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London : FSA and SEC roundtable discussion on market structures

Legal

Oct 15, 2011

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FSA managing director Martin Wheatley and US Securities and Exchange Commission (SEC) chairman Mary L Schapiro have jointly held a roundtable discussion in London with global regulators on market structures.

The roundtable was attended by markets and securities regulators from Europe, the Americas, Asia and Australia.

The roundtable focused on a number of market structure issues specifically automated trading strategies such as high frequency trading (HFT), market fragmentation and undisplayed liquidity (for example, “dark pools”). The meeting also discussed the appropriate approaches regulators might adopt in the light of these market structure developments.

There were extensive discussions on all aspects of HFT, which noted the positive and negative effects of HFT; impact on market liquidity and market efficiency; the potential for market abuse and the impact on long-term investors. The meeting also highlighted the need for global coordination on regulatory approaches to HFT.

Further areas of discussion focused on the impact of market fragmentation, particularly the benefits and consequences of the growth of alternative trading venues as well as analysis of the impact of undisplayed liquidity.

Martin Wheatley said:

“The meeting provided an opportunity for regulators from around the globe to discuss vital markets structure issues, particularly the impact and role of high frequency trading. The meeting allowed for the sharing of useful information between the regulators and will contribute to a sound basis for continued work to be done at a global level.”

SEC chairman Schapiro said:

“The rapid developments in trading technologies and trading platforms have had a profound impact on the evolution in the structure of markets around the world. This roundtable provided an important opportunity for regulators to share their experiences and their views on these developments. Cooperation among regulators at an international level is increasingly vital in ensuring the safety and soundness of our markets and protecting investors, and the meeting was a tremendous success in advancing such cooperation on market structure issues.”

The meeting laid the groundwork for future discussions on these issues, allowing securities regulators an opportunity to continue to work together to address advances in technology and new trading strategies.

AIR Worldwide : insured losses estimated Less than USD 52 Million

International

Oct 14, 2011

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After striking a sparsely populated stretch of Mexico’s Pacific coast on October 11 as a Category 2 hurricane, Jova weakened as it traveled inland towards the north, dissipating late last night over the state of Nayarit. Because it was a small storm and weakened to tropical storm strength within 12 hours of landfall, damage from Jova’s winds has been limited. AIR estimates insured losses from flood-induced damage, as well as from some isolated wind damage along southern coastal areas, to be less than MXN 700 million (USD 52 million).

“Heavy rainfall, which began as Jova’s outer rain bands approached the coast prior to landfall and is finally subsiding after the storm’s dissipation, has caused serious flooding and landslides in parts of Colima and Jalisco,” said Dr. Tim Doggett, principal scientist at AIR Worldwide. “Mexico’s coastal mountains enhanced precipitation on the north and east sides of the storm. As the slow-moving storm came ashore, its counterclockwise flow of air was forced over the mountainous terrain, cooling in its ascent and forming clouds and precipitation.”

The highest recorded wind speed was a 74 km/h (46 mph) gust in Manzanillo. However, this was located outside Jova’s 15-mile radius of maximum winds. It thus does not reflect the true maximum winds that were located in a very limited area around the eye of the storm at the time of landfall, which according to the National Hurricane Center was around 100 mph.

Initial reports from the Mexico National Weather Service indicate up to 37 cm (14.5 in) of rainfall in parts of Colima, and 10–12 cm (4-5 in) in other impacted areas, including parts of Chiapas, Jalisco, and Michoacán. These rainfall totals fall within the forecast range.

Dozens of towns—including Cihuatlán, La Huerta, Villa Purificacion, and Cuautitlán de García Barragán—have been isolated by floodwaters, which are several feet deep in some places. The Marabasco River, which forms the border between Colima and Jalisco, and ten of its streams have overflowed.

Significant flooding has also been reported in Manzanillo in Colima state, about 60 miles southeast of the Jova’s landfall location. Yesterday, streets in the busy port town remained impassable, and highways that connect Manzanillo to southern Jalisco were closed. Nearby, streets in the coastal towns of Zihuatlan, Melaque and Barra de Navidad were reported to be inundated as well.

Dr. Doggett continued, “Jova passed within 15 miles to the east of Puerto Vallarta, a popular resort city with a population of more than 250,000. Because of its reduced wind speeds by that point (maximum sustained of 65 mph, which put it at tropical storm strength), and the fact that Puerto Vallarta was on the weaker, left side of the storm, the city was spared from significant wind and flood damage.”

According to AIR, most insured residential structures on Mexico’s west coast—including those in Manzanillo and Puerto Vallarta—are made of confined masonry, which performs better than plain masonry under lateral wind loads because of its use of bond beams and columns. However, masonry is characterized by weak connections between building elements and the material itself is pervious to water. Furthermore, a large percentage of houses built every year in Mexico are constructed without a building permit, perhaps as large as 50%. Take-up rates (the percentage of properties actually insured) for residential properties are very low in the region, estimated at around 5%.

Commercial properties in this region are typically constructed of confined masonry or reinforced concrete and usually have stronger foundations than residential buildings, making them less vulnerable than residential structures. Concrete buildings are less vulnerable to flooding than masonry, but may suffer cracking and rebar expansion. Commercial/industrial insurance penetration is estimated at around 70%, and automobiles at 100%.

