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Fitch Ratings has affirmed Sterling Insurance and Sterling Life Insurer Financial Strength (IFS) ratings at ‘BBB+’. The Outlooks are Stable. The companies are the underwriting members of the UK-based Sterling Insurance Group Limited (Sterling).

The affirmation reflects Fitch’s expectation that the capital position of Sterling SICL and SLL will remain stable and supportive of the ratings.

Sterling demonstrated strong profitability in 2011, driven by continuous improvement in its underwriting performance and growth in administration income. Sterling’s net income increased to GBP3.6m in 2011 from GBP0.5m in 2010, and its combined ratio improved to 96.0% from 102.4%. Fitch expects continued improvements in underwriting margins.

Fitch views Sterling’s growth of administration income relating to the management of credit insurance accounts as a marginal positive for the ratings. This income provides diversification and strengthens the bottom line. The group does not assume any underwriting risk on these policies.

Fitch regards Sterling’s investment risk as acceptable for the ratings. Although its investment portfolio is somewhat riskier than peers due to relatively high exposure to corporate bonds, this is mitigated by good credit quality and strong capitalisation.

Sterling is a niche UK insurance company that has established a respectable franchise with a strong distribution network. However, it remains a small player in what is still a challenging market. Its lack of scale and heavy concentration in the UK make it more difficult to control pricing, access external finance and absorb a potential fall in demand for its products. Fitch views Sterling’s scale and operating profile as rating constraints and considers an upgrade unlikely in the near to medium term.

Key rating triggers for a downgrade include a change in dividend policy resulting in significant capital extraction. A significant deterioration of underwriting performance and/or poor investment results leading to a depletion of capital would also put downward pressure on the ratings. Fitch would be concerned if the group reported a Fitch-calculated combined ratio in excess of 105%. In addition, the introduction of further risk into the investment portfolio could create negative rating pressure.

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SSP has appointed Kevin Gaut as chief technology officer for the company’s insurer division.

Gaut, who has 23 years’ experience in insurance IT, re-joins SSP following a period at Legal and General where he was head of architecture – savings and investments.

He will report to Steve Lathrope, the managing director of SSP’s insurer division and will be responsible for driving innovation across the insurer division and forming strategic alliances. Gaut will also work closely with the sales and product management teams to ensure customers receive maximum business benefit from their partnership with SSP.

Welcoming Gaut back to SSP, Lathrope said: “I am delighted that Kevin is back at SSP, not only does he bring with him his exceptional technology and development skills, but his understanding of the issues facing insurance businesses is now even greater. His focus on delivering technology solutions that deliver real benefit to clients will be a great asset and his keen understanding of the commercial considerations of insurers will help drive SSP forward.

“Plus by adopting market-leading technologies and forming partnerships with complimentary organisations, Kevin will help SSP maintain its market-leading role in this space.”

Gaut added: “I am delighted to be back at SSP and excited about the job ahead. There is a great opportunity in this market to take a more collaborative approach to technology solutions, and providing a more rounded and complete offering to our current and future insurer partners.”

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Sterling Insurance Group’s Personal Lines, Commercial Underwriting and Claims divisions are celebrating a year on from receiving Chartered Insurer status from the Chartered Insurance Institute (CII), an accolade which recognised their high quality of training and professional development.

One year on, 25% of Sterling’s customer-facing staff in underwriting and claims now hold the  CII Certificate qualification or above. Furthermore, the proportion of staff who achieved diploma level certification has risen from 8% in 2011 to 13% in 2012.

Sterling maintains this dedication to staff development through its commitment to CII examinations. The company offers mentoring, study facilities and study leave in an effort to assist and support employees. Additionally, now in its fourth year, Sterling’s graduate recruitment scheme continues to attract new and exciting talent.

John Blundell, managing director of Sterling, comments: “Receiving such recognition from the CII was a real achievement and one which we have worked extremely hard to maintain. Sterling has always encouraged better standards of professionalism and integrity and I’m very proud of all our employees who continue to maintain these standards. These results clearly demonstrate our ongoing expertise and our service commitment to brokers, clients and customers.”

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Fitch Ratings has affirmed Old Mutual ‘A-‘ Long-term IDR and Old Mutual Life Assurance Company (South Africa) and Skandia Life Assurance Company Ltd’s IFS and IDRs. The Outlook is Negative. A full list of ratings actions is at the end of this comment.

The affirmation reflects Old Mutual’s significant decrease in financial leverage and anticipated improvements in fixed-charge coverage, and continued strong earnings. The Negative Outlook reflects Fitch’s Negative Outlook on the South African sovereign rating. Fitch originally revised Old Mutual’s Outlook to Negative from Stable on 16 January 2012 on the back of the revision of the Outlook on South Africa’s Long-Term Foreign-Currency IDR of ‘BBB+’ to Negative from Stable.

The repayment of GBP1.5bn of debt since early 2010 led to a decrease in financial leverage from 28% at end-2010 to 21% at H112 on a pro forma basis and based on Fitch’s methodology. Fitch considers Old Mutual’s current financial leverage as low for its rating level.

