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AXA Elevate : boosts proposition with duo of discretionary managers

Industry News

Jul 6, 2011

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Following strong Q1 results from AXA Elevate, new partnerships with Evercore and Collins Stewart Wealth Management further strengthen the platform offering from AXA Wealth.

AXA Wealth recently announced platform sales on Elevate had risen 140%, bringing total platform assets under administration at the end of Q1 to £2.5bn. The platform, which has been recognised for its superior level of features and benefits for the second consecutive year*, has partnered with two discretionary managers to offer additional third-party portfolios.

Evercore Pan-Asset has launched a specially adapted range of portfolios on AXA Elevate. The PanDYNAMIC AE portfolios are highly flexible and can be used for all or part of an investment portfolio and within most forms of tax wrapper.

Christopher Aldous, chief executive officer, Evercore Pan-Asset Capital Management, said: “AXA Elevate is an exciting development in the platform market and is growing assets rapidly. We have tailored our existing PanDYNAMIC models to meet the needs of Elevate users. Using index tracking funds instead of exchange traded funds, the portfolios offer a multi-asset solution with low overall costs.”

Collins Stewart Wealth Management has made seven risk-rated discretionary portfolios available on the AXA Elevate platform. The seven portfolios are all managed by the dedicated intermediary portfolio management team and vary in risk.

Phil Simmonds, head of intermediary sales, Collins Stewart Wealth Management, said: “We are delighted to have made our core multi-manager offering available to intermediaries via the AXA Elevate platform. The platform is very intuitive and we expect it to alleviate many administrative burdens for intermediaries and as such, we have worked within Elevate’s risk-rating processes to help advisers select the correct portfolio according to their clients’ specific risk tolerances.”

David Thompson, managing director, AXA Wealth UK Distributors, said: “On-platform sales have grown significantly at the start of this year and key partnerships, such as the ones with Evercore Pan-Asset and Collins Stewart Wealth Management, will help to ensure that AXA Wealth builds on the existing 5 star service capability of the Elevate proposition. With an increasing number of advisers suggesting that they will use platforms to transform their business to be RDR ready, Elevate continues to explore ways to meet advisers’ needs and become a market leading proposition.”

Elevate recently received an ee+ rating for individual pensions and an eee rating for SIPP in the Finance & Technology Research Centre’s e-excellence ratings.

Source : AXA

AXA / Norges Bank : agree Paris office joint venture on €1.4 billion property portfolio

Financial News

Jul 6, 2011

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Norges Bank which manages the Norwegian Government Pension Fund Global, and AXA Real Estate, real estate manager in Europe with €39.4 billion of assets under management as of March 2011, acting on behalf of AXA France Insurance Companies, announce that they have entered into a joint venture through which both parties will co-invest in Paris offices.

The Joint Venture has been created following an initial transaction in which AXA Real Estate intends to sell to Norges Bank a 50% interest in seven assets from its Paris office portfolio with a total value of €1.4 billion. The seven assets are all located in either the western or central business districts of Paris and provide a total gross lettable area of approximately 156,000 m2.

The Joint Venture allows AXA France to continue an on-going strategy of rebalancing their exposure to large Paris office properties. At the same time, the transaction provides AXA France Insurance Companies with funds which it can reinvest across Europe to create a more geographically diverse portfolio, while still retaining a significant stake in attractive Paris office properties that will benefit from future upside potential and high quality income.

The Joint Venture portfolio will comprise the following assets:

– 12-14 Rond Point des Champs-Elysées, Paris 8e

– 1-3 / 2 rue des Italiens, Paris 9e

– 16 avenue Matignon, Paris 8e

– 24-26 rue Le Peletier, Paris 9e

– Meudon Campus, 92 Meudon

– OPUS 12, 92 La Défense

– 31-33 rue de Verdun, 92 Suresnes

Commenting on the Joint Venture, Karsten Kallevig, Chief Investment Officer Real Estate of Norges Bank Investment Management, said: “This acquisition enables us to gain a significant exposure to the Paris office market, one of our key European target markets. We look forward to a long and beneficial partnership with the AXA Group.”

Pierre Vaquier, Chief Executive of AXA Real Estate, added: “To enter into a joint venture with such a highly regarded investor as Norges Bank is a clear endorsement of AXA Real Estate’s standing in the European real estate market and its ability to work with world class real estate investors, as well as highlighting of the quality of the properties in its Paris office portfolio. The Joint Venture will allow AXA France Insurance Companies to reallocate capital and diversify into other European markets, especially the UK and Germany, while maintaining exposure to this important market by retaining a significant stake in the Joint Venture. We will continue to manage the portfolio and look forward to working with Norges Bank in this exciting partnership.”

Source : AXA

Appointment : Martin Joyce will manage DUAL’s new National Business Unit in Manchester

Social

Jul 4, 2011

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Martin Joyce will manage DUAL Corporate Risks’ National Business Unit in Manchester.

Martin’s promotion will follow the departure of Fiona Saggers who is leaving the company to pursue a writing career. He is promoted from the position of Regional Development Manager.

