations will launch later in the year with Bupa contributing a broad range of expertise to Tower Hamlets as well as providing funding and volunteers to help deliver MEND’s healthy lifestyle programmes on the ground.

Ray King, chief executive, Bupa, said:

“The Bupa Global Challenge is about getting as many people moving as possible so I’m delighted that so many children from Tower Hamlets’ schools were able to join us today to help set the new world record.  We’re now looking forward to working with MEND, the NHS and the local authority in the longer term to support a new community-led approach to healthy living that will make a real difference to people in the area.”

Esther Trenchard-Mabere, said:

“Childhood obesity levels in the borough are amongst the highest in the UK so we are always looking for new ways to tackle the social and environmental barriers to children being active, building on our Healthy Borough programme. Getting involved in the Bupa Global Challenge is a great way for children in Tower Hamlets to learn that being active can be fun and we’re looking forward to working more closely with Bupa and MEND in the months ahead.”

Harry MacMillan, chief executive at MEND said:

“We’re delighted to be working with Tower Hamlets and Bupa to help children and adults in the borough to live healthier lives. MEND’s free healthy lifestyle programmes are based on research and help children reduce their BMI and increase their fitness and self-esteem. We look forward to delivering a full range of our MEND programmes and services in Tower Hamlets, and empowering the community to become fitter, healthier and happier.”

Isobel Cattermole, corporate director for Children Schools and Families at Tower Hamlets Council said:

“Obesity levels have reduced year-on-year among children entering schools in Tower Hamlets. This demonstrates the excellent effort of our schools, the NHS and the local authority in encouraging all children to enjoy staying active and healthy. The World Record has been a great opportunity for the children to get active and have fun at the same time. They can all go back home and say they’ve been involved in making a little bit of history today.”

Bupa’s Global Challenge is helping to keep people well as part of Bupa’s mission to help people live longer, healthier, happier lives.

Source : Bupa

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A thick plume of ash from the erupting Puyehue volcano in the Andes shifted direction into Chile on Sunday after spewing volcanic dust over parts of Argentina.

North-westerly winds pushed the giant column of ash from the Chilean volcano, located 870 kilometers (540 miles) south of the capital Santiago near the border with Argentina, into Chile’s Lago Ranco area.

The eruption forced some 3,500 people to be evacuated from 22 rural Chilean communities.

“This change means that we will have ash falling in the area, with damage to the population and a threat to small farmers,” Lago Ranco Mayor Santiago Rosas told AFP.

The volcano, located in the Andes 2,240 meters (7,350 feet) above the sea level, appeared to have largely gone quiet on Sunday, though Chile’s Office of National Emergencies (ONEMI) said it was experiencing a “moderate” level of erupting.

The Puyehue rumbled to life on Saturday after showing no activity since 1960, when it was awoken following a magnitude 9.5 earthquake.

“There are some people, especially heads of family, that have decided to stay home and take a risk. The government, for the time being, will not interfere in that individual decision,” said the regional governor in Chile, Juan Andres Varas.

The eruption forced the nearby Argentine resort town of Bariloche, population 50,000, to declare a state of emergency on Saturday and close down its airport.

The eruption also forced a major border crossing point to close due to low visibility, an dropped ash on the upscale Argentine resort town of Villa La Angostura.

Bariloche, located about 100 kilometers (62 miles) east of the volcano, had covered in a sooty blanket of several centimeters (inches) thick and remained under a state of emergency.

The picturesque town, as well as others in the vicinity affected by the ash, welcomes thousands of foreign tourists each year to its lakes and mountain scenery, as well as ski slopes in the winter months.

Chile has some 3,000 volcanoes, of which some 500 are geologically active and 60 have erupted in the past half century.

In 2008 the eruption of the Chaiten volcano, also in southern Chile, spread a thick cloud of ash across a large swath of South America, grounding flights across the region. Ash from that eruption drifted east as far as the Argentine capital of Buenos Aires.

 

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Assurland.com belongs to French mutual insurance giant Covea, which is composed of Maaf, MMA and GMF. The current discussions are in their “final strait line” as stated by the economic daily La Tribune.

