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George Stobbart

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AIG / AIA : share sale set to close early on strong demand

Oct 18, 2010

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The share sale of the Asian unit of US life insurer AIG could close two days early due to stronger-than-expected demand, a report said on Monday. The initial public offering for AIA could raise up to 20 billion dollars this month, making it the world’s second biggest IPO this year.

And the firm looked well on course to achieve that as investors snapped up shares, which went on sale Monday, the Wall Street Journal said, citing people familiar with the situation. It said the sale may have to close on Tuesday rather than Thursday.

AIG plans to price the deal on Friday. AIA’s management has been holding roadshows for the past two weeks as it sought investment from large institutions to buy as much as two-thirds of the company from AIG, it said.

Announcing details of the sale at a press conference in Hong Kong Sunday, AIA said it will initially offer 5.86 billion shares between 18.38-19.68 Hong Kong dollars each. It is looking to raise up to 15 billion US dollars.

However, it said it could issue up to 8.08 billion shares if it exercised a greenshoe option, which would bring the total raised to around 20 billion dollars and leave AIG with a stake of just 32.9 percent stake.

AIG, which is looking to repay US taxpayers after a government bailout in

2008, won approval last month for the sale. AIG was forced to look at publicly floating AIA in Hong Kong after the collapse in June of a 35.5-billion US dollar takeover bid by Prudential.

Among confirmed cornerstone investors are the Kuwait Investment Authority, the oil-rich Gulf emirate’s sovereign wealth fund, and a number of Hong Kong tycoons. Chinese sovereign-wealth fund China Investment Corp is also among the buyers, the report cited one of the people close to the situation as saying. Earlier this year, Agricultural Bank of China raised a total of 22.1 billion dollars from an IPO, exceeding the previous record set by the Industrial and Commercial Bank of China, which raised 21.9 billion dollars in 2006.

Trading in AIA is expected to begin on October 29.

Hong Kong, Oct 18, 2010 (AFP)

Car insurance : premiums and fees rise

Uncategorized

Oct 18, 2010

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It appears there is no light at the end of the tunnel for motorists after another record rise in car insurance premiums.

The AA British Insurance Premium Index indicates that there has been a record rise of 11.5 per cent over the past three months, meaning that over 12 months the cost of an annual comprehensive car insurance premium has shot up by 39 per cent – or £792. Young drivers are being hit particularly hard with the average cost of insurance jumping by 51 per cent for those aged between 17 and 22.

Customers are being warned to watch out for extra charges with insurers worried about parents fronting policies for their children; regularly charging administration fees for amending policies; and cancellation fees. The additional charges have been described by Which? Magazine as “exorbitant” but are deemed necessary by insurers who are losing money due to claims inflation.

A spokesman from AA Insurance, Ian Crowder, commented that the cost of repairing cars has been rising and at the same time the number and value of personal injury claims has increased. This means motorists are facing increasing premiums when the rest of their household budgets are also being squeezed.

Source : Contract Hire and Leasing

Insurance fraud : North Korean refugees use bogus claims to pay debt

Legal

Oct 17, 2010

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North Korean refugees struggling to adapt to a bewildering new life in South Korea are increasingly getting sucked into insurance frauds as their first taste of capitalism. Insurance scams have for years been common in the South, and fraudsters in recent years have targeted the refugees as sometimes unwitting accomplices.

“Sometimes defectors get involved because they don’t know how the insurance system works. They just have no idea what they are doing is wrong,” an official at the Hanawon resettlement centre told AFP.

All North Koreans who flee their impoverished communist homeland for the South must spend their first 12 weeks at the centre, which lies about 80 Kilometres (50 miles) south of Seoul.

It offers job education, information on South Korea and basic survival skills — such as buying a subway ticket, opening a bank account and using a credit card. From May it has also offered a new two-hour course on insurance fraud, with investigators from the Financial Supervisory Service (FSS) warning about the possible consequences.

“We expect that through education, defectors will think twice before making a decision to become an accessory to fraud,” the official, who supervises the course, told AFP on condition of anonymity.

Newly arrived refugees get government financial help but often must repay big debts to the brokers who arranged their escape via China. This makes them susceptible to taking part in frauds, which focus on bogus medical insurance claims.