Martin will pick up all management responsibilities for the branch and will hold full regional underwriting authority to write D&O, EPL, Crime and Pension Trustee Business. Martin began his role on 1 July and will report to senior management at the DUAL Corporate Risks head office in London.

Russell Kilpatrick, Executive Chairman of DUAL Corporate Risks, said: “We are very pleased to be continuing the growth of the National Business Unit with Martin at the helm. Martin is an experienced, respected and dynamic professional and we could not have hoped for a better person to step into this role.

“Martin’s promotion and the appointment of new talent in the NBU demonstrate the strength in depth we now enjoy, which is particularly important as we grow in diverse commercial insurance lines such as D&O, PI for the IT sector, Employment Practices Liability and Investor Protection.”

Russell added: “At the same time, we are very sorry to bid farewell to Fiona and we wish her every success with her future endeavours. Her leadership and contribution as manager of the National Business Unit has been greatly admired and provides us with a solid platform for continued growth.”

Before joining DUAL Corporate Risks in March 2007, Martin spent four years at Allianz as a business developer and four years at AIG. Martin has also been a commercial broker with Aon, also in Manchester.

Source : DUAL

Admiral : impact from referral fees ban

Industry News

Jul 3, 2011

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Admiral has become a stock market darling, despite almost all of its profits being drawn from the UK motor insurance market, which has suffered heavy losses in recent years.

Jonathan Djanogly, a justice minister, said the current situation regarding referrals was “rotten” and action was needed to increase transparency and reduce costs.

According to Admiral’s 2010 full-year results, 52pc or £142.4m of its UK car insurance profits came from “ancillary” sales. Analysts estimate that a significant proportion of these were from so-called “acceptance fees”, the payments insurers receive for putting customers in contact with lawyers in order to seek damages.

This trend has been widely criticised by industry leaders, politicians and consumers, who have faced a rising cost on car insurance premiums. One industry expert warned that Admiral’s model was “not sustainable”, adding that the stock market seemed “oblivious” about the issue.

In response, a spokesman for Admiral said: “When one of our customers calls us for help with a claim that was not their fault, we refer them on to a retained accident management company who help sort out their claim, but only if they give us their permission. If they don’t want to be passed through to our accident management company we do not put them through. If the claim needs to be referred to a lawyer then the accident management company will pay us a referral fee.”

Last week, Axa became the first insurance company operating in the UK to refuse so-called “acceptance fees” from personal injury lawyers to help eliminate fraud across the industry. The company said it took the decision to combat the UK’s growing “compensation culture”, which has increased the cost of motor policies.

The move came after The Sunday Telegraph revealed how unwanted texts, promoting compensation claims for accidents or financial mis-selling, are now at the centre of a growing industry estimated to be worth at least £175m.

Jack Straw, the former justice secretary, has also blamed motor insurance companies for pushing up the cost of premiums. The Labour MP for Blackburn said the cost of personal injury claims had doubled to £14bn in 10 years.

Admiral’s reliance on “ancillary sales” has been flagged up by analysts in recent months. Kevin Ryan, an analyst at Investec, has described Admiral’s business model as a “complex balancing act”. Eamonn Flanagan at Shore Capital added: “The group makes no reference (as far as we can note) to the sharp rise in bodily injury claims that has so afflicted the rest of the UK personal motor insurance market. Indeed, the apparent lack of impact in Admiral’s combined ratio of the near epidemic in bodily injury claims in the UK, despite a 10pc market share, has left many in the insurance industry somewhat incredulous over the group’s seeming ability to ‘walk on water’.”

The Association of British Insurers estimates that UK consumers now pay £2.7m each day to the legal profession through motor insurance premiums.

The industry body has called for a complete ban on the fees. Nick Starling, ABI’s director of general insurance and health, said: “It is not right that people take cash for tipping off lawyers about accidents which fuel personal injury claims, driving up costs for all motorists. They must be banned as part of a whole package of civil litigation costs reform which includes looking at solicitors’ fixed fees and hourly rates.

“Unless action is taken, the compensation culture will become more prevalent and the cost of insurance will continue to rise. We are calling on the Government to crack down on ‘no win, no fee’ claims as part of an overhaul of the whole personal injury compensation system.”

Source : Telegraph

Aviva : new Fixed Term Retirement Plan

Communication

Jul 1, 2011

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Aviva is launching its new Fixed Term Retirement Plan, a retirement income plan that doesn’t lock customers in for life. It gives customers the option of taking tax-free cash, if they haven’t already, an income, or both from their pension fund.

It offers two investment options, each with a guarantee around the value on maturity of the plan. Depending on the investment options chosen, customers can hold the plan for a fixed term of a minimum of five and maximum of 10 years.

During this time it cannot be cashed in and when the plan matures, the customer uses their remaining pension fund to buy another retirement product, allowing them to reassess their circumstances at that point.