Dr. Doggett concluded, “In summary, the storm hit a relatively sparsely populated region of the coast, and strongest winds from the storm were highly confined. Furthermore, rainfall accumulations were moderate, but not extreme, in the more populated regions of Jalisco where there are higher concentrations of exposure.”

Source : AIR Worldwide Press Release

Shelter : rents in England are unaffordable

Market

Oct 12, 2011

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Average private rents are unaffordable for ordinary working families in over half (55%) of local authorities in England, new research from Shelter reveals today.

In a sign that those priced out of home ownership are now struggling to meet the costs of renting – often considered the cheaper option – the Shelter Rent Watch shows that in the majority of local authorities, typical rents from private landlords were over a third of average take-home pay, the widely accepted measure of affordability.

The housing and homelessness charity is calling for government to take urgent action to stabilise a rental market that is out of control, and develop policies to bring rents more in line with average earnings. From 1997 to 2007, rents increased at one and a half times the rate of incomes.

Recent research by Shelter showed that 38% of families with children who are renting privately have cut down on buying food to pay their rent.

The figures, which provide a picture of rental affordability across the country for the first time, show that many rural areas are bearing the brunt of high rent rates and low earnings. The research reveals that it’s more affordable to rent in Manchester, Liverpool or Birmingham than it is to rent in north Devon, north Dorset or Herefordshire. And in Yorkshire, the cities of Bradford and Sheffield are both more affordable than the rural areas of Ryedale and Richmondshire.

London boroughs are the most expensive, with the average rent for a two bedroom home in the capital (£1,360) almost two and a half times the average in the rest of the country (£568). The least affordable local authority area outside London is Oxford, where typical rents account for 55% of average earnings.

Campbell Robb, Chief Executive of Shelter, said:

“With huge differences in affordability across the country, there are now worrying signs that families are likely to be displaced by our out-of-control rental market.

“Over recent years we have seen more and more people forced into renting, as high house prices and a lack of social housing have made it the only option for thousands of ordinary families. What we’re seeing now is that renting is no longer the easy, cheap alternative to home ownership.

“We have become depressingly familiar with first time buyers being priced out of the housing market, but the impact of unaffordable rents is more dramatic. With no cheaper alternative, ordinary people are forced to cut their spending on essentials like food and heating, or uproot and move away from jobs, schools and families.

“With rural areas suffering just as much as cities – or in many cases, even less affordable – it’s no longer enough to encourage people to move out of crowded urban areas.

“Government must urgently consider how private renting can become a stable, affordable option for families, and not a heavy financial burden that makes parents choose between buying food for their children and paying the rent.

“This should be the wake-up call needed to finally take action to address our renting crisis.”

Source : Shelter Press Release

AIR Worldwide : Hurricane Jova makes landfall on Mexico’s Southwest Pacific Coast

International

Oct 12, 2011

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Hurricane Jova made landfall as a Category 2 storm in a sparsely populated stretch of the Mexican state of Jalisco, near the town of Chamela at 23:00 local time yesterday (6:00 UTC today). Maximum sustained winds at landfall were nearly 100 mph, as originally forecast. High waves and heavy rain were also reported.

“Today, Jova’s most significant threat is that from precipitation; even prior to making landfall, Jova’s outer rain bands brought heavy rainfall to Mexico’s southwest coast,” said Dr. Tim Doggett, principal scientist at AIR Worldwide. “At this time, Jova’s tropical-storm force winds extend outward for 105 miles. Given the storm’s decreased strength, the extent of wind damage will likely be mitigated. Puerto Vallarta is likely to be the most affected area from a wind perspective; it may experience tropical storm-force winds later today.”

As of the National Hurricane Center’s (NHC) 11:00 AM EST advisory today, Jova is 15 miles east of the popular tourist resort of Puerto Vallarta. The storm has weakened significantly, to tropical storm strength; maximum sustained winds are now 65 miles per hour. Jova is moving slowly north, at 6 mph. The storm is forecast to continue to weaken, dissipating sometime in the next 24 hours.

Dr. Doggett continued, “Jova’s slow speed raises the potential for heavy rainfall accumulations—especially in the higher terrain to the right side of the storm track, including in Guadalajara, Mexico’s second most populous city and the capital of Jalisco. Indeed, given the high exposure concentration in Guadalajara, there is risk of notable flood loss from this event. Rainfall accumulations of 6-12 inches could be seen in the state of Jalisco, as well as in the states of Michoacán, Colima, and Nayarit. Isolated locations could experience accumulations as high as 20 inches.”

Jova made landfall between Manzanillo and Puerto Vallarta; the coastline in this region is dotted with popular beach resorts, though it also includes vast areas that are sparsely populated. Thus, the exposure value in this region is relatively low.

According to AIR, Jova’s Category 2 winds at landfall could have caused considerable damage had they impacted a more densely populated location. Indeed, structural damage to non-engineered buildings may occur from Category 2 winds, particularly to roofs—while windows and the cladding on engineered structures could be damaged by impact from debris. Most insured residential structures on Mexico’s west coast—including those in Manzanillo and Puerto Vallarta—are made of confined masonry, which performs better than plain masonry under lateral wind loads because of its use of bond beams and columns. However, a large percentage of houses built every year in Mexico are constructed without a building permit, perhaps as large as 50%; these buildings are more prone to damage from wind. Commercial properties in this region, meanwhile, tend to be constructed of confined masonry or reinforced concrete.

