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George Stobbart

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Banks maximize the value of their assets while securing protection from long-term risks.

Property repossessed by a financial institution after foreclosure may stay vacant or unfinished for months or years, making it susceptible to various types of damage. According to RealtyTrac®, the leading online marketplace of foreclosure properties, more than 932,000 properties received a foreclosure filing in the first quarter, a 16 percent increase from the same time last year.

Aon Risk Services, the risk management and insurance brokerage business of Aon Corporation, today announced that financial institutions can now maximize the value of their real estate-owned assets through Aon’s Comprehensive Asset Maximization program.

This innovative approach allows lenders the flexibility to procure insurance for each stage of the asset maximization process – before foreclosure, during the holding period following foreclosure and at the completion of construction. In addition, this course of action offers completed operations protection for all parties.

“Financial institutions of any size seeking to maximize the value of their REO assets face a myriad of insurance and risk management challenges not typically covered by traditional insurance programs,” said Michael O’Connell, managing director of Aon’s financial institutions practice. “This new solution allows banks to deliver the best results to investors while allowing them to manage and control the REO maximization process.”

Michael Szot, managing director of Aon’s construction services group, added, “We set out to develop a program for our banking and builder clients to drive success with very little administrative or cash flow impact. Our Comprehensive Asset Maximization approach does just that while fully supporting decision-making processes by delivering a combination of insurance, education, legal and industry resources efficiently.”

Chicago, June 8

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Broker insurer MMA has opened the doors to its new regional office in Newcastle, and announced the local team appointed to take the insurer forward in the North East region.

The Newcastle office will be lead by Anthony Harris, Business Development Manager and Regional Underwriter Ian McIntire. They have been with MMA for seven and two years respectively.

Derek Plummer, Commercial Director of MMA commented: “Newcastle is our second regional office to open in 2010 as part of our ongoing UK expansion. It very much follows the model we have successfully introduced in other locations where  brokers value our approach enabling them to develop local relationships with the local underwriting decision makers.

Anthony and Ian have the local credentials to maximise SME business opportunities in the North East building on their existing broker relationships”. Initial broker reaction to our announcement has been very positive so we look forward to MMA becoming a real force in the Newcastle market.”

Newcastle is the first of three new offices including Bristol and Chelmsford in addition to their regional offices in Manchester, Glasgow, Reading and Birmingham.

MMA is running a series of broker forums around its new regional offices beginning with the North East this week. These events support the local offices and give MMA management an insight into regional brokers’ requirements.

Reading, 8 June 2010

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Two-Pronged casualty claims solution from Aon eSolutions and Aon Global Risk Consulting combined browser-based claims technology and casualty claims consulting to launch at PRIMA.

Aon eSolutions, the technology solutions business of Aon Corporation (NYSE: AON), and Aon Global Risk Consulting, a world leading provider of risk consulting, actuarial services and captive management, today announced that they will offer public entities a holistic claims solution that combines browser-based claims technology with claims consulting services.

This two-pronged approach is designed to help organizations optimize their casualty claims process and will be introduced at the Public Risk Management Association Conference at booths 105 and 107, June 7 and 8 in Orlando.

With shrinking budgets and staff, public entities are being forced to do more with less. In terms of casualty claims, they must increase their efficiency in handling. However, many entities are hampered by legacy systems and accompanying manual, labor-intensive processes. This antiquated combination leads to high overhead and an inability to control claims costs.

Teri Gass, director of business development at Aon Global Risk Consulting, will be at PRIMA to discuss the new strategy, and stated: “Unless technology is integrated with claims best practices, public entities cannot fully realize a return on their IT investment. Aon’s two-pronged solution helps organizations to leverage a significant ROI, providing financial justification for this program in today’s tough economic climate.”

Aon eSolutions’ iVOS system is the industry’s most comprehensive claims technology solution and offers a complete set of automation tools, while RiskConsole is the industry’s leading risk management information system, and consolidates claims data from multiple sources to help quantify and reduce an organization’s total cost of risk.

iVOS and RiskConsole leverage Aon’s overall casualty claims approach by enabling clients to improve claims handling, expedite claims closure, ensure accurate claims reserving and more effectively comply with governmental standards.

Lucy Williams, deputy human resources director over claims for Riverside County in California and an early adopter of this integrated approach, added: “We chose iVOS for its ability to enhance efficiencies by automating workflows and developing a paperless environment. Once we began implementation, we realized the need to enhance our processes. Aon claims consultants took inventory of our workflows and made best practice recommendations to improve our overall operations. As a result, we were able to consolidate administrative functions and reduce our clerical staff substantially. Going forward, we are considering RiskConsole to enhance our ability to manage the county’s overall risks and exposures.”

ORLANDO, FL, June 7, 2010

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AEGIS London has appointed Matthew Yeldham as its new Head of Casualty.

Mr Yeldham joins on 12 July and, subject to regulatory approval, will also become a director of  AEGIS London. A well-known figure in the London insurance market and respected leader in casualty business, Mr Yeldham was most recently Head of International Insurance for Aspen and active underwriter of Aspen’s syndicate at Lloyd’s. During an extensive career he has also held senior positions with Wellington and Catlin.

Mr Yeldham’s recruitment signals AEGIS London’s commitment to develop its casualty account and position it for growth in the medium term.