After the refugee has bought a private policy or enrols in a state scheme, or both, insurance company workers typically conspire with hospital administrative staff to issue fake certificates of treatment. When a refugee has been reimbursed by the insurance company, and sometimes by the government, he or she hands over a portion to the accomplices.

“I received about three million won (2,700 dollars) and used the money to pay debts when I came to South Korea,” one woman in her late thirties told the JoongAng Daily newspaper.

Police in Gyeonggi province surrounding Seoul, a known centre for the scams, said that over the past five years ending March refugees received a total of 3.1 billion won from 31 insurance companies in bogus claims.

“It’s prevalent and we are constantly investigating to catch them,” said a provincial police investigator.

The watchdog FSS says refugees typically send 30 percent of their takings from the frauds to brokers in China and the rest to family still in the North. In one case in 2008, police said they had charged 41 refugees accused of receiving a total of 420 million won through bogus medical claims.

“Insurance fraud has become almost the common thing to do among defectors after they come to South Korea,” Chun Ki-Won, a priest who helps the refugees, told AFP.

“The primary reason why insurance fraud is rapidly increasing is because it’s becoming harder for defectors to adapt to a new environment.”

Refugees find it harder than their southern-born counterparts to find well-paid jobs and some complain of discrimination. In a survey conducted by legislator Kim Young-Woo, 66 percent of refugees described their living conditions as difficult.

Some 56 percent said their monthly income is below 500,000 won (450 dollars) — officially deemed to be the lowest sum on which families can manage. bout 17,000 North Korean defectors have gone through the Hanawon centre since it opened 11 years ago, and it is currently holding about 500 people.

Seoul, Oct 17, 2010 (AFP)

Life insurance : Tesco expands insurance products

Uncategorized

Oct 15, 2010

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Tesco, the supermarket giant, will expand its insurance activities by selling life insurance. Although Tesco has previously focused its insurance business on car insurance, it is expected to build up its provision of other types of cover, such as life, home, travel, and pet assurance.

The retail giant is also adding to its banking operations and building up its call centre staff, before an expected move to create a full service retail bank and insurance spin-off. It has already taken £4.5 billion in customer deposits, but now is keen to increase the profits from its services, including insurance and banking, online shopping and mobile phones.
Michael Lafferty, chairman of the retail financial research company Lafferty Group, thinks that Tesco can make inroads in the financial services industry, “There may be short-term issues, but they are really on the right track.”

Featured /PPI : CC confirms point-of-sale prohibition

Oct 14, 2010

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The Competition Commission (CC) has confirmed that it will introduce a remedies package based around a point-of-sale prohibition for all forms of payment protection insurance (PPI) (with the exception of retail PPIMaythis year. 1) after detailing how it will benefit customers. This follows the CC’s provisional decision on this issue, which was published in May this year.

The point-of-sale prohibition would stop the completion of sales of PPI during the sale of the associated credit product such as a personal loan. It was one of a package of measures the CC planned to introduce following its investigation into PPI, which concluded that businesses that offer PPI alongside credit face little or no competition when selling PPI to their credit customers.

The report and in particular the proposed point-of-sale prohibition were the subject of a legal challenge last year to the Competition Appeal Tribunal (CAT) by Barclays, supported by Lloyds Banking Group and Shop Direct Group Financial Services Ltd. Whilst upholding the CC’s conclusions as to the competition problems in this market, the CAT ruled that it must in particular consider further the role and importance of a potential drawback to the prohibition, namely that it might inconvenience customers.

Peter Davis, Inquiry Chairman and CC Deputy Chairman, said:

In this review we were tasked by the CAT to reconsider the potential advantages and disadvantages of the remedies package that we proposed in our report in 2009. Having reviewed the evidence, we have come to a clear view that, overall, customers will benefit significantly from the market reforms we propose introducing for PPI products. In particular, these reforms will mean that PPI providers will, in future, face real competition where there is currently little. And, in consequence, the prices consumers currently pay for PPI will fall significantly.

In essence, there are clear benefits of putting our remedy package in place. First, we found that some consumers would actually value an opportunity to reflect on their options away from the credit point of sale. Second, the package of remedies—including the point-of-sale prohibition—will introduce competition which is likely to bring substantial benefits to customers in terms of lower prices, better products and more choice. While the evidence does suggest that there is a potential downside to the prohibition, that some consumers will indeed suffer an inconvenience from not being able to purchase PPI at the credit point of sale, we are unanimous in our view that overall, consumers will be better off .