Old Mutual’s fixed-charge coverage is strong for the insurer’s rating level (8.3x for 2011) and Fitch expects it to improve in 2013 in light of the significant debt reduction during 2012. Fitch also assesses the group’s hard-currency cover to measure its ability to service its non-rand-denominated debt obligations based purely on its non-rand earnings. Fitch views Old Mutual’s hard-currency cover as low at 2.3x in 2011 but, thanks to the planned reduction of debt, expects this ratio to improve to about 2.5x to 3x in 2013, which is considered commensurate with Old Mutual’s rating.

Old Mutual has significantly reshaped its business profile over the last two years. Following the sale of its US life business in 2011 and Nordic business in 2012, the group derives about 80% of its operating earnings from South Africa, compared with only around 60% in 2010. The remainder of the earnings are largely from Europe and US asset management. The group’s reliance on emerging markets has therefore increased, and its operating scale and geographical diversification have reduced. However, these negative impacts are more than offset by the reduction in credit risk and financial leverage, resulting from the disposal of the US life business and the use of some of the proceeds of the Nordic disposal, respectively.

The IFS rating of the group is one notch higher than the South African local currency sovereign rating in recognition of Old Mutual’s geographical diversification, albeit reduced, with a still sizeable proportion of earnings generated in the UK and Europe. The additional notch also reflects the group’s ability to share with policyholders potential investment losses on its investments in the South African financial markets, and the financial flexibility from being listed on the London Stock Exchange.

Old Mutual’s group capitalisation has continuously improved since end-2008, reaching a regulatory solvency ratio of 168% at H112 (2008: 122%). Fitch considers Old Mutual’s capitalisation as commensurate with its rating category. In 2011, 25% of Old Mutual’s total non-unit-linked investment portfolio of GBP29.2bn was held in equities. However, as most of Old Mutual’s non-unit-linked investments back with-profits business, where investment performance is largely shared with policyholders Fitch is not overly concerned about Old Mutual’s relatively high equity allocation.

A downgrade of South Africa’s Long-Term Foreign- or Local-Currency IDR would most likely trigger a downgrade of Old Mutual’s ratings. A downgrade could also result from a lack of progress by Old Mutual toward achieving hard-currency interest cover of at least 3x, or if there were greater-than-expected earnings pressure on its South African operations from volatile investment markets, weak consumer confidence and recessionary fears. Further reduction in the geographical diversification of earnings, or a deterioration in the quality of international earnings, could also lead to a downgrade. Given the Negative Outlook on South Africa’s sovereign and given that Fitch expects Old Mutual’s hard-currency interest cover to remain below 3x in the near term, the agency considers an upgrade unlikely at present.

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The British Insurance Brokers’ Association (BIBA) has proposed an alternative fairer structure for the Financial Services Compensation Scheme (FSCS) funding model, which has been produced on its behalf by consultants Oxera.  BIBA suggests an alternative structure, which includes a separate sub-class for ‘pure’ insurance brokers, and retains insurers in the cross subsidy part of the model to ensure greater responsibility for their products and the way they are sold.

In its consultation response to the Financial Services Authority (FSA), BIBA outlined its alternative fairer model for brokers which is economically justified and sustainable. It also retains insurers’ financial responsibility for the mis-selling of their products and provides a solution for the FSA to indentify ‘pure’ insurance brokers by looking at a firms permissions, their regulated income and their total number of insurance sales.

BIBA’s response included an economic analysis of FSCS funding by the insurance intermediary sub-class and also incorporated the work that BIBA commissioned Beachcroft LLP to conduct, in order to identify a legal definition of a ‘pure’ insurance broker.

Achieving a sub class for ‘pure’ insurance brokers would mean that brokers are ring fenced from other intermediaries such as credit brokers whose payment protection insurance failures have led to increased fees for brokers over recent years.

Eric Galbraith, BIBA’s Chief Executive, said:”It is essential to look for separation for brokers and we have worked with Oxera to produce a viable solution.  I’m very disappointed that the FSA’s revised proposed structure is yet again unacceptable and that they have based their suggestion on ability to pay rather than the fairness of the scheme. We will continue to work with the FSA to achieve a fairer and more workable solution.”

Steve White, BIBA’s Head of Compliance and Training, added: “We are confident that our solution is workable and achievable for the FSA. It means that they will have to collect some additional information from intermediaries as part of their data collection process but it is a fair and economically justifiable solution.”

Responding to FSA consultation CP12/16 – FSCS funding model review, BIBA outlined brokers’ significant contribution of 1% to GDP and said that this should entitle insurance brokers to a more tailored approach including their own sub-class.  BIBA also said that the suggested structure put forward in the review creates unnatural and unequal cross-subsidies where insurance brokers are exposed to possible failures in the IFA sector and it takes insurers away from their responsibility for product sales on intermediated business.

Oxera was commissioned by BIBA because of its knowledge and experience of the FSCS through its work in establishing the current funding model for the Financial Services Authority.

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On the day of his appointment as the new Chairman of TheCityUK, Standard Life’s Gerry Grimstone is speaking at the organisation’s Annual Dinner at Mansion House. Gerry will warn the industry that it needs to remember it is delivering a service to clients and must put customers back at the heart of everything they do. He will say that this new attitude must be driven from the top of organisations with Chairmen and Boards taking the lead, and ultimately responsibility for the actions of their businesses.

