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Fitch Ratings has downgraded Portuguese insurer Millenniumbcp-Ageas’s (MBCPA) operating entities’ Insurer Financial Strength (IFS) ratings to ‘BBB’ from ‘A’ and maintained the ratings on Rating Watch Negative (RWN).

The downgrade follows Fitch’s downgrade of Portugal’s Long-term foreign and local currency Issuer Default Ratings (IDR) to ‘BBB-‘ from ‘A-‘ (RWN) on 1 April 2011 (see “Fitch Downgrades Portugal to ‘BBB-‘; On RWN” on www.fitchratings.com). The agency considers that the deterioration in Portugal’s economic and fiscal profile, to which, as a largely domestic insurer, MBCPA has both significant business and investment concentration, indicates a heightened probability of a further rating downgrade of the insurer in the near term.

Fitch believes that the immediate impact of the deterioration in Portugal’s economic and fiscal profile will be evidenced in a weakening of the insurer’s regulatory solvency – through the accumulation of sizeable unrealised capital losses on the Portuguese fixed-income portfolio – and the part-suspension of new business being produced by the minority partner, Banco Commercial Portugues (Millennium bcp, ‘BBB-‘/RWN). While a prolonged period of deterioration could result in a liquidity strain for the insurer, as policyholders look to redeem their policies, Fitch has no evidence to suggest that this is currently happening.

MBCPA’s ratings incorporate some benefit from the Ageas Group’s ratings (AG Insurance; IFS ‘A+’/Stable) reflecting ongoing and expected future operational and financial support. Majority owner Ageas has clearly stated that it continues to view MBCPA as a strategic investment and a long-term partnership and that, together with Millennium bcp, owner of the remaining 49% of MBCPA, it would ensure the protection of existing policyholders should this be necessary.

Source : Fitch Press Release

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Fitch Ratings has revised Italian insurer Societa Reale Mutua di Assicurazioni’s (RMA) and its Spanish subsidiary Reale Seguros Generales’ (Reale Seguros) Outlooks to Stable from Negative. At the same time, Fitch has affirmed RMA’s and Reale Seguros’ Insurer Financial Strength (IFS) ratings at ‘A-‘.

The rating action follows more tangible evidence that RMA is successfully executing its turnaround plan for its non-life operations in Italy. However, some weaknesses persist within RMA’s main Italian subsidiary, Italiana Assicurazioni (Italiana), whose recovery, in Fitch’s opinion, remains more challenging.

Fitch expects RMA’s combined ratio to have improved in 2010 (2009: 106.2%). This improvement is mainly due to a reduction of the current accident year loss ratio for property and general liability lines. In motor, claims frequency (i.e. the number of reported claims) has also reduced in 2010, however this line of business has continued to suffer from worse than expected claims experience, particularly on prior years business and for large risks.

Fitch considers RMA’s regulatory solvency continues to compare favourably to Italian peers. Fitch’s own risk-adjusted assessment of group capital adequacy also indicates that RMA Group’s capital is strong which Fitch views as a positive rating factor. RMA trimmed its exposure to equities during 2010, reducing the balance sheet sensitivity to future volatility in the equity markets.

Fitch considers RMA’s investment portfolio to be prudent and well diversified across industries. The vast majority of the fixed income portfolio is rated ‘AA-‘ or above.

Marginally offsetting this conservative portfolio is the large exposure to sovereign debt issued by the Republic of Italy. Italy remains rated ‘AA-‘, with a Stable Outlook, but a prolonged period of wide credit spreads on Italian sovereign debt and a volatile equity market could exert negative pressure on RMA’s strong capital adequacy.

Trading conditions in the Italian non-life market are improving after two years of poor operating performance in 2009 and 2010. There is a stronger degree of consensus among market participants regarding the need to raise tariffs to restore profitability, as well as more evidence that the operating environment, and regulatory aspects in particular, could support the non-life industry in its recovery (see “Non-Life: Recovery Underway; Life: Sales Fading, But Profitability Holding Up”, dated 28 March 2011 and available on www.fitchratings.com).

Fitch views RMA diversification into the Spanish market through Reale Seguros as a positive rating factor. Fitch believes Spain is a key territory for RMA and that support would be provided to Reale Seguros from RMA if needed. As a result, Fitch continues to view Reale Seguros as a “core” entity to RMA.

Reale Seguros’ rating reflects its core status in the RMA group. The rating is also supported by Reale Seguros’ profitable underwriting results, solid capitalisation and strong reserving policies, amid challenging trading conditions in the Spanish non-life insurance market. The company has been an important contributor to RMA’s earnings over the period 2008-2010, when earnings from the Italian operations have been under pressure.

RMA’s rating could be upgraded if the company reports an underwriting profit for 2011 (i.e. combined ratio below 100%), maintaining a balance between growth and capital adequacy (i.e. non-life premium growth above 3%, regulatory solvency margin above 200%). This should also be accompanied by improving technical results for Italiana (combined ratio strengthening to close to100% at end-2011).

Reale Seguros’ rating could also be upgraded if RMA is upgraded and if Fitch continues to consider it as a core operating entity in the RMA group.

Conversely, RMA’s rating could be downgraded if its combined ratio was to deteriorate beyond its 2009 level and if the company’s regulatory solvency should fall below 150%.

Reale Seguros’s rating could also be downgraded if the company were no longer viewed as a core subsidiary of RMA.

RMA is the parent company of the fifth-largest non-life insurance group in the Italian market. RMA is also well-established in Spain through Reale Seguros Generales. Total group sales in 2010 were EUR3.4bn.

