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Sofia Ashmore

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The Retail Distribution Review or RDR is a process set up by the Financial Services Authority or FSA to regulate how recommendations are made to investors about investment products such as funds and pensions.

The Retail Distribution Review (RDR) is a key part of the FSA’s consumer protection strategy. It is establishing a resilient, effective and attractive retail investment market that consumers can have confidence in and trust at a time when they need more help and advice than ever with their retirement and investment planning.

The RDR aims to ensure that:

– Consumers are offered a transparent and fair charging system for the advice they receive

– Consumers are clear about the service they receive; and

– Consumers receive advice from highly respected professionals.

To achieve this we have published new rules that will require:

– Advisory firms to explicitly disclose and separately charge clients for their services;

– Advisory firms to clearly describe their services as either independent or restricted; and

– Individual advisers to adhere to consistent professional standards, including a code of ethics.

These changes will come into effect on 31 December 2012 and will apply to all advisers in the retail investment market, regardless of the type of firm they work for (banks, product providers, independent financial advisers, wealth managers, stockbrokers).

Advisory and product provider firms should start to evaluate their business models now and make the necessary changes to meet our requirements.

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Specialist insurer Hiscox announces the launch of their new annual travel insurance policy. The new policy is available on the phone or online and provides a choice of Europe or worldwide cover for individuals, couples and families.

Hiscox travel insurance cover includes:

– Up to £10 million emergency medical cover

– Up to £2 million personal liability cover

– Up to £50,000 legal expenses

– Up to £10,000 for political unrest and natural catastrophe evacuation to get you to a safe destination and includes specialist assistance support

– Up to £5,000 for cancellation and curtailment if a trip needs to be cut short due to an emergency such as your home being flooded

– Extended travel disruption cover for missed departure in the case you miss a flight or can’t travel due to a strike, industrial action or mechanical breakdown, this cover is especially important for independent travellers

– Reimbursement of a car hire damage or theft excess if in an accident and the cost of replacing rental car keys

The policy also gives clients the choice to select additional covers they might need, such as cover for their winter ski holiday or, if they run their own business for example, the opportunity to cover themselves when they are away on a business trip. These additional options include:

– Baggage and money cover, including new for old cover for personal belongings

– Business Travel cover which includes the cost of a close business associate to replace you if you are unable to attend a pre-arranged meeting and the cost of replacing business equipment

– Golf equipment in the case it is lost, stolen or damaged and green fees if you can’t attend due to illness, an accident or are prevented from playing due to losing personal documents

– Winter Sports, including off-piste skiing within ski area boundaries of a recognised ski resort

– Extended sports activity cover for ‘high octane’ activities such as white water rafting, quad biking and kite surfing

Steve Langan, managing director of Hiscox UK and Ireland, comments:  “Whether you are an independent pleasure-seeker, a sun worshipper or a frequent business flier, this comprehensive annual policy means you can enjoy everything from a spontaneous weekend in Italy to a planned safari in South Africa with the peace of mind knowing that if something does go wrong, you’ll get the assistance you need to get things back to normal as soon as possible.

“Taking the time to understand a policy and what it does and doesn’t cover is important so that you are confident that you will have the right protection for your travel needs. For example, the financial failure of travel providers, such as hotels, airlines, car companies or even planned activities are a risk in these turbulent economic times. Our product offers up to £5,000 for travel disruption due to financial failure so if you have purchased a £600 hot air balloon flight on safari and the operator unfortunately goes into liquidation, we will cover these costs.”

Source : Hiscox

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Participating speakers think that 2012 will belong to modifying pension & Life products with their complex presentation to the customer.

In the upcoming year, Bancassurers should learn how to manage geographical differences between distribution strategies whilst focusing on the drivers of future growth in Bancassurance. Sharing the experience with industry professionals is boosting the new ideas from which the company can benefit.

Readers of News Insurances will benefit from 15% discount of the registration fee. The Forum will take place in Barcelona, February 15-16 and program requests are submitted at barbora.kuckova@flemingeurope.com.

 

This is a conference brought to you by Fleming Europe.

Visit the conference page here : Bancassurance Forum 2012

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The European Central Bank (ECB) has publishing its fifth report on the results of the “Survey on the access to finance of small and medium-sized enterprises in the euro area”.

This survey round was conducted between 22 August and 7 October 2011, covering a sample of 8,316 firms in the euro area. The report provides information on the financial situation, financing needs and access to financing of small and medium-sized enterprises (SMEs) in the euro area, compared with large firms, in the preceding six months (i.e. from April to September 2011). It also provides information on SMEs in the individual euro area countries.

According to the survey results, euro area SMEs’ external financing needs increased slightly between April and September 2011. At the same time, the survey results show that access to bank loans deteriorated. On balance, firms’ opinion about the availability of bank loans decreased by 5 percentage points, to -14%. Moreover, the survey results point to slightly lower rates of success when applying for a loan. Meanwhile, the percentage of respondents reporting “access to finance” as their main problem was unchanged (at 16%).