Gerry will also address the threats to London’s position as the leading global financial centre. He will stress the need for the UK to be at the heart of Europe and fulfil its role as Europe’s financial centre.

Gerry Grimstone, new Chairman of TheCityUK and Chairman at Standard Life, will say:
“There is an important point in the description of our industry – financial and professional services. I sometimes think that we forget ‘services’ are all about the desire to serve. At some point we lost that desire to serve and that needs to be brought back into focus.

“This means proving our value and regaining trust and credibility in the eyes of a sceptical public. To do this a fundamental realignment is required, putting the customer at the very heart of the industry – a ‘new deal’ for our customers.

“We have to ensure that the UK financial services sector conducts its business in line with the highest standards of integrity. Responsibility for integrity lies at the very top of companies and partnerships, with Boards and in particular with the Chairman. As one of the longest-standing Chairmen of a major financial services company in the UK, I see company ethics, integrity and corporate governance at the core of my responsibilities.

“We need to get ahead of past issues and fundamentally rebuild the integrity and trust that had underpinned the City’s success for generations. We know there are lessons to be learnt. There is a need to focus on ethical change, rather than just behavioural compliance, and we need to redouble our efforts as a sector to drive home the message that ‘doing the right thing’ is as important as obeying the rules.

“The scale of the challenge may appear daunting, but the financial crisis and its aftermath present an opportunity to reappraise our industry, and place it on a firmer footing for long-term success.”

On the UK’s role in Europe Gerry will say: “The City must be an integral part of the European financial services framework and have complete and unfettered access to the wholesale Euro markets.

“We have not made the case strongly enough how important it is that the UK remains the EU’s financial centre. London benefits from attracting firms that want easy access to the Single Market.

“So we need to protect and promote the Single Market. That means greater engagement at a European level, given the weight of regulation that now emanates from Brussels, and taking steps to ensure this occurs at an earlier stage – playing a larger role in proactively informing and shaping the EU and wider international policy agenda.”

Gerry Grimstone succeeds Stuart Popham as Chairman of TheCityUK. He will work closely with the organisation’s management team, including Chief Executive Chris Cummings, to ensure TheCityUK continues to champion the financial and professional services sector, both in the UK and overseas. Gerry will continue in his roles as Chairman of Standard Life and independent Board member of Deloitte LLP.

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Xchanging welcomed a group of Bermudian underwriters and brokers to their London Headquarters. The visit was part of a tour to learn about the London Market and how it relates to operations in the US and Bermuda. The group had already spent time with Lloyd’s, the LMA and a number of carriers and brokers earlier in the week long tour.

Xchanging introduced the group to their Global Insurance Sector, which includes customers and operation in Australia, Bermuda and the US, and elaborated on its specific role within the international insurance market. The day concluded with an operational tour of the claims platforms and detailed presentations on Netsett and Xuber, Xchanging’s Insurance Software business that was formally re-launched in London earlier in the week.

A non-profit organisation, the Bermuda Under 40s Re/Insurance Group consists of registered members in the re/insurance industries under the age of 40. The group aims to promote interest and knowledge in all areas of re/insurance by providing a forum between members for topical comment, educational and networking opportunities.

Julie Lynch, Head of Relations at Xchanging Insurance commented: “Xchanging has a well established customer base in the Bermuda and US markets. This event offers an excellent opportunity to update these important markets on how we are operating, and more importantly, the innovation that we are bringing to our customers through our globally combined service capabilities.  Having this face to face contact with the leading underwriters and influencers of the future is a great opportunity to mutually reinforce these relationships.”

Julia Mather, Tour Leader and Head of Miller Bermuda commented: “Without the generosity and support of companies like Xchanging, these tours would not be possible. During the week the tourists have had their horizons broadened and exposure to exciting new developments within our industry. As with previous visits, those companies that have sponsored their employees onto this tour, will undoubtedly see the benefits over the coming months and years.”

The Company’s attending were:

  • ACE Bermuda Insurance Ltd.
  • Endurance Specialty Insurance Ltd
  • Alterra Bermuda Limited
  • Hiscox Bermuda
  • AON (Bermuda) Ltd
  • JLT Park Ltd
  • Argo Re
  • Miller Bermuda Limited
  • Ariel Re
  • Montpelier Re
  • Axis Capital
  • Oil Casualty Insurance Ltd
  • Axis Specialty Ltd
  • Partner Re
  • Bowring Marsh
  • Validus Re

 

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Catastrophe risk modeling firm AIR Worldwide (AIR) announced that Aspen Reinsurance has licensed AIR’s Multiple Peril Crop Insurance Model (MPCI) for China to enhance its risk management capabilities in catastrophe-exposed agricultural regions of China.  

“The structure of the agriculture insurance market in China continues to evolve and improve. Given the complexities of provincial and local government protection in this region, we need a reliable and independent tool to help manage the risk,” said Massimo Amico, senior underwriter, agriculture reinsurance, Aspen Re. “AIR’s crop model provides insight into the severity, frequency, and location of potential future droughts, floods, and typhoons in China, giving us an objective and reliable assessment of the potential impact on crop losses.”