Although limited wind damage is expected to well-built structures at Jova’s observed wind speeds, the storm is expected to bring torrential rainfall; heavy rains are expected to persist well inland along the track and flooding and mudslides are a major concern.

The damage picture from Jova is still emerging at this time, but the states of Jalisco, Colima and Nayarit are expected to be hit hardest. In the major port of Manzanillo, there have been reports of toppled trees, disrupted power lines and flooded streets. North of Manzanillo, flooding from storm surge remains possible along a 210-mile stretch of Mexico’s coast.

Dr. Doggett commented, “Hurricane Jova’s general movement to the north is forecast to continue as it moves inland today—on a track that will take the storm over western Mexico today and tonight. It is expected to weaken and ultimately dissipate within 24 hours. At present, Jova remains a consolidated system with a well-defined and tight center. Heavy rain is the primary concern.”

In 1959 an unnamed hurricane made landfall in the same area where Hurricane Jova came ashore yesterday, destroying about 40 percent of all homes in Manzanillo. The 1959 hurricane made landfall as a Category 5 storm, however, while Hurricane Jova was a Category 2 storm. Additionally, Hurricane Jova currently was a rather small storm, with hurricane-force winds relatively confined to the center of the eye.

Source : AIR Worldwide Press Release

MoneySupermarket : research shows why people would conceal their credit card

Communication

Oct 10, 2011

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MoneySupermarket reveals new research showing 8% of Brits have a credit card they conceal from their partner. A further 11% of those with credit cards would deliberately make sure their partner does not see the different statements.

The comparison site asked why people hide a credit card or statement, and the top reason for being deceptive was because they feared their partner would be annoyed by the amount of money they spent (40 per cent). Other sneaky reasons for a secret credit card included 38 per cent of people desiring to have their own purchasing freedom, 21 per cent said it was because they wanted to make purchases their partner would not approve of, and 11 per cent believed their other half wouldn’t approve of them having a credit card at all. However, the reasons weren’t all bad natured, 29 per cent of those with a secret credit card proved their motive was a kind one and said they used the card to buy their partner presents without them knowing.

MoneySupermarket also asked what people used their secret credit card for, indulgences for either their partner or themselves topped the reasons for concealed spending with over two fifths, (42 per cent) saying they bought gifts for their partner, while 25 per cent used it to buy expensive clothing or shoes and a further 23 per cent had splashed out on a holiday. Other private purchases included gambling, expensive nights out and jewellery (13 per cent, 13 per cent and 12 per cent respectively). People also confessed to using a ‘covert’ credit card to fund a secret relationship (7 per cent), to pay for adult entertainment (11 per cent) and even private family issues such as child maintenance payments (7 per cent).

Kevin Mountford, head of banking at MoneySupermarket said: “As our research shows, a credit card can be an easy way to make purchases which will be kept separate from the general outgoings of your main bank account. They provide flexibility in repayment terms which allow you to purchase larger items such as gifts for a loved one or allow indulgence on something they couldn’t normally afford to buy in one go, such as expensive clothes or shoes. It’s great to see that not all the reasons for having a secret card are sinister, romance is still alive and well with a high number of people using a card to purchase surprise gifts for their partner or loved one.”

The research revealed that people in the South East were most likely to hide their credit card statements, with one in five (18 per cent) admitting they had done so. Men were found to be almost three times as likely to use their hidden credit card on an expensive night out – a fifth (19 per cent) would fund their festivities this way compared to only 7 per cent of women. Also nearly ten times more men (17 per cent) said they put adult entertainment on their secret card than women (2 per cent), however females topped their male counterparts when it came to putting expensive clothing or shoes on their concealed card or hiding their statements with 35 per cent having done so.

Kevin Mountford continued: “Even if you have a secret credit card for the right reasons you still need to choose the right product for your needs to ensure you’re getting the best possible deal. Someone wishing to make a big ticket purchase and needing to pay off the money over a longer period of time may want to go for an interest free product offering zero per cent on purchases, such as the Marks & Spencer Credit Card offering 15 months interest free on purchases. This could be a good option for credit card users, as there would be no interest on any money borrowed in the event they are unable to pay back the full balance immediately, so long as they were able to at least cover the cost of the minimum repayments. Failing to do so would likely see the 0 per cent promotion pulled.

“As with all credit products, when using a card it is vital customers keep track of their transactions. For those who own a secret or hidden credit card, it may prove that little bit harder to monitor but they shouldn’t forget this is one more thing to think about paying off at the end of the month, those in this situation should not overlook the fact they are borrowing the money they are spending and it will need to be paid back sooner or later”

Source : Moneysupermarket.com

Lloyd’s of London : Florida’s regulation office grants eligible reinsurance status

International

Oct 7, 2011

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The Lloyd’s of London will now have the opportunity to operate in the state of Florida. The Florida Office of insurance Regulation agreed and signed a consent order allowing Lloyd’s of London underwriters to post reduced collateral and operate as an eligible reinsurer.

Lloyd’s represents one of the oldest and largest non-U.S. reinsurers in the United States, and will represent the seventeenth eligible reinsurer operating in Florida with similar terms; it is also the first eligible reinsurer operating in Florida headquartered in the United Kingdom.