As the UK population ages and finances are squeezed, individuals approaching retirement are increasingly considering working past the traditional retirement age, and taking ‘part-tirement’ is becoming more popular. The Fixed Term Retirement Plan helps to meet the changing needs of many people transitioning into retirement, offering a more flexible alternative to a conventional lifetime annuity.

Clive Bolton, at retirement director at Aviva, said:
“The Aviva Fixed Term Retirement Plan offers some great advantages. By investing for a fixed period of time, customers know they will have the chance to reconsider their financial needs and requirements in the future, and make a further decision on how to best use their pension fund at that point. It’s a happy medium that’s suitable for those who want some flexibility, as well as an element of certainty.

“We know through our customer research and regular Real Retirement Reports that the retirement market is changing rapidly. No two people are alike and individuals are approaching retirement with very different ideas about how they’d like to spend their life after work. We’re responding to these changes by expanding our range of retirement solutions, offering increased choice and flexibility to customers.”

Aviva offers a full range of retirement solutions, including conventional and enhanced annuities, standard and phased drawdown, the Fixed Term Retirement Plan and equity release.

Moneysupermarket.com : the real cost of lunch

Good to know

Jun 29, 2011

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The latest figures from the British Retail Consortium (BRC) indicate UK consumers are increasingly turning from credit cards to cash and debit cards, with debit card transactions up 15.8 per cent in the last year. Research from moneysupermarket.com reveals insight into the spending habits of people using debit or credit cards, and how they regularly choose to pay for everyday ‘small transactions’ under £10 on their cards.

According to the research, over half of Brits (56 per cent) are using their debit card to purchase items under £10, with an average of 3.2 transactions a week. The research also revealed the average transaction was £6.34 meaning UK consumers are funding a whopping £560 million worth of small purchases on their debit cards; which amounts to just over £20 per week and over £80 per month for each individual.

Despite the decline in overall credit card usage found by the BRC, Britons’ spending on ‘small transactions’ still remains high, with almost a quarter of consumers (23 per cent) still funding small purchases on their credit cards. The average spend for these transactions is £6.63, and an average number of weekly transactions of 3.4, means the nation’s weekly bill for small transactions on credit cards is over £250 million.

Someone spending £22.50 per week on their credit card, £90 per month, risks paying an extra £105.06 in interest over 12 months if they fail to pay off their balance in full, meaning a cheap lunch can end up much more expensive than they realise.

The rise of contactless cards is likely to fuel the number of small transactions being paid for on credit. The UK Cards Association has already seen an increase in contactless card usage from 13.8m transactions in January this year to 15.1m in March, and we can expect to see these figures increase even further as more card providers issue contactless cards and retailers install terminals to accept these type of transactions.

Kevin Mountford, head of banking at moneysupermarket.com said: “Paying for a low-cost purchase using a debit or credit card is convenient, and with the onset of contactless technology, getting even easier. However it is easy to fall into a trap and be caught out by not keeping a close eye on these smaller transactions – they soon mount up.

“If you accidentally stray over your authorised overdraft limit or fail to pay off your credit card in full at the end of the month, it could end up costing you dearly and that ‘cheap’ lunch may end up being far more expensive than you anticipated.

“If you can’t afford to pay off your credit card in full each month don’t use it to pay for everyday spending such as your lunch or coffee on the way into work.

“For those who already have an outstanding balance on their credit card, it is important to look how to clear that debt as quickly as possible. Consider moving the debt onto a credit card offering zero per cent interest on balance transfers such as the Barclaycard Platinum with Extended Balance Transfer which offers 20 months interest free could be a good option.”

Source : Moneysupermarket.com

The implications of a new partnership to fund long-term care by the Chartered Insurance Institute

Industry News

Jun 29, 2011

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The Commission on Funding of Care and Support (the Dilnot Commission) is due to set out its final recommendations in early July, to overhaul the way long-term care is funded in the UK.

In advance, this short paper assesses the possible implications for consumers and financial services of a likely new partnership model.

The CII’s central argument is that whilst the new model is likely to address many of the fairness issues associated with the current system, engagement problems will still persist. This could have serious consequences for consumers by preventing them from building and preserving their wealth in the most effective way.

For example, many individuals will still need to consider using assets to fund long-term care in the ‘new world’ even though many appear to be reluctant to using their home as a means to fund this cost. It is therefore essential that people plan in advance in order to minimise losses on non-pension assets.

To counteract this lack of engagement we set out the following recommendations:

1. Education is key to winning the battle to raise awareness – currently nearly 8 in 10 people have no idea how much they will have to pay for care. The Money Advice Service will be able to help in this regard but the Government should do more. A large scale information campaign about the need to save for retirement and plan for long-term care costs may help to close the perception gap and ultimately lead to less people falling back on the state for support. Industry and consumer groups will also have vital roles to play in informing consumers appropriately about the options that are available to make the process of paying for care less painful.