This survey round was conducted jointly by the ECB and the European Commission. In addition to the questions asked every six months in order to assess the latest developments in financing conditions for firms in the euro area, it included a separate set of questions on SMEs’ growth and the obstacles they believe may hinder their growth. The survey is carried out in this particular format every two years.

The report on the survey results can be found on the ECB’s website at http://www.ecb.europa.eu in the “Statistics” section under “Monetary and financial statistics” / “Surveys” / “Access to finance of SMEs”, along with detailed statistical tables with additional breakdowns.

Source : European Central Bank

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The Environment and how we manage it has continued to receive attention and focus from every industry, compounded by ever increasing and stringent regulation including the European Environmental Liability Directive (ELD). 

ELD is designed to make companies across Europe take on a greater degree of responsibility and accountability for the way we act and promotes a heightened awareness of our impact on the environment. The regulation looks to prevent further incidents of damage to land, water and biodiversity whilst limiting the propensity for liability claims being identified when damage occurs to a third party.

It is vital that environmental claims are therefore managed swiftly, appropriately and effectively to ensure damage limitation both in terms of the environment but also through costs to an insurer. Added to this over the past year some insurers and brokers have witnessed environmental business more than double, bringing an increased need to understand and expertly manage such claims.

However with such a focus the environment and a growing insurance market, the ways in which these claims are being handled has perhaps lagged behind, often becoming elongated – creating a negative customer experience and all too often costing insurers more than they should.

In response, Merlin has developed an innovative new model to address the changing needs of this growing and dynamic market. Merlin’s model has been developed in a strategic partnership alongside MEL Environmental solutions, to deliver an unrivalled level of expertise whilst driving down the cost and time taken to resolve claims.

The Merlin model consists of a team of Adjusters with the technical knowledge and experience to ensure the right approach is adopted on a case by case basis, whether the claim is first party, third party, commercial or household. The Environmental team integrate seamlessly and benefit from the support and expertise of Merlin’s Claims Technicians, Surveyors as well as MEL, all of whom use some of the most advanced technical innovations to enable the delivery of this market leading service.

The model is built around the belief that making the right decision at the outset of a claim is fundamental in driving down the lifecycle of a claim and limit liability in the long run. An initial quality call determines the nature, cause and type of claim to ensure that the right skills are deployed to meet each claim’s individual requirements. The call is followed by joint site visits by both the appointed Loss Adjuster and MEL, to assess the site, gather recovery information and put in place any immediate mitigation methods to prevent further damage. This joint approach continues throughout the process allowing for highly efficient channels of communication amongst all parties.

Ultimately this streamlined collaborative approached mitigates environmental damage, reduces cost, reduces claim lifecycle by up to 5 weeks compared to traditional methods, limiting insurer liability and all whilst minimising impact on the policyholder to improve the customer experience.

This innovative approach means Environmental claims should no longer ‘Cost the Earth’, in more ways than one!

Contact Merlin today to learn more about this innovative new model and how they can help you.

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Indian energy giant Reliance Industries said Friday it had abandoned talks with Bharti Enterprises to buy out its 74 per cent stakes in two insurance joint ventures with France’s AXA. 

The companies had given no value for the proposed deal but analysts said it was worth around 50 billion rupees ($956 million). Reliance announced in June plans to buy out Bharti’s stakes in the joint ventures — Bharti AXA Life Insurance and Bharti AXA General Insurance — as part of a drive to diversify beyond its main energy activities.

Bharti Enterprises is parent of Bharti Airtel, India’s top mobile firm by subscribers, while AXA is Europe’s second-largest insurer.  AXA, Bharti and Reliance Industries “have mutually agreed to terminate their negotiations on the proposed acquisition,” Bharti said in a statement.

Reliance said in a statement the discussions to buy Bharti’s 74 per cent stakes in the life insurance and general insurance joint ventures were ended because it could not reach agreement on a “long-term vision” for the insurance ventures with AXA.

Reliance, India’s largest listed company, has been seeking to bolster its sagging energy revenues by moving out of the fuel sector into such industries as financial services and telecommunications. It also has a large retail operation.

Bharti Enterprises established the joint ventures — Bharti AXA Life Insurance and Bharti AXA General Insurance — with AXA in 2006.

Bharti has been seeking to pay down debt after its $10.7-billion acquisition of the African mobile operations of Kuwait’s Zain last year and the costs of rolling out its high-speed third-generation (3G) network in India.  The Bharti AXA insurance ventures now will continue to develop their local operations and build a “long-term business” by tapping the “significant growth potential offered by the Indian market,” Bharti added in its statement.

New Delhi, Nov 25, 2011 (AFP)

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UN Secretary General Ban Ki-moon told Asian business leaders Friday that their region was growing in wealth but not doing its share to help the world’s poorest. 

“While Asia gains in power and influence, it has not yet begun to take its proper share of responsibility,” Ban told the executives at an Asian investment conference on Indonesia’s Bali island.

“Asia has not taken a proper role in the international community for the world that we share. That is the message I will deliver to world leaders” at the 18-nation East Asia Summit on Saturday, Ban said.