There have been developments in the market since we started investigating. While it is clear that credit markets—and therefore insurance on credit products —have suffered significant falls in demand in difficult economic times, we were far from persuaded that the competition problems around PPI have gone away since our initial report was published in 2009. Rather, the fundamental problems remain and can only be tackled by addressing the root of the problem—the advantage that those selling PPI alongside credit products have over potential competitors. We know that the major providers have been planning for a time when the prohibition is in force and in our judgement they will look to continue selling PPI in the future—but thanks to our measures it will generally be as providers of stand-alone products, rather than ones tacked on to the credit product, which will contribute to greater competition.

We have been told that in the current climate, it is more important than ever for customers to take out protection of this nature. If so, then it is surely very important for customers to have access to a competitively-priced quality product which meets their needs and to have the chance to make a considered and informed choice.

Since the CAT’s judgment, the CC has carried out a detailed analysis of the likely effects of such a prohibition including undertaking customer surveys, and an assessment of parties’ internal documents and of various experiments looking at the possible impact of splitting the sales processes of credit and PPI. In its final decision published today, the CC has concluded that the benefits of a package of remedies including the prohibition, by introducing greater competition and choice and lower prices to the market, will outweigh the disadvantages, in particular the potential inconvenience to some customers. The CC has also assessed changes in PPI markets since it published its report in January 2009 and concluded that despite the effects of the economic climate and regulatory action, the underlying problems identified remain firmly in place.

It will now move to introduce the full package of measures, which also include a prohibition on single-premium policies, a requirement to supply personal PPI quotes, annual reviews and other measures to make sure that improved information is available to consumers to make it easier for them to compare and search for products and switch policies at a later point.

The exception is retail PPI where, although like other forms of PPI distributors of retail PPI face little or no competition when selling the product, the CC has not been convinced that the advantages for retail PPI customers of introducing a remedy package based around the point-of-sale prohibition would outweigh the costs—because research suggests that many retail PPI customers are unlikely to search for alternatives given the relatively small sums typically involved. Following a provisional decision on this in July, the CC will instead introduce changes that will see clearer information provided to customers on the cost of retail PPI cover and their rights; ‘unbundling’ PPI from merchandise cover and a requirement for providers to supply information to the new Consumer Financial Education Body for its price comparison tables.

PPI covers repayments on credit products if the borrower is unable to make repayments due to accident, sickness, unemployment or (in many cases) death. PPI is sold to cover a variety 3 of financial products, but over 90 per cent of PPI sold in the UK is either unsecured personal loan PPI, credit card PPI, mortgage PPI or secured loan PPI.

In its 2009 report, the CC found that the vast majority of the UK’s more than 12 million PPI policies were sold at the same time as a consumer takes out a loan, credit card or other type of credit. The CC found that many consumers are unaware that they can buy PPI from other providers, rarely shop around to compare prices and terms and conditions of PPI policies, and rarely switch PPI providers. The resulting ‘point-of-sale’ advantage makes it difficult for other PPI providers to reach credit providers’ customers and in the absence of such competitive pressure, consumers are charged high prices.

During the inquiry, the CC liaised closely with the industry regulator, the Financial Services Authority, which takes the lead on regulating sales practices and tackling miss-selling, as well as the Financial Ombudsman Service, which deals with consumer disputes. The CC’s focus has been on examining whether there is effective competition in the market as a whole.

Source : Competition Commission Press Release

External growth : AXA buys majority share in leading Azerbaijani insurer

Uncategorized

Oct 14, 2010

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French insurance giant AXA has bought a majority share in leading Azerbaijani insurance provider MBASK, the Azerbaijani company said Thursday.

MBASK said in a statement that AXA had bought a 51 percent stake in the company from the European Bank for Reconstruction and Development (EBRD) and company chairman Eldar Garibov though a subsidiary, AXA Seguros Generales. Garibov will retain the remaining 49 percent. Financial details of the transaction were not disclosed.

Baku, Oct 14, 2010 (AFP)

Pensions tax relief proposals

Good to know

Oct 14, 2010

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The life and pensions provider is pleased the Government is both listening to and working with the industry.