The valuation of Assurland.com is between 150 and 200 million EUR.  According to the economic daily, who will not provide its sources, the three investment firms that are in the loop are : Golden Lake Capital, Silver Lake and TA Associates.

« Web related persons have also followed the issue”, has said someone close to Assurland.com, quoted in the daily paper, who adds that no competitor has taken up the bet. An IPO was planned in 2010 but no action has been taken.

 

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Fitch Ratings expects UK non-life insurance premium rates to rise more quickly over the next 12 to 24 months as insurers seek to improve returns on capital, according to a new report.

“While it is generally considered that the catalyst for widespread rises in insurance premiums tends to be the occurrence of major insured losses, Fitch believes that insurers’ need to maintain adequate returns on capital will result in a general upturn in premium rates over the next two years,” says Martyn Street, Director in Fitch’s Insurance rating team.

Motor insurance underwriting performance continues to be a focus. Insurers have continued to raise premium rates sharply, with the 17-22-year age category seeing the cost of personal motor insurance rising by 65% in the year to April 2011. Fitch views these price rises as essential for motor insurers to return to technical profitability but also sees an opportunity for insurers to differentiate their performance.

“Companies that successfully address the key issues of widespread detection of fraudulent claims and controlling the steep rise in settlement awards for bodily injury claims will hold an advantage over competitors that remain solely focused on pricing adjustments,” Street says.

The occurrence of further major insured loss events, including the forthcoming US windstorm season, will be a key determinant of London Market insurers’ credit ratings for the remainder of 2011.

The outcome of the June and July renewal period, during which a significant proportion of US catastrophe-exposed insurance is renewed is an important indicator of the sub-sector’s near-term profitability. It remains unclear to what extent the sequence of catastrophe losses focused across the Asia-Pacific region and recent revisions to Risk Management Solutions (RSM) US Windstorm Model will have on US renewal prices.

Fitch’s report “UK Non-Life Insurance – Profitability: Capital is Both the Problem and the Solution” is available on Fitch’s website.

Source : Fitch Ratings

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A report from Hymans Robertson has found considerable inconsistencies and variances particularly in the inflation and longevity assumptions used by companies to report their pension liabilities under IAS19.

The number of FTSE 350 companies using an RPI inflation assumption below the market implied rate for their pension scheme has fallen from last year, but still represents two thirds of the total.  At the same time, CPI assumptions vary greatly as schemes struggle to place an accurate benchmark on this in the absence of CPI-linked bonds.  Furthermore longevity assumptions vary greatly across the FTSE350.

The impact of these variations on pension liabilities can be considerable, meaning investors need to carefully scrutinise the pension risks inherent in company accounts. The findings are part of the annual FTSE 350 Accounting Assumptions Survey from Hymans Robertson, the independent pensions & benefits consultancy.

Clive Fortes, Head of Corporate Consulting at Hymans Robertson, comments:

“While two-thirds of FTSE350 companies adopt inflation assumptions below that implied by market yields, this is down from 82% last year.  The average difference between assumed inflation and market implied inflation has fallen from 0.2% in 2009 to 0.1% in 2010.

“Our report also found a high degree of variation in CPI assumptions.  The switch to CPI indexation has clearly saved companies considerable amounts of money – as much as £25bn across the FTSE350.  There is, however, considerable uncertainty about the level of CPI inflation given the lack of appropriate CPI-linked bonds against which to benchmark CPI inflation making this estimate unreliable.

“Notwithstanding the uncertainty over future CPI inflation, based on the extent of the impact of the change to CPI, we estimate that the market demand for CPI linked bonds by FTSE350 sponsored pension schemes could be approximately half of that for RPI linked bonds.  Although some investment banks are prepared to quote a price for CPI hedging, the market capacity is extremely thin.  There is therefore likely to be a strong demand for Government issued CPI bonds.

Clive Fortes, commenting further on life expectancy assumptions, added:

“Perhaps not surprisingly, there is a range of assumed life expectancy adopted by FTSE350 companies.  What is, however, surprising is the extent of the difference (7 to 8 years) and the apparent underestimate in the rate of future improvement in life expectancy.  Current studies suggest increases of two years per decade, yet companies are assuming on average only a one year per decade improvement.”