2. Trust: Just providing more information will not be sufficient to improve engagement with financial services and the private care sector. Consumers must have trust that the products and advice that they invest in will deliver outcomes in line with their preferences and future expectations. This will be a challenge given the complex empirical relationship between disability and longevity, making predictions around future care needs harder to model than life expectancy. Similarly, many customers will continue to buy products related to long-term care as a ‘distress purchase’. Providers and distributors must continue to work hard to develop and deliver products to consumers with due care and attention to these additional sensitivities.

3. Certainty around future rules: For the private sector and consumers to be able to plan effectively for the future, they must be confident that the funding model the Government ultimately chooses will be here to stay. Government and opposition therefore must do their best to provide certainty around future rules – making cross party support for Dilnot’s recommendations vital.

The Commission’s proposals are likely to provide the building blocks from which a new and fairer system can emerge. Without improving levels of engagement however, the public could still be left ‘out to dry’. It is not enough just to have a new public policy vision for care – it must be backed by the government, consumers and the relevant private sector and voluntary sector partners. Only then will we have a Beveridge-style plan for the 21st century.

Source : CII

RMS : releases new China and Hong Kong Typhoon Model

Industry News

Jun 29, 2011

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The newly released RMS China Typhoon Model, covering both mainland China and Hong Kong, delivers significant advancements in quantifying typhoon-related flood risk.

Flood is a key driver of loss in typhoon events, and some of China’s most economically developed areas along its east coast are at risk from both typhoon wind and flood impacts. With the release of this model, companies are now able to quantify the risk from both typhoon and earthquake events, following the release of the RMS China Earthquake Model in 2007.

According to the China Meteorological Administration (CMA), there have been approximately nine typhoon landfalls on average each year since 1950. Quantifying the risk of wind and related flood loss is a key concern for insurers and reinsurers looking to increase market penetration in China, where these losses are both covered by fire policies. “Although wind and flood damage are driven by the same typhoon events, the new model allows companies to quantify the losses independently,” said Matthew Grant, global head of client development at RMS. “By gaining a stronger grasp of what’s driving the loss from typhoons, companies will be able to select risks more confidently and capitalize on opportunities in this rapidly emerging market.”

The new model is based on an event set of over 24,500 storms derived from the CMA’s historical catalogue of storms from 1945 to 2009. Key historical events are incorporated, including the Super Typhoon Saomai, which affected the east coast of China in 2006, killing over 450 people and causing $2.5 billion (2006 USD) of damage. This was a record-breaking event and the most severe landfall typhoon in China since 1949.

In developing the model, RMS collaborated with the National Meteorological Center (NMC), and Branch of CMA, Beijing Normal University (BNU), as well as with Prof. Johnny Chan at City University of Hong Kong.

“We have leveraged our long-standing relationships with an extensive network of consultants and government agencies in China to validate the wealth of scientific information in the new model,” said Stefan Beine, senior director at RMS.

Available as part of the China typhoon release, the Hong Kong model is now enhanced by a new and more complete event set, new windfield models and the inclusion of inland flood modelling. Each component explicitly addresses Hong Kong’s unique topography and land use.
While no major event has impacted Hong Kong recently, additional recorded wind data from the CMA and the Hong Kong Observatory were incorporated to update the windfield model.

The China Typhoon Model was released as part of version 11.0 of the RiskLink and RiskBrowser modelling platforms that are used throughout the insurance and reinsurance industry.

Source : RMS

Munich Re : apologises for sex trip

Communication

Jun 29, 2011

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One of Germany’s top insurance companies took out full-page advertisements in national newspapers Wednesday to apologise for laying on prostitutes for its top salesmen.

“When people make mistakes they say sorry. When firms make mistakes they do something about it. That’s why we are doing both,” the advert from Ergo, part of the Munich Re group, said.

“We are working intensively on clearing up these allegations. We are taking far-reaching measures to make sure that mistakes like this don’t happen again,” it added.

In May it emerged that Hamburg-Mannheimer (HMI), a unit of Ergo since 2010, had in 2007 turned Budapest’s popular Gellert Baths into a brothel for the night with some 20 prostitutes available for the firm’s 100 top salesman.

The Handelsblatt daily quoted one unnamed participant as saying that the guests were able to take the women, wearing colour-coded wristbans, to four-poster beds at the spa “and do whatever they liked.”

The firm said that the “incentive trip” cost around 83,000 euros ($120,000) but assured its customers that the junket was a one-off and that the managers responsible no longer worked for the company. Other revelations about the firm included that HMI had overcharged around 14,000 customers in 2005. It said that an external auditing firm has since been been hired.

Berlin, June 29, 2011 (AFP)

AMII : conference to celebrate professionalism

Industry News

Jun 25, 2011

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Healthcare intermediaries and product providers are embracing professionalism head on with encouraging numbers taking the Association of Medical Insurance Intermediaries (AMII) and Chartered Insurance Institute (CII) healthcare insurance qualification launched a year ago.

Details of the success of the exam will be announced at the AMII Exhibition and Conference next week on Thursday, 30 June, which will also offer AMII members and non-AMII members who have yet to take the exam some guidance and support ahead of their revision and exam taking.