AEGIS London’s managing director Stuart Davies said : “Matthew is a key player in London market casualty business and is extremely well respected. We’re delighted to have persuaded him to join AEGIS London and lead our casualty team in the next phase of its evolution. Our objective in recruiting Matthew is to strengthen our highly regarded casualty team further, enabling it to grow in a managed way now and be perfectly positioned for strong growth when market conditions are optimal. His arrival is a major boost for us and allows our other casualty team members to focus on their strengths. In particular, it allows Chris Terry to focus on his specialism of international casualty, which is expected to be the main element of our growth strategy.”

Commenting on his new role, Mr Yeldham said: “AEGIS London is one of the success stories of recent years and an advertisement for what a sensible, long term strategy can achieve in this market. I’m delighted to be joining the team to lead its highly successful casualty account on to the next stage of its development.”

Following a degree in politics and philosophy at Southampton University, Mr Yeldham joined the Agnew Syndicate 672 in 1992,progressing to deputy liability underwriter. In 2001, he became an Underwriting Director of  Wellington Underwriting Agencies Ltd (WUAL) with responsibility for all casualty and marine underwriting, subsequently rising to deputy chief underwriting officer by 2006, before taking on the role of deputy active underwriter with Catlin following the merger of the companies. In 2007, Mr Yeldham moved to Aspen as head of international insurance and active underwriter of the Aspen syndicate.

London, 8 June 2010

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Employers could face higher costs for providing life, critical illness and income insurance cover as benefits to their employees.

Aon Consulting’s annual survey of insurers and reinsurers who provide group risk benefits in the corporate market found that, almost uniformly, the underlying cost of providing lump sum life assurance, death in service pensions, income protection and group critical illness to employees was cheaper in 2009 than 2008.  Many underwriters predict that these cost reductions will not persist during the year to come.

The survey, which covered a combined group risk market worth £1.5bn of premium found that: 50% of insurers and reinsurers believe they will have to increase the cost of income protection insurance.

In a major U-turn from last year, when half of insurers predicted the premiums for lump sum life assurance to decrease, 50%  now expect rates to remain steady while 38% expect rates to increase. Not one insurer expects the cost of critical illness  cover to decrease, while 29% expect to see increases. Employers can expect costs to remain steady or increase for death in service pensions with 29% of insurers and reinsurers expecting an increase and 57% expecting rates to remain on hold.

As always, insurers will be walking a fine line between maintaining market share while ensuring they remain profitable. The past few years, which have seen decreasing rates and inflationary pressures, have eroded profit margins to such an extent that it is far more likely insurers will need to focus on increasing margins.

Additionally, although a long way off, insurers are looking towards 2012 and the effect Solvency II will have on their operating models.  Here, they predict that the increases in capital requirements will mean rates will have to rise in the not too distant future.

Paul White, head of risk benefits consulting at Aon Consulting, commented: “Employers and employees have had a relatively good ride recently with the cost of some of the most basic employee perks decreasing. However, this year we are seeing more consensus amongst insurers that costs are likely to increase.

“Insurance underwriters and brokers have already seen employers cutting back on these type of benefits, offering  cheaper alternatives, or shifting the cost to employees. This trend is likely to continue, particularly if the much speculated ‘double-dip’ recession does come to fruition, and companies potentially look at benefit reduction as a cost-saving measure.

“Companies should make sure they take advantage of the cheaper costs whilst they persist. For the future, the picture might not be rosy; however, companies should not jump straight to cutting their benefits programme. Companies should be working with their advisors to build and evidence a culture of managing risks and taking action to control claim costs, from wellness strategies to active absence management programmes.”

London, 8 June, 2010

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Under-fire Prudential chief executive Tidjane Thiam apologised to shareholders on Monday for the failed takeover of US insurance giant AIG’s Asian unit AIA and vowed to work to regain their trust.

Thiam told the British insurance company’s annual general meeting that the collapse of the ambitious 35.5-billion-dollar (30-billion-euro) bid last week had caused “significant strains” for shareholders.”I deeply regret this,” he said. “I will have the task to restore your confidence.”

Thiam and chairman Harvey McGrath are fighting for their jobs after being forced to pull out of what would have been the biggest ever takeover in the insurance sector.

Prudential has been left with a 450-million-pound (540-million-euro, 660-million-dollar) bill for the abortive bid, including a break fee of 152 million pounds.

McGrath told shareholders Monday that he and Thiam were “utterly disappointed” that the bid foundered after AIG refused to drop its price but insisted that it had been the right course of action to pursue the deal.”AIA was an opportunity to accelerate our already strong growth.

It was a unanimous decision of the board to pursue the deal then pull out,” McGrath told shareholders in London.”We are all utterly disappointed (that the deal didn’t succeed).” “Please don’t be in doubt how sorry we are (about the costs), but we are convinced we were right to pursue this opportunity,” McGrath said.

But one private shareholder, Anthony Watson, made clear his anger at the failed bid, asking the executives: “You’re experts, why did you all get it wrong?”

Major shareholders have approached Prudential’s former chief executive, Mark Tucker, with a view to him replacing Thiam, according to reports on Monday. At least two of the British insurance giant’s top 15 shareholders are touting Tucker, the Financial Times newspaper said.