“Given the differences in assumptions adopted by FTSE350 companies, investors cannot simply take at face value reported IAS19 figures but need to analyse them and understand the risks inherent in pension schemes in a more comprehensive way.”

Key findings of Hymans Robertson’s 2011 “FTSE 350 Accounting Assumptions Survey”:

RPI assumptions:

– 65% of FTSE350 companies use below market implied inflation for pension accounting;

– Average assumed inflation adopted by FTSE350 companies is 0.1% below that implied by market yields reducing reported deficit by £7bn;

– Considerable improvement over 2009 where 82% of companies used below market implied inflation with an average assumed inflation rate of 0.2% below that implied by market yields.

CPI assumptions

– The Government’s change in indexation from RPI to CPI introduces need for a CPI assumption.

– In the absence of any market in CPI bonds, there is a high degree of uncertainty over CPI inflation;

– Wide range of CPI assumptions adopted by FTSE350 companies of between 2.3% and 3.4%;

– Average CPI assumption is 2.8% – 0.7% lower than the average RPI assumption, consistent with historic differences;

– Uncertainty highlights need for CPI-linked bonds;

Longevity assumptions:

– There is a 7 year age difference in assumed life expectancy across the FTSE 350 for pensioners and 8 years for non-pensioners;

– FTSE350 companies allow for life expectancy improvements of one year per decade on average, less than half the rate of improvement indicated by current trends (Analysis produced by Club Vita  indicates that life expectancy is increasing by at least 2 years per decade).

Source : Hymans Robertson

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Philip Brown is joining LV= as head of retirement propositions in August 2011.

Philip joins from Partnership, where he was head of retirement products from October 2007. Philip has 23 years experience in financial services, and in his new role, will report directly to John Perks, LV= retirement solutions director.

Philip was also a founder member of Pensions Income Choice Association (PICA), the group lobbying for the open market to be the default annuity option, and is chair of the Origo Options steering group.

John Perks, LV= retirement solutions director said: “LV=’s retirement business goes from strength to strength, growing by a third in 2010. Appointing someone of Philip’s calibre will further strengthen our team, and help continue our excellent performance through 2011 and beyond.”

Philip Brown commented: “I’m looking forward to the challenge of joining LV= at an exciting time in its growth in the UK retirement market. Their waterfront at retirement proposition of SIPPs, drawdown, annuities and equity release puts them in a great position for further success and a compelling reason for me to join.”

Source : LV=

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Allianz has launched a unique add-on motor insurance product which combines the benefits of motor legal protection insurance with comprehensive UK breakdown assistance.

Designed specifically for Allianz Retail brokers, Allianz Pro-Motor Rescue has been developed to provide a single add-on solution for motor policies.

Allianz Pro-Motor Rescue provides comprehensive motor legal expenses cover including uninsured loss recovery, motor prosecution defence and motor contract dispute protection. Customers also have 24/7 access to Lawphone, which provides legal advice on any personal matter.

In addition, Pro-Motor Rescue includes a range of vehicle breakdown assistance cover provided by Mondial Assistance, the specialist assistance division of the Allianz Group, who have a rich history of providing breakdown cover for major motor manufacturers. Cover includes roadside repairs with nationwide recovery, ‘at home’ breakdown assistance, 24 hour car hire, hotel accommodation and emergency medical assistance.

Brokers are now able to provide their customers with a flagship motor add-on product in Pro-Motor Rescue, as well as offer Pro-Motor for customers who already have a breakdown provider. This enables Allianz to give brokers and customers real choice when it comes to Legal Expenses.

Steve Rowley, BTE business development manager at Allianz Legal Protection (ALP), commented: “Pro-Motor Rescue is the latest in a range of add-on products developed to meet the ever-evolving needs of our clients. This has been a collaborative effort involving not only

Allianz Retail and Legal Protection but also Mondial Assistance, sharing the knowledge and capabilities of the Allianz Group to benefit the UK broker base.”

He adds: “This offering will help to strengthen the value of our broker relationships by providing a competitive ‘add-on’ solution to benefit brokers and customers alike.”