Sean McGovern, General Counsel and Director of Lloyd’s America said: “We are very pleased the Florida Office of Insurance Regulation has recognised Lloyd’s financial security and approved our application for reduced collateral.

“Lloyd’s is committed to providing insurance and reinsurance to protect people and businesses in Florida. And the Florida Insurance Office and State of Florida have given us a clear signal that Florida is pro-business and actively encouraging investment.”

Florida is the first state to allow ceding insurance companies to receive full credit on their financial statements for reinsurance purchased from non-U.S. based reinsurers that are highly rated, and financially sound. Lloyd’s reported statutory capital and surplus of $29.9 billion, which exceeds the $250 million requirement. Lloyd’s also indicated secure financial strength by demonstrating favourable ratings from two statistical rating organizations deemed acceptable by the commissioner as having experience and expertise in rating insurers doing business in Florida. Lloyd’s has already been granted status as an eligible reinsurer in the state of New York.

Other eligible reinsurers in Florida include (in alphabetical order): Ace Tempest Reinsurance, Allied World Assurance Company Ltd., Alterra Bermuda Ltd., Arch Reinsurance Ltd., Ariel Reinsurance Company Ltd., Aspen Insurance Ltd., Axis Specialty Ltd., DaVinci Reinsurance Ltd., Hannover Re (Bermuda), Hannover Re (Germany), Hiscox Insurance Co., Montpelier Reinsurance Ltd., Partner Reinsurance Co., Renaissance Reinsurance, Tokio Millennium Re Ltd. and XL Re Ltd.

Source : Florida Office of Regulation

Fitch Ratings : German non-life insurance sector rating outlook to remain stable

International

Oct 5, 2011

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The German non-life insurance sector remains stable according to Fitch Ratings. German non-life companies are well prepared to meet the sector’s challenges, and there should not be significant rating changes over the next 12 to 24 months.

German non-life underwriting profitability should improve in 2011/2012, and the sector should report a net combined ratio of 98%/97%. This compares favourably to 2010 when the sector recorded its weakest net combined ratio since 2002, at 99%. Fitch estimates that the sector achieved a small underwriting profit of EUR25m in 2010, and expects it to achieve an underwriting profit of EUR500m/EUR1.0bn in 2011/12.

The low underwriting result in 2010 was primarily driven by weak underwriting profitability in the motor segment. During 2010, motor gross written premiums increased by 0.5% after declining for five years in a row. However, the net combined ratio deteriorated to 106% from 104% as claims increased by more than 3% that year. The agency expects that the net combined ratio for motor will improve to 104% in 2011 and further in 2012.

“German non-life insurers’ competition for motor business has slowed over the past 12 months, and the sector has maintained underwriting discipline in 2011 so far,” says Christoph Schmitt, Director in Fitch’s Insurance team. “Fitch expects that gross written premiums for motor will increase by a further 4% in 2011 and the trend of increasing premium rates will continue in 2012. As motor represents about one-third total non-life premiums, Fitch anticipates that the sector will report improved underwriting profitability in 2011 and 2012.”

Due to the low investment yield environment and the sharp decline in DAX30, Fitch expects the sector to report a lower net investment return rate of 3.9% for 2011 and investment earnings to decrease to EUR5.4bn in 2011 from EUR6.0bn in 2010. German non-life insurance companies were able to achieve a higher net investment return rate of 4.3% (2009: 4.2%) in 2010, based on Fitch’s calculations.

In common with previous underwriting cycles, the soft phase of the current underwriting cycle has not eroded German non-life insurers’ capitalisation (other than through the reduction of equalisation reserves). Gross and net claims reserves continued to increase through the soft market. Reserving practices remained strong, but Fitch believes that they may have been slightly less conservative than prior to the current soft market.

Source : Fitch Ratings

Marsh : global insurance rates flat for Q3

Market

Sep 30, 2011

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Insurance brokers Marsh said insurance rates are rising for property in high risk areas, while rates are falling for many lines of professional insurance.

The hottest topic at virtually any gathering of insurance executives of late is rates, and whether more than $70 billion in disaster losses around the world this year will force an across-the-board “hard market” where insurers have pricing power with customers.

But the Marsh report suggests the industry is instead seeing pockets where rates are strengthening, particularly in areas that have either suffered disasters already this year or are considered at risk.

“The effect of losses earlier this year meant that even property programs not affected by losses — but with catastrophe exposures — typically renewed with increases of up to 10 per cent,” Marsh said in a summary of the report.

In Japan, the devastating March earthquake forced rate increases of 20 to 50 per cent, while rates went up at least 5 per cent in Australia after heavy flooding earlier in the year.

On the other hand, Marsh said rates actually fell in most of the world on many kinds of liability insurance, including directors’ and officers’ policies for public companies and liability coverage for financial institutions.

“Overall, despite significant insurance losses in the first half of the year, insurers have remained competitive but cautious,” Marsh said.

Source : Reuters

Greece : smoking may be good for the state

International

Sep 30, 2011

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Between public health and public finances, the Greek government Friday tried to split the difference, allowing smoking in some nightclubs and casinos in exchange for paying a special tax.

A law passed last year had banned smoking in nightclubs and casinos — a move to discourage the cigarette habit in a country that holds the European record for smokers.