One leading investor told the business daily: “Mark Tucker was the real architect of the Pru’s growing success in Asia, UK and US.”If he could be persuaded to return for a period, Thiam could go immediately.”But the FT reported that other investors were opposed to Tucker returning to his old job because they fear he could break up the group.

Thiam, born in the Ivory Coast but with French nationality, took a huge gamble by making the bid for AIA just eight months into his job at the helm of Prudential. Thiam had hailed the bid as a potentially transformational deal that would have made Prudential the world’s top non-Chinese insurer by market capitalisation, ahead of competitors Allianz and AXA.

It would also have transformed Prudential into an international insurance powerhouse. But the high price asked by AIG caused a shareholder revolt and Thiam was unable to persuade AIG to lower its demands. Both he and McGrath have insisted no heads will roll following the collapse of the AIA deal.

London, June 7, 2010 (AFP)

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Thousands of demonstrators gathered Saturday in Greece to protest against a controversial, debt-dictated pension reform proposal that includes cuts, higher contributions and tougher retirement rules.

Protesters rallied around banners warning “hands off social insurance”, and also denouncing the “selling off” of public benefits, following the government’s announcement of a three-year privatisation drive in key sectors.

The main labour federations, the GSEE with one million members, and ADEDY which numbers 370,000, organised the Athens-based protest, which is expected to extend to Greece’s second city, Thessaloniki in the north.

A strike is also planned for when the pensions reform proposal, which includes increasing the minimum retirement age to 65, and reducing pensions is presented to parliament later this month.

Greece has accumulated a debt of nearly 300 billion euros (368 billion dollars) and was narrowly saved from default in May by the first instalment of an 110-billion-euro bailout loan from the EU and the IMF.

The government had to adopt unpopular austerity measures to clinch the loan, including tax hikes, wage and pension cuts and a hiring freeze in the civil service.

Athens, June 5, 2010 (AFP)

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Hungary’s government hastened to calm fears Saturday with assurances that the country’s public deficit was containable, after earlier statements that it faced similar problems to Greece.

“The Hungarian economy has healthy foundations and the deficit target of 3.8 percent of gross domestic product can be maintained for 2010 if we adopt certain measures,” a top aide to new Prime Minister Viktor Orban said.

Secretary of State Mihaly Varga was speaking at a hastily-arranged press conference two days after warning the deficit would be 7.5 percent of GDP this year.

Lajos Kosa, vice president of Orban’s centre-right Fidesz party, had also said the Hungarian economic situation was “very critical, the state is comparable to that of Greece” and that “the bankruptcy of the state is close.”

Their remarks sent the Hungarian currency, the forint, and the Budapest stock exchange plunging on Friday, and the cost of insurance against a sovereign default — credit default swaps — climbed.

Varga said Saturday that the government would be meeting in a special session this weekend and would announce various measures on Monday. In reference to Kosa’s comment, he said that “if colleagues compare the situation in Hungary to that of another country, it is unfortunate.”

The IMF said Friday that its new mission chief for Hungary, Christoph Rosenberg, would be going to Budapest on Monday “for a short visit to meet the new government and discuss the economic situation and prospects with senior officials.”

“The IMF staff looks forward to working with the new government and, as usual, will cooperate closely with European Commission staff who will also be in Budapest,” said a fund spokesperson.

Hard hit by the global economic crisis, Hungary received a 20-billion-euro (24-billion-dollar) rescue from the IMF, the World Bank and the European Union in November 2008. After tapping the IMF lifeline three times for a total of 8.7 billion euros (10.4 billion dollars), the government said in November 2009 that it no longer needed to draw on the credit thanks to improved investor confidence in the country’s economy and bonds.

Currently, 1.7 billion euros (2.0 billion dollars) in financing remains available and immediately accessible. IMF chief Dominique Strauss-Kahn, speaking at the G20 summit of top financial officials in Busan, South Korea, said he was “surprised” by the reports from Budapest, while the European Union’s Economic Affairs Commissioner Olli Rehn expressed scepticism.

He dismissed fears of a default, saying that Hungary had made major steps in recent years, in particular cutting its deficit by five percent between 2006 and 2009.

The 3.8 percent target was fixed by the previous Socialist government, in coordination with the IMF. Analysts have also suggested that Thursday’s warnings could have been made for political purposes as the government, which took power only last month, tries to convince the country to accept the tough decisions now needed to get the economy on track.

Budapest, June 4, 2010 (AFP)

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Prudential chief executive Tidjane Thiam will face the British insurance giant’s shareholders Monday amid calls for his resignation over a failed takeover of AIG’s Asian unit AIA.

The annual general meeting was supposed to confirm the 35.5-billion-dollar (30-billion-euro) takeover of AIA, but the  hugely ambitious deal collapsed last week after AIG refused to accept a lower offer.

Prudential was left with a 450-million-pound (540-million-euro, 660-million-dollar) bill, including a break fee of 152 million pounds, and a number of shareholders are calling for Thiam’s head.

“Someone at board level should be accountable for the losses associated with this failed deal,” said Richard Buxton, head of UK equities at Schroders.”Blaming the weakness of markets for the failure of shareholders to approve the deal is disingenuous.”