Weather is the predominant driver of agricultural losses in China. In the AIR Multiple Peril Crop Insurance Model for China, a weather-based approach to crop modeling ensures greater accuracy in modeled loss calculations. The high resolution model explicitly accounts for the spatial correlation of weather events, whether they are widespread or highly localized. The model thereby enables an assessment of crop risk at both provincial and county levels, catering to the wide variety of insurance needs, such as accurately determining the remaining risk to reinsurers after complex rules relating to geography-specific government recoveries are considered.

“The AIR Multiple Peril Crop Insurance Model for China leverages industry-leading crop loss modeling experience; in-depth knowledge of China’s geography, farming practices, and insurance system; and a thorough grasp of the frequency and severity of potential adverse weather events and resulting crop losses,” said Uday Virkud, P.E., executive vice president at AIR Worldwide. “Companies assuming risk in China are increasingly turning to AIR to help manage their catastrophe risk. Our relationship with Aspen Re reflects our continued focus on and growth in this evolving insurance market.”

Alan Calder, group head of catastrophe risk management at Aspen Re, added, “The new AIR Multiple Peril Crop Insurance Model for China will be a central part of our China agricultural portfolio risk assessment process. We believe there are many business benefits from this model, and it will be an additional tool to help us manage and price agricultural risk in China.”

AIR released the industry’s first Multiple Peril Crop Insurance Model for China in 2011. It provides a fully probabilistic approach for determining the likelihood of losses to the country’s major crops of corn, cotton, rapeseed, rice, soybeans, and wheat. The model employs AIR’s advanced Agricultural Weather Index™ to capture the significant effects that weather-related perils have on each crop during different growth stages. It explicitly models damages resulting from various weather perils, including drought, floods, and typhoons, which are the leading causes of crop loss in China. The model accommodates China’s complex policy conditions, which vary depending on crop type, peril, and province.

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Tobacco producer Swedish Match claimed Friday it was offered the opportunity to pay 60 million euros ($78 million) to thwart new EU tobacco legislation in a scandal that has cost Europe’s top health official his job. 

“I can say that those are the amounts we are talking about, and I’d also like to stress that for us the amount of money does not matter,” company spokesman Patrik Hildingsson told AFP.

Health and consumer commissioner John Dalli said he had been asked to resign on Tuesday after he was cited in a tobacco-linked influence peddling fraud probe.

The European Commission announced his resignation on Tuesday “with immediate effect” following an investigation by OLAF, the EU’s anti-fraud office, into a complaint by Swedish Match.  The Maltese commissioner has maintained his innocence, claiming he is the victim of a tobacco lobbying campaign to block tough new rules to make smoking less attractive.

In February, Dalli oversaw proposals that would tighten regulations on the use of flavouring in tobacco, which would have included non-tobacco products such as snus, or Swedish snuff.

Snus is a moist powder tobacco originating from dry snuff. Though its sale is illegal across the EU, it is manufactured and used in Sweden, which has an exemption, and Norway, which is not an EU member.

Hildingsson said the alleged 60 million euro bribe to a Maltese businessman with links to Dalli would have been paid in two installments, with 10 million euros due before new legislation was enacted and the remaining 50 million to be paid when the new rules were in place.

Stockholm, Oct 19, 2012 (AFP)

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Barclays said it was setting aside a further £700 million ($1.13 billion, 862 million euros) to compensate clients mis-sold insurance by the embattled British bank. 

Barclays, which has recently suffered a boardroom shake-up after being rocked by the Libor interest rate-rigging scandal, said it was hiking its total bill from the insurance mis-selling saga to £2.0 billion.

The bank, which will announce third-quarter results on October 31, added that adjusted pre-tax profits, before exceptional items, would be “broadly in line with current market consensus of £1.7 billion” for the three months to September.

Barclays’ share price slid 1.51 per cent to close at 240.7 pence on London’s FTSE 100 index of leading companies, which rose 0.10 per cent to 5,917.05 points.

“Barclays has experienced higher than previously anticipated levels of Payment Protection Insurance (PPI) claim volumes since the end of the first half, and has therefore determined that it is appropriate to provide a further £700 million,” the lender said in a statement.

“This is in addition to provisions recognised of £1 billion in 2011 and £300 million in the first quarter of 2012.

“Based on claims experience to date and anticipated future volumes, the resulting provision includes Barclays best estimate of expected costs of future PPI redress,” the bank said.  Back in April 2011, Britain’s biggest banks lost a high court appeal against tighter regulation of PPI, which provides insurance for consumers should they fail to meet repayments on a credit product such as consumer loans, mortgages or payment cards. PPI became controversial after it was revealed that many customers had been sold it without understanding that the cost was being added to their loan repayments.

British authorities subsequently banned simultaneous sales of PPI and credit products.  The nation’s biggest banks have all suffered large PPI provisions that slashed their profits. HSBC has racked up a total PPI compensation bill of £1.7 billion, Lloyds Banking Group has booked a hefty £4.3 billion provision and Royal Bank of Scotland £1.3 billion.

Thursday’s announcement comes as Barclays fights to restore its battered reputation in the wake of a series of scandals, which include the mis-selling of interest rate swap arrangements.

