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Fitch Ratings has affirmed Bupa Insurance’s Insurer Financial Strength (IFS) rating at ‘A+’ and Long-term Issuer Default Rating (IDR) at ‘A’ with Stable Outlooks. Fitch has also affirmed BIL’s GBP330m subordinated perpetual bond, issued by Bupa Finance plc (BF) and guaranteed by BIL on a subordinated basis, at ‘BBB+’.

Bupa Finance plc (BF; ‘A-‘/Stable/’F2’) is the immediate holding company of BIL. It is also the main holding company of the Bupa Group’s other operations (see ‘Fitch Affirms EMEA Retail, Leisure and Consumer Products Ratings’; dated 18 September 2012 at www.fitchratings.com). Bupa Group is a private company limited by guarantee, without share capital and without shareholders.

Fitch expects BIL’s profitability to have remained in line with the rating in 2012 and notes that earnings generation is strong from a group perspective. The ratings reflect BIL’s stable underwriting profitability and capitalisation which have both remained strong despite the challenging economic environment. BIL’s loss ratio was 73% in 2011 and has remained stable in recent years.

Fitch anticipates that capitalisation will remain commensurate with the ratings. BIL’s capitalisation improved, both when measured by the regulatory capital ratio (2011: 165%) as well as on Fitch’s internal risk-based capital assessment. Capitalisation for the group as a whole is also strong, despite a considerable amount of goodwill affecting the quality of capital.

Fitch believes that the loan through which BIL channels cash to its parent also detracts from the quality of BIL’s capital, but the agency recognises that a portion of this loan could be repaid at any time should BIL require additional capital. Fitch expects the loan, which is almost entirely deducted from regulatory capital, to increase further in 2012 as BIL targets a regulatory solvency ratio of 150%, as compared to the end-2011 ratio of 165%.

Fitch considers the risk profile of the investment portfolio to be consistent with the rating level. BIL has no exposure to equities or alternative investments but takes some credit risk. At year-end 2011, 3% of total invested assets were non-investment grade bonds. Other than that, BIL’s investment portfolio consisted of highly rated cash and cash equivalents and BIL’s loan to the parent. Exposure to troubled sovereign or bank debt is low.

Other credit strengths include the insurer’s leading market position in the UK, the Bupa Group’s strong franchise in Spain and Australia and the strong earnings generation stemming from the group’s care-homes business. The group’s lack of diversification by business-line, evident in its strong reliance on medical insurance as a source of income, somewhat constrains ratings. Fitch analyses Bupa on both a BIL legal-entity basis and a Bupa Group basis. BIL’s rating is based primarily on its stand-alone characteristics; Fitch regards the ownership by the BUPA Group as neutral for the ratings.

Fitch considers an upgrade unlikely in the near future given the company’s mono-line status. However, an upgrade could be possible in the future if there were to be a significant increase in the actual and target regulatory capital ratios and/or a significant increase in market share without compromising capitalisation and profitability.

The key rating drivers that could result in a downgrade include:

– A deterioration in operating performance as evidenced by an increase in the combined ratio to over 100% for an extended period of time and earnings-based interest coverage declining to below 4x-8x level

– A sustained drop in capitalisation below management’s target of 150% of regulatory solvency

– Any changes in government healthcare policy that impact BIL’s ability to appropriately price its products or otherwise hinders the company’s financial or operating profile

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SSL Claims has become the UK’s only loss adjuster to be granted membership of the Chartered Institute of Building (CIOB) and has also been named as the international trade body’s training partner.

CIOB, the international voice of the UK building profession with over 48,000 members, has awarded SSL Claims chartered member status, making the Northampton-based firm the only loss adjuster currently to have CIOB membership.

The granting of training partner status by CIOB recognises the professionalism and integrity that the surveying team at SSL bring to understanding the construction and repair issues around complex third-party insurance claims, such as motorway central reservation damage and railway bridge strikes.  The training programme is a sign of commitment to providing facilities, financial support, the hosting of events and training excellence.

Chartered Member status of the CIOB is recognised internationally as the mark of a skilled professional in the construction industry and CIOB members have a common commitment to achieving and maintaining the highest possible standards within the building environment.

Julia Hewett, joint Managing Director of SSL Claims Limited commented: “We are delighted to become the training partner of the CIOB.  We have always said that we wanted to be a different sort of loss adjusting firm, with a unique commitment to technical excellence, transparency, and skilled service; and being asked to work with CIOB is an endorsement of just how much the industry recognises this.”

“This tremendous achievement is a further demonstration of SSL’s commitment to excellence, and shows that we have been right to invest in our skilled team of Building professionals. We believe this status will send a powerful message that all clients and partners can expect only the highest standards of professionalism when working with us.”

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The Jelf Group, including Jelf Employee Benefits, has been awarded the highest accolade in its 2013 independent assessment by Investor in Customers (IIC). The coveted ‘3 Star’ award recognises exceptional performance in customer service and is reserved for organisations that consistently exceed customer expectations.

Improving its overall score for the fifth consecutive year, Jelf has retained its position as the top-rated broker within the UK in the field of customer service and customer relationships. The results convey the importance Jelf places on putting the client at the centre of its business, through building lasting relationships and working to become their trusted advisers.

The IIC survey is an independent benchmarking exercise that assesses the quality of client relationships in four key areas:

– Understanding client needs

– Meeting clients’ needs

– Delighting clients

– Engendering loyalty

Alex Alway, Group Chief Executive for Jelf, said: “In these challenging economic times, where market competition is at an all-time high, I’m delighted that Jelf has achieved a ‘3 Star’ rating across the board for ‘exceptional’ client service.

“Setting ourselves apart from our competitors is essential and this achievement provides a clear message that Jelf listens to its clients and adapts to the changing environment in which they operate. Without the continued support and commitment of our team of dedicated and hard-working professionals this achievement would not have been possible.

“Jelf firmly believes in putting the client at the heart of its operations and this result is a positive affirmation of our strategy – we will not rest on our laurels and will continue to learn from the 2013 feedback.”