Source : Allianz

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Employers are beginning to rely more on employees to stem the tide of rising health care costs, but the inability to motivate and change habits has prompted concern, according to Aon Hewitt, the global human resource consulting and outsourcing business of Aon Corporation.

Aon Hewitt surveyed 1,028 employers nationwide in its 2011 Health Care Survey and found that the top health care outcomes organizations would like to achieve this year are improving employee health habits (56 percent), lowering the health care cost trend (49 percent), decreasing worker health risk (44 percent), increasing participant awareness of health issues (37 percent) and enhancing participation in health improvement/disease management programs (37 percent).  This survey suggests that success may be difficult, as 56 percent of respondents say motivating participants to change unhealthy behaviors is the most significant challenge to accomplishing 2011 health care program goals.  This was followed by issues involving reluctance to change (26 percent), unpredictability of costs (23 percent), government regulations/compliance (22 percent) and managing the health of an aging workforce (21 percent).

In addition, this survey revealed that many companies offer disease management (70 percent), health and wellness improvement (64 percent) and behavioral health (60 percent) as key components to health care strategies.  In an acknowledgement that more needs to happen to achieve success, many organizations are looking to expand efforts during the next three to five years and implement strategies that focus on total well being to improve physical and mental health (60 percent), absence management (53 percent), and integrated safety and health improvement efforts (50 percent).

“Despite reform, organizations still face rising costs and worsening population health,” said John Zern, Americas Health & Benefits Practice leader with Aon Hewitt.  “It’s clear that traditional annual trend mitigation tactics alone won’t work.  As a result, leading employers are implementing a ‘house money, house rules’ environment, using a mix of incentives, penalties and targeted messaging to reward healthy behaviors.”

While some companies are budgeting for a medical trend increase during the next four years, many do not have a long-term increase built into their budgets as of yet.  Nearly one-third of respondents (30 percent) have budgeted an annual medical trend increase between 4 percent and 7 percent from 2011 – 2015, and 22 percent have budgeted an increase of more than 8 percent during that time.  Meanwhile, 42 percent have not built an annual long-term increase into their budget at this point.

“Employers are spending millions of dollars annually on health care, and yet many report they do not have a specific plan for how best to manage that investment,” notes Jim Winkler, Large Employer Segment leader in the Health & Benefits Practice with Aon Hewitt.  “Given the risks and opportunities presented by health care reform, it is imperative that employers develop a written strategy for controlling cost and improving health.”

Rewarding & Penalizing Participants

The Aon Hewitt survey also showed that 22 percent of employers will have programs in place by the end of 2011 to reward participants for achieving specific health outcomes, and 10 percent will have similar programs to penalize participants for exhibiting unhealthy behavior.  However, by 2016, 64 percent of organizations said they will add programs that reward for good health, while 46 percent said they will add programs that penalize for unhealthy outcomes.

Respondents currently offer incentives to employees for participation in key initiatives, such as biometric screenings (33 percent), health risk assessments (33 percent), wellness programs (31 percent) and tobacco cessation programs (27 percent).  Conversely, some employers are imposing a penalty for non-participation in biometric screenings (5 percent), health risk assessments (5 percent), wellness programs (2 percent) and tobacco cessation programs (6 percent).

Money serves as the primary incentive and penalty these employers use to promote employee participation in key programs, including health risk assessments (66 percent have a monetary incentive; 9 percent have a monetary penalty); biometric screenings (65 percent have a monetary incentive; 8 percent have a monetary penalty); disease/condition management (54 percent have a monetary incentive; 9 percent have a monetary penalty); and wellness programs (59 percent have a monetary incentive; 6 percent have a monetary penalty).

“In a challenging economy, organizations are using financial incentives, as a mix of rewards and penalties, to motivate behavior change,” said Jennifer Boehm, principal in the Aon Hewitt Health & Benefits Practice, and a project leader for the survey.  “However, leading employers also recognize that success requires more than just dollars; those organizations also focus on marketing health improvement services, eliminating barriers to needed care and measuring the impact of specific interventions.”

Additional Survey Data

– One-third of organizations currently offer stress reduction programs and 35 percent offer nutrition programs to employees.