The Libor affair meanwhile erupted in June when Barclays was fined £290 million by British and US regulators for attempted manipulation of European interbank rates between 2005 and 2009.

The scandal led to the resignations of three Barclays senior board members — chief executive Bob Diamond, chairman Marcus Agius and chief operating officer Jerry del Missier.

Diamond has been replaced by Barclays’ head of retail and business banking, Antony Jenkins, and Agius by financial industry veteran David Walker.

Jenkins has been quick to stamp his mark, announcing earlier this month a deal to buy the British online arm of Dutch bank ING, as he looks to refocus attention on Barclays’ retail arm and away from the investment unit in the wake of Libor.

The Libor fallout risks becoming much wider, with analysts claiming that Barclays could face massive lawsuits, since mortgage rates passed onto customers were influenced by Libor.

Although Barclays is the only bank to have been fined over Libor, it is understood that at least 15 lenders globally are being investigated for potential rate manipulation.

Britain’s government on Wednesday announced plans to make it a criminal offence to manipulate interbank Libor lending rates, backing the findings of a major report into the Barclays rate-rigging scandal.

London, Oct 18, 2012 (AFP)

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The British Insurance Brokers’ Association (BIBA) has welcomed further clarification from the Financial Services Authority (FSA) on the transition to the new regulator, the Financial Conduct Authority (FCA).

BIBA is pleased that the FSA’s paper ‘Journey to the FCA’ provides more detail on the important changes that will impact members when the FCA becomes effective in early 2013.

Steve White, BIBA’s Head of Compliance and Training, said: “We welcome the signal in the paper that the FCA will work closely with trade associations going forward.  We have been in regular contact with the FSA as they have put their plans together and we will continue this as the transition to the FCA happens.  However, we continue to remind the regulator that regulation needs to be appropriate, proportionate and cost effective.”

BIBA has been working with politicians and Lords to suggest amendments to the Financial Services Bill so that the government can ensure there is downward pressure on costs for brokers, and that regulation is proportionate to the low risks that brokers pose.

Eric Galbraith, BIBA’s Chief Executive, added: “Regulation is the big issue on members’ agenda. The paper from the FSA is a positive step but we still want certainty from the government that the cost and style of regulation is proportionate to the low risk and nature of insurance brokers. We are not asking for light regulation, but the right regulation and are looking forward to working even closer with the FCA.”

The FSA’s paper sets out a new level of detail on key areas, such as the new powers, the authorisation process, supervision procedures, enforcement, new policy risk and research decisions, maintaining relations with stakeholders and how the FSA will be more accountable and transparent.

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QBE announces a reorganisation of its relationship management structure for brokers and clients in the South of England. 

Business currently handled by QBE’s Reading office (which formed part of the company’s acquisition in April 2012 of Brit UK’s regional operations), is being redistributed between QBE’s London, Bristol and Birmingham offices and a new office which it is opening in Chelmsford, in a move which will allow the company to build on its existing commercial relationships and better service the needs of brokers across the South of England.  As a result of this change, QBE’s Reading office will close at the end of October 2012.

The new Chelmsford-based National office will in particular focus on QBE’s Commercial Combined offering, with seamless links to the specialist underwriters in the London office when necessary. QBE already has a long-established presence in Chelmsford which is and will remain the main office for QBE’s Motor business.

Paul Scott, Commercial Manager of QBE’s National South office, said: “The move to Chelmsford will allow clients and brokers to benefit immediately from the combined strengths of the new office and give them access to a wider product range. We will of course continue to work closely with our clients and brokers across the region.”

Richard Beaumont, Regional Manager, London and South National, QBE, added: “The South is an incredibly important region for QBE. Establishing a regional presence in Chelmsford and extending the footprint of our Bristol and Birmingham operations will allow us to build on the success of our London business and enhance our ability to service the needs of all our clients and brokers across the south of England.”

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According to catastrophe modeling firm AIR Worldwide, the 17th named storm of the Atlantic hurricane season, Tropical Storm Rafael, is moving away from the Leeward Islands after battering the islands with strong winds and heavy rain. As of the National Hurricane Center’s (NHC) 11:00 AM EDT advisory, the storm is located approximately 170 miles northeast of San Juan, Puerto Rico and approximately 850 miles south of Bermuda. Rafael has maximum sustained winds of 60 miles per hour with tropical force winds that extend outward from the center an impressive 175 miles. The storm’s forward speed has slowed to 12 mph, which has allowed it to become more organized. A tropical storm watch is in effect for Bermuda.

“Rafael has entered an area favorable for intensification; sea surface temperatures are warm and wind shear is relatively weak,” said Scott Stransky, senior scientist at AIR Worldwide. According to the NHC, it is possible for the storm to gain hurricane intensity later today. The most likely track brings Rafael towards Bermuda on Tuesday.

Bringing strong winds and heavy rains, with accumulations of 2 to 4 inches, the storm downed trees and power lines, damaged roofs, and flooded low-lying areas throughout several Caribbean islands, including the Virgin Islands, Trinidad and Tobago, St. Kitts, and Antigua.