Source : Fitch Press Release

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Later in the year, AXA plans to establish a general insurance joint venture with Bank Mandiri in Indonesia. It aims to sell general insurance products to the customers of the Mandiri Group and will build on the existing successful life insurance joint venture AXA Mandiri Financial Services which was formed in 2003.

AXA Mandiri, a strong and recognized brand in Indonesia, currently offers life and savings products and has a Bancassurance market share of 33%. In 2010, its total premiums were 2,820.2 billion Rp and net profit was 479.9 billion Rp.

Mike Bishop, CEO of AXA Asia, says “We are delighted with this development which will further strengthen our very successful partnership with Bank Mandiri. We strongly believe in the strategic attractiveness of the Indonesian general insurance market with its superior growth and profitability potential. The new general insurance joint venture will combine the strengths of Bank Mandiri, the largest bank in Indonesia, with AXA, one of largest insurer in the world and will allow us to leverage the strength of our existing AXA Mandiri brand. We are very excited to extend the scope of our successful collaboration with Bank Mandiri as it will allow us to build a significant general insurance presence in Indonesia and deepen AXA’s commitment in Asia.”

For this start up joint venture operation, Bank Mandiri together with AXA will acquire Asuransi Dharma Bangsa (ADB) in which Bank Mandiri will own 60% and AXA 40%.

Following the acquisition by Bank Mandiri and AXA, Asuransi Dharma Bangsa is expected to have paid up capital of one hundred billion Indonesian Rupiah (approx 8m Euro).

The transaction is subject to the finalization of agreements, relevant shareholder approvals, as well as regulatory approvals.  AXA is targeting to launch the new joint venture later this year subject to receiving all required approvals.

Source : AXA Press Release

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Fitch Ratings has placed Irish Life Assurance plc’s (Irish Life) Insurer Financial Strength (IFS) rating of ‘BBB+’, Long-term Issuer Default Rating (IDR) of ‘BBB’ and its subordinated debt, rated ‘BB+’, on Rating Watch Negative (RWN).

Irish Life is the main insurance subsidiary of Irish Life & Permanent Plc (ILP). ILP’s Individual rating was today downgraded to ‘E’ from ‘D/E’ and its Support Rating maintained at ‘2’, RWN. The Irish sovereign’s rating of ‘BBB+’ has been placed on RWN (see ‘Fitch Places Irish Banks’ Guaranteed Debt on RWN, Downgrades AIB’s, BOI’s & EBS’s Subordinated Debt’ dated 4 April 2011 and ‘Fitch Places Ireland’s Ratings on Rating Watch Negative’ dated 1 April 2011 at www.fitchratings.com).

ILP announced on 31 March that it will be selling Irish Life by IPO in the next 3 to 6 months to partly cover the bank’s increased capital requirements of EUR4bn. Although Fitch views the bank as a drag on the insurer’s ratings due to its weak capitalisation, the IPO will not trigger an upgrade of Irish Life’s ratings as they are capped by the sovereign rating. The RWN on Irish Life reflects the strong link between its ratings and the sovereign rating. Any downgrade of the sovereign rating would result in a downgrade of Irish Life.

Irish Life’s ratings could be downgraded if the Irish macro-economic situation deteriorates further or has a greater than expected impact on persistency or new business, or if the company does not remain profitable. The impact of the Irish government’s austerity package, high unemployment, reduced consumer confidence and lower than expected GDP could trigger higher policyholder lapse rates and lower sales volumes, threatening Irish Life’s profitability. The company is also exposed to the Irish sovereign through its significant shareholder exposure to Irish government debt and to the economic environment through other Irish investments.

Despite the RWN, Irish Life’s ratings continue to reflect the positive rating factors of its strong standalone capitalisation (regulatory solvency ratio of 175% at end-2010), comparatively low-risk business and strong market position. It reported operating profits of EUR160m in 2010 and has total embedded value of EUR1.6bn. However, Fitch expects profit margins and earnings to remain under pressure for a number of years.

Source : Fitch Press Release

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Fitch Ratings says in a new comment that the strong results reported by UK life insurers for 2010 puts them in good shape as they continue to prepare for sweeping changes to how they are regulated and how their products are distributed.

The UK life 2010 results season has been characterised by stronger capital, higher IFRS profits and upbeat messages from CEOs announcing dividend increases. There has also been a striking emphasis on cash generation in the 2010 results announcements.

“While it has always been important for life insurers to generate cash to cover their costs, debt-servicing and dividends, this looks like a concerted effort by the sector to show how its business can and does generate cash in the shorter term,” says David Prowse, Senior Director in Fitch’s Insurance team. “This is an important consideration for potential investors in the industry who might naturally assume otherwise, given the long-term nature of life insurance. It may also be part of a wider move by insurers to appear more simple and transparent to investors, in response to longstanding criticism of the complexity of the financial data they present.”

The UK life sector is preparing for an unprecedented combination of reforms that will transform regulation and distribution, with implications for capital management, product design and pricing. Foremost among these are Solvency II and the Retail Distribution Review. Fitch expects these changes to cause some disruption to the UK life market but expects major insurers to adapt successfully to the new landscape, meaning that the agency maintains its stable rating outlook for the sector.

Source : Fitch Ratings Press Release

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Details of a new flat-rate state pension thought to be worth £155-a-week will be unveiled later on Monday.

It will replace existing means-tested arrangements for new, but not existing, pensioners from 2015 or 2016. The current full state pension is £97.65-a-week, but is topped up to ensure a minimum income of £132.60.

This is to be replaced by a new £140 flat rate, with inflation expected to push this up to £155 by the time it comes into effect.

“Tomorrow’s pensioners do face a very different world,” said Pensions Minister Steve Webb.

“They will, on average, be working for a lot longer, they will be retired for longer, they will not on the whole have final salary guaranteed pensions in the way that perhaps their parents did.