Many will take encouragement from Richard Brown, Corporate Business Manager at the Private Healthcare Bureau based in Stourbridge, West Midlands, who despite being relatively new to the PMI market and having joined his firm just two years ago after a career in banking and building society financial services sector, passed the exam first time.

Richard said, “I would absolutely reinforce the importance of a professional qualification. The online facility was enormously helpful and I used the questions provided to revise. I read the course book chapter by chapter and then went online to do the tests.

“There are aspects of the exam which cover other protection products in there as well so for those of us just advising on PMI there are new things to be learnt.”

Andrew Tripp, Chairman of AMII said: “The Association is delighted with the exam uptake and many congratulations to Richard on his personal success. The objective of the examination was to provide knowledge and understanding of the fundamental principles and practices relating to healthcare insurance and in so doing demonstrate professional standards to consumers to inspire their confidence and trust.”

Source : AMII

Fitch Ratings : downgrades AMANAT Insurance to ‘B-‘, Outlook Negative

Industry News

Jun 23, 2011

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Fitch Ratings has downgraded AMANAT Insurance’s (AMANAT) Insurer Financial Strength (IFS) Rating to ‘B-‘ from ‘B’ and National IFS Rating to ‘B+(kaz)’ from ‘BB(kaz)’. The Outlook is Negative.

The downgrade reflects the weakening of AMANAT’s regulatory capital position to marginal levels and the significant delay in completing the announced capital increase by KZT360m. The rating action also takes into account the deterioration of the insurer’s underwriting performance in 2011. The ratings are supported by the insurer’s risk-adjusted capital position commensurate with the rating level and its relatively good liquidity position.

If any non-compliance by the insurer with regulatory prudential requirements were followed by external regulatory intervention, Fitch would view these events as a key trigger for a downgrade. Alternatively, reduction of the regulatory risk and signs of the improving underwriting performance could result in positive rating actions.

AMANAT was close to the minimum required level of solvency margin of 100% at end-4M11 and end-5M11 due to pressure on available and required capital, both components of the solvency ratio. AMANAT’s required capital grew in 2011 because the regulator increased the minimum guarantee fund, a fixed sum. Pressure on available capital was triggered by changes in the reserving methodology by the regulator which came into force in 2011.

AMANAT expected its shareholder to inject an additional KZT360m in Q410 to support the company’s regulatory capital position. The injection has not, however, been completed due to the long drawn out transfer of the ownership of the insurer from the technical holding vehicles directly to the beneficiary shareholder. The formalities related to the ownership were completed by April 2011, but the shareholder has delayed the capital increase to end-2011.

The deterioration of the insurer’s underwriting performance to date in 2011 was caused by increased allocations to loss reserves which at end-Q111 strengthened by a net 83%, with 78% represented by an increase in the incurred but not reported loss reserve. In Q211, AMANAT’s technical result was adversely affected by larger losses in a number of business lines. Fitch is concerned about the sustainability of AMANAT’s negative operating cash flow, which was explained by the restructuring of the portfolio in 2009-H110, but now appears to signal that underwriting activity is recovering more slowly than had been expected. At the same time, Fitch notes that the insurer still has a relatively good liquidity position with net technical reserves covered by relatively liquid, local investment assets.

AMANAT is a medium-sized Kazakh non-life insurer with gross premiums written of KZT5bn in FY10 and gross assets of KZT4bn at end-2010. The performance of the insurer was adversely affected by changes in the ownership structure and management team in Q109.

Source : Fitch Raings

Appointment : Natalie Ball is IFB new Lead Fraud Analyst

Social

Jun 23, 2011

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The Insurance Fraud Bureau (IFB) has appointed Natalie Ball as Lead Fraud Analyst, a newly created position within the team. Natalie will be responsible for reviewing existing processes and implanting new strategies, to optimise the value derived from the proactive network model.

Natalie brings five years of valuable experience gained with the British Transport Police (BTP), where she completed her National Intelligence Analyst Training and Financial Analysis Training. Prior to taking up the position with the IFB, Natalie was a Senior Analyst at BTP, leading a team of 12 Analysts and Researchers in London and a further 12 force wide. Her focus and responsibility was the tactical approach to dismantling criminal gangs. Her earlier years at BTP saw her working as a Researcher covering criminality including drug trafficking and cable theft. She was subsequently promoted to Analyst within BTP and London Underground, where she worked on high profile, worldwide operations.

Glen Marr, Director, IFB said: “Natalie brings essential and highly relevant experience to the IFB which will complement the expanding skill sets and expertise within the team. Our new software can now identify networks on a weekly basis and Natalie will be responsible for optimising how this information delivers best value to our insurer customers and industry partners.”

Natalie Ball said the credibility of the IFB within both the industry and wider law enforcement stakeholders, made it a very attractive career choice. She added: “This is an exciting time to be joining a highly successful team with an expanding remit.”

Marr concludes: “On behalf of the IFB I am pleased to welcome Natalie to the team.”