IIC’s Charlie Williams, Director – Assessment & Consulting, commented: “Again this year, Jelf is IIC’s top-scoring broker – clearly out in front with its ‘3 Star’ rating. This is a truly exceptional performance from Jelf, improving scores across all 16 themes for the second year running. This year also saw the highest year-on-year increase in client scores demonstrating how Jelf continues to develop a truly client-centric culture.

“Jelf places the customer at the heart of everything they do. They listen and learn from the feedback each year and their success in the field of client service is reflected in their strong financial results reported for 2011/12.”

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On March, 16, 2012, the AXA Group granted 50 free AXA ordinary shares  or “AXA Miles” to more than 120,000 employees worldwide, engaging all employees in the successful execution of the company’s strategic plan Ambition AXA.

A first tranche of 25 AXA Miles was granted without any condition. The second tranche was subject to the fulfilment of a performance condition determined by AXA’s Board of Directors.

This condition required the achievement of at least one of two indicators related to Ambition AXA: an increase in underlying earnings per share or an increase in the Group’s customer satisfaction index or “Customer Scope”.

For the year ended December 31, 2012, both of these conditions were met and, consequently, the grant of the second tranche has been confirmed.

“On behalf of the Executive Committee, I would like to thank all AXA employees for their continued engagement and focus which is the key to our future success and ability to achieve our Ambition AXA objectives. This grant of free shares to all our employees is intended to both recognize the many contributions of our employees around the world and to ensure that they share in the benefits of the Group’s success going forward. ” said George Stansfield, Head of the AXA Group Human Resources.

These 50 AXA Miles shares granted in 2012 will vest upon completion of a two or four year vesting period (i.e., in 2014 or 2016) depending on applicable local regulations2, and subject to fulfilment of certain conditions3.

On December 10, 2012, AXA’s employees held approximately 7.43% of the share capital of

AXA.

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Swiss Re has delivered a net income of USD 4.2 billion for 2012. The result was driven by very strong profitability in Property and Casualty Reinsurance and an excellent investment result. Swiss Re’s Board of Directors will propose a regular dividend of CHF 3.50 per share and, in addition, a special dividend of CHF 4.00 per share, amounting to a total return of capital to shareholders of approximately USD 2.8 billion.

Michel M. Liès, Swiss Re’s Group Chief Executive Officer, says: “This result shows that our strategy is effective and that we remain well on our way to achieving our 2011-2015 financial targets. We have seen a particularly strong performance in our P&C Re business and our investment results were excellent. The underlying business performance of the Group was clearly very strong and the result included positive reserve development from prior year business and realised gains on investments. 2012 was the first full reporting year under our new corporate structure and all units have contributed positively to this very pleasing result.”

Excellent full-year Group results
Net income was USD 4.2 billion in 2012 (vs USD 2.6 billion in 2011). The result was driven by strong premium and fee income growth of 15% from USD 22.2 billion in 2011 to USD 25.4 billion in 2012 and by favourable prior year development in the P&C businesses. Furthermore, investment income was a very impressive USD 4.5 billion for the year, with a return on investments of 4.0% (vs 4.4%). Investment-related net realised gains amounted to USD 1.5 billion in 2012.
The Group combined ratio was excellent at 83.1%, significantly better than the projected 94% for 2012. This includes the unchanged claims estimate of USD 900 million from Hurricane Sandy as communicated at the end of November 2012. Adjusting for prior year reserve releases and slightly lower than expected natural catastrophe losses, the underlying combined ratio for the year was 91.1%. Measured over a longer period to remove some of the random volatility, the Group’s five-year average combined ratio has improved from 98.3% in 2007 to 95.4% in 2012. This underlines the strength of the Group’s portfolio of property and casualty risks.
Earnings per share were USD 11.85 or CHF 11.13 (vs USD 7.68 or CHF 6.79 in 2011). Shareholders’ equity rose by USD 4.4 billion to USD 34.0 billion. Book value per common share increased to USD 95.87 or CHF 87.76 at the end of December 2012, compared to USD 86.35 or CHF 80.74 at the end of 2011.
As a result of the strong Group capital position, Swiss Re’s Board of Directors is pleased to propose at the Annual General Meeting an increased regular dividend for 2012 of CHF 3.50 per share from CHF 3.00 in 2011. In addition, the Board of Directors will propose a special dividend of CHF 4.00 per share. Together, the dividend payments will result in a total return of capital to shareholders of approximately USD 2.8 billion. The payments will be made in the form of Swiss withholding tax exempt distributions out of legal reserves from capital contributions and will be made after shareholder approval at the Annual General Meeting.
George Quinn, Group Chief Financial Officer, says: “The commitment to our capital management strategy remains a top priority. We announced the possibility of a special dividend one year ago and we are now in a position to make a significant distribution to shareholders.
“Our capital management priorities remain unchanged for the coming years – first, we aim to grow the regular dividend, then we will grow our business where new opportunities meet our profitability expectations. The Group intends to continue to maintain high levels of capital adequacy.”

Very strong P&C Re result
P&C Re net income rose to USD 3.0 billion in 2012, an increase of USD 1.9 billion from 2011. This very strong result was due to the combination of a 21.6% increase in net premiums earned to USD 12.3 billion (vs USD 10.1 billion), improving margins, favourable prior year reserve development and realised gains on investments. The result also includes the natural catastrophe loss from Hurricane Sandy.
The P&C Re combined ratio was 80.7% in 2012 (vs 104.0%). Adjusted for expected natural catastrophes and prior year reserve releases, the combined ratio was 90.1%.

Life & Health Reinsurance net income of USD 739 million
L&H Re delivered a net income of USD 739 million for 2012 (vs USD 1.7 billion). The lower result was due to a lower investment return.
2012 saw a number of successful, innovative transactions and strong global growth in the Health segment. Premiums earned and fee income increased by 8.5% to USD 9.1 billion (vs USD 8.4 billion). The benefit ratio for the year was 75.5%, slightly higher than the 74.5% in the prior year.