“We therefore need a simpler, clearer foundation because more of them will now be asked to save for their retirement.”

Work and Pensions Secretary Iain Duncan-Smith has also indicated that the retirement age will rise to 66 for both men and women by 2020, as European law requires the same age for both genders.

Changes

Plans for a universal, flat-rate state pension have been discussed for a number of weeks. Final confirmation of the government’s intentions was given in Chancellor George Osborne’s Budget on 23 March.

He said that the flat-rate pension would only be available for new pensioners reaching state pension age, rather than the millions of existing pensioners. The government wants to simplify the state pension.

The planned reform would mean the state second pension would be abolished, although the government would honour contributions that had already been made ahead of the change.

It would also bring “contracting out” arrangements to an end, where some people pay lower National Insurance contributions because their second state pension is contracted out to their company final salary pension scheme.

Details of how they would be affected are likely to be revealed in the government’s full plans.

More than one-and-a-half million eligible pensioners do not claim pension credit, and the government believes that such individual losses of entitlement would not occur under a simpler flat-rate system.

However, there is likely to be debate about the fairness of a flat rate that makes no distinction between poor and wealthy pensioners.

Under current arrangements, a minimum income guarantee ensures couples get £202.40 a week through the means-tested pensions credit.

Source : BBC News Business

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Tawa plc’s subsidiary, PRO Insurance Solutions (’PRO’) and Swiss Re Europe S.A. German Branch (’Swiss Re’) today announced a strategic alliance for the German market which seeks to leverage the resources and experience of PRO to expand the services provided to Swiss Re’s clients.  PRO will focus in providing Claims Handling, Risk Management and consulting services to insurers regarding outsourcing of services.

Richard Lawson, head of PRO Consulting, commented “Pro has considerable commercial and (re)-insurance experience which has brought significant value to our clients and we are delighted to bring this expertise into our new alliance with Swiss Re in Germany. PRO has consistently developed strategies to help insurance companies positively differentiate themselves in terms of proactive risk management and robust claims handling in markets Europe-wide.”

“PRO’s expertise in this field makes them an ideal partner to offer these services,”  according to Thomas Witting, Market Executive of Germany, the Nordic and Baltic countries of Swiss Re, ”With their established credentials within the insurance industry, we are confident they can provide bespoke and cost-effective insurance solutions to the market.  Our alliance will give Swiss Re and our clients’ access to this expertise which will contribute to a strengthening of our operations.”

David Vaughan, CEO of PRO, said “We are delighted with this new partnership with Swiss Re, which firmly establishes our servicing capacity and market presence in Germany.  The support Swiss Re is providing us will enable us to be more agile in responding to demands from new and existing clients.”

 

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Mid and high net worth insurance specialist, Home & Legacy, has announced that specialist insurer Ecclesiastical is set to join the Company’s household insurance panel.

As of April 1, Ecclesiastical will compete with existing panel members to underwrite Home & Legacy’s Principal and Prestige Home products.

Commenting on the partnership, Adrian Ewington, underwriting manager at Home & Legacy, said: “We are extremely confident that the addition of Ecclesiastical will help facilitate profitable growth by giving brokers greater choice and flexibility – increasing their opportunities to win and retain clients in this growing market.”

He added: “Our unique panel arrangement provides broker partners with access to exclusive rates from a number of top insurers – with Ecclesiastical onboard our quotes will benefit from their flexible and competitive approach. This is the latest example of our ongoing investment in our products, pricing and sales and distribution capabilities to meet the needs of our brokers.”

Tony Bloomer, schemes and affinities director at Ecclesiastical, said: “Home & Legacy’s broad broker base an

Source : Allianz Press Release

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Munich Re provisionally estimates that its claims payments for the devastating earthquake and tsunami in Japan will total some €1.5bn (after retrocession and before tax). As a result, its profit target of around €2.4bn for the financial year 2011 can no longer be maintained.

This initial loss estimate is based solely on modelling. Owing to the extent of the destruction, further possible aftershocks and difficult clearing-up operations, it will be many weeks before the losses are assessed and all the claims notifications from Japanese primary insurers have come in. As many reinsurance covers do not attach until very high losses have been sustained by individual cedants, it will only become apparent at a later stage whether and to what extent reinsurers are affected by losses under particular treaties. Further uncertainties result from the impact on international flows of goods and supply chains from business interruptions suffered by Japanese industrial producers.

The magnitude 9.0 earthquake on 11 March struck the northeast coast of the main island of Honshu. Following the quake, whole towns on the northeast coast were devastated by a massive tsunami. “The earthquake was not only the strongest ever recorded in Japan: it was also the fourth most severe ever measured anywhere in the world”, said Torsten Jeworrek, Munich Re’s Reinsurance CEO. “That makes clear the extent of the losses and the suffering. Our full sympathies are with the Japanese people and our clients there.” Munich Re’s business relations with Japanese insurance companies date back to 1912. “We will naturally continue to make our capacity available to our clients in Japan and support them in dealing with the losses. We can be counted on, particularly at moments like this, and are in close contact with our clients”, stressed Jeworrek.

The losses for Munich Re result mainly from covers in commercial business. With the exception of covers placed with mutual insurers, earthquake insurance for residential buildings in Japan is provided solely by the Japanese earthquake pool, which is insured by the Japanese state together with private Japanese insurance companies. Due to supervisory regulations, risks from the earthquake pool may not be transferred to the international reinsurance market. The private insurance industry will not be significantly affected by the accidents at the Fukushima nuclear power plant.