Source : IFB

Germany ‘dismisses Greek debt compromise plan’

International

Jun 23, 2011

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A German compromise plan to resolve a dispute with the European Central Bank over the Greek rescue that was reported by Der Spiegel magazine is no longer on the table, according to a government source.

Der Spiegel had reported ahead of its Monday issue that the German finance ministry called for a beefed-up version of Europe’s temporary bailout mechanism lending to Greek banks to insure they have adequate collateral with the ECB.

It would boost the effective lending capacity of the Emergency Financial Stability Facility (EFSF) to 440 billion euros ($629 billion) and see member states double the amount of guarantees they provide the fund.

Germany’s share of guarantees would climb to 246 billion euros from 123 billion euros, according to the report.

But a German official, who spoke on condition of anonymity, said that while “several options” were being debated to involve private creditors in an Athens rescue, the reported proposal was “no longer on the agenda”.

The source added that the initial plan had differed from the reported proposal in “key aspects”.

German officials say they seek a plan with as few “unwanted side effects” as possible.

The ECB has repeatedly warned that requiring creditors to swap existing Greek debt for new bonds with longer maturities could amount to a default, something which could send shock waves through the European and global financial systems.

German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed Friday to a plan through which private bondholders could volunteer to buy new government bonds to replace ones that matured.

This “rollover” option was favoured by the ECB and France, since it avoids the risk of rating agencies declaring Athens in default.

Germany had previously called for full-scale debt restructuring but Merkel appeared to back down after the meeting with Sarkozy.

Eurozone finance ministers were to meet in Luxembourg later Sunday for talks on saving Athens from default as early as next month.

Merkel said in a separate interview released Sunday that she was upbeat about the eurozone despite the Greek crisis.

“We are already far better equipped now in Europe,” Merkel told Super Illu magazine, referring to austerity measures taken by debt-laden member states.

But she said the countries sharing the euro still had to work through “significant failures” and “sins of the past” in terms of fiscal discipline.

Merkel said Greece had “achieved a great deal in the last year — we should recognise that”.

“It has cut new borrowing by five percent — that is remarkable savings but it is not enough,” she said.

Berlin, June 20 2011, (AFP)

Legal & General : launch of Retail Occupiers’ Guide to sustainability

Communication

Jun 22, 2011

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Legal and General Property announces the publication of their Retail Occupiers Guide to sustainable property. The aim is to equip leisure tenants with a thorough understanding of the environmental impact of property and the necessary toolkit to implement change.

As one of the largest UK institutional property fund managers, with £10.1bn of property assets under management, LGP is very serious about its role in minimising the impact of the built environment, but recognises that in order to implement fundamental change it needs to go beyond measures within its own control and reach out to its tenants, partners, agents, suppliers and the wider industry. Indeed, with a sustainability strategy centred on maximising the efficiency and sustainability of its portfolio, it believes in the fundamental importance of working with tenants to take these changes to the next level.

Inspiring occupiers to accept that they have an important part to play in carbon reduction and educating them on the real and significant cost savings that can be achieved through simple but critical changes to the running of a property, the guide aims to forge a link between landlords and tenants in tackling change. It is broken down into seven key categories of sustainable action, namely waste management, energy, buying goods and services, paper, water, travel, and corporate and social responsibility.

Culminating in a list of next steps, the guide recommends establishing a Building Management Committee, through which LGP’s representative managing agents can work together with its tenants to create bespoke sustainability action plans for each building and then put these cost saving, energy efficiencies into motion. The guide also highlights major success stories of retail initiatives that have already been put in place, such as at Ealing Broadway Shopping Centre where, by improving recycling, it halved the total waste disposal costs of the centre. Similarly, there is a case study on Midsummer Place in Milton Keynes, where, by making a simple but significant change to its cleaning operations, it reduced its service charge costs by a total of £80,000 pa and its utility use by 25%.

Representing just one of the many commitments the Company has made to the green agenda over the past few years, it follows the ‘Office Occupiers’ Guide’, launched in July last year, and LGP’s Sustainability Review and Strategy report, which was brought out just last month to provide a thorough review of the significant “green” successes it has achieved to date and an overview of its strategy and targets going forward.

As set out in this report, a number of factors have informed LGP’s approach to sustainability, including rising costs of energy, changing legislation and evolving stakeholder expectations. It has now set individual targets across the main business areas of fund management, asset management, development and refurbishment and property management. Against this, LGP has identified key areas of priority which are sustainability risk management, climate change and energy, resource use and environment and sustainable communities.

With a robust environmental risk model in place for all new assets and investment processes, LGP considers sustainability as a key element of its due diligence process when evaluating the purchase of a property and over the next three years aims to review all assets for climate change risks and develop asset specific strategies. The Company will also seek to minimise waste direct to landfill wherever LGP is responsible for waste management, targeting the 10 largest waste producing sites to reduce the proportion of waste to landfill by 20% below 2010 levels and provide energy efficiency savings of 5% on all properties where CRC data has been provided.