Corporate Solutions delivers profit and growth
Corporate Solutions delivered a good net income of USD 196 million for 2012, up significantly from USD 81 million a year earlier. Gross premium written net of intra-group transactions grew by an exceptional 38.1% to USD 3.5 billion, supported by organic growth across all major lines of business. The combined ratio improved to 96.2% from 107.9%. This includes the impact from Hurricane Sandy, which was partly balanced by positive prior year reserve development.
Corporate Solutions remains committed to growing as a lean global player in the corporate insurance market and is well on track to achieving its targets of growing the book of business to USD 4-5 billion and delivering a ROE in the range of 10-15%.

Admin Re® with very strong gross cash generation
Admin Re® delivered net income of USD 183 million for the full-year (vs USD 329 million). This figure reflects the sale of the Admin Re® US business. Excluding the effects of the sale, net income would have reached USD 582 million. The result includes gains on investments and benefited from positive business run-off.
Gross cash generation was significantly stronger than anticipated at USD 1.2 billion. Group CFO George Quinn says: “The gross cash generation strength of Admin Re® has further improved with the actions taken in 2012, including the sale of the Admin Re® US business. We continue to look for opportunities to grow our Admin Re® business and to further enhance the gross cash generation capacity.”

Successful January renewals
The January P&C treaty renewals were successful, allowing Swiss Re to achieve profitable growth of 11% while maintaining a high-quality portfolio. The portfolio saw price increases of 2% before taking into consideration the economic impact of lower interest rates. Including these, the risk-adjusted price quality of the portfolio was maintained at last year’s level. Growth was driven by demand for tailored solutions and solvency relief transactions in Europe and the Americas.
In December 2012, a five-year 20% quota share agreement with Berkshire Hathaway expired. This effect alone is expected to lead to a significant increase in net premium income in our P&C Re and Corporate Solutions businesses for 2013.

Swiss Re on track to reach 2011-2015 financial targets
Swiss Re is well on track to deliver on its 2011-2015 financial targets. In 2012, return on equity was 13.4% and earnings per share grew by 54%. Economic net worth per share figures will be reported with the publication of the 2012 Annual Report in March 2013.

150 years of enabling growth and market development

Swiss Re celebrates its 150 Year Anniversary in 2013 in a series of events around the world. Founded in 1863 after a fire destroyed the Swiss township of Glarus, Swiss Re has established a successful track record in the business of protecting society against major risk events and enabling the growth of a private sector approach to managing risks.
Group CEO Michel M. Liès says: “It is a privilege to lead Swiss Re in its 150th year and we see many excellent opportunities ahead for the Group. In mature markets we will continue to focus on innovation and leveraging our high quality expertise. In our target high growth markets, where we see huge potential for the industry, we will also be proactive in enabling market development and bringing financial protection against risks to help people protect their property and assure their livelihoods. Swiss Re has good reasons to look to the future with optimism.”

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A lull in European dealmaking in the first nine months of 2012 was offset by a surge of M&A in the fourth quarter, with volumes up by 5.4% and value up by 88.9%.

Deal values were the highest since Q4 2010 and Europe’s uptick was in line with a global spike in deal making. M&A activity was supported by improved confidence about the future of the Eurozone as well as greater certainty about the trajectory of the US as newly re-elected President Barack Obama averted the looming fiscal cliff.

In terms of geographies, dealmaking continues to reflect the dynamics of the Eurozone crisis, with the Nordics and relatively stable markets Central and Eastern Europe dominating deal flow alongside a more subdued Southern Europe

Published by mergermarket in association with Merrill DataSite, EMEA Deal Drivers provides an extensive review of M&A activity in the EMEA region, offering a detailed analysis of specific sectors – including sector-specific league tables – and identifying emerging trends for the next six month period.

Some key findings in the report include:

– Most sectors registered a decline in full year M&A activity by value, with the overall figures rescued by a 31% surge in the value of energy mining and utilities deals, supported by the €34.4bn all share merger of Xstrata and Glencore.

– Industrials and chemicals was another active sector during 2012, accounting for 14.1% of deals by value and 22.3% by volume.

– Buyouts in the private equity sector proved relatively muted in 2012, with a total of 877 deals worth €70.7bn compared to 1,105 worth €78.6bn in 2011.

– Exits in 2012 were also down on the previous year, with 542 deals worth €84.9bn compared to 655 worth €93.7bn in 2011.

According to Sarah Syed, private equity correspondent at mergermarket, “Global economic uncertainly has hindered the M&A market since the Lehman crash and 2012 was no exception to this rule. On a positive ending to the year, however, deal flow picked up – a trend that dealmakers are hoping will trickle into 2013. Opportunistic M&A and consolidation looks most likely for the year ahead with some even hoping for further mega buys following the buyouts of Dell and Heinz.”

Deal Drivers EMEA provides an extensive review of M&A activity in the EMEA region, offering a detailed analysis of specific sectors – including sector-specific league tables – and identifying emerging trends for the next six month period.

For the full report, please see the following link:       http://www.mergermarket.com/PDF/Deal_Drivers_EMEA_FY2012.pdf

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As the nation’s love affair with gadgets and gizmos shows no sign of slowing down, new research reveals that Brits are now carrying over £4,100 worth of technology to and from work – a £289 increase in value compared with two years ago.

The research, by esure home insurance, found that the typical commuter bag contains as many as six gadgets with more than a quarter of Brits (26 per cent) carrying more than three costly items at any one time.  The most popular gadget is a Blackberry (46 per cent), closely followed by a laptop (38 per cent), and the iPhone 4/4S (20 per cent).

15 per cent of ‘tech-obsessed’ commuters are now proud owners of the Kindle Fire HD – which retails at a costly £159 – the iPad mini (£269) or a Google Nexus 7 (£199).  And with 2013 predicted to be another huge year for gadget launches – including the iPhone 5S and Amazon phone – the cost of the commuter bag is set to rise even further.