The Franco-Ivorian chief executive has been in his post for just eight months — he was previously finance director of the group, and before that, worked at rivals Aviva.

Both he and chairman Harvey McGrath have insisted that no heads will roll following the collapse of the AIA deal. “No one has offered to resign and no one has been asked to resign,” McGrath told the Financial Times Friday, saying the shareholders calling for change were “outliers” and the biggest investors supported the top team.

Thiam also told the business daily: “It is a clever thing to try and connect my inability to seal a 35-billion-dollar deal with my broad ability to run a company, but it is a fallacy.”To say I’m inexperienced in running a 35-billion-dollar transaction, that’s true. Not many have experience of running a 35-billion-dollar transaction.”

Thiam took a huge gamble in making the bid, in what would have been the biggest ever takeover in the insurance sector and was intended to transform the 162-year-old firm into an international insurance powerhouse.

But when turbulent financial markets made the original price tag impossible, he was unable to persuade AIG to re-negotiate a cheaper deal.

Thiam took over last October amid huge excitement, becoming the the first black person to lead a major British company. He was described by ING analyst Kevin Ryan as having a “brain the size of two solar systems”.

The 47-year-old diplomat’s son was born in Ivory Coast and became the first Ivorian to study at France’s prestigious Ecole Polytechnique. He received an MBA from INSEAD and in 1988, he joined US consultants McKinsey in Paris.

In 1994, he returned to Ivory Coast at the request of president Henri Konan Bedie. Thiam always said he was proud that “politics didn’t kill” in his country, and he joined the cabinet as secretary of planning and development.

But at Christmas 1999, when Thiam was abroad, the government was overthrown. While he briefly went back, he found himself confined to his house and so left, and for six months “I had no job, no career, nothing at all”.

On the plus side, he said “it taught me a lot about myself. If you’ve been in a situation where you have nothing, there’s nothing much you’re afraid of”.

There was yet more disappointment when he returned to France, where he complained his African origins barred him from achieving high office.

A strong believer in meritocracy, he responded by taking his American lawyer wife and their two sons across the Channel to Britain in 2002, where he joined Aviva and developed a love of Arsenal football club.

Thiam faces another difficult situation this week, but is keeping his cool as he insists he will keep his job. “We are doing very well, we (Prudential) are in a very good health, I hope that it will contribute to the image people will keep of me,” he said.

London, June 6, 2010 (AFP)

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The problems British oil giant BP faces in controlling a massive oil spill in the Gulf of Mexico highlight the dangers of working in such deep waters which the industry will have to come to terms with.

“What is taking place is an issue which will impact the global oil and gas industry and will necessarily have a very broad impact not only in the United States but around the world,” BP chief executive Tony Hayward warned Friday.

BP’s costs in combatting the worst environmental disaster in US history have already run up to around one billion dollars and could go many times higher, prompting ratings agencies to downgrade the company’s prospects.

The wider fallout could see higher industry costs for oil, with prices for the consumer rising as a result.

“Events in the Gulf of Mexico have demonstrated that drilling for oil in water depths of one mile (1.6 kilometres) … is rather like putting a man on the moon,” said David Hufton of PVM.”The technology to find the oil at such depths … exists but the technology to cope with a disaster at such (depths) is lacking,” Hufton added.

For the oil industry, one immediate impact has been Washington’s decision to ban any new drilling in the Gulf of Mexico for six months, and the delay in several projects off Alaska.

In themselves, such moves should not be so important but they raise new uncertainties for the business, complicating planning for what can be hugely costly and difficult projects.

“The ultimate outcome, we believe, will be slower development of deep water prospects and higher costs, supporting higher oil prices in the longer term,” said Helen Henton of Standard Chartered Bank.

“There is now considerable uncertainty over the future of deep water exploration, both in the US and elsewhere … more rigorous enforcement of safety and environmental standards will raise the operating and insurance costs,” Henton said.

The Gulf of Mexico accounts for 19 percent of US oil reserves, of which most lie in deep water, and contributes 29 percent of US national oil production, she added. What has happened there may complicate exploitation of the vast reserves put at 50 billion barrels of oil off the cost of Brazil in water depths up to seven kilometres, a huge technical challenge.

“Much of our future supplies were supposed to come from deep water drilling,” said Hufton of PVM. “The environmental risks are now all too apparent. Perhaps the US public will accept that it is worth paying much higher prices to have the risks removed elsewhere,” he added.

The shift offshore and then into ever deeper waters is seen by many as essential to make up for falling production on land, with the major oil companies struggling to maintain and increase their reserves.

“The world’s demand for energy is continuing to grow and so is that in the United States,” Hayward said. “The world needs the contribution of oil from the deep water and America can benefit hugely from the resources of the Gulf of Mexico but we need to prevent anything like this spill from ever happening again anywhere in the world. “

London, June 6, 2010 (AFP)

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    The free-spending role of corporations in California’s electoral system has come under fire as the state prepares to vote on two referenda which opponents have condemned as a “hijacking” of democracy.

    Whether its a bid to legalize marijuana or ban same-sex marriage, single-issue referenda, known in California as ballot initiatives, are part of the fabric of the state’s political scene. But two ballot measures being presented to voters at Tuesday’s June 8 primaries have raised questions about an electoral system which allows corporations to bankroll campaigns with millions of dollars.