Furthermore, as a minimum, it will seek to achieve BREEAM ‘Excellent’ or an equivalent benchmark for all development projects and retain ISO 14001 accreditation for all relevant properties within its portfolio. Finally, it will continue to seek significant reductions in energy use, focusing on those properties which use the most energy and therefore where the most real impact can be made.

Source : Legal and General Property

Which? : variable rate mortgage customers being squeezed by lenders

Industry News

Jun 22, 2011

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Which? Money has performed new survey in which 95 per cent of lenders seem to fail to fully pass on cuts in the base interest rate to their Standard Variable Rate (SVR) mortgage customers. Furthermore, as many borrowers are trapped on SVR mortgages, a rate increase could leave thousands of households in financial difficulty.

A one per cent increase to the base rate would add over £50 to the monthly repayments of someone with a £100,000, 20-year mortgage. Which? research shows that seven in ten people are worried about mortgage rates and two in ten fear repossession.

More than a fifth of lenders have increased their SVR since the base rate hit an all time low of 0.5% in March 2009. Cheltenham & Gloucester and Lloyds TSB Scotland were the only lenders who are part of the four biggest banking groups to pass on the full cut.

At 6.08%, KRBS has the highest SVR on the market – more than 12 times the base rate. The five other direct lenders with the highest SVRs are all building societies.

The average SVR is now 3.48% above the base rate, compared with 1.95% in September 2008.

Peter Vicary Smith, Which? CEO comments :

“Millions of people are on variable rate mortgage deals and for many a rate hike could mean they’re facing real financial difficulties.

“Banks have enjoyed increased margins on mortgages for the last few years and when the base rate rises again, few lenders will be able to justify passing the full amount onto their SVR customers.”

Source : Which?

CML : responds to Which? on borrowers paying standard variable rate (SVR)

Industry News

Jun 22, 2011

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The Council of Mortgage Lenders reacts to claims by Which? where 95 per cent of lenders have failed to “pass on” cuts in base rate to customers on a standard variable rate (SVR).

The CML reminds borrowers of the fundamental change the mortgage market has been subject to since the financial crisis, reinforcing that base rate is no proxy for the cost to lenders of raising funding.

Since 2008, lenders have been operating in market conditions that have changed significantly, with a shortage of funds, new requirements to hold more capital and liquidity, and increased pressures to help borrowers in difficulty while mortgage arrears are expected to increase. Since base rate reached its historical low point in March 2009, lenders have been affected by:

– New requirements to hold capital and liquidity, which have increased their operating costs.

– Wholesale funding markets that have recovered only partially (and which remain closed to many lenders), reinforcing the dependence of lenders on retail deposits.

– Competitive pressures in the market for retail deposits, as savers seek better returns in response to higher inflation.

– Pressures to extend greater forbearance to borrowers in difficulty at a time when mortgage arrears are expected to rise.

– Pressures to make more mortgage lending available to new borrowers at a time when an increasing number of existing borrowers are reverting to lenders’ standard variable rates.

Commenting on market conditions for lenders, CML director general Michael Coogan said:

“Lending rates are fundamentally driven by the cost of funds, not the base rate, although the two were more closely correlated before 2008. But this apparent historical relationship has been blown apart by the move to an unprecedented low base rate since March 2009.

“Since the onset of the financial crisis, firms have been operating in lending and funding markets that have changed dramatically, and we have been reinforcing the message that base rate is not a proxy for the funding costs for lenders.

“For borrowers anticipating difficulty, however, the message remains unchanged. They should speak to their lender as soon as possible if they are struggling to meet their repayments, and lenders are committed to helping them wherever they can do so.”

Source : Council of Mortgage Lenders

U.S. : healthcare law should stabilize employer coverage

International

Jun 21, 2011

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Recent study shows that most Americans will continue to get health insurance through their employers after the healthcare law takes full effect, even if their number has declined.

About 61 per cent of non-elderly Americans got their healthcare coverage through employers in 2009, down from 69 per cent in 2000, according to a study sponsored by the non-partisan Robert Wood Johnson Foundation. Low and moderate-income families employed by small firms were the most likely to be affected by a loss of employer-sponsored coverage.

Julie Sonier, a senior researcher at the University of Minnesota who helped write the report, said the erosion in employer-sponsored insurance in the decade before the healthcare law was enacted underscored the need for action.

“When people don’t have access to employer coverage, they might get public coverage, they might be uninsured, there might be a higher uncompensated care burden at their local hospital. The costs are in the system somewhere,” she said in a telephone interview.

A second study by the centrist Urban Institute said it expects the healthcare overhaul signed into law last year by President Barack Obama to help small businesses provide medical coverage to employees.

“Our results show significant health care cost savings (under the law) to firms with fewer than 50 workers, as well as a small increase in the number of people covered by their employer-sponsored plans,” the Urban Institute study said.

The law includes some tax incentives for small employers to provide coverage and penalties for large employers with employees who receive subsidized medical coverage on state-based exchanges that will go into operation in 2014.