London commuters carry the highest total value of gadgets on their daily journey to work – lugging around an average of three gadgets each up to the value of £866.  In contrast, those in the East Midlands have the least costly commuter bag carrying around just £433 worth of portable technology with them to and from the office.

Despite seven per cent of Brits revealing they had a portable gadget stolen from them in the past year more than a quarter (28 per cent) are unsure as to whether their personal belongings insurance covers the cost of the gadgets and portable technology they are carrying around with them.

According to the research, commuters now spend an average of five hours and 42 minutes using their iPad or laptop on a daily basis and up to two hours staring at, or using their mobile phones.  Brits will spend nine hours and sixteen minutes in a day staring at a screen at home and at work – more than five hours longer than they spend chatting face-to-face with a friend or loved one.

Over half of Brits (58 per cent) use their gadgets first thing in the morning when they wake up, and last thing at night before their head hits the pillow.  Two fifths of Brits (40 per cent) surf the internet on their phone or iPad from their beds and almost half (46 per cent) check their emails.

A fifth of Brits (20 per cent) admit to arguing with their other half about the amount of time they spend glued to their gadgets and 18 per cent wish that their partner would spend more quality time with them.

Nikki Sellers, Head of Home at esure, said: “We have become a nation of self-confessed tech-addicts who are always on the look-out for the next big thing in the gadget world.  This is clearly shown in our research revealing the increase in the cost of the commuter bag from previous years.

“In light of this, we are urging workers to take extra care when carrying around their pricey belongings and to be vigilant on their daily commute.  It is important for commuters to check that they have adequate insurance to cover the value of the gadgets and devices they are lugging around with them.”

BREAKDOWN OF COMMUTER BAG COSTS

iPhone 4/4s: £449

Blackberry Bold 9900: £399.95

Other mobile phone (e.g Nokia 6111): £90.99

iPad: £329

Sat Nav (e.g Tom Tom 60): £149.99

Digital Camera (e.g Samsung Galaxy): £394.99

Amazon Kindle: £69

Laptop (Apple 15″ MacBook Pro): £2,299

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Research among commercial van drivers in the UK has found that modern technology has led to a doubling in the number of small businesses using their vans as a “mobile office” in the last five years.

But AXA Business Insurance warns that many could be leaving themselves and their businesses at risk by failing to take sensible precautions around the equipment that keeps them mobile.

The survey, commissioned by AXA Business Insurance, found that two thirds of van drivers now coordinate their businesses from their vans, a rise from 34% five years ago.  This is reflected by the fact that on average, van drivers spend only half (56%) of the time in their vans actually driving while one in seven spend less than 20% of ‘van-time’ actually on the road.

Over two thirds believe that the technology they now carry with them in their vans has had a positive effect on running a mobile office and nearly a third believe it improves the image of the business.  However, many admit that losing this equipment would mean their business would suffer.

Today, 71% of those using a van will carry a smartphone with them and 60% a satnav.  Nearly half (45%) have a laptop or tablet and seven percent even carry a printer in their van.   All of this can add up to well over £1,000 worth of equipment which, if left in a van, could be potentially uninsured. Under a regular van insurance policy, cover will generally be provided for just a few hundred pounds worth of these items. But this cover is also dependent on owners showing due care and attention – which could rule out claims from the half who don’t use a functioning alarm or even hide valuables away when they leave their van.

Darrell Sansom, Managing Director at AXA Business Insurance explains: “We appreciate that items such as mobile phones, laptops and tablets are vital to many businesses these days and we, like other insurers, will provide some cover[1] for items stolen from a van.

“However, if you are carrying a lot of equipment, not only should you ensure you do not make it easy pickings for thieves by leaving it in your van, you should contact your business insurer to arrange suitable cover for it.”

In the last five years, 15% of van drivers have reported having a technological item stolen from their vehicle with smart phones the number one target followed by laptops and tablets.

Darrell Sansom concludes: “It is a sad fact of life that these items are very attractive to thieves and van owners need to ensure that they take the relevant precautions to keep them safe.  If not, they could not only see business efficiency taking a hit, but could also end up footing a bill for hundreds of pounds to replace them.”

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Transactor Global Solutions announces three new developments for 2013. Sharepoint integration was launched earlier this year whilst a General Ledger integration option, and Microsoft Outlook integration option will both be available from Q2 2013. 

Ian Blakesley, Chief Technology Officer, TGSL, said,  “As a Microsoft .Net software house MSD Nav offers us great integration options.  There is not much about a GL solution that is insurance specific, so we see MSD Nav as adding value to Transactor, which already offers first class insurance enterprise sales accounts management for B2B and B2C businesses.  NAV is a very credible and referenceable choice for us, with nearly 100,000 higher-end enterprise clients and the onward investment that will keep it ahead of the pack.”

The General Ledger integration was initially built and piloted by long standing Transactor user Cornish Mutual, with technical support from TGSL, and has been live for over a year.  The facility has been built using SQL Server Integration Services (SSIS).  For General Ledger integration, Transactor is used as the sales ledger, and a nightly extract file is exported into Microsoft Dynamics NAV.  NAV is part of the Microsoft Dynamics family, and has been evolved by Microsoft from market leading finance package Great Plains, acquired by Microsoft in 2001.

TGSL partially completed Microsoft Outlook integration in 2009, but now wants to offer complete integration.  Full Outlook integration is being completed in the 6.3.2 Transactor version, and is due to be released in Q2 2013.  The development will include full Exchange server integration allowing user mailboxes to be accessed and explored from within Transactor, and emails selected and moved straight into Transactor’s native file handling capability, utilising additional version control and note-recording options.

Simon Macray, Director of Insurer Relations, TGSL, said, “Our growth in SME commercial business, and sales success around MGAs and London Market operations has led us to develop Outlook integration.  A lot of quotation management is still conducted via email in certain business classes, and whilst we think there are more efficient ways of automating this type of business, we can add immediate value by offering Outlook integration to our users.  However the integration of Outlook at client, policy and claim level will also come in very useful across a whole range of day-to-day processes, so we are excited about the new facilities.”