    The highest profile initiative — Proposition 16 — is backed and financed by Pacific Gas and Electric, the private, for-profit electric company which supplies energy to nearly two thirds of northern California. Proposition 16 would require any city or county in the state seeking to start its own municipal utility to get approval from two thirds of its voters. Opponents of the initiative say that if approved it will give PG&E and other existing companies a virtual monopoly, locking out potential public sector rivals in perpetuity.

    “I think it’s outrageous that a regulated company could decide to write its own business advantage into the state Constitution,” John Geesman, a former member of the California Energy Commission, told the Los Angeles Times. So far PG&E has spent an estimated 46 million dollars on its campaign, blitzing local television, radio and newspapers with hard-hitting ads touting the measure as the “Taxpayers Right to Vote.”

    Opponents however are hamstrung because the law forbids municipal power providers from spending any money on electioneering. The  “No on 16” campaign is staffed exclusively by volunteers and has so far raised only 80,000 dollars. “The initiative process originated with the idea that ordinary voters could bring forth issues of importance to them and it’s pretty much been hijacked by wealthy corporations,” said “No on 16” spokeswoman Mindy Spratt.

    “We have far more public support, far more endorsements, far more volunteers. But the challenge is getting our message out against a 46 million dollar ad campaign that has blanketed the entire state. “PG&E has obviously calculated ‘If you can buy a Governor’s Mansion, you might as well try and buy a part of the constitution.'”

    The other ballot measure being decided Tuesday, Proposition 17, is being funded by Mercury Insurance, which has spent more than 15 million dollars on the campaign. Supporters say the measure is designed to allow drivers to keep loyalty discounts even if if they switch insurance companies.

    Opponents say Proposition 17 will allow insurance companies to raise rates by imposing premium surcharges that are currently illegal. “When was the last time an insurance company spent millions to save you money?,” the “Stop Prop 17” campaign asks on its website.

    Experts say that while corporations attempting to influence politics is nothing new, the sums of money being spent by backers of the two California measures in Tuesday’s election are unprecedented.

    John Matsusaka, a leading authority on ballot initiatives who heads the Initiative And Referendum Institute at the University of Southern California, described the PG&E-financed campaign as “staggering.” “Corporations have been involved in initiatives since the very beginning. It’s not new. But the amount of money being spent is,” Matsusaka told AFP.”PG&E has spent something like 45 million dollars now. That’s staggering. Huge. That is a completely new thing.”

    Matsusaka noted however that corporations were not alone in trying to buy influence at the ballot box, where public sector unions and wealthy individuals have often mounted similar campaigns in the past.”What I do think is of concern though is the imbalance between the two sides,” Matsusaka said.

    “The direct democracy process was set up in the belief that the voters are competent to make choices. “But in order for them to make choices they need to hear both sides of the argument. What’s troubling about this campaign is that only one side of the argument is being heard.”

    Los Angeles, June 6, 2010 (AFP)

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    British insurer Prudential on Sunday said it would not resurrect its failed bid for US insurer AIG’s Asian unit, calling speculation about reviving the mammoth takeover “misguided and inaccurate”.

    Last week, Prudential abandoned its bid for American International Group’s AIA subsidiary, throwing the future of its chief executive Tidjane Thiam into doubt amid shareholder anger over the collapsed deal.

    Both he and Prudential chairman Harvey McGrath have insisted that no heads will roll following the collapse of the AIA deal. Thiam will face shareholders at the company’s annual general meeting on Monday.

    The aborted deal, which ended Prudential’s quest to become the world’s top insurance firm outside of China, came one day after troubled AIG refused to cut the price tag from 35.5 billion US dollars to nearer 30 billion dollars.

    The huge transaction, which would have been the biggest-ever takeover in the insurance sector, had needed re-negotiation because of turbulent financial markets, Prudential said.

    The company’s statement on Sunday came in response to a report in Britain’s Sunday Times that cited unnamed sources as saying Thiam was planning to revive the AIA takeover, derailing its possible flotation in Hong Kong.

    “We remain highly committed to Asia through our current very successful business,” Prudential said in the statement Sunday. “(But) we will not be resurrecting the AIA deal and any speculation is misguided and inaccurate.”

    Last month, Prudential took out secondary listings in Hong Kong and Singapore to woo Asian investors ahead of a planned issue of shares designed to raise 21 billion US dollars to help fund the now-aborted AIA takeover.

    The collapsed deal cost Prudential some 450 million pounds (650 million dollars), including a break-fee of more than 152 million pounds.

    Hong Kong, June 6, 2010 (AFP)

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    Swiss insurer Zurich Financial Services said on Monday it had gained a foothold in Indonesia’s fast growing life insurance market with an agreement to buy 80 percent of Indonesian firm PT Mayapada Life

    The Swiss group said the acquisition would mark the first step in its expansion plans in Indonesia — one of the world’s most populous nations with some 240 million inhabitants — and a building block for business growth in Asia.

    Mayapada’s eponymous parent group will continue to hold 20 percent of the company, Zurich said in a statement. The deal is due to be concluded in the third quarter, subject to regulatory approval.