“The evidence suggests the Affordable Care Act may have a stabilizing influence on small firm coverage,” the study said.

The studies counter a recent report by Chicago consulting firm McKinsey that said about 30 per cent of employers will “definitely” or “probably” stop offering health coverage once the state insurance exchanges begin operation, which are to provide a place for small businesses and individuals to shop for health insurance coverage.

That report sparked a fresh round of criticism of Obama’s healthcare law by Republicans who are pushing to repeal it. Democrats demanded an explanation of the methodology, since other reports, including the Congressional Budget Office, said the law would have a small impact on employer coverage.

On Monday, McKinsey clarified that its report was a survey of employer attitudes and “was not intended to be a predictive economic analysis” of the impact of the new healthcare law.

The two studies sponsored by the Robert Wood Johnson Foundation that were released on Tuesday said most of the erosion in employer sponsored healthcare since 2000 was by small businesses.

Four states, Mississippi, Indiana, Michigan and Minnesota saw a loss in employer-sponsored coverage that was twice as large as the national average, according to the studies.

Source : Reuters

Good to know : scientists study ‘hammock’ effect on sleep

Good to know

Jun 20, 2011

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A team of Swiss and French scientists published a study on Monday that suggests the rocking motion of a hammock improves sleep quality and helps people get to sleep faster.

The study included 12 male volunteers who were not habitual nappers but who agreed to try an afternoon snooze on both a stationary bed and a rocking bed while machines scanned their brains, eye and muscle movements.

Women were excluded from the study because the menstrual cycle can have an effect on electroencephalogram (EEG) monitoring, the researchers said.

Two of the 12 men had to be left out of the final analysis because one had a malfunctioning EEG and one experienced too much anxiety to fall asleep on the day he was assigned to the stationary bed. But the remaining 10 subjects fell asleep faster in the rocking bed than they did in the still one and the quality of their 45-minute nap was deeper, said the findings published in the journal Current Biology.

“We observed a faster transition to sleep in each and every subject in the swinging condition, a result that supports the intuitive notion of facilitation of sleep associated with this procedure,” said Michel Muhlethaler of the University of Geneva. “Surprisingly, we also observed a dramatic boosting of certain types of sleep-related (brain wave) oscillations.”

A midway sleep stage known as N2, which includes no rapid eye movements and usually makes up about half of a sound period of sleep, was observed to be longer in the hammock-type bed.

“The rocking bed also had a lasting effect on brain activity, increasing slow oscillations and bursts of activity known as sleep spindles. Those effects are consistent with a more synchronized neural activity characteristic of deeper sleep,” said the study. Researchers hope to examine whether the hammock effect would be similar in longer stretches of sleep, and would like to find out if it can be harnessed to help people who suffer from insomnia.

Washington, June 20, 2011 (AFP)

Catlin : new office in Madrid and adds new senior Casualty reinsurance underwriter

Communication

Jun 17, 2011

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Catlin Re Switzerland will underwrite treaty reinsurance business from a new office in Madrid as of the first of July, 2011. The office will be headed by Julio Sáez, who joined Catlin on 1 June 2011. The Madrid office will complement Catlin’s existing Barcelona office, which will continue to offer direct insurance solutions for the Iberian market.

In addition, Daniel Gantner joined Catlin Re Switzerland as Underwriting Director-Casualty on 1 June. His appointment completes Catlin Re Switzerland’s senior underwriting team, enabling the company to underwrite all major classes of reinsurance (property, casualty, speciality, trade credit and surety).

Peter Schmidt, Chief Executive Officer of Catlin Re Switzerland, said:

“We want to be valued by our clients for our technical expertise, excellent financial strength and our ability to make decisions swiftly. Since we began operations in December 2010, we have been very pleased with how the market has received us.

“The addition of Daniel Gantner allows us to offer comprehensive reinsurance solutions across all lines of business. The opening of the Madrid office under the direction of Julio Sáez demonstrates our confidence in the Iberian market’s long-term prospects and the benefits of maintaining close relationships with our clients.”

Julio Sáez, Branch Manager, will head Catlin’s office in Madrid. He previously served as Head of Engineering and Senior Underwriter at Swiss Re for Spain, Portugal and Latin America. Julio Sáez has been in the insurance industry for 24 years. He is a naval engineer and holds an MBA from the IESE Business School in Madrid.

The Madrid office will underwrite property, casualty and specialty classes of reinsurance business for clients in Spain and Portugal.

As Underwriting Director-Casualty based in Zurich, Daniel Gantner will be responsible for casualty reinsurance underwriting at Catlin Re Switzerland, expanding the company’s range of products into liability, professional lines and motor liability classes. He joins Catlin Re Switzerland from Munich Re, where he most recently served as Casualty Underwriting Consultant. Previously, he was with Swiss Re as Senior Product Manager for casualty with key responsibility for the European and Asian portfolios. Daniel Gantner, who holds a PhD in natural science, has 20 years’ experience in international casualty reinsurance.

Source : Catlin

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