According to AIR, in these affected territories, building stock and code enforcement can vary widely. The common construction types for residential structures in the region include wood frame, unreinforced masonry, and reinforced masonry, although the distribution of these construction materials depend on local practices. In Saint Martin, for example, construction must comply with French building standards, resulting in a consistent and robust building inventory. On the Dutch side of the island, Sint Maarten, attention to design standards is not as uniform, and building stock tends to be constructed of weaker wood frame or unreinforced masonry construction.

Stransky continued, “Although the wind speeds are likely too low to cause significant damage, some locations may experience flood-related damage. Flood waters which penetrate into vulnerable wood frame and unreinforced structures can cause damage, primarily to the building’s contents. Auto damage may also be significant, particularly in places where floodwaters rise rapidly, leaving little time for their evacuation.”

“The most likely forecast track takes Rafael just east of Bermuda by Tuesday but it does not currently represent a risk to the U.S. Given that the radius of tropical storm force winds is about 175 miles (mainly to the east of the system), Puerto Rico and Bermuda will be right on the borderline of tropical storm-force winds, and will escape Rafael’s strongest winds. However, a shift in the track towards the west could bring stronger winds closer to Bermuda. Wind damage is expected to be minimal; its most substantial effect throughout the region will likely be from flooding.

The storm is expected to bring rainfall accumulations of three to five inches over the Lesser Antilles and the Virgin Islands with one to three inches expected in Puerto Rico. The heaviest rainfall—as much as 10 inches in isolated areas—
can affect the region’s mountainous areas, creating a risk of life-threatening flash floods and mudslides.

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Allianz Global Corporate & Specialty (AGCS) has appointed Chris Turberville as Head of Marine Hull and Liability (UK). Mr Turberville will be based in the London office and will take responsibility for managing the UK’s Hull and Liability team and portfolio. He will report directly to Duncan Southcott, Regional Head of Marine at AGCS.

Mr Turberville has worked in the London market since 1986 where he started his career with Commercial Union until 2002. He then moved to Thomas Miller for 5 years as the underwriter and then Operations Director for Dex in London. Before being recruited by AGCS he was employed by Groupama Transport in London as the Deputy General Manager and Hull Underwriter for the Hull and yacht books, underwriting the full range of hull business.

Duncan Southcott, Regional Head of Marine at AGCS comments:

 “It’s very satisfying to welcome someone of Chris’s calibre to the team. He’s an energetic, highly motivated individual and I wish him every success in his new position.  Chris has an excellent track record as evidenced by his 25 years career in the London Marine Market as well as his degree in Maritime Studies.”

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Many of us are ‘In the Dark’ about mobile security with only 54% of mobile device users in the UK able to pass a basic mobile device security test, leaving them at risk of issues such as ID theft. That’s the conclusion of an extensive online study from free online advice site, knowthenet.org.uk, which today launches an interactive test, to educate and help Britons secure their smart devices.

The mobile device is at the centre of our personal and professional lives with more than half of adults owning a smartphone and one in 10 having a tablet. Yet research by knowthenet.org.uk, which surveyed 1,000 smartphone and tablet users, reveals that Britons are making basic mobile device security errors, leaving them vulnerable to ID theft and other forms of cyber fraud.

Fraudsters only need three pieces of information to steal an individual’s identity, trading digital identities in thousands of covert online marketplaces for less than $1 apiece; yet shockingly, 38% of GB adults online with a mobile device keep key personal data such as online banking details (4%) and social media passwords (18%) on their device, and 44% of all smart device users don’t even have a password to protect it. Phones can be compromised when stolen, and cyber-criminals can even intercept data when you’re surfing free Wi-Fi in a coffee shop or airport.

We are putting ourselves at risk:

– 43% don’t have security measures in place such as anti-virus software, remote wipe or the latest operating system, leaving them vulnerable to a wide range of threats

– 21% of 16-24 year olds have been ‘phone jacked’, risking data and ID theft

– 19% would log-on to unencrypted WiFi exposing themselves to sniffing attacks

– 17% have clicked on an unknown link sent to their device, including website links in the devices internet browser (10%), a link in an email (6%), risking malware infection and phishing attacks

We are confused over security:

– 27% aren’t aware that they need to protect their mobile device, 31% don’t know how to and 19% don’t think it’s necessary

– 28% don’t know how to judge whether an application is secure

120,000 smartphones are stolen in the UK each year, which demonstrates the scale of the risk and the need for people to secure their mobile devices.

Phil Kingsland, Site Director at knowthenet.org.uk, said, “The prevalence of mobile devices is making them a target for cybercrime. The personal and sensitive information stored on the devices, their portable nature and a failure to view them as a target for crime means users in the UK are now vulnerable to device fraud and security lapses. That’s why we have launched a free online test on our Internet advice site, knowthenet.org.uk, which will put participants through a number of scenarios, designed to stop people being in the dark about mobile security.”

A focus group led by professional ‘white hat hacker’ and security consultant for knowthenet.org.uk, Peter Wood, highlighted the issue. Only half of the group had password protection on their smart device, yet when discussing the storage of sensitive information, one participant said “I’ve got my pin code (credit card) in the notes on my phone”. After it was highlighted how little information is needed to defraud an individual and how often this information is stored on a smart device, one participant reflected the general mood, saying, “I thought people stole phones for the phone, not for information.”