In reality, however, the ban is daily violated in Greek cafes and restaurants.

On Friday the ministries of health and finance issued a statement saying that night clubs and casinos of more than 300 square metres (3,230 square feet) could set aside “half that space” for smokers, if they pay a tax of 200 euros ($270) per square metre annually.

The first payment must be made by November 30, in a bid to feed the public coffers before wrapping up the 2011 budget, as debt-mired Greece faces an European audit to secure the next payment of an EU-IMF bailout needed to avoid default.

Athens, Sept 30, 2011 (AFP)

Motorbike Insurance: Worth The Money

Sponsored

Sep 29, 2011

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The most recent figures released by the Department for Transport show that, in 2009, 21,500 casualties involving motorcycles occurred on Britain’s road. These accidents ranged from the incidental to the severe and, ultimately, fatal.

What is clear, above all else, is that, regardless of the skill of the driver, the threatening spectre of an accident forever looms large. The importance of taking the time to compare motorbike insurance and discover the perfect cover cannot be understated.

Bike insurance is there to cover the cost of damage and injuries incurred while riding so you don’t foot the expense. In addition, it offers cover to theft and accidental damage. In layman’s terms, three types of cover are available:

Third party

This covers the owner for injuries to others and their property as a result of a motorcycle accident.

Third party, fire and theft

As above with additional cover for your own bike in the case of theft or damage caused as a result of attempted theft or a fire.

Comprehensive

As the name suggests, comprehensive cover includes all the benefits detailed in the previous two insurance groups as well as the chance to make a claim for any damage suffered by your own vehicle in the event of an accident.

Such claims are subject to policy exclusions. Standard and optional extras are frequently available for all insurance policies including breakdown cover, travelling in Europe and using other bikes.

The importance of being insured while in charge of a vehicle cannot be overstated as it affects both yourself and others. According to statistics from the Motor Insurers’ Bureau, one in 25 road-users is uninsured. An estimate of 23,000 people are injured and 160 killed by uninsured motorists every year. The cost of uninsured drivers to insurance firms is a staggering £500 million a year whilst the problems generated from uninsured driving increase each individual annual premium by an average of £30.

Riding a bike without insurance is, put simply, breaking the law and can result in you being issued a fine, getting points on your license or having your vehicle confiscated by the police.

Though the insuring a bike may seem like an unwanted expense, it is nothing in comparison to the potential cost of failing to do so. In addition, there are hints and techniques to follow to ensure you get the right cover for you without any unnecessary expenditure.

– The importance of taking the time to look around and find the perfect premium cannot be overlooked.

– Knowledge and research are essential when it comes to getting cover without overspending.

– Your premium will be decided by an evaluation of your ‘risk level’ which considers a number of factors.

For example, as with a car, your claims history and driving record will be taken into account, as will the amount of time you spend on a road. Furthermore, your personal circumstances, parking arrangements and bike type can affect what you pay.

Typically, a small engine bike stored in a locked garage overnight will cost less to insure then a high performance alternative. Small details like consulting your provider over what security devices you could install all help keep the premium down.

Additionally, completing an approved advanced riding course will cut costs, as will agreeing to pay a higher excess. All policies will expect the rider to pay the first part of any claim, known as a compulsory excess. Offering to pay a higher excess, in addition to the compulsory original, should save money on your premium.

Insuring your motorcycle is an unavoidable legal requirement. Providing you take the time to research and check the, you can roam the roads in safety without breaking the bank.

XL Insurance : insurance solutions for upper middle market companies in the Nordic Region

Social

Sep 28, 2011

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XL Insurance has announced the extension of its Nordic Region team, which offers insurance solutions to upper middle market companies. An underwriting team, based in Stockholm, will serve companies with a revenue of approximately EUR 30 million to approximately EUR 300 million. The Upper Middle Market team will focus on offering property and casualty policies, with a capability to provide a combined solution, if required.

As a result of the extended offering, XL Insurance has hired two new underwriters:

– Jan Jonassen, Manager, IPC Middle Market, brings almost 15 years of experience in liability broking and underwriting and rejoins from Chartis.

– Anthony Herring, Property Underwriter, joins from FM Global where he spent the past 4 years as underwriter.

Peter Wullimann, XL Insurance’s General Manager for the Nordic Region, said: “Middle Market companies form an important part of the Nordic economy. As they grow, they find themselves facing new and complex risks”.

“Having earned trust in the market place primarily serving large multinational companies, I am very pleased that we can now offer our capabilities and strengths to a new segment of clients. With our service commitment, underwriting expertise and global network we can support these companies both in their domestic markets and internationally. Our entry into this segment is an important element of XL Insurance’s growth strategy in the Nordic Region.” Added Mr Wullimann.

Daniel Maurer, Chief Underwriting Officer, International P&C Middle Markets, responsible for implementing this initiative, commented: “Our dedicated Upper Middle Market underwriting team will offer comprehensive property and casualty policies from a wide range of sectors.”

With XL WorldPass we can also provide a Global Program solution with coverage in more than 100 countries, helping clients to respond to tighter and more complex local regulatory frameworks as they look to expand abroad.”