    “The acquisition of Mayapada Life is a first step in Zurich Life’s expansion plans in Indonesia,” said Mario Greco, chief executive of Zurich’s Global Life section. “The Mayapada Group will be a strong local partner as we seek to build key relationships to grow our business in the Asia-Pacific region,” he added.

    Greco also highlighted the “rapidly growing” portion of the Indonesian population with savings and insurance needs. Jakarta-based Mayapada Life had gross written premiums of 1.7 million dollars (1.43 million euros) at the end of 2009.

    Stefan Schuermann, an analyst at Vontobel Bank, said Indonesia’s life insurance market was very attractive. “This small acquisition corresponds to ZFS’s expansion strategy for life insurance in developing nations,” he said.

    Zurich, June 7, 2010 (AFP)

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      GEICO has opened its newest Auto Repair Xpress (ARX) facility in the East Brunswick area at Branning’s Auto Group, 1120 Route 18 to help serve local customers with collision repairs.

      “The Auto Repair Xpress program is GEICO’s unique, pain-free approach to collision repair,” said Steve Cunningham, regional vice president of GEICO’s New Jersey’s operations. “GEICO policyholders and claimants are welcome to have their vehicles repaired at the facility of their choice, but we offer ARX repair shops as a convenience to customers who are seeking out repair facility recommendations.”

      How GEICO’s Auto Repair Xpress works:

      Customers drop off their vehicle at an ARX shop, where they meet a GEICO auto damage adjuster on site to evaluate the repairs needed.
      Customers can drive away in a rental car, as long as the appropriate coverage has been purchased.
      The GEICO adjuster will oversee the entire repair process, provide customer updates and perform a quality assurance inspection before the vehicle leaves the shop.
      When the repair is complete, the customer will return the rental car to the ARX facility and drive away in the repaired vehicle.
      GEICO and the repair shop guarantee the work for as long as the customer owns the vehicle.

      Eric Tomkiewicz, GEICO’s auto damage manager for the area said, “We are excited to expand our ARX program here in the heart of Middlesex County. We have worked closely with Branning’s’ staff and are confident that we have found a partner committed to providing quality repairs and upholding our outstanding customer service promise. Customers will be interested to know that Branning’s Auto Group is also environmentally conscience, and all spray equipment meets or exceeds E.P.A. requirements.”

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        As new figures from the EEF (The Manufacturers Organisation) reveal growth in manufacturing output and orders, insurer RSA is warning companies that have downsized during the recession to prepare for the risks that a sudden surge in big and untypical orders will bring.

        Often manufacturers base their raw material, machinery and employee numbers on existing customers and retained contracts. Since the middle of 2007, manufacturing orders have decreased significantly, resulting in substantial job cuts and site closures. Consequently, while any large or significant orders would be gratefully received by many manufacturers, some may not be adequately prepared to fulfil the job.

        New orders can often mean an increase in holding extra goods and materials, employing casual labour and working longer hours. All of this brings with it different risks:
        Business Contents insurance will need to be increased to cover for the additional materials on the premises; tight deadlines may require staff to work longer hours or at a faster pace leading to accidents and mistakes. An RSA survey last year found that 35% of workers in the manufacturing sector fear they are more likely to have an accident due to being overworked. Employers liability cover and product liability cover are therefore advised; and if temporary staff are brought in, employers should ensure that they are sufficiently trained and abide by health and safety regulations.

        Jon Sellors, UK Head of Communications, RSA, said, “With news that the manufacturing sector is improving, competition for orders will be fierce and many companies may overpromise to secure contracts. Those companies that do manage to meet the order may do so to the detriment of their employees and those that fail could face significant reputational damage. It is essential that companies approach their insurance broker for risk management advice in order to best take advantage of this current industry growth.”

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        Commenting on the launch of HSBC’s 1.99 per cent discount mortgage deal and Santander’s mortgage rate cuts, Hannah-Mercedes Skenfield, mortgages channel manager at moneysupermarket.com

        “Any cuts in rates and fees is good news for mortgage borrowers, and its great to see Santander and HSBC leading the charge by announcing changes and additions to their mortgage offerings. Santander’s cuts are clearly targeted at those who want to shelter from a possible rise in interest rates in the medium term. Those consumers seeking this kind of risk mitigation will find Santander’s offering very attractive, but not necessarily the best available, so it is worth shopping around.

        “HSBC are targeting a different breed of borrower. The last time HSBC made this move we saw a sharp increase in remortgage borrowers coming back into the market. These were people with a lot of equity built up in their home that had been happy to sit on their current lender’s SVR. HSBC’s product is looking to encourage these people away from their current lender with a fantastic headline rate. With many products with high headline rates, we have seen extremely high arrangement fees which actually make the products less competitive. However, this HSBC deal is a market leading product but with a maximum LTV of 60 per cent, this launch won’t have much impact on a vast number of borrowers, or potential borrowers.

        “It is worth being aware that, as a discount product, the 1.99 per cent rate is vulnerable to changes in the lender’s SVR offering. We are currently seeing a lot of discrepancy between lenders’ SVR deals with a difference of 3.95 per cent between the lowest SVR rate and the highest. The average SVR rate currently sits at 4.72 per cent compared to 4.64 per cent three months ago and 4.59 per cent in March last year. These increases have occurred despite a flat Base Rate, and so borrowers with mortgages pegged to an SVR should be aware that their rates could be increased without the Bank of England taking any action at all.