Friends Provident believes the Government’s proposal to reduce the annual allowance to £50,000 is absolutely the right move and argues the pledge will not only achieve the required savings, but will also avoid a wholly unnecessary and complex administrative nightmare.

The insurer believes this will help ensure key decision-makers within companies continue to participate in and promote their existing workplace pension arrangements. But Friends Provident argues the next step should be to index both the annual allowance and lifetime limit so they continue to be relevant to future retirement needs.

Trevor Matthews, chief executive officer for Friends Provident, comments:

“Today’s commitment to look at replacing the previous Government’s complex proposals with an elegant solution that achieves the same revenue objective is to be applauded. It is a welcome first step that begins to remove the uncertainty that has been lingering over pension planning in the UK for some time. I am hopeful the government will continue with this common sense approach and also consider indexing both the £50,000 annual allowance and the £1.5 million lifetime allowance limit on an annual basis.”

Source : Friends Provident Press Release

Study : Western diseases spread to developing world

Oct 14, 2010

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Chronic illnesses like obesity and diabetes, generally seen as “Western”, are making worryingly rapid inroads in the developing world, health experts warned at a meeting in Berlin this week.

Around 80 percent of new cases of cancers, diabetes and cardiovascular diseases are now being recorded not in the rich West, but in poorer parts of the globe, according to World Health Organisation (WHO) figures.

The explosion is a “consequence of importing lifestyles from Western countries,” Francis Collins, head of the US-based National Institutes of Health, told the World Health Summit at Berlin’s Charite hospital. According to the WHO, the worst-affected areas are Southeast Asia and the western Pacific, while the Middle East stands out for swelling rates of obesity.

“An obesity epidemic is inevitable unless policies to reduce intakes substantially from fat and sugar with spontaneous increases in activity are introduced now,” said Philip James, chairman of the British-based International Obesity Task Force (IOTF).

Currently, there are around 300 million people around the world classified as obese, with a body mass index (BMI) — a measure computing body weight and height — of over 30, according to the IOTF.

The rise in the developing world is all the more surprising because these countries are also ravaged by hunger, but the increase in obesity does not necessarily mean that people there are becoming better fed. Obesity often masks underlying deficiencies in vitamins and minerals, the IOTF says.

As these countries develop economically, people’s diets change as more and more of them move to cities and eat high-fat and high-sugar foods, often in Western-style fast food eateries. Urban life also tends to be more sedentary.

As a result, people put on weight, making them more susceptible to chronic illness including diabetes, heart disease and cancer, adding to the strain on already overstretched health care systems. In India, for example, rates of diabetes are twice as high in urban centres than in rural areas, James said.

According to the WHO, 90 percent of sufferers have Type 2 diabetes — when the body cannot effectively use the insulin it makes — largely as a result of excess body weight and physical inactivity. Diabetes sufferers are expected to number 300 million in 2025, up from 135 million in 1995, the WHO predicts. Deaths will double between 2005 and 2030.

In 2005, an estimated 1.1 million people died from diabetes, with almost 80 percent of deaths occurring in low- and middle-income countries, the WHO said. But many experts say that the international community has not yet taken on board the growth of chronic diseases in the developing world. Instead, particularly in Africa, efforts are focused on fighting contagious diseases like malaria, tuberculosis and AIDS, which are also mass killers.

“From a medical point of view, they are preventable,” said Pekka Puska, director general of the National Institute for Health and Welfare in Finland (THL).

“We need to elevate health to a cabinet issue. We need to put this on the agenda of heads of state,” said Olivier Raynaud, responsible for health issues at the World Economic Forum. Berlin’s three-day World Health Summit, gathering around 1,000 health experts from around the world, wraps up on Wednesday.

Berlin, Oct 13, 2010 (AFP)

Supercat event : insurance glossary

Glossary

Oct 14, 2010

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A Supercat event is defined as generating an insured market loss of at least USD10 billion.

Insurers are warned about an eventual ‘supercat’ event in Asia, more precisely in Japan, China and South Korea.

Appointment : Richard Webb is new director for Manchester Underwriting Management

Social

Oct 14, 2010

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Broker-only MGA Manchester Underwriting has announced the appointment of Richard Webb as a Director of the business.

The role, which has been created as part of the company’s plan for commercial lines development, will report to chief executive Charles Manchester. Richard is responsible for developing broker relations, and overseeing the development of key business relationships.