Source : XL Insurance

S&P : financial markets are the main test for German insurers

International

Sep 27, 2011

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Ratings agency Standard & Poor’s believes insurance companies in Germany will continue and demonstrate resilient credit fundamentals following tough operating and financial conditions. German insurers and Germany based subsidiaries of international groups thus have an average rating of ‘A’ from S&P. In a recent market report, Standard & Poor’s says that it expects credit quality in the German non-life insurance market to remain stable, while the life insurance sector may see a downward trend over the next few years.

Standard & Poor’s report :

The report titled, “German Insurers’ Staying Power Faces An Endurance Test From The Financial Markets,” states that German life insurers will likely undergo greater challenges than their non-life counterparts.

We expect life insurers to be potentially more exposed than non-life insurers to persistently low interest rates, volatile equity markets, increasing credit risk, and forthcoming EU Solvency II regulatory measures. Lower bond yields reduce the spread between investment income and guaranteed rates on life insurance policies, which could strain capitalization and exert pressure to cut crediting rates. Life insurers will have to balance competitive crediting rates to policyholders to sustain new business against the need to protect policyholder capital buffers and financial resources.

Non-life insurers are, on average, better capitalized than life players, have a greater ability to generate earnings, and are less reliant on investment returns; therefore, their credit quality should remain stable. Nevertheless, in this highly competitive segment, reduced investment returns have, in our view, not led to an increased focus on underwriting profits in recent years.

We also monitor rated German insurers’ credit exposures to certain European sovereign issuers, mainly in the southern part of the continent. Currently, we don’t expect exposures to Portugal, Ireland, and Greece to have the scale to significantly erode German insurers’ capital bases. Nevertheless, exposures to Italy and Spain are more material, and increasing credit risk stemming from these countries could create rating pressure on Germany’s insurers.

From this perspective, we believe positive rating momentum in the German insurance market is relatively unlikely. Positive impetus could arise from a sustained gradual rise in interest rates or a strong improvement of underwriting performance. Instead, we regard ratings downside as more likely if financial market volatility reduces German insurers’ capital positions to levels that are inconsistent with our current ratings.

Source : S&P

Plum Underwriting : launch of seminars to help brokers tackle non-standard risks

Communication

Sep 26, 2011

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Plum Underwriting has launched a series of workshop events for brokers entitled ‘Back to the Broker’. Key objectives include; enhancing brokers’ ability to identify and cater for the growing demand for non-standard household risks and to provide technical training. It also offers participants the opportunity to provide feedback on their needs and requirements to key members of the Plum team.

Plum, which was recently voted fifth best for service by brokers in a market wide survey, held the first event in the City of London. It featured an interactive technical workshop on the underwriting of subsidence risks, where brokers benefited from Plum claims manager David Hole’s 27 years of knowledge and practical experience. This was followed by an open forum in which attendees were invited to raise and discuss issues relating to the underwriting of non-standard household risks.

Plum managing director, David Whitaker said: “The Back to the Broker initiative is part of our commitment to supporting brokers and is designed to further build close working partnerships with them. Because understanding about non-standard household insurance varies greatly in the market, we believe an underwriting perspective is useful for brokers in further understanding this class of business and the opportunities it presents.

“Further events are scheduled around the country in the next twelve months, with the next due to be held in Bristol in November. Feedback provided in the open forum sessions will have a direct bearing on the products and services Plum offers.”

Source : Plum Underwriting

S&P : Russian insurer Pomosch rated ‘B/ruA-‘ with a stable outlook

International

Sep 21, 2011

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Standard & Poor’s Ratings Services said today it assigned its ‘B’ long-term counterparty credit and insurer financial strength ratings and ‘ruA-‘ Russia national scale rating to Russia-based insurance company Pomosch Insurance Company Ltd. (IC Pomosch). The outlook is stable.

The ratings on IC Pomosch reflect our view of the company’s weak competitive position in international terms, the high industry and country risks in Russia, and the company’s weak capitalization. These factors are offset by IC Pomosch’s marginal operating performance and quality of investments.

IC Pomosch was established in 1995 as a regional insurer based in St. Petersburg, predominantly focused on corporate property insurance and travelers’ medical insurance in the region. In 2007, the company opened a branch in Moscow, which created significant business inflow in 2008, particularly, increasing volumes of obligatory insurance that cover liabilities under state contracts.

We consider IC Pomosch’s overall competitive position to be weak in international terms, as reflected in the company’s relatively small size and generally low brand recognition in the Russian insurance market, except for niche segments where it is well represented. IC Pomosch’s lack of regional presence and recent penetration in new and highly competitive insurance lines are additional constraints. We note that the company’s competitive position also reflects the high industry and country risks in Russia.

In 2010, IC Pomosch was ranked No. 53 among direct insurers in Russia, posting gross premiums written (GPW) of Russian ruble (RUB) 1.6 billion (about $55 million). About 23% of the company’s GPW came from obligatory insurance that covers liabilities under state contracts, and in this segment IC Pomosch had a leading market share of 12%. The Russian insurance regulator imposed obligatory insurance in 2005, but abolished it in August 2010. Owing to this, we believe that IC Pomosch’s competitive position could weaken in 2011. However, we consider that IC Pomosch could partly compensate for the loss in this type of insurance through growth in insurance of construction risks and liability insurance, an area in which it ranks in the top 10, based on GPW.