Later in the session, the security expert demonstrated how easy it is to view an individual’s browsing activity when connected to an unencrypted WiFi network – allowing malicious users to steal information even without direct contact with your phone. After showing participants the personal information obtained by viewing their net activity, one participant said she was “shocked at the information that can be seen” while another said “I won’t be using unencrypted WiFi anywhere”.

After participants discussed the security of smart devices, one participant said “I’m probably not as aware or as cautious about it as I should be really. I logon, do my stuff and that’s it. I don’t really think about anything else.” Another said “I think I’m going to be finding an App which remotely wipes data as soon as my phone gets stolen”.

Peter Wood, CEO of First Base Technologies and knowthenet.org.uk security expert said “The research shows there’s low understanding of smartphone and tablet security and that people are complacent when it comes to protecting and securing their devices. This mindset needs to change as criminals now see mobile devices as a valuable target. As a result, we have put together some top tips to help people make their mobile device more secure”.

Top tips:

– Don’t leave important data on your smartphone or tablet

– Don’t do financial transactions or enter passwords on public WiFi

– Set-up remote wipe and device location capabilities

– Download an antivirus app for your phone and check your phone is running the latest version of the operating system

– Create a strong password (long but memorable) and set your screen lock at a five minute, or less, timeout

– When downloading an app, check the author’s web site and other users’ comments and be mindful of what data and services you’re allowing it access to

Knowthenet.org.ukhas launched a free online test – similar to the one used in the research – which lets consumers test their understanding of mobile device security. It is accessible at www.knowthenet.org.uk/inthedark with further articles on how to stay safe on the Internet accessible at knowthenet.org.uk.

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Standard & Poor’s Ratings Services assigned its ‘A-‘ long-term issue rating to the proposed $500 million undated notes to be issued by French insurer CNP Assurances (A+/Negative/–). The rating on the notes is subject to confirmation, following S&P’s receipt and review of the final terms and conditions.

The rating is two notches below the counterparty credit rating on CNP, reflecting the standard notching for junior subordinated debt issues. S&P has analysed and rated the proposed debt issue on the understanding that, when issued, the notes will be subordinated to debt held by senior creditors.

The rating agency expects to classify the notes as “intermediate equity content” under their hybrid capital criteria, and would confirm this following the review of the final terms. S&P includes securities such as these in total adjusted capital (TAC) up to a maximum of 25% of TAC, which is their measure of available capital in the consolidated risk-based capital analysis of insurance companies. Under such criteria, the notes can only be included if they are also considered eligible for regulatory solvency treatment and the aggregate amount of included notes does not exceed the total amount eligible for regulatory solvency treatment.

S&P understands that the notes contain interest deferral provisions that enable CNP to optionally defer coupons at any time, unless the issuer has declared or paid dividends during the six months before the interest payment date. CNP can call the junior subordinated notes after six years, in October 2018, and on any coupon date thereafter, subject to approval from its regulator. Initially, CNP will pay a fixed coupon for six years, after which the coupon will be reset every six years. A step-up of 100 basis points would apply at the second reset date (October 2024).

S&P understands that CNP plans to issue these notes to strengthen its regulatory solvency margin, which was 183% including unrealized gains and 113% excluding these gains at June 30, 2012.

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Customers are still struggling to understand annuity products and aren’t offered enough information, according to research conducted by Age UK Enterprises. Despite calls to make annuity provision more transparent, 31% of respondents who have a defined contribution or additional voluntary contributions pension pot said that they were not made aware by their pension providers that they have the right to shop around for an annuity that best suits their needs

Purchasing an annuity is a once in a life time decision so getting the best rates and the right type of product is crucial. However, a third of respondents (32%) didn’t know about the Open Market Option or what it meant when they bought their annuity. And 38% of customers were not aware that certain medical conditions or lifestyle factors such as smoking could considerably improve their annuity rate.

The research also found that almost a third of over 60s (29%) are feeling uncertain or negative about their current financial situation, for reasons which range from the economic crisis hitting their pension pots (27%) and lack of planning for retirement (18%) to pension pots being much smaller than expected (10%). 3% blame their negative emotions on receiving bad financial advice and therefore failing to make the most of the money that they had.

Gordon Morris, Managing Director, Age UK Enterprises, said of the findings: “It is disappointing to see that customers are still being let down by some pension providers who are still not clear enough about the open market option when discussing annuities. This is a once in a lifetime purchase, so the industry as a whole has to do more to support customers and provide them with the information they need to pick the right product for their lifestyle and needs.

 “Shopping around for the right type of annuity and the best rates is one way to enhance your income in later life. No one should simply accept the annuity offered by their pension provider; they should check first if other companies offer higher rates or a product that better suits their needs.”

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Standard & Poor’s Ratings Services has raised its ratings on Dublin-based, Allianz Worldwide Care to ‘A+’ from ‘A’. The outlook is stable.