Charles Manchester commented: “Richard is a prominent figure in the insurance market and has had a successful 24 year career in the industry. He brings with him a wealth of experience and enthusiasm to this new position.

“This position is fundamental to our planned growth and development and is a key factor in our development over the coming years”

Richard Webb, who was previously Head of Marketing and Broker Development for HCC International has a wide ranging career having also worked for Hiscox Insurance Company and General Accident Insurance Co. Plc. Commenting on the new role, Webb said – “I’m delighted to be working with Charles again and the team at MUM. The market is crying out for innovation and a new approach to underwriting and the business relationships and I feel that we are ideally placed to help brokers grow their business”.

The appointment of Richard Webb is subject to FSA approval.

Source : Manchester Underwriting Management Press Release

Weather warning : Hurricane Paula

Uncategorized

Oct 13, 2010

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Hurricane Paula dumped rain on the Caribbean resort of Cancun on Wednesday as it moved away from Mexico’s Yucatan Peninsula toward western Cuba.

Paula, a “small but strong” Category 2 hurricane on the five-step Saffir-Simpson intensity scale, appeared to have spared dozens of hotels lining the white sand beaches of Mexico’s Caribbean coast. Tourists and residents were evacuated from tourist islands on Tuesday as a safety precaution.

“There’s a drizzle outside right now. We were never on high alert, although some precautions, like emptying the pools, were taken,” Karla Arroyo, an employee at Cancun’s Fiesta Americana Condesa Hotel, told Reuters.

Paula packed maximum sustained winds near 100 mph (160 kph) and was located 55 miles (90 km) east of Cancun and 70 miles (115 km) off the western tip of Cuba at 7 a.m. CDT (1200 GMT), the U.S. National Hurricane Center said.

The Miami-based center said a hurricane warning for one of Mexico’s main tourist areas would likely be lifted on Wednesday. There were no immediate reports of injuries or widespread damage in or around Cancun.

AIG : Commences Exchange Offer

Uncategorized

Oct 12, 2010

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American International Group Inc. (AIG) on Friday commenced an offer to exchange up to 74.5 million of its equity units, a move that comes after the U.S. government said it will sell off its stake in the insurer.

Following the exchange of the units and the government’s conversion of AIG preferred shares to common shares in the coming months, private shareholders will own about 7.9% of AIG, or about 143 million shares. The government will hold roughly 1.66 billion shares, or 92% of AIG common shares, and it has said it intends to reduce its stake over time.

“We are taking these steps to simplify our capital structure in connection with the execution of our restructuring plan with the government,” an AIG spokesman said Friday.

The units AIG seeks to acquire represent about 95% of the outstanding corporate units. The offer is equal to 0.09867 share of its common stock plus roughly $3.27 in cash. The exchange offer will expire at 11:59 p.m. New York City time on Nov. 10, unless extended or earlier terminated by AIG.

The equity units, also known as mandatory convertible securities, were originally issued in 2008, when AIG raised about $5.9 billion from selling 78.4 million units at about $75 each.

Fitch Ratings : AXA Bank Europe SCF’s First Obligations Foncieres Expected ‘AAA’ Ratings

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Oct 8, 2010

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Fitch Ratings has assigned AXA Bank Europe Societe de Credit Foncier’s (ABE SCF) Series 1 Obligations Foncieres (OFs, the French legislative covered bonds) an expected ‘AAA’ rating. The bonds will have a benchmark size and a maturity of up to ten years. The final ratings are contingent on the receipt of final documents conforming to information already received.

At the same time, Fitch assigned ABE SCF a Long-term Issuer Default Rating (IDR) of ‘A+’ with a Negative Outlook and a Support Rating of ‘1’. The ratings of ABE SCF are based on potential support in case of need from AXA Belgium (Insurer Financial Strength ‘AA-‘ with a Negative Outlook) given ABE SCF’s strong integration with and strategic importance to AXA’s activities in Belgium.