We assess IC Pomosch’s capitalization as weak and weighed down by weak risk-based capital adequacy, but supported by adequate reinsurance protection. Capital adequacy, according to Standard & Poor’s risk-based insurance capital model, is weak: As of Dec. 31, 2010, available total adjusted capital (RUB571 million) was 65% lower than the level commensurate with the ‘BBB’ rating. However, we note that IC Pomosch has increased its statutory capital to RUB850 million, which exceeds the new regulatory requirements of RUB480 million (effective Jan. 1, 2011) for companies transacting reinsurance business.

The quality of IC Pomosch’s reinsurance program is adequate, in our view. The company places about 79% of its outward reinsurance with companies rated ‘A-‘ or higher, which is on par with large insurance companies in Russia.

We consider IC Pomosch’s operating performance to be marginal, reflected in a very high expense ratio, but very low loss ratios. The net loss ratio was a low 29% in 2010 compared with 17% in 2009. This stemmed mainly from the low loss ratio relating to obligatory insurance that covers liabilities under state contracts, insurance of construction risks, and other liability insurance. However, we note that the company’s net expense ratio is very high compared with that of regional peers. In 2010, the net expense ratio was 75% compared with 82% in 2009. However, IC Pomosch’s net combined ratios increased to 104% in 2010 from 99% in 2009.

We believe that the quality of the company’s investment portfolio is positive for the rating. In 2010, the investment portfolio constituted bonds (60% of the investment portfolio), shares (15%), loans (3%), cash and cash equivalents (20%), promissory notes (1%), and mutual funds (about 1%). In our view, IC Pomosch’s overall credit risk is moderate, reflecting the company’s investments in fixed-income instruments of marginal credit quality. IC Pomosch is exposed to market risk through its investments in equities that are subject to significant market volatility. We note, however, that the company invests in the equities of Russian blue-chip companies and currently aims to decrease its equity exposure to less than 10% of the investment portfolio. Net investment income totaled RUB14.9 million in 2010, up from RUB0.7 million in 2009.

The outlook is stable because we expect IC Pomosch to preserve the marginal quality of its investments, while showing at least marginal operational results in 2011 and beyond. We expect IC Pomosch’s competitive position to be weak overall, although the company could successfully develop in particular niches. We do not expect IC Pomosch’s combined ratio to decrease to less than 90% in 2011-2012, owing to an expense ratio that is higher than peers’.

A significant deterioration of earnings, competitive position, quality of reinsurance protection, or capitalization could lead to negative rating actions.

A positive rating action is unlikely at this stage, but could occur if IC Pomosch further improved its competitive standing, if Standard & Poor’s risk-based capital adequacy ratio for the company increased to at least marginal levels, and if the other credit indicators stayed at their current levels.

Source : S&P Press Release

Prudential : more than one third of UK workers have no pension

Market

Sep 14, 2011

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According to new research from Prudential, 35 per cent of workers in the UK admit to not having a pension plan, thus relying on state pension and any form of savings in retirement.

The survey of working adults also found that those who do contribute to private or company pension schemes pay in an average of 6.2 per cent of their annual incomes. Women are far less likely to save for their retirement with 41 per cent saying they do not have a pension, compared with 29 per cent of men.

To make matters worse for those who do not save into a pension fund, as well as facing a sharp drop in income at retirement, they are also missing out on significant tax relief during their working lives. Office of National Statistics figures suggest that the average worker in the UK earns nearly £1 million over the course of their working lives. An individual making the average pension contribution of 6.2 per cent of this income could receive a total of more than £15,000 in pension tax relief.

While the average tax relief on pension contributions is £334 per year for a person paying the basic rate of tax, higher rate taxpayers stand to lose substantially more by not paying into a pension scheme.

Vince Smith-Hughes, head of business development at Prudential, said: “Failing to save into a pension means not only having to rely solely on the State Pension in retirement, but also missing out on the ‘free money boosts’ which come with pensions, such as tax relief and employer contributions.

“Making regular pension contributions is a vital part of securing a comfortable retirement. Although saving for retirement may not be a priority for young people, the more money which is stashed away from an early age, the more likely that significant rewards will be reaped later in life.

“When coupled with the benefits of any additional employer contributions or gains through fund performance, a pension is the best way of saving for retirement, for many people. In order to maximise pension benefits, to understand the impact of tax relief, and ultimately to secure a decent retirement income, it’s important to seek professional financial advice.”

Source : Prudential

S&P : Groupama placed on CreditWatch Negative because of likely weakening Financial profile

Industry News

Sep 13, 2011

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Standard & Poor’s Ratings Services placed its ‘BBB+’ long-term counterparty credit and insurer financial strength ratings on France-based composite insurer Groupama S.A. on CreditWatch with negative implications. At the same time, we placed the ‘BBB-‘ ratings on the group’s hybrid notes on CreditWatch with negative implications.

We also placed the long- and short-term ‘BBB/A-2’ counterparty credit ratings on Groupama’s wholly owned banking arm, Groupama Banque, on CreditWatch with negative implications.

The rating action reflects our perception that adverse capital market conditions may be weakening Groupama’s financial profile.

In our view, the recent negative capital market developments might have further undermined Groupama’s already weak and volatile capital adequacy.