– Slightly more than half (52 percent) of employers have initiatives targeted to employees with chronic conditions (e.g., asthma, diabetes, heart conditions).

– Less than 20 percent of organizations have performance goals tied to wellness success or participation levels, while 49 percent plan to add this type of program in the next three to five years.

– By 2016, 77 percent of employers plan to have targeted communications on their health care programs, based on workforce demographics.

– By 2016, 61 percent of employers plan to use social media to reinforce smart health behaviors and actions with their plan participants.

Source : Aon Hewitt

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Half of UK motorists say they have reduced the amount of driving they do due to the rising cost of fuel, while more than nine out of ten feel ripped off by the current price of petrol and diesel. These are some of the findings of new research by car insurance expert Admiral that illustrate how motoring costs are affecting many drivers.

Admiral commissioned YouGov to survey 2,500 drivers as part of the annual Admiral Survey of Motorists. The results reveal the impact fuel prices are having on motorists, with 92% agreeing they feel ripped off by the current cost of fuel.

Sue Longthorn, Admiral managing director said, “With the average cost of a litre of unleaded at £1.36 and diesel at £1.41, our research shows the depth of feeling British motorists have about the high cost of fuel right now. And it seems high fuel costs are actually affecting how much they drive, with 51% saying they’ve reduced the amount of driving they do.”

Admiral also asked motorists what percentage of the cost of fuel they believe is made up of duty and tax and what percentage of it they think would be a fair amount. On average, they believe 64% of the cost is made up of fuel duty and VAT, however they think a fairer amount would be less than half that at 31%. Actually fuel duty and VAT account for around 60% of the total price of petrol and diesel.

But it isn’t just the cost of fuel that’s affecting driving habits, other expenses are having an impact too. 18% said they have ignored a fault or problem with their car because of the cost of repairs. While 15% said they have cut back or stopped servicing their car due to costs, and even more worrying, 8% said they have ignored problems with their tyres due to the cost of replacing them.

Sue Longthorn, said, “It’s a concern that some motorists are willing to drive around with tyres not in the very best of condition. This could cause more serious problems long term and could even cause them to have an accident.”

Despite half of motorists admitting they have reduced the amount of driving they do because of the cost of fuel, they do not expect the rising cost of motoring will result in less traffic. Only 37% said they agreed it would result in fewer vehicles on our roads, compared with 41% who didn’t agree with this.

The full 2011 Admiral Survey of Motorists will be released at the beginning of July. All figures, unless otherwise stated, are from YouGov Plc.  Total sample size was 2,500 adults who have a drivers licence and at least one car in their household. Fieldwork was undertaken between 6th and 9th May 2011.  The survey was carried out online.

Source : Admiral

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Rob Barnett joins the company’s executive committee as it continues to strengthen its capabilities across the business, following the launch of Friends Life in March.

An experienced senior HR professional, Rob Barnett joins Friends Life from Royal Bank of Scotland, where he was HR Director for RBS Insurance and latterly, HR Chief Operating Officer for RBS Group. Friends Life will benefit from his extensive experience leading transformation and change management at RBS Insurance. Rob Barnett was heavily involved in the creation of the RBS Insurance business through the integration of the Direct Line and Churchill businesses. He also played a key role in the preparation of RBS Insurance for separation from the RBS Group.

Andy Briggs, Chief Executive Officer, Friends Life, commented :

“Rob Barnett’s appointment is further evidence of the steps we are taking to drive our business forward following the recent acquisitions. We are fully focussed on preparing Friends Life for an independent future as a progressive life company. Friends Life represents an enviable paradox – a brand new company with prominent experience and expertise firmly in place – and Rob’s skills and experience will help ensure our people and processes realise this potential. I am delighted to welcome Rob to the business.”

Rob Barnett will report to Andy Briggs, Chief Executive Officer and joins a company bringing together 6,000 employees worldwide.

Rob Barnett said:

“I am tremendously excited to be joining Friends Life at an important time for the business. As it moves forward, I am looking forward to helping build an organisation that will position Friends Life as an industry-leading life company.”

Source : Friends Life

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