The launch of SharePoint integration paves the way for TGSL’s new document management solution, currently in development and likely to pilot in Q3 2013.  The Microsoft .Net architecture utilised by TGSL in Transactor means that MS SharePoint capability is more or less ‘out of the box’, and a number of TGSL’s users have had SharePoint deployed for quite some time.  “With clients’ strategies pointing us more and more towards SaaS and Cloud based deployment, and the IT savvy nature of Transactor clients, the greater use of SharePoint is an obvious choice for us.” concludes Blakesley.

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Fitch Ratings has affirmed Munich Re Insurer Financial Strength (IFS) rating and Long-term Issuer Default Rating (IDR) at ‘AA-‘ with Stable Outlooks. Fitch has additionally affirmed the ratings of certain entities within the Munich Re group. A full list of rating actions is at the end of this comment.

KEY RATING DRIVERS

The affirmation reflects Munich Re’s strong level of risk-adjusted capitalisation and the group’s diversified business model, which contributes towards earnings stability. Preliminary full-year 2012 results reported by the reinsurer confirm a significant rise in post-tax income to EUR3.2bn (2011: EUR770m), driven by a recovery in the contribution made by the reinsurance segment, following a reduction in the level of natural catastrophe claims across 2012, when compared to 2011.

Munich Re’s capital position is expected to strengthen as a result of a relative increase in retained profits from FY2012 earnings. However, the group’s shareholders’ funds of EUR27.4bn at end-2012 (end-2011: EUR23.3bn) includes unrealised gains on fixed income available for sale assets, which have partly arisen through the prevailing low interest rate environment. An increase in interest rates would result in decreased market values for bonds, which would lead to a corresponding reduction in shareholders’ funds. Currently, Fitch considers Munich Re’s capitalisation as strong and commensurate with the rating level.

The agency considers Munich Re’s robust business model as a key advantage compared to other groups. Historically, the reinsurer’s diversified earnings stream has allowed the company to offset a proportion of natural catastrophe related losses with earnings generated by the life reinsurance segment and its primary insurance operations. The contribution of life reinsurance is growing, which Fitch views positively, as the segment’s steady cash flows add stability to the relatively volatile property and casualty (P&C) reinsurance results.

Munich Re uses limited retrocession coverage and other forms of risk mitigation, leaving net losses relatively near to gross losses. Fitch considers Munich Re’s catastrophe risk as reasonable in the context of a highly diversified catastrophe portfolio by geography and in relation to the group’s strong capital position. The agency notes that in years where catastrophe losses are closer to the historical average, the group generates the majority of its profits from its P&C reinsurance operations, benefiting from overall solid margins within its catastrophe book.

The agency considers Munich Re’s gross financial debt leverage to be commensurate with the rating, standing at 21% at Q312. Fitch anticipates that gross financial leverage will decrease further in the medium-term. Fixed charge coverage improved at Q312, due to strong operating earnings.

Fitch considers asset risk as low to moderate with little exposure to equities and alternative investments and moderate credit risk. Munich Re has decreased its peripheral eurozone exposure to a level that Fitch views as very manageable.

Offsetting factors include the relatively low profitability levels generated by the primary life operations and issues with weak but improving underwriting performance within Munich Re’s international primary non-life operations. Fitch will continue to follow closely the restructuring of Munich Re’s primary operations and the effect of this on profitability.

RATING SENSITIVITES

Munich Re’s ratings could be upgraded if it improves profitability on a sustainable basis to a return on equity of 10% or above and a combined ratio of 96% or lower, provided the capital base remains strong on a risk-adjusted basis.

The key rating triggers that could result in a downgrade include a sustained material drop in the company’s risk-adjusted capital position measured by Fitch’s risk-based capital assessment, failure to maintain a disciplined underwriting approach, or strong underperformance relative to peers.

The rating actions are as follows:

Munich Re:

IFS rating: affirmed at ‘AA-‘; Outlook Stable

Long-term IDR: affirmed at ‘AA-‘; Outlook Stable

All subordinated debt ratings: affirmed at ‘A’

Munich Re America, Inc.

IFS rating: affirmed at ‘AA-‘; Outlook Stable

Munich Re America Corporation

IDR rating: affirmed at ‘A+’; Outlook Stable

USD500m senior debt due 2026: affirmed at ‘A+’

Hartford Steam Boiler Inspection & Insurance Co.

IFS rating: affirmed at ‘AA-‘; Outlook Stable

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A G Doré & Others Syndicate 2526; the Lloyd’s Syndicate specialising in Professional Indemnity, Medical Malpractice, Directors & Officers Liability and Financial Institutions insurance, has launched a new portfolio focussed on Accident and Health cover. The strategy, which will target UK Brokers, will focus on both commercial and consumer customers.

The core product areas underwritten will cover Personal Accident and Sickness, Travel and Medical Expenses. The new Accident and Health team is made up of two ex-QBE underwriters. Line Underwriter, Mark Gibson has 19 years experience as an A&H underwriter and manager with QBE European Operations, ACE European Group and Chubb Insurance Company of Europe and supporting him will be James Glover who has 10 years experience as an A&H underwriter with QBE European Operations, ACE European Group, Compass Underwriting and RBS Insurance.

Also, in line with Lloyd’s 2025 vision, expansion into Accident and Health cover will help diversify A G Doré’s capital base by growing its premium income in a new market. A G Doré & Others Syndicate 2526 is actively managed by Asta, the Lloyd’s leading third party syndicate manager.

Mark Gibson, Line Underwriter for the new portfolio comments: “Distribution for the portfolio will consist of both Lloyd’s and non-Lloyd’s entities for the first year. James and I intend to exploit the strong and long standing relationships we have built up with the brokers and cover holders over the years and AG Doré is just the place to do this. The syndicate will allow growth for a portfolio of this size in a flexible and nurturing environment.”