For Munich Re, the first quarter of 2011 had already been marked by high losses from the earthquake in New Zealand, the floods in Brisbane and Cyclone Yasi in Australia. Now including the projected losses from the earthquake and tsunami in Japan, the major-loss burden from natural catastrophes amounts to over €2.5bn (after retrocession and before tax), thus far exceeding the volume to be expected for this period. That means the profit target for 2011 of around €2.4bn is no longer achievable

Source : Munich Re Press Release

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Merlin Professional Claims Services has re-structured its Surveying Services division to further enhance service delivery and operational efficiencies.

The recent surge combined with an overall increase in demand for its services, has led Merlin to identify benefits in dividing its Surveying Services Division into two distinct product offerings. The new divisions, both of which will sit under the Surveying Services brand, are Merlin Project Management and Consultancy Services, which will focus on large value claims, as well as consultancy, party wall and CDM services; and Merlin Xpress, a new offering from Merlin which will handle on site validation and scoping of lower value claims.

The focus of these two areas continues to build on Merlin’s belief in getting the appropriate person, with the appropriate skills and experience to the property at the earliest opportunity. Faster, more cost efficient service to clients in combination with an enhanced customer experience is at the heart of Merlin’s menu of service and this division is already delivering against these goals.

Mike Eyquem, who was instrumental in the setting up of the lower value claims team, will continue to be responsible for the Project Management and Consultancy Product, whilst newly recruited Graham Forrest will head up the Merlin Xpress team.

Graham Forrest, who joins Merlin from Davies, has a wealth of surveying and insurance experience, with over 35 years in the industry, and will start in this new role at Merlin on the 16th March 2011.

John Watson, Director of Contractor and Surveying Services comments: “The new structure will allow Merlin to focus individually on further enhancing the quality delivered by both product areas, as well as providing the platform to allow us to review other markets and added value services to support each area. We are delighted to welcome Graham to the team and look forward to drawing on the expertise he brings to the role”

Source : Merlin Press Release

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A mega-earthquake and tsunami struck off the northeastern coast of Japan this morning, with initial reports suggesting significant damage, injuries and fatalities. The United States Geological Survey (USGS) recorded the magnitude-8.9 earthquake at 2:46 PM local time (5:46 UTC) with an epicenter 130 kilometers (80 miles) east of Sendai, Japan and 373 kilometers (231 miles) northeast of Tokyo at a depth of 24.4 kilometers (15.2 miles). Ground shaking from the temblor lasted for nearly two full minutes. Following the main tremor, several aftershocks stronger than magnitude-6.0 occurred (including a magnitude-7.1). The earthquake was felt as far away as Beijing, China – some 2,500 kilometers (1,550 miles) from the epicenter. According to official reports, this is the strongest earthquake ever recorded in Japan.

To put the current situation into historical context, this surpasses the magnitude-7.9 Great Kanto earthquake from September 1, 1923 in strength. That event left more than 140,000 people dead in the greater Tokyo region. The Great Hanshin event on January 17, 1995 was a magnitude-6.8 tremor that killed 6,400 people. Economic damages were in excess of USD100 billion and insured losses were approximately USD3 billion.
In recent global history, the current earthquake becomes the seventh strongest tremor ever recorded. The temblor was the biggest since a magnitude-9.1 earthquake triggered a tsunami off northern Sumatra, Indonesia in December 2004 that left about 220,000 people dead or missing in 12 countries around the Indian Ocean. The earthquake was even stronger than the February 27, 2010 magnitude-8.8 tremor that struck Chile. The largest recorded earthquake in world history was a magnitude-9.5 earthquake that hit Chile on May 22, 1960.

Immediately after the initial earthquake struck, the Japan Meteorological Agency and the Pacific Tsunami Warning Center both issued tsunami watches and warnings for the majority of areas bordering along the Pacific Ocean. Notable warning areas included Japan, Russia, Guam, Taiwan, Philippines, Indonesia, Papua New Guinea, Hawaii, Samoa, Australia, Fiji, Tonga, Mexico, New Zealand, Guatemala, El Salvador, Costa Rica, Nicaragua, Antarctica, Panama, Honduras, Chile, Ecuador, Colombia, Peru and the entire western coasts of the United States and Canada. Local governments in these regions issued mandatory evacuations for residents along coastal areas as waves were projected to come ashore.
Reports from Japan noted that tsunami waves reaching upwards of 10 meters (33 feet) swept away homes, boats, cars, buildings and excessive amounts of debris several kilometers (miles) inland. It should be noted that the 10-meter (30-foot) wave height has not been officially confirmed at this time. Officially, the PTWC measured a 2.79-meter (9.2-foot) tsunami wave at the Hanasaki Hokkaido, Japan recording station. The JMA noted that large tsunamis washed ashore along a 2,100-kilometer (1,300-mile) stretch of the country’s eastern shore from the northern island of Hokkaido to central Wakayama Prefecture.
Preliminary damage assessments indicate that the event has caused significant structural damage throughout Japan’s Honshu Island, with fires, landslides and flooding also being reported. According to local media reports, one of the hardest hit tsunami areas came in the city of Sendai, where television footage showed waves of muddy water carrying buildings (some of which were on fire) that were sweeping over farmland. Reports noted that the tsunami waves later reversed their direction after coming inland and washed debris back out into the ocean. The Japanese public broadcaster NHK showed footage of a large ship that had been swept away by the tsunami and crashed directly into a breakwater in the city of Kesennuma in Miyagi Prefecture. Similar tsunami destruction was seen in dozens of communities along the coast. Local police reports noted that liquefaction was also found throughout the region. One specific report of liquefaction came from Tokyo’s Disneyland and Disney Sea theme parks.
Japan’s prime minister released a statement noting ‘major (structural) damage in broad areas’ across northeastern sections of the country due to the earthquake itself outside of the tsunami. Some of the most significant damage has been reported in the Tohoku area to the north of Tokyo. In downtown Tokyo, highrises and skyscrapers shook violently as residents and workers evacuated into the streets. The Japanese media reported that the ceiling of the Kudan Kaikan building (a large hall) had collapsed and injured an unspecified number of people who were attending a wedding ceremony. Shattered glass and debris was commonly found in streets.