The expected rating of the OFs is based on ABE SCF’s Long-term IDR of ‘A+’ and a Discontinuity Factor (D-Factor) of 17.0%, the combination of which enables the OFs to be rated as high as ‘AA+’ on a probability of default (PD) basis, provided that the overcollateralisation (OC) between the cover assets and the covered bonds is sufficient to sustain the corresponding stress scenario. The agency also modelled expected recoveries from the cover pool in case of a default of the covered bonds in a ‘AAA’ stress scenario. Fitch found the OC of 13.1%, which the issuer is expected to maintain, to be sufficient for its cash-flow model to sustain a ‘AA+’ level of stress. It also provides outstanding recoveries on the covered bonds in a ‘AAA’ scenario, justifying a one-notch uplift from the PD rating, under Fitch covered bonds rating criteria.

ABE SCF is a fully-owned French subsidiary of Belgium-based AXA Bank Europe (ABE), which in turn is 100%-owned by AXA Holdings Belgium. AXA Holdings Belgium is the holding company of AXA’s operating companies in Belgium, notably AXA Belgium. ABE SCF is licensed as a Societe de Credit Foncier authorised to issue OFs and is supervised by the French bank regulator. It was established in September 2010 as a refinancing vehicle for the mortgage business of ABE in Belgium.

The programme’s D-Factor is mainly influenced by the satisfactory segregation of the cover assets under the French SCF law from the bankruptcy estate of ABE and by the solution to overcome liquidity gaps. For OFs issued with a hard-bullet maturity, ABE will fund a pre-maturity reserve covering principal payments due by the SCF for the following nine months if the SCF’s rating is below ‘F1+’. It may also issue OFs in the form of soft-bullet bonds with an extendible period of 12 months. Fitch views the extendible maturity as more protective than the Pre-Maturity reserve feature, leading to a D-Factor of 14.8% instead of 17.0%. However, were the SCF to issue hard-and soft-bullet bonds, it would apply a weakest-link approach and assign the higher D-Factor to the programme. Therefore, the expected rating has been based on a D-Factor of 17.0%.

The D-Factor further reflects the feasibility of the transition to an alternative manager following a default of ABE and the supervision from the French banking authorities.

The covered bonds will be secured by all the SCF’s assets. The cover pool will initially consist of the senior RMBS notes issued by Royal Street NV/SA, a Belgian securitisation vehicle, through its compartment RS-2. They are backed by residential mortgage loans originated by ABE in Belgium and are expected to be rated ‘AAAsf’. Fitch has assumed that the notes would not default in a ‘AAA’ scenario. However, a downgrade of the RMBS notes may lead to a downgrade of the OFs.

The RS-2 notes will start to amortise after five years, over a period of 30 years. This can create a wide maturity mismatch, depending on the covered bonds’ maturity. Fitch has simulated the cost of refinancing the cover pool when modelling the OC supporting the assigned rating. The agency assumed that nine months would be necessary to refinance the cover pool in a stressed situation. Interest mismatches in the programme are minimal, as all cover assets bear a floating rate of interest and the fixed-rate OFs will be swapped into a floating rate.

The level of OC supporting the expected ‘AAA’ rating is 13.1%. This percentage will be affected, among other things, by the profile of the cover assets versus covered bonds, which will change over time. All else being equal, the covered bonds can remain rated ‘AAA’ as long as the issuer is rated at least ‘BBB+’.

Source : Fitch Rating Press Release

New insurance fund to cover cost of future oil spills

Legal

Oct 8, 2010

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U.S. oil explorers are talking about forming a new insurance fund that would cover the costs of any future oil spill, to avoid a scenario where smaller companies are unable to drill offshore, a senior industry executive said on Thursday.

BP’s oil spill is expected to rack up an over $30 billion bill for shutting the leak, cleaning up the oil and compensating those affected.

This has prompted concerns about what would have happened if a company without BP’s massive resources had been operating the blown-out well.

Jim Farnsworth, Chief Executive of Cobalt International, a small explorer focussed on the deepwater of the Gulf of Mexico, said his company was in talks on a solution to avert such fears.

“It is likely and probably desirable for a combination of us to come together and insure against these types of accidents,” he told the Finding Petroleum conference in London.

“Cobalt is actively in discussions along those lines,” he added.

Some analysts have predicted that the oil spill could cause a shakeout with smaller companies being forced to sell up because new regulations force them to seek insurance cover which may be either unobtainable or unaffordable.

In the wake of Exxon’s Valdez oil spill, companies formed a $1 billion fund to pay for future oil spills. Farnsworth, a former BP executive, said he expected the new fund to be bigger.