Commenting on the new portfolio, Andy Doré – Active Underwriter at A G Doré concludes: “We are extremely pleased to welcome Mark and James to the syndicate as well as supporting them this new venture. A new line of business like Accident & Health supports our business ambitions for 2013 as well as reinforcing our desire to nurture new talent in a flexible, specialist environment.”

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According to catastrophe modeling firm AIR Worldwide, on Friday, February 15, a meteor exploded over the city of Chelyabinsk (population: 1 million) in Russia’s central Ural Mountains, injuring hundreds and causing damage to buildings in six cities. According to the Russian Academy of Sciences, the massive meteor weighed 10 tons and entered the earth’s atmosphere at a speed as high as 33,000 mph.

Most of the damage was caused by the shock waves as the meteor broke up in the atmosphere. The force of the explosion was enough to shatter dishes, televisions, and windows. According to local officials, more than 725 people in in the city of Chelyabinsk alone have sought attention for injuries, mostly from glass shards. Authorities have cancelled school and asked residents to stay indoors.

The explosion is estimated to have shattered more than 1 million square feet of glass.  Preliminary reports suggest that more than 3,000 homes and business sustained damage from broken glass, including a zinc factory where part of the roof collapsed. As many as 20,000 people have been dispatched to search for places where meteorites (fragmented meteors) might have fallen. The governor of the Chelyabinsk district reported that a search team found an impact crater on the outskirts of a city about 50 miles west of Chelyabinsk.

The last meteorite strike was recorded in Sudan in 2008. Astronomers spotted a meteor heading toward Earth about 20 hours before it entered the atmosphere and it exploded over the vast African nation. Hundreds of smaller meteorites strike the Earth’s surface every year, although only 10 to 20 are detected. Such meteorites usually reach the surface having been burned down by the atmosphere and are too small to cause damage.

According to AIR, in many countries with developed insurance markets, a comprehensive multi-peril insurance policy generally will cover all risks that are not specifically excluded, meaning that meteorite damage would generally be covered. The dwelling portion of the homeowner policy is very broad and if damage from falling objects is not listed in the exclusions, it is generally covered.

The meteor hit less than a day before an asteroid, known as 2012 DA14, will make a near pass by Earth—possibly approaching as close as 17,150 miles. This massive space rock, which is 150 feet wide, is one of the largest known asteroids to approach the planet. According to the European Space Agency there is no connection between the asteroid and the meteor that hit Russia.

On average, objects of this size pass this close to Earth once every 40 years, and strike the planet once every 1,200 years. DA14 will not be perceptible to the naked eye, though it will be visible from Asia, Eastern Europe and Australia with the aid of binoculars.

According to AIR, the last time an object of a size similar to DA14 hit the earth was also in Russia, and is known as the Tunguska event. In June 1908, the asteroid, which was estimated at 100 meters in diameter, burst in the air over the Podkamennaya Tunguska River, in Russia’s Krasnoyarsk Krai region. It was the largest such hit in recorded history.

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New research released from Confused.com has revealed that the vast majority of Brits don’t understand the road signs they come across on a daily basis.

Further to this, over three-quarters (76%) of Brits think that distraction caused by road signs can be dangerous; a concerning statistic given that nearly half (46%) have been distracted by road signs whilst driving.

Brits’ lack of understanding when it comes to road signs has resulted in nearly a third (30%) having had a crash, bump or near miss. Of these people, more than four in five (81%) had to fork out up to £600 on car repairs.

With these statistics in mind, it may not come as a surprise to hear that the Department of Transport reports we have around 9,000 redundant road signs which need to be revised. Four out of five (82%) Brits agree with the Government’s plans, with over 40% believing that the public should vote for which signs are reviewed.

Nearly a quarter (23%) of Brits feel that road signs aren’t useful, and more than half (52%) feel confident enough driving without the need for ‘roadside furniture’. Part of this could be because Brits confess to being confused by road signs, as found by a list created by Confused.com and voted for by the public.

Recent Government changes spark debate

Confused.com’s research was commissioned in response to Transport Secretary Patrick McLoughlin’s call for a crackdown on unnecessary road signs which are cluttering the countryside. The Department for Transport is currently revising its ‘Traffic Signs Regulations and General Directions’, for implementation in 2014.

Gareth Kloet, Head of Car Insurance at Confused.com says:“Our research suggests that many accidents are actually caused by redundant or perplexing road signs. It is clear that the Government needs to do a better job in educating people on what road signs mean in order to improve road safety. Any accidents caused because of distracting road signs will affect car insurance premiums, which will in turn cost the consumer more money.”

In order to voice the public’s opinion on road signs, Confused.com is running an online petition where you can vote for which road signs should be revised via http://www.confused.com/car-insurance/confusing-road-signs . Any road sign which receives more than 5,000 votes will be petitioned to the government.

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Four London Market insurers, Newline Group, Advent Group, OdysseyRe and RiverStone, all part of Fairfax Financial Holdings Limited, have jointly funded a ‘healing space’ at the Royal London Children’s Hospital, Whitechapel, a special gift in recognition of the 25th anniversary of the founding of Fairfax. 

The healing space is the first of its kind, a highly innovative and interactive facility, enabling play and communal activities for young patients and their families, rehabilitation and an opportunity to get away from the hospital environment.  The facilities will be used by clinicians to enhance the recovery and treatment of children with a range of conditions and disabilities but also to improve the experience of those undergoing long stays in the hospital. The space officially launched on Wednesday 13 February.

Carl Overy, Managing Director at Newline Groupcommented:“We at Newline, and at our affiliated companies, are delighted to be able to fund the development of the healing space at the Royal London Hospital.  It is a really spectacular facility that will no doubt aid in the treatment of many of the children based at the hospital and we hope that they and their families will benefit from it.  We chose to invest in the Royal London Hospital due to its proximity to the London Market, the heart of all of our businesses.”