The earthquake has also triggered multiple fires throughout Honshu.  A large fire, with flames shooting in excess of 30 meters (100 feet) in the air, is burning at the Cosmo oil refinery in Ichihara City in Chiba Prefecture near Tokyo after an unknown number of storage tanks exploded. Another major fire is burning at an industrial area in Yokohama’s Isogo region. A third notable fire was burning in Miyagi Prefecture, where a fire broke out in a turbine building of a nuclear power plant. In the city of Tokyo itself, at least 10 fires were burning with the most notable being a large building immersed in flames in the Odaiba district of the city. Dozens of additional fires were reported in northern prefectures of Fukushima, Sendai, Iwate and Ibaraki after gas lines exploded.
Both the electrical and transportation infrastructures have also been heavily affected. The Tokyo Electric Power Company indicated that more than four million homes were without electricity in and around Tokyo. Telecommunications (including mobile phone service) has been virtually shut off as mobile networks were downed. In terms of transportation, many sections of the Tohoku Expressway serving northern Japan were severely damaged. Tokyo’s main Narita International Airport and its secondary Haneda Airport were both closed and passengers were quickly evacuated. Media footage from Sendai’s airport showed cars, trucks, buses and thick mud deposited over its runways. At the one-year-old Ibaraki Airport in the city of Omitama in Ibaraki Prefecture, a large section of the main terminal ceiling collapsed to the ground. Ports along coastal sections have also sustained major flood inundation. Underground subway trains and bullet train service was also halted throughout the country. Several nuclear power plants along the coastline were automatically shut down immediately after the earthquake occurred, though there have not been any reports of radioactive leakage at this time.
The Japanese government has ordered members of the military to begin relief and recovery efforts across central and northern sections of the country.
Based on data from the USGS, an estimated 58.8 million people felt direct shaking from the event when using the Modified Mercalli Intensity scale. As of a 5:00 AM CST Friday morning report, the population exposure based on the scale included: 2.14 million (VIII – Severe), 29.96 million (VII – Very Strong), 19.69 million (VI – Strong) and 7.07 million (V – Moderate).
The USGS has provided the following tectonic summary of the event: “The 3/11/2011 earthquake (preliminary magnitude-8.9) near the east coast of Honshu, Japan, occurred as a result of thrust faulting on or near the subduction zone interface plate boundary between the Pacific and North America plates. At the latitude of this earthquake, the Pacific plate moves approximately westwards with respect to the North America plate at a velocity of 83 mm/yr. The Pacific plate thrusts underneath Japan at the Japan Trench, and dips to the west beneath Eurasia. The location, depth, and focal mechanism of the March 11 earthquake are consistent with the event having occurred as thrust faulting associated with subduction along this plate boundary. Note that some authors divide this region into several microplates that together define the relative motions between the larger Pacific, North America and Eurasia plates; these include the Okhotsk and Amur microplates that are respectively part of North America and Eurasia.
At this time, there have yet to be any preliminary estimates of both economic and insured losses.
It should be noted that Japan has a rigorous earthquake building code in direct response to being located on the Pacific Ocean ‘Ring of Fire’ – which is a highly seismic region where earthquakes and volcanoes are regularly recorded.

Source : Aon Benfield Press Release

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The Federal Government says it may subsidise insurance premiums for people living in flood-prone areas.

During the recent Queensland floods many people whose homes were flooded were either under-insured or not insured at all.

Assistant Treasurer Bill Shorten today announced a six-month review into natural disaster insurance, which he says will determine if private flood insurance was adequate and if there is a role for the Government to provide a subsidy.

He says the review will investigate the level of non-insurance and under-insurance for flood damage and what can be done to change that.

“We’ll be seeking answers from individuals and communities affected by floods and other natural disasters on how they will be able to recover as quickly as possible,” he said.

“We want Australians to be able to choose where they live in an informed way.”

The review will examine the ability of private insurers to offer “adequate and affordable” insurance to individuals, small businesses and governments for floods and other natural disasters.

He says it will also look at “whether there is a case for subsidising insurance premiums for individuals and small businesses in areas of highest risk”.

He said the inquiry would look into the Government providing disaster insurance or re-insurance to the private sector or the establishment of a natural disaster fund.

The review will be chaired by actuary and former insurance regulator John Trowbridge and assisted by an insurance claims lawyer and a life insurance executive.

Mr Trowbridge says it is separate from the examination of a single flood definition.

“The flood definition of itself is the beginning of a solution; it’s not a complete solution,” he said.

“It will give us the opportunity to have a common understanding across the community of what’s covered and what isn’t.

“But it doesn’t solve the problem about who will pay for it, how it will be funded and they’re the sort of questions the panel has to look at.”

The Insurance Council of Australia welcomed the inquiry but said flood mitigation and mapping should be part of the probe.

Chief executive Rob Whelan said proper flood mapping would better define risk and allow the industry to offer a range of insurance policies.

“Other measures of importance include improved building standards, better land-use planning, as well as the introduction of preventative infrastructure projects such as levees, barrages, flood gates and improved drainage.”

The commission of review is due to report to state and federal governments by the end of the year.

But Opposition spokesman Mathias Cormann is warning against the idea of subsidies, saying it would distort the market.

“[It would] encourage people to take higher risks than what they otherwise would,” he said.