        “We are perhaps reaching a fork in the road for the mortgage market, with some lenders keen to capitalise on the low Base Rate for excellent, headline grabbing rates and others looking to lock customers in on fixed deals before rates rise. Borrowers coming to the end of a deal have a tough choice to make, do they take the risk and plump for a low rate variable deal and hope nothing changes, or do they pay a little more each month for the sake of secure fixed repayments? Ultimately each individual will have to make this decision themselves and there is no right or wrong answer. However, if you do go for a variable rate, do so only if you can afford a potential three or four per cent increase in rates, when they do eventually rise.”

        moneysupermarket.com

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        “As predicted, 2009 was an extremely tough year. Underwriting activities at Groupama Insurances suffered as a result of unprecedented levels of claims inflation and the poor premium rating environment that affected our core private car portfolio. In addition, performance was also impacted significantly by the severe weather events encountered in January and during the final quarter of the year.

        However, even in what were very challenging economic conditions our broking subsidiaries delivered a robust set of results and made a valuable contribution. Given the very challenging conditions encountered in 2009 it is pleasing that we were still able to produce a profitable performance for Groupama.”

        François-Xavier Boisseau – CEO

        Business highlights
        Revenues
        In highly competitive market conditions, total revenues at Groupama Insurances rose 3.9% to £450.3 million (2008: £433.3 million).

        The private car policy count reduced to correct adverse profitability whilst commercial lines and healthcare (PMI) revenues remained under pressure as a result of difficult business conditions and continuing fierce competition in the company’s core SME business. The household portfolio performed particularly strongly and there was also encouraging development in the motorcycle, fleet, personal accident and travel accounts.

        Combined revenues in the Group’s broking businesses also held up well at £66.5 million (2008: £66.4 million)

        Profitability
        Combined profitability for the UK operations (before tax and amortization) reduced to £14.1 million (2008: £30.1 million) reflecting the challenging economic environment and tough trading conditions.
        Underwriting activities at Groupama Insurances were affected by the results of the private car portfolio where inadequate market pricing, significant claims inflation and some unprofitable schemes impacted performance. In addition, severe weather in the first and final quarters of the year produced claims totalling £6 million.

        In all other business areas Groupama Insurances delivered an encouraging performance and the Commercial Lines Division and Groupama Healthcare continued to do well.

        Overall broking operations again generated a valuable contribution to the combined results of the UK businesses.

        Personal lines
        Personal lines revenues at Groupama Insurances lifted to £267.9 million (2008 £225.2 million).

        The company’s household, motor cycle, personal accident and travel business developed strongly following the acquisition of a number of specialist scheme opportunities.

        Volumes in the personal motor portfolio reduced significantly to correct adverse profitability

        Commercial lines (including fleet, commercial vehicle and schemes)
        Total commercial lines revenues moved up 13.1% to £135.1 million (2008: £119.5 million).

        Although competition in the open market for SME business remained intense, the Commercial Lines Division continued to develop schemes in niche areas and to build its growing e-business capabilities. The company benefited from significant enhancements to its on-line broker trading facilities and from Optima Small Fleet, the innovative e-traded product for smaller fleets that again delivered very encouraging growth.

        Private medical insurance – Groupama Healthcare
        The company’s healthcare operations continued to reap the rewards of improving performance as a result of its focus on bottom line profitability. Total private medical insurance (PMI) revenues accordingly eased back almost 10%.

        Pleasingly, 2009 was also marked by an improving trend in new business activity at Groupama Healthcare as the market began to show some signs of rate strengthening. Groupama’s reputation for service excellence was also reinforced again with two major industry awards during the year.

        UK broking operations
        Although in 2009 the poor economic environment had a severe impact on the UK’s insurance broking community, Groupama’s broking subsidiaries still delivered an improved result that made a valuable contribution to the performance of the combined UK business.

        0 1

        US insurance giant AIG has agreed to sell its Asian arm, AIA, to British insurer Prudential for around 35 billion dollars (26 billion euros, 23 billion pounds), a source close to the deal said.

        American International Group (AIG), which received a huge taxpayer bailout to stave off collapse during the financial crisis, had been persuaded to let Prudential take over its Asian businesses, said the source late Sunday.

        The deal will transform Prudential into the world’s top non-Chinese insurer by market capitalisation, ahead of major competitors Allianz and AXA.

        It is understood the sale will be unveiled in the coming days, perhaps as early as Monday.

        The purchase will be financed in cash, through a rights issue by Prudential, and through AIG taking a minority part of the British insurer, said the source.

        Tidjane Thiam, who took up the job of Prudential chief executive in October, had never hidden his desire to expand the business in Asia.

        The business chief, who has French nationality but was born in Ivory Coast, went to New York at the end of last week to persuade AIG’s board to sell American International Assurance (AIA) to his company.

        Prudential stepped in as AIG was planning an initial public offering for its Asian arm in Hong Kong in April.

        Estimates had valued the market flotation at around 10 billion dollars — which would have been the biggest of 2010 on global markets.

        Prudential’s shareholders, for their part, had welcomed the company’s projects, said the source.