Andrew Douglas, Chief Executive of Barts and The London Charityadded: “Barts and The London Charity are thrilled to be working with generous donors like the members of Fairfax Financial Holdings Limited. With their crucial financial support we have been able to build this wonderful ‘healing space’ which has transformed the new paediatric service at Barts Health, and which will benefit thousands of young patients and their families for years to come.”

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Recent research by Jelf Employee Benefits has found that 90% of employers see tax-reliefs on medical-related employee benefits as key to controlling sickness absence.  However, the research also shows that identifying the right benefits for such reliefs is pivotal for this to be successful.

The Sickness Absence Review (SAR), and the recent Government response to that document, placed an onus on rehabilitation services as the principle beneficiary of any new tax-reliefs.  However, Jelf Employee Benefit’s research provides evidence that employers are not convinced that this component of the medical-related suite of benefits will be the most useful in reducing absence levels and costs.

Indeed, less than 5% of employers surveyed believed that rehabilitation services were the most important benefit in managing sickness absence.  Healthcare policies (31%), and Occupational Health (31%) were seen as the most useful benefits in this area.  These were followed by Employee Assistance Plans (12%), Income Protection (11%) and Medical Cashplans (10%).

With a decision on whether to allow tax reliefs on medical-related employee benefits due to be made in the 2013 budget, Jelf Employee Benefits believes that these findings are important, and should be taken into consideration by policy-makers.

Steve Herbert, head of benefits strategy for Jelf Employee Benefits says: ‘Rehabilitation will always have an important role to play in addressing sickness absence, however employers are clearly saying that they would like to see tax incentives across the board, but if this is not possible at this time, it would be sensible to target any reliefs on the areas that employers feel will best help them control sickness absence.

Herbert continues: ‘The Sickness Absence Review offers a lot of practical suggestions that could really benefit employers, and the economy as a whole, and it would be a shame if key opportunities were lost.  We urge the Government to listen to what employers say they actually need.’

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A fundamental lack of understanding about who the customer is means insurers are facing a “through the looking glass” moment. Traditional perspectives about the importance of operational excellence and a primarily product-focused approach, are being turned inside-out in the rapidly emerging customer-ascendant marketplace.

New research from the global analysts highlights how the insurance sector is quickly moving through an inflection point in the way commerce is conducted. The market is moving from a model where one-to-many messaging works, particularly in mass media, to a framework where consumers are gaining more power in the business transaction.

However, Ovum believes that until insurers understand who the customer is, they will be unable to shape, deliver, and strengthen the experience each customer expects. Insurers must ensure that marketing is tailored to each individual customer as closely as possible.

“Without a thorough knowledge of their customers, insurers are heading towards a competitive myopia. Customer experiences are becoming the basis of competition in the insurance industry and companies need to encompass customer needs, expectations, and satisfaction into their customer experience management (CEM) strategy,” says Barry Rabkin, principal analyst, Insurance Technology.

The forces of technology are creating an environment of “more” – more information, more smart devices, more functional apps, more interconnected people to seek advice from or share opinions with – and making all of it available at a customer’s fingertips. The forces of “more” are delivering a personalised, real-time experience to each person. One of the biggest challenges facing insurance companies is figuring out who the customer is, and how to find competitive success in an environment where each customer expects to be treated as an individual.

“In this age of “more”, customers are increasingly expecting to receive a quality experience from their interactions with insurers. Insurers must quickly weave in the importance of customer experience into the company strategy at each touch point in order to succeed or fail to meet their expectations,” Rabkin concludes.

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NFU Mutual is due to relocate its Saffron Walden office in Essex on Wednesday 27th February from Fairycroft Road to Gold Street.

The move has been prompted by continued business success and significant team expansion, which has seen the office team grow from 4 to 9 in order to accommodate customer requirements in the market town and surrounding countryside.

Roger Willmott, Senior Agent, said: “We are excited about our new central location which will help us to provide an even better service and facilities for our members, potential customers, and our growing team.

“Just like NFU Mutual, the building we are moving to is also rich in agricultural history. The Saffron Walden office was a former corn and grain store. We will proudly be offering the use of our meeting room to the Agricultural Training Group and the NFU for meetings, helping to support our rural community.”

Having worked with NFU Mutual for 12 years, Roger took up his post as Senior Agent 5 years ago, also fulfilling the role of NFU Group Secretary. With strong agricultural roots, Roger has a good understanding of the rural community and the importance of local businesses.

Roger is joined by fellow Agent Alex Forbes who has over 12 years of experience in the insurance industry. Alex has expertise in all areas of commercial and farming insurance that NFU Mutual provides.

The Saffron Walden team attributes the success of the business to their long standing links to the surrounding countryside and its people.

Roger continued: “All of our staff are based in and around Saffron Walden and have a very good understanding of the needs and issues that affect those who live and work in the countryside.

“We feel that supporting the rural community is a very important role for our business. Being able to talk to our members face-to-face about their insurance or financial needs is very reassuring and is the reason why many people renew and trust us.”

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According to catastrophe modeling firm AIR Worldwide, from New York 500 miles north to Maine and then into Canada, the fierce February 8-9 winter snow storm brought deep snow, high gusting winds, and significant storm surge along the New England coast. An estimated 40 million people have been affected and as of early Monday, there were no reports of substantial structural damage.

“The storm developed late Thursday and in the early hours of Friday when a strong coastal disturbance that had developed along the Delmarva Peninsula moved from over the Atlantic and interacted with an upper-level trough that had been bringing widespread snowfall from the Great Lakes across upstate New York,” said Dr. Tim Doggett, principal scientist at AIR Worldwide. “As the two systems approached each other, the energy from the Great Lakes system came into phase with the coastal low pressure system—and the coastal storm rapidly intensified and tracked northeastward, reaching the southern Massachusetts coast Friday night. As the strengthened storm tracked into the Canadian Maritimes, it impacted the entire U.S. eastern seaboard from New York City to Portland, Maine, while also bringing heavy snow and gusty winds inland across Connecticut and Rhode Island and into western Massachusetts, Vermont, New Hampshire, and interior Maine.”