Source : ABC News

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British insurer Aviva on Thursday said  profits soared by more than a third last year, after a jump in life and  pension sales, and expressed confidence on the outlook for 2011.    Earnings after tax jumped 35 percent to £1.46 billion ($2.38 billion, 1.72  billion euros) in 2010 from £1.1 billion in 2009, the company said in a  results statement.

Aviva, Britain’s second largest insurer after Prudential, said total life  and pensions sales rose 4.2 percent to £33.36 billion.

Operating profit climbed 26 percent to £2.55 billion, which was roughly in  line with market expectations, according to Dow Jones Newswires.

“We’ve gone from strength to strength in 2010. In a tough external  environment, we’ve outperformed,” chief executive Andrew Moss said in the  statement.

“Operating profits are up 26 percent and we are able to reinvest in the  business and pay a healthy and growing dividend.

“Over the last few years, we’ve grown the business, significantly reduced  costs and strengthened the balance sheet. As a result, we’ve created a good  platform for the next phase of growth.

“We have a clear strategy and we are meeting our customers’ needs. By  focusing on what we do best in the markets where we have strength and scale,  we will continue to prosper in 2011.”

The company declared a shareholder dividend of 25.6 pence a share, up from  24 pence previously.

London, March 3, 2011 (AFP)

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RSA Insurance Group annual profits for 2010 fell 14%, to £474m, due to increased bad weather claims totalling £250m, half relating to the UK, and £30m costs for the Chilean earthquake.

Net written premiums for the group, which employs about 1,200 staff in Liverpool, rose 11% to £7.45bn.

The insurer’s combined operating ratio, which represents the amount of money spent on claims and costs for every £1 of premiums taken, of 96.4%, included 3.5 points of worse than normal weather losses.

However, the group increased its international spread last year with acquisitions in Canada, Ireland, Sweden, Denmark and Oman, and chief executive Andy Haste outlined more aggressive international expansion plans for 2011 and a target to double premiums in emerging markets to £2.2bn by 2015.

He said emerging markets and international growth will generate 70% of net written premiums in the next five years.

However, UK chief executive Adrian Brown said this would adversely affect UK operations. He said: “Expansion overseas does not mean contraction in the UK.

“The UK market is mature and you can only grow by taking business from other players. Emerging markets are really growing.”

He added: “Maybe people don’t realise just what an international group we are.

“Diversification of the group across the globe means we can ride out adverse conditions in other markets.”

He praised Liverpool’s contribution to the group’s performance.

General insurance division More Than’s household and motor insurance business achieved growth of 10% and 4% respectively.

Source : Liverpool Daily Post

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Aegis Group notes that one of its former Spanish clients, Nueva Rumasa, and certain affiliated companies have filed for pre-insolvency protection under section 5.3 of Spanish Insolvency Law. Section 5.3 allows a company to enter into a four month negotiation period with creditors, ahead of any potential formal insolvency process.

As these Nueva Rumasa companies have outstanding liabilities owing to an Aegis subsidiary in Spain, Aegis considers it likely that a provision will be made against the group’s net exposure which will be recorded as a one-off exceptional charge in its 2010 full year results, due to be released on 17 March 2011. This exceptional charge is estimated to be circa £25m, on a post tax basis, reducing statutory diluted earnings per share by around 2.0p, but will have no impact on underlying results.

The Board anticipates that underlying results for 2010 will be in line with current consensus forecasts.

Aegis will update the market in its 2010 Results Announcement on 17 March 2011.

Source : Aegis Press Release

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Non-standard household insurance specialist Plum Underwriting has seen sales increase by 54% and has more than doubled its agency base since announcing aggressive growth plans a year ago. The company is now predicting at least the same level of sales growth in the coming 12 months.

The results reflect strong broker demand for the non-standard solutions Plum provides, which address the lack of available options in the market due to a diminishing appetite by mainstream insurers for risks that do not fit standard client profiles.

Plum’s household insurance product Flex, which caters for risks such as non-standard construction types and adverse claims histories, through to previous convictions/bankruptcy, non-standard occupations and irregular occupancy, is performing particularly strongly. Plum is currently recruiting additional underwriters to meet demand and, following close consultation with brokers, is planning a number of new product launches throughout the remainder of 2011.

Plum director David Whitaker said: “The growth in demand for our specialist products Flex, Elite and HomeWorks, highlights the need of brokers for non-standard solutions. We are delighted with the growth achieved to date but as the appetite of mainstream insurers continues to shrink there is a much wider market waiting to be served. As insurers focus on less complex standard risks, tightening risk acceptance criteria and underwriting parameters to chase volumes of ‘clean’ risks, so an insurance underclass is emerging. Plum is commitment to working with brokers to help them address the non-standard needs of their clients and becoming the non-standard brand of choice in the market.”

Source : Plum Underwriting Press Release

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Highlights :
– Strategic review of AXA UK activities completed in 2010. AXA UK & Ireland has further embedded its multi-specialist model with the creation of separate businesses focused on Personal Insurance, Commercial Insurance, Healthcare, and Wealth Management, delivering products and services to 16 million customers in the UK and Ireland, equivalent to 1 in 4 families holding an AXA product.
– The retained AXA Wealth business represents a fast-growing, capital-lite and Retail Distribution Review ‘ready’ business with new business premiums of £3.9 billion1, up 41% on 2009 (on a consistent basis), and £18 billion funds under management.
– In 2010, UK Personal Insurance2 revenues3 rose by 17 per cent to £1.4 billion in 2010, due principally to growth of the private motor account in the direct channel (+71%) – taking total property & casualty (P&C) revenues to £3.6 billion (+3%).
– Excluding the impact of the exceptional winter freeze (£118million or 3.3pts of combined ratio) the total P&C current year combined ratio improved to 102.0%.
– 2010 Underlying earnings of £131 million (2009: £235million).
– Further Personal Insurance premium increases are likely in 2011 as the market continues efforts to restore profitability; in contrast, across most products, commercial property & casualty insurance rates are expected to remain soft until 2012.