        AIG was forced into giving up some of its assets after the company’s near collapse in the depths of the financial crisis led the US government to hand it a bailout which totalled around 180 billion dollars.

        In 2008, the firm tried to sell up to 49 percent of AIA through an auction process but had to drop the idea after failing to receive suitable offers. The company then turned to the idea of an initial public offering.

        The Wall Street Journal reported that some of the proceeds from the sale of AIA to Prudential were already earmarked for US government coffers.

        The US giant reported Friday a worse-than-expected fourth quarter net loss of 8.9 billion dollars — still nearly 10 times less than in 2008, when AIG recorded 99.2 billion dollars in losses.

        Prudential will be transformed by the deal to buy AIA, which will double its size. The company, founded in 1848, currently has a market capitalisation of about 23 billion dollars.

        Sales in Asia already make up half of new contracts for Prudential across a number of countries including China, India, Indonesia, Malaysia and Thailand. The company also has a strong presence in Britain and the US.

        The takeover also marks a success for Thiam — who was the first black chief executive of a company listed on London’s benchmark FTSE 100 index — after leaving rival Aviva to join Prudential in 2008.

        AIG almost went under in September 2008, unable to meet its obligations for contracts written to insure mortgage securities and related assets without sufficient capital.

        The Federal Reserve, fearing a shock to the global financial system in the event of an AIG default, provided a loan of 85 billion dollars to AIG in September 2008 in what would be the first portion of the gigantic bailout.

        AIG generated fresh controversy at the start of February when it revealed plans to pay 100 million dollars in bonuses — a year after similar payments ignited a political firestorm.

        “(President Barack Obama) is frustrated and angry that Wall Street continues to have the sense that excessive compensation should reward some of the excessive risk taking we’ve seen over… the last couple years on Wall Street,” said White House deputy press secretary Bill Burton.

          1 0

          Space insurers are expected to generate more than USD400 million in profit for 2009 provided there are no claims before the end of the year, according to Aon’s International Space Brokers, the largest specialist risk adviser in this sector.

          The space insurance market has been very profitable over the last five years and this will inevitably lead to more competitive premiums for satellite operators in the New Year as the capacity for space risks continues to increase.

          In 2009, more than USD800 million of premiums is expected to be paid for ‘all risks’ launch and in-orbit insurance. The third quarter of 2009 saw five major insured launches (two Ariane 5s, two Protons and one Long March 3B – of which ISB were involved in four), which generated an estimated USD154.6 million of premium income for the space insurance market.  The Long March 3B launch fell short of the target orbit due to a third stage anomaly but engineers managed to manoeuvre the Palapa D spacecraft to the correct orbit which resulted in a loss of only one third of the spacecraft life.

          Losses occurring so far this year amount to between USD 400 and USD 450 million, while the other major launch vehicles have performed flawlessly. It means insurers will have been profitable for four out of five years, with the only exception being a deficit in 2007. The favourable market conditions are attracting more capacity into the space insurance market, enabling risks to be placed at better terms due to increased competition. As a result, rates in 2009 to date have continued their slow, but steady decline.

          Clive Smith, space business unit leader, said: “Demand for satellite communication capacity continues to grow, from delivering broadband and television to surveying the earth for pollution, resources and disaster monitoring. The recession made it more difficult for some operators and particularly new projects to raise capital but nevertheless there are a number of interesting projects that are still progressing well. The health of the insurance industry means it’s well positioned to support satellite programmes by providing sufficient capacity to satisfy investor requirements.”

          0 0

          New claims for jobless insurance benefits in the United States posted a surprise rise, the Labor Department said Thursday amid concerns unemployment could dampen economic recovery.

          The seasonally adjusted initial claims in the week ending February 13 rose to 473,000, an increase of 31,000 from the previous week’s revised figure of 442,000, the Labor Department said.

          The latest claims reading was larger than the forecast of most economists of around 430,000, as the world’s largest economy emerged from its worst recession in decades with unemployment posing a key challenge.

          Claims had tumbled to 432,000 during the week that ended January 2 to their lowest level since mid-2008 but they had been volatile since the beginning of the year, casting doubts about a labor market recovery.

          “It is important not to read too much into a week’s worth of data, though; the general trend in claims in recent months has pointed to slow improvement in the labor market,” said Andrew Gledhill, an economist at Moody’s Economy.com.

          The Labor Department said that the four-week moving average for the jobless insurance claims, a less volatile indicator than the week-to-week figures, was 467,500, a decrease of 1,500 from the previous week’s revised average of 469,000.

          The latest data also showed that the total number of Americans receiving unemployment benefits remained at the lowest level in more than a year.

          The number of seasonally adjusted insured unemployment during the week ending February 6 was 4.563 million, unchanged from the preceding week’s revised level.

          The Federal Reserve predicted the US jobless rate would hover between 9.5 percent and 9.7 percent, higher than the November estimate of 9.3 percent to 9.7 percent, according to minutes of the central bank’s policy meeting last month released Wednesday.

          With unemployment near double-digit level and predicted to come down slowly as economic growth gathers pace, President Barack Obama acknowledged this week that for many Americans, the misery was not yet over.

          “Millions of Americans are still without jobs. Millions more are struggling to make ends meet. It doesn’t yet feel like much of a recovery. I understand that.”

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