According to AIR, at its most intense, the winter storm produced snowfall at a rate of three to four inches per hour in bands across southern New England. Central Connecticut experienced intense snowfall characterized by imbedded thunderstorms that lasted for several hours Friday night, additionally increasing the snow totals in that region. The town of Hamden, Connecticut, received 40 inches of snow, the highest so far reported by the National Weather Service. Cold air driven southward in advance of the storm system resulted in lighter, more powdery snow that drifted in the high winds. Overall, the storm deposited between one and three feet of snow in its wake across the whole region.

Dr. Doggett observed, “In coastal areas, strong winds knocked out power and caused significant tidal surge. Wind gusts of 83 miles per hour were recorded at Falmouth, Massachusetts, while storm surge impacted many coastal communities from Cape Cod north to New Hampshire. The impact of the surge was heightened by the fact that it coincided with the monthly astronomical high tides that occurred late Friday night and again Saturday morning.”

Although many news reports have referred to the Friday-Saturday storm as a blizzard, according to the strict meteorological definition of a blizzard, it may not have met those official criteria. A blizzard, officially, is a severe snowstorm that is characterized by strong sustained winds of at least 35 mph that last for a prolonged period of time—typically three hours or more. Such sustained winds produce a visibility of less than a quarter mile (.25 miles) for their duration. Despite the high wind gusts and significant snowfall, those meteorological criteria of sustained duration (and low visibility) may not have been met.

At the height of the storm more than 650,000 customers had lost power throughout the area, mostly in southeastern Massachusetts and on Cape Cod, in Rhode Island, and on the eastern Connecticut shore. In particular, flooding caused extensive damage to the electrical power infrastructure along the southern Massachusetts coast. Five states declared states of emergency—Connecticut, Massachusetts, New Hampshire, New York, and Rhode Island—and President Obama declared a federal state of emergency for Connecticut as well. In Massachusetts, Governor Duval Patrick declared a ban on all road traffic as of 4:00 pm EST Friday, except for emergency vehicles and snow plows. The ban, while controversial, is being credited for keeping down the number of fatalities from road accidents.

According to AIR, with the impacted area receiving rain today, Monday, and with temperatures expected to fall below freezing by nightfall, the snow will absorb the water and the added weight on snow-covered roofs will increase, as also on trees and other structures that could collapse and cause damage.

Dr. Doggett concluded, “Several mitigating factors have limited damage so far: the region was not already covered by earlier snow when the storm arrived (had there been antecedent snow, impacts would have been greater); the snow brought by the storm was of a relatively low density (light and fluffy) in much of the region, thereby minimizing the weight of the snow pack; and while some notable wind gusts were observed, the sustained winds were not quite as strong as they were forecast to be—and thus snow drifting and tree damage were lessened. Finally, today’s rain notwithstanding, temperatures for the next couple days will be above freezing, so homes that remain without power are less likely to experience frozen pipes, which would be a high possibility at this time of year.”

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As economic growth continues to show little sign of bursting into action, UK businesses are learning to adjust to conditions that look set to stick. The eighth national business sentiment survey conducted by QBE, the business insurance specialist, shows that back in 2011, 21% of businesses expected to see a full economic recovery within two years. Two years later and just 9% now expect a full recovery within two years. 87% of businesses now expect the recovery to be two years or more and 61% believe we will need to wait until at least 2016 – three years or more, before a full recovery can be expected.

Turnover expectation and staffing – the ‘new normal’

As businesses adapt to the ongoing economic circumstances and the ‘new normal’, 71% of businesses expect to keep staffing levels the same for 2013, up from 53% in 2012. There has been a great reduction in the number of businesses intending to employ new staff however, down from 26% in 2012 to just 15% in 2013. Businesses were even more optimistic about hiring in 2011 when almost a third (32%) said that they expected to take on new staff.

More than half of businesses, 57%, now expect their turnover to remain the same over the next six months, compared to 44% in 2012. 27% of businesses are expecting slight growth in 2013 (34% in 2012) and just 3% are expecting turnover to increase greatly (7% in 2012).

Elliot Miller, General Manager, UK National QBE European Operations:  “Almost all businesses expect it to be a long haul before the economy fully recovers.  While the hope of a quick recovery has certainly petered out over the time QBE has been conducting this research, it is encouraging to now see a level of stability from businesses across the UK. Most of their cost cutting measures have already been implemented, leaving management to focus on growing turnover. While the prospects for the economy may look weak, UK businesses remain resilient.”

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Ascent Underwriting, a specialist Managing General Agent (MGA) providing coverage for emerging cyber risks, has been launched targeting clients ranging from micro businesses to international corporations.

Ascent will be working with London Market brokers providing insurance products to clients on a worldwide basis and will specialise in writing coverage for non-tangible risk including cloud computing, data privacy, network interruption, professional liability and intellectual property perils.

CyberPro, Ascent’s first product suite, is primarily aimed at the USA, UK, Canadian and European markets and has been tailored to conform to specific and evolving regulation and legislation within each territory. Coverage is offered on a modular basis and includes comprehensive cyber risk protection with professional services cover. Additional product lines are also scheduled for launch throughout 2013.

Utilising Lloyd’s capacity led by Amlin Plc, the London Underwriting Centre-based MGA has the financial strength, expertise and appetite to underwrite large risks on either a stand-alone or subscription basis.  It also has the operational efficiency to extend a similar comprehensive coverage offering to SMEs by use of a proprietary technology platform.  In addition, Ascent intends to join the UK’s Managing General Agents’ Association (MGAA).

The Ascent team is led by Directors Gareth Tungatt, previously Underwriting Manager Technology Risks at Barbican Syndicate, and David Umbers, a Senior Partner at Lloyd’s broker Safeonline.

Gareth Tungatt said: “Client demand for emerging cyber risk cover is growing rapidly as it becomes less of an optional purchase for businesses of all sizes. We intend to support these businesses and keep Ascent at the forefront of the market by continually developing innovative insurance products for both recognised risks and risks that are beginning to manifest as major threats to businesses.”

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