Commenting on the Results, Paul Evans, AXA UK & Ireland group chief executive said: “2010 was a year of transformation for AXA UK. Having successfully completed the £2.75 billion sale of our traditional life insurance business, we have restructured our UK organisation to create specialist businesses focused on the particular needs of consumers and intermediaries in each of our target markets – personal insurance, commercial insurance to small and medium enterprises, healthcare and wealth management – all of which have significant growth potential. Building on low cost platforms developed over recent years and benefiting from a resolute focus on our target markets, AXA’s businesses in the UK and Ireland are now very well-positioned for profitable growth.

“Cost competitiveness and excellent customer service rely enormously on the efficiency of product platforms. I am delighted with the progress made in the UK Personal Lines business during 2010.
The online-only platform acquired with Swiftcover in 2007 is now able to administer all personal insurance products, for each of our brands, in all distribution channels (brokers, partners and direct) at a cost and service level advantage which will fuel profitable growth across the key areas of private motor and household. In 2010, UK Personal Insurance revenues rose by 17 per cent to £1.4 billion, due principally to growth of the private motor account in the direct channel (+71%) – taking total property & casualty revenues (including healthcare) to £3.6 billion (+3%).

“An improvement on 2009, the current year combined operating ratio of 105.3% was nevertheless disappointing, reflecting the 3.3pts of exceptional winter freeze claims. Further improvements will come through during 2011 as the premium increases applied during 2010 across Personal Lines insurance take effect, but further pricing action will be necessary together with ongoing productivity improvements.

“The retained AXA Wealth business represents a fast-growing, capital-lite and Retail Distribution Review ‘ready’ business with new business revenues of £3.9 billion (up 41%) and £18 billion funds under management. Its low-cost online investment ‘wrap’ platform ‘Elevate’ is the fastest growing platform in the UK market with over 900 registered IFA firms and £2 billion funds under administration.

“Our priority in 2011 is to focus on delivering great service and valued products to consumers and businesses in those markets where AXA can leverage real competitive advantage. With this renewed focus, AXA’s businesses in the UK and Ireland are well positioned to realize their growth potential.”

Source : AXA Press Releas

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For the second year in a row, more professionals from Aon Risk Solutions, the global risk management business of Aon Corporation, received Risk & Insurance® Power Broker® awards than any other firm – taking home 46 of the 144 awards given across 24 industry categories. Aon leaders also dominated seven of the categories, including Aviation, Construction, Energy, Fine Arts, Global, Marine and Public Sector.

Two Aon professionals, Jim Aylsworth, managing director of Aon Risk Solutions’ Energy Specialty and Kevin Kalinich, managing director of Aon Risk Solutions’ Financial Services Group, received the distinguished honor of being named Responsibility Leader®; a designation presented to 10 Power Brokers whose achievements not only benefited their clients and company, but also positively impacted their communities.

In addition, continuing an unbreakable streak since the award’s inception in 2006, Marshall Nadel, managing director of Aon Risk Solutions’ Power Specialty, was named Power Broker for the sixth consecutive year.

Eighteen Aon professionals made the magazine’s Under 40s list, which identifies rising stars in the insurance industry.

“Earning a Power Broker award is a highly coveted recognition, not only because it represents the best in the industry, but because it is a direct recognition of the value delivered to clients,” said Steve McGill, chairman and chief executive officer of Aon Risk Solutions. “We congratulate all of the winners and finalists, and join them in our thanks to the risk managers whose voices determined this excellent result.”

The 46 Aon professionals named 2011 Power Brokers are:
Mike Stankard, Automotive
Stephen Alexandris, Aviation (Under 40)
Jay Innes, Aviation
Kristi Nowicki, Chemicals
Christian Hoffman, Chemicals (Under 40)
Michael Parizino, Construction (Under 40)
Tom Ricketts, Construction
Paul Rodriguez, Construction (Under 40)
Michael Szot, Construction
Carleen Patterson, Education
Mike Buckley-Stanton, Energy
Matt Gelotti, Energy (Under 40)
David Mittelholzer, Energy (Under 40)
Joe Addison, Entertainment/Media
Daniel R’Bibo, Entertainment/Media (Under 40)
Veronica Benzinger, Environmental
Lynn Marcin, Fine Arts
Anne Rappa, Fine Arts
Adrienne Reid, Fine Arts (Under 40)
Timothy Gosnear, Global
Elizabeth Henry, Global
Mary Judson, Global
Madeline Serpico, Global
Raymond Subers, Global
Giselle Lugones, Healthcare
Simone Hanraads, Hospitality/Gaming (Under 40)
Jim Aylsworth, Marine (Responsibility Leader)
Kevin Sisk, Marine
Gary Eppinger, Nonprofits
Hilda Batlle, Pharmaceuticals (Under 40)
Lois Lewis, Pharmaceuticals
William Becker, Public Sector
Michael Brodie, Public Sector (Under 40)
William Deeb, Public Sector
Kathleen Felderman, Real Estate
Rick Miller, Real Estate
Monica Brecka, Retail
Carol Murphy, Retail
Patrick Donnelly, Technology
Kevin Kalinich, Telecommunications (Responsibility Leader)
Gary Vitalone, Telecommunications
Todd Denton, Transportation (Under 40)
Mike Miller, Utilities
Marshall Nadel, Utilities
Thomas Sewell, Workers’ Compensation
Christina Sikorski, Workers’ Compensation (Under 40)
The 23 Aon professionals designated as Finalists:
Charles Cederroth, Aviation
Michael Gruetzmacher, Aviation (Under 40)
Anthony Meakin, Construction
Kristin Springer, Construction (Under 40)
Jim Doyle, Education
John Brosnan, Entertainment/Media
George Walden, Entertainment/Media
Matthew Edelheit, Environmental (Under 40)
Gregory Schilz, Environmental
Nick Kalist, Financial Institutions (Under 40)
Diane Jackson, Fine Arts
Jeff Minett, Fine Arts
Otis Tolbert, Healthcare
Brian Driscoll, Marine
Edwin Albers, Pharmaceuticals (Under 40)
Michael O’Brien, Public Sector
John Griffin, Real Estate
Jonathan Griffiths, Real Estate
Christopher Goodrich, Retail
John Turner, Retail
Shawn Ram, Technology
Jason Peery, Technology
Peter Law, Workers’ Compensation