The upgrade reflects AWC’s sound track record of strong and stable underwriting and operating performance. Its five-year average net combined ratio is 96.2% (2007-2011) and the volatility level inherent in the ratio is less than 1%. (Lower combined ratios indicate better profitability. A combined ratio of more than 100% signifies an underwriting loss.) In addition, AWC has an average return on equity of 21% and return on revenue of 5% and has reported a net profit in each year over the past five years, even as the company doubled in size in terms of gross premium income (€302 million in 2011, up from €136 million in 2007). Furthermore, AWC restructured its investment portfolio to underpin its strong underwriting performance with stable investment income and protect its capital base, which is regarded as positive.

Based on S&P’s base-case scenario, it is expected that AWC will sustain its strong operating performance and continue to report combined ratios of around 96% while increasing its premium income by 10%-20% in 2012-2014. It is also anticipated that the company will maintain its conservative investment profile and average credit quality of the portfolio at least within the ‘A’ range.

The ratings continue to be underpinned by the company’s strategic importance to Allianz Group (main operating entities are rated AA/Negative/–). The ratings continue to be offset by AWC’s competitive position and capitalization, which are viewed as weaker components of the ratings despite being good (within the ‘BBB’ range).

Based on S&P’s base-case scenario, it is not expected any material improvements in these components of the ratings in the next two years, but capital adequacy ratio is expected to be maintained at least within the ‘BBB’ range according to S&P’s capital model; this translates into a solvency margin of over 160%. The rating agency expects that if needed, Allianz Group will continue to provide capital support to AWC to meet the higher capital requirements of the business as it continues to grow.

According to S&P, AWC is likely to remain a strategically important member of the Allianz Group and will continue to maintain its position in its key U.K. and German corporate markets. S&P anticipates that AWC is likely to continue to further reinforce and diversify its geographic reach, particularly to new markets with high growth potential, suggesting that there is potential for on-going franchise development.

Standard & Poor’s considers a positive rating action to be remote. They could take a negative rating action if a significant change in the competitive environment shrinks underwriting margins and restricts growth, if capitalization weakens to below the ‘BBB’ range, or if the solvency margin falls to less than 160%.

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QBE has entered into a partnership agreement with the Institute of Risk Management (IRM) involving sponsorship of the Risk Leaders Conference, Professional Development Forum and Special Interest Groups.

The IRM is the world’s leading enterprise risk management institute. It operates internationally, with over 4,000 members and students in over 100 countries. The Risk Leaders Conference is aimed specifically at Heads of Risk and those responsible for risk at a board level, with workshops and speakers covering a wide range of risk management issues. The Professional Development Forum is the largest UK event for risk management professionals and offers seminars, speakers and networking opportunities for all business sectors. The Specialist Interest Groups run by the IRM are clusters within vertical markets where risk management is particularly nuanced and important.

Richard Thomas, Head of Risk Management Services Practice at QBE, said: “Risk management is an important business discipline for all types of businesses. The Institute of Risk Management is a leader in this field and as such QBE feels that its own values and principles towards risk are mirrored by the Institute. We are very pleased to be partnering with the IRM and look forward to working closely with them in future.”

David Draper, Director of Client Management, QBE, said: “The scope and diversity within the IRM allows us the opportunity to engage with company directors and business leaders across all sectors. We hope that this will enable us to develop a greater understanding of emerging issues that differing types of businesses are facing and where our experience and insight might be able to help and add further value.”

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Standard & Poor’s Ratings Services has placed Groupama UK on CreditWatch with positive implications.

Groupama UK’s parent has agreed to sell the company’s non-life insurance business to Ageas UK. The CreditWatch placement reflects S&P’s expectation that once the acquisition has officially completed, the ratings on Groupama UK will no longer be constrained by those on Groupama S.A. (BB/Negative/–). Until completion, we understand that, based on regulatory restrictions and contractual arrangements, Groupama S.A. has limited ability to weaken the financial risk profile of Groupama UK, and little incentive to do so.

The ratings on Groupama UK reflect our view of its good stand-alone credit characteristics. These include its conservative investment portfolio, a good and improving operating performance, and a good competitive position. Partially offsetting these strengths are the long-term uncertainty surrounding the insurer’s underperformance in its commercial motor and property accounts and Groupama UK’s concentration in the very competitive U.K. motor insurance market, from which it derived 51% of its premiums in 2011.

Additionally, there is some uncertainty regarding the continuity of Groupama UK’s broker relationships and commercial business given the recent financial pressures at Groupama S.A. and following the sale of part of the group’s U.K. broking operations. Groupama UK and the U.K. broking arm operate as a distinct and independent business unit within the Groupama group. The September 2012 agreement that Groupama S.A. signed with Ageas UK covers the sale of the group’s U.K. non-life insurance business but excludes the broking services.

We expect to resolve our CreditWatch placement on approval of the acquisition by the U.K.’s Financial Services Authority. If the acquisition goes through, the rating on Groupama UK will be based on our assessment of its stand-alone financial and business characteristics. We currently expect to raise the ratings on Groupama UK to the ‘BBB’ category when the transaction completes. This is expected to take place during the fourth quarter of 2012.

In the event that the acquisition does not go through, we will resolve the CreditWatch placement and the ratings on Groupama UK will remain constrained by those on Groupama S.A.

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