Cobalt’s market capitalisation has dropped by $1.5 billion, or 30 percent, since the oil spill began, Farnsworth said.

The CEO added that he expected it would take a long time for drilling to resume in the Gulf of Mexico even if a drilling moratorium, installed in the wake of the oil spill, is lifted in November, as expected.

“The real moratorium ends when they start issuing permits again and that could take a long time,” he said.

Some analysts predict permitting may remain paralyzed until late 2011.

Source : Reuters

Appointment : Colin Batabyal is new underwriting director for MMA

Social

Oct 7, 2010

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Colin Batabyal has been appointed as the new Underwriting Director for MMA Insurance. Colin takes up his role with immediate effect and will be based in the company’s Reading headquarters. He will be responsible for all of MMA’s underwriting in both commercial and personal lines classes.

Colin has over 30 years experience of the insurance industry having worked for a range of insurance businesses, the most recent of which was esure.

He began his career with Municipal Mutual in 1977 and progressed through Endsleigh Insurance, Churchill Insurance and Norman Insurance before joining Direct Line in 1994 as General Manager of Motor Insurance. Moving to esure as a Director in 2000, Colin took responsibility for the company’s underwriting, corporate analysis, reinsurance, business development and partnership activities. During this period Colin was also CEO of First Alternative from 2004 to 2007.

Commenting on his new role, Colin said: “I’m extremely pleased to be joining MMA. The company has transformed itself radically over recent years, becoming a serious challenger in the commercial lines arena, as well as a strong personal lines insurer. My job is to ensure that momentum continues while keeping our underwriting disciplined, innovative and accessible. It’s a challenge I’m delighted to be taking on.”

MMA’s CEO Garry Fearn said: “Colin is an excellent addition to the MMA team. A highly skilled and talented insurance professional, he has maintained a position at the forefront of underwriting in this country. His knowledge and underwriting insight will be of tremendous benefit to MMA.”

Source : MMA Press Release

Amlin AG: Amlin plc announces completion of the change in domicile of Amlin Bermuda Limited to Switzerland

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Oct 7, 2010

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Amlin announces that it has today completed the previously announced change in the corporate domicile of its wholly-owned subsidiary Amlin Bermuda Limited from Bermuda to Switzerland. This was completed following the receipt of approvals from the Swiss Financial Market Authority (“FINMA”) and the Bermuda Monetary Authority (“BMA”).

The redomiciled Swiss company is named Amlin AG and the existing operations of Amlin Bermuda Limited will become a Bermuda-based branch of Amlin AG. Amlin AG is capitalised at approximately US$1.4 billion, placing the company amongst the leading independent players in terms of financial strength with excellent credit ratings (A from S&P, A from AM Best and A2 (positive) from Moody’s).

Amlin AG has been established as an independently capitalised, full service reinsurance operation. The company’s new Zurich-based underwriting business (trading as “Amlin Re Europe”) offers strong security and service delivery to European reinsurance buyers and brokers. Amlin Re Europe is able to write all major non-life reinsurance classes and products with a team of experienced and professional underwriters with local knowledge of each European market. Amlin AG has already recruited 28 high quality professionals and intends to expand further as the business grows.

Philippe Regazzoni, Chief Executive of Amlin AG said, “The establishment of Amlin Re Europe demonstrates Amlin’s commitment to providing European reinsurance buyers with Amlin’s strong security and service delivery. We believe that Amlin Re Europe will offer a meaningful alternative for high quality reinsurance capacity, especially for small and mid-sized companies.”

Amlin remains committed to Bermuda as a key operating platform. Amlin AG’s Bermuda-based branch will trade as Amlin Bermuda and will continue to serve its reinsurance clients and brokers in exactly the same manner as it does today. The high levels of service and security Amlin Bermuda’s clients have come to expect will be unaffected by these changes.

Source : Amlin Press Release

Announcement : AIG’s Chief Risk Officer Steps Down

Social

Oct 7, 2010

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American International Group Inc.’s first and only chief risk officer will retire from the company. AIG Chief Executive Robert Benmosche told employees that Senior Vice President and Chief Risk Officer Robert E. Lewis had decided to retire.

The decision came a little more than three months after Lewis appeared before Financial Crisis Inquiry Commission, an investigative panel convened by Congressional act to examine causes of the financial crisis.