Power Broker designations are based on nominations provided by brokers and judged based on references given by risk managers. Judging is primarily based on a nominee’s demonstrated knowledge of the particular industry group, creativity in solving risk-related problems and level of client service. To review the complete list of Power Brokers, visit www.riskandinsurance.com.

Source : Aon Press Release

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A case involving footballer Darren Bent could impact all insured car drivers in the UK who accept a replacement vehicle following a crash, Allianz Insurance is warning today. The ruling follows the case of the Aston Villa football star who had claimed over £63,000 from Allianz for the hire of an Aston Martin via a car credit company while his car was being repaired.

The case, which returned to Cambridge County Court last week, could mean that car drivers involved in an accident for which they are not liable will be responsible for finding a reasonable deal on a hire car whilst their vehicle is being repaired. The Judgment is a warning to hirers not to blindly accept a car offered following an accident as hirers carry a burden of responsibility that they must:

– make reasonable enquiries into the likely repair period

–  phone several companies to obtain competitive rates

–  not take age restrictions on websites at face value

–  secure a hire rate to reflect the repair period.

Martin Saunders, motor and casualty claims manager at Allianz Insurance, comments: “It is important for motorists to understand that the general public may still have to pay towards the costs of a so-called ‘free’ credit hire vehicle, if they do not follow basic principles. If claimants can afford it, shop around and talk to the insurer, even if it is the insurer of the driver who caused the accident. In most cases they will be only too pleased to help and discuss solutions.

“The issue is being compounded by an increase in the number of third-party car credit hire firms renting vehicles at high costs to individuals looking for replacement vehicles.  Drivers need to be vigilant or they could face the same situation as Mr. Bent.”

In the case of Darren Bent, the footballer hired an Aston Martin from Accident Exchange which charged £573.28 per day + VAT for the car. Allianz Insurance, the insurer of the liable driver in the accident, contested that this charge was unreasonable and Cambridge County Court originally ruled that the cost should be covered by Allianz Insurance. However, when the case was taken to the Court of Appeal it was ruled that Mr Bent did not go far enough in carrying out a market comparison on other cars available to hire whilst his was being repaired. The ruling has meant Bent failed to recover in excess of £20,000 of the amount claimed.

Martin Saunders concluded: “This case is important in establishing some clear guidelines when dealing with such insurance claims. We completely understand that people need mobility but accept that what might amount to a first estimate could leave some badly out of pocket.”

Source : Allianz Press Release

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Premiership Rugby has worked with Aviva to develop club rugby’s first ever online rugby show, “Aviva Behind the Badge” which launches this week.

As the title suggests, the show aims to take supporters behind the scenes and provide an insight into the workings of an Aviva Premiership Rugby club, as well meeting some of the characters involved on and off the pitch.

Each week ITV’s former Northampton and England second row Martin Bayfield will spend time with a different club and see what makes them tick, talking to players, coaches, medics and other staff, supporters and media.

Players will be given cameras to show what they get up to off the pitch and they will also have the chance to pit themselves against players from the other Aviva Premiership clubs to demonstrate their knowledge and rugby skills.

Three and five minute versions will be free to watch, via a range of platforms including Facebook, the Premiership Rugby channel on YouTube, and premiershiprugby.com. To view the first show go to www.premiershiprugby.com.

The first episode will go online today (Friday 11 February) and will go behind the scenes with Harlequins and London Wasps as they prepare for their Aviva Premiership Rugby round 14 matches against Exeter Chiefs and Gloucester Rugby, as well as all the best moments from the pairs’ recent trip to Abu Dhabi.

Host Martin Bayfield said: “Aviva Behind the Badge will be a great way to get under the skin of the clubs, see what makes them tick and get an insight into the team behind the team.

“Viewers of the ITV show tell us they want to see as much action as possible on that show. Now we have Aviva Behind the Badge to cover all the other stuff that goes on at the clubs, to take them behind the scenes and get a taste for the banter and chat that happens at all 12 clubs across the country.”

Aviva UK’s head of sponsorship and CR, added: “We have worked hard with Premiership Rugby to create a show that really gets up close and personal with the fantastic characters that are at the 12 Aviva Premiership Rugby clubs, showing what they are like of the pitch.”

Episodes of Aviva Behind the Badge will run weekly from now until the end of the season and the schedule is as follows:

– Thursday 10 February, London Wasps/Harlequins

– Thursday 17 February, Bath Rugby

– Thursday 24 February, Leeds Carnegie

– Thursday 3 March, Gloucester Rugby

– Thursday 10 March, Sale Sharks

– Thursday 17 March, London Irish

– Thursday 24 March, Leicester Tigers.

Source : Aviva Press Release