Furthermore, we believe management has not so far taken action to significantly reduce this volatility. In particular, we understand that Groupama has not yet started its planned derisking of its equity exposure,

which stood at 16% of total investments at year-end 2010. In addition, we believe that Groupama’s credit risk has increased because of the group’s sizable exposure to sovereign bonds, in particular those of Greece

(CC/Negative/C) and Portugal (BBB-/Negative/A-3), which represented 7.8% and 3.3% of the group’s shareholder’s funds on June 30, 2011, after taxes and profit sharing.

Furthermore, we note that Groupama’s financial flexibility is limited by its capacity for issuing additional hybrid capital and by the likely cost of raising such capital.

Standard & Poor’s expects to resolve the CreditWatch placement next week, once we have reassessed the elements supporting Groupama’s ratings. In particular, we are reassessing the impact of the capital markets downturn on Groupama’s capital adequacy. If we determine that the downturn has significantly reduced

capital adequacy, we could lower the ratings on Groupama by up to two notches, based on our current view.

Source : Standard & Poor’s

Fitch Ratings : Austrian insurers are well capitalised as they engage in Eastern European markets

Industry News

Sep 12, 2011

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In a new report, Fitch Ratings sais that prospects for Austrian insurers are closely linked to Central Eastern and Southern Eastern Europe (CESEE), as more than one-third of their premium income originates. Furthermore Austrian insurers continue to engage in M&A activity there as the region offers great growth opportunities.

With CESEE growth rates expected to exceed growth in Austria, Fitch expects the region to become even more important to Austrian insurers. However, although CESEE insurance business is generally profitable, it adds volatility to the balance sheets and earnings of Austrian insurers because CESEE countries show a relatively high sensitivity to global economic downturns.

Austrian insurers have strong capital, which protects their solvency positions from fluctuations in financial markets. Fitch views Austrian insurers as well prepared for Solvency II, the new regulatory regime for European insurers due to take effect in 2013. Insurers representing 99.9% of the Austrian market (by premium) took part in the fifth Quantitative Impact Study for Solvency II (QIS5). In aggregate, they reported a solvency ratio of 246%, well above the European average of 165%.

Although Austrian insurers reported improved earnings in 2010, driven by higher equity and bond markets and an absence of domestic natural catastrophes, their profitability remains under threat from low interest rates and pricing competition.

Austrian non-life insurers have high exposure to natural catastrophe risks. Scenario calculations by Munich Re show that despite strict limits on the insurance of residential buildings, insured losses from single cat events in Austria could exceed EUR1bn.

Notable investment risks for Austrian insurers include exposure to CESEE government bonds and banks, concentration risk related to Austrian banks, and large holdings in participations whose reported values may be at risk of postponed write-downs.

The report, entitled ‘Austrian Insurance Market Review and Prospects’, is available at the Fitch Ratings website.

Source : Fitch Ratings

Appointment : Greg Lawson is new Head of Retail at Collinson Insurance Group

Social

Sep 10, 2011

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Collinson Insurance Group announced the appointment of Greg Lawson as Head of Retail. Greg’s appointment was made as part of the group’s long-term growth strategy and is another step forward in developing Collinson Insurance Group’s retail offering – including its leading travel insurance brands Columbus Direct, Club Direct and Preferential Direct.

Greg brings 17 years’ travel insurance experience, including ten years in the London Market as a Lloyd’s broker, as well as expertise across medical screening, claims and assistance services, digital marketing and business development. He is also the Chairman of the Association of Travel Insurance Intermediaries.

Since January 2004, Greg has been the Commercial Director at Citybond Holdings with the responsibility for insurer relationships, product development and pricing as well as compliance and contract negotiation. In recent years, he has also been involved in the growth of the direct brands such as Flexicover and TopDog through affiliate and aggregator channels.

David Evans, Managing Director of Collinson Insurance Group, commented: “Greg joins us at an exciting time of innovation and growth, and I’m confident that, with his knowledge and experience, we will strengthen our position as a global business.”

Greg Lawson commented: “After seven great years at Citybond, I am delighted to be joining the Collinson team and working within such an integrated group. The aim is to continue the recent growth and acquisition strategy, whilst focusing on profitability and productive efficiency. I believe that my past travel and management experience will support, and strengthen, the Collinson Group structure, helping to develop a globally-recognised retail insurance brand.”

Source : Collinson Insurance Group

Allianz : reorganises asset management business

Financial News

Sep 8, 2011

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Allianz said it is reorganizing its asset management business to give better visibility to its two main brands, Pimco and Allianz Global Investors.

Pimco is Allianz’s global fixed-income securities business, while Allianz Global Investors groups the company’s equity investment. The two will be paired up in a new unit called Allianz Asset Management, with EUR1.4 trillion in assets in its care.

Allianz spokesman Hanno Strube stressed that “no sale or initial public offering of either of the two brands is planned,” and said there will be no change to Pimco’s management team or Pimco’s standing as an independent entity within the group.

Allianz Global Investors’ management team is being strengthened by the reorganization, Strube said. The new structure will be effective Jan. 1, when Jay Ralph will succeed Joachim Faber as head of asset management on Allianz’s management board.

Strube said Faber and Ralph jointly developed the new structure to move away “from a family of boutiques model to a clear two-pillar structure.” The new structure also reflects the shift toward a customer-oriented businesses rather than just brands, the Allianz spokesman said.

Frankfurt, September 6, 2011, (Dow Jones)

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