Lewis told the commission that AIG had been blindsided by the crisis and found itself short on liquidity (BestWire, June 30, 2010). The near-collapse of the insurance giant triggered government involvement and resulted in a $182 billion taxpayer bailout.

“As it turned out, we were wrong about how bad things could get,” Lewis stated to the panel. “What happened was so extreme, it was beyond anything we had planned for.”

Attempts to reach Lewis were unsuccessful. AIG spokesman Mark Herr said the company would not comment on Lewis’ retirement beyond Benmosche’s memo to employees. A successor to Lewis will be named soon, and Lewis will remain with the company during a transitional period, the memo said.

Lewis joined AIG in 1993 as a vice president and chief credit officer and was part of the company’s early efforts to build a credit risk management function, according to the memo. In 2004, he was tapped by then CEO Maurice “Hank” Greenberg to become the company’s first chief risk officer, making Lewis responsible for identifying, evaluating and managing risk.

That role would land Lewis before the Financial Crisis Inquiry Commission in June, seated between two notable players in the company’s near collapse — former AIG Financial Products Corp. CEO Joseph J. Cassano and former AIG CEO Martin J. Sullivan.

Benmosche has been reshaping the company’s management structure since taking over the company some 13 months ago. In February, he tapped Peter D. Hancock as executive vice president of finance, risk, and investments, a role that involves oversight of AIG Financial Products Corp. (BestWire, Feb. 8, 2010).

As of Sept. 20, AIG (NYSE: AIG) still owed the U.S. government about $128.2 billion in debt (BestWire, Sept. 20, 2010).

AIG stock was selling at $40.71 in morning trading on Oct. 6, up 1.95% from the previous close. Most AIG insurers have current Best’s Financial Strength Ratings of A (Excellent).

Source : Insurance News Net

New app : Pothole Reporting App For Motorists

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Oct 5, 2010

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Motorists who have been forced to claim on their car insurance due to the damage inflicted on tyres and suspension by potholes can now easily report the hazards with a new iPhone app.

The Fill That Hole app reports problems via the Cyclists’ Touring Club (CTC) website and uses a photograph of the pothole and GPS technology to pinpoint the location of the pothole to the relevant local authority.

The app, which was commissioned by CTC and Aggregate Industries, will offer millions of road users who suffer injury or damage to their vehicles because of potholes the chance to instantly report them.

Some 1.4 million potholes were reported in England and Wales last year and it is believed that £9.5 billion needs to be spent to bring the roads up to standard. It also highlights which local authority is responding to the issue with data outlining fix rates and league tables of local authorities across the country. Figures released by CTC show an increase of 133 per cent in the number of potholes reported to the Fill That Hole website against just 18 per cent that have been fixed to date.

Source : Confused.com

Award : Brit Insurance’s Alan Groves receives the CII’s prestigious Rutter Prize

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Oct 5, 2010

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Brit Insurance, the international general insurance and reinsurance group, is pleased to announce that Alan Groves, Reinsurance Contracts Manager for its Reinsurance business unit, has been awarded the Chartered Insurance Institute’s Rutter Prize, one of the Institute’s highest accolades. The medal is awarded annually to the best new Fellow of the Chartered Insurance Institute (FCII).

Alan received his gold medal, along with a prizewinner’s cheque, at a ceremony held by the Insurance Institute of London (IIL) on 27th September.

A key element in the CII’s decision to award the medal to Alan was his fellowship dissertation, entitled “Capital Markets Convergence – Short Term Fix or Long Term Partnership?”. Exploring the development of Insurance Linked Securities, in particular the history of, and prospects for, the catastrophe bond market; it was considered by the CII to be an outstanding piece of work.

Alan has over 24 years of reinsurance experience and joined Brit Insurance in 2001 where in recent years he was integral to the team that developed Norton Re, a Bermuda-registered catastrophe retrocession insurer. It was during this time that he developed particular expertise in alternative capital structures. He completed his ACII in 2004.

Jonathan Turner, CEO of Brit Reinsurance, commented:

“To achieve FCII status is a major achievement in itself. This award is added recognition of the dedication and enthusiasm Alan brings to Brit Insurance and our industry. His technical knowledge and desire to stay one step ahead of industry trends make him a thoroughly deserving recipient of the Rutter Prize.”

Source : Brit Insurance Press Release

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