With President Barack Obama attending the regional grouping that will for the first time take in the United States and Russia, Ban said he wanted to speak about “an issue that keeps me up most nights” and let others discuss political and economic challenges. One of the most pressing issues in the world was healthcare for the world’s poorest women and children, he said.

“Remember that the health of women and children is core to everything, starting with the productiveness of your own workforce,” Ban told his audience, describing women and children as “the foundation stone of social progress”.

“I am asking you to step up and recognise your place in this new world and help the UN help those who are less fortunate.”

Asia’s economies have weathered the economic storm better than most of the rest of the world, and the region is maintaining relatively strong growth rates. Ban added that governments did not need to wait to grow wealthy before launching healthcare initiatives.

He noted that Thailand had launched healthcare programmes while still a relatively poor country, and that Bangladesh had taken impressive steps in providing healthcare to its poorest.

Ban pointed out that the UN Global Compact, an initiative to encourage businesses worldwide to adopt sustainable and socially responsible policies, had been able to raise $40 billion in only a year.

“Why and how could we mobilise $40 billion in just one year in this time of economic crisis?” Ban asked.

“Because this is a moral imperative, because the health of women and children matters to all of you and all of us personally and fundamentally.

“But we need more, and when women and children die needlessly from disease or complications of childbirth that can be prevented it’s a tragedy, it’s a tragedy of the world because these deaths can be easily prevented.”

Nusa Dua, Indonesia, Nov 18, 2011 (AFP)

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Hundreds of doctors in white coats and other health workers demonstrated Tuesday in Barcelona, blocking traffic in protest at crisis spending cuts that have shut down hospitals.

Yelling “No cuts!” and waving banners with pictures of scissors, some 500 doctors demonstrated in front of the Vall d’Hebron hospital and blocked a major avenue in the northeastern Spanish city, causing traffic chaos in the rain.

The autonomous but centrally-funded Spanish regions are being pressed by the central government to make cuts to their budgets to rein in Spain’s huge deficit. In some regions, health and education services are being hit.

“The cuts are already being felt,” said one demonstrator, general practitioner Almudena Plaza, 46, complaining that operations were being delayed, waiting lists were growing and surgeries being shut down. The Catalonia health workers’ union MC said in a statement that more than 70 per cent of the 16,500 staff who were called on to strike did so on Tuesday. The regional health authority put the figure at 20 per cent.

The president of the MC, Albert Tomas, said the regional health budget was being cut by 10 percent — about a billion euros ($1.35 billion).

The union called for a second strike day Wednesday, when a demonstration is planned at the regional health ministry.

“If we don’t get the government to back down, we will keep fighting and will carry out other protests,” said another demonstrator, Xavier Plannel, a 51-year-old family doctor.

Barcelona, Nov 15, 2011 (AFP)

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Heavy rains have caused widespread flooding in France and Italy during the first week of November after a low pressure system that developed over the Mediterranean Sea moved northwards, bringing high levels of precipitation. The system responsible for the recent flooding in Italy and France began as an extratropical storm named “Rolf” and subsequently developed tropical characteristics over the warm waters of the Mediterranean.

According to AIR, the flooding in Italy and France has been caused by a specific form of low-pressure system that occasionally forms over the Mediterranean Sea. The relatively warm waters of the Mediterranean can facilitate the formation of such storms, which are hurricane-like with well-defined central regions and roughly symmetrical cloud-structures. Opinion is divided as to how to classify these events since they exhibit properties of both hurricanes and polar-low systems (sometimes called “artic hurricanes”).

In the last 20 years, studies have reported approximately 15 instances of these storms, which have the potential to generate hurricane-force winds and heavy precipitation. According to AIR, Europe’s commercial building stock displays a wide variety of construction materials. Smaller commercial structures are usually masonry construction, while large commercial buildings are more likely to be of reinforced concrete or steel; they also tend to be well engineered. Because concrete and steel have lower porosity and higher strength than masonry and wood construction, commercial buildings typically have lower vulnerability to flooding than do residential structures.

During its development, the storm generated sustained winds of tropical storm strength and gusts up to 95 mph at Porquerolles Island, France, south of Toulon. Although these hybrid events tend to be short-lived due to the proximity of land in any direction, they can still cause significant damage from both wind and flooding. The recent event—more damaging from a flood perspective— brought rainfall in excess of 400 mm over a period of 4 days in the Var region of France.

In France last week, flood warnings were issued throughout the Riviera and westward along regions near the Pyrenees Mountains. As of yesterday, 12 French regions remained on high alert amid reports that the flooding has affected approximately 2,300 people in the Var and Alpes-Maritimes Départements of France—where at least 750 people have reportedly been evacuated.

In northern Italy, meanwhile, the city of Genoa was on high alert last week after local rivers burst their banks. More than 350 millimetres of rain fell in six hours. The flooding compounded problems from flooding that had inundated the area just a week earlier. Alerts were also issued across the north of Italy, particularly along the Po and Tanaro rivers, and westward as far as Venice. Thousands of people were evacuated from low-lying areas in and near Turin after the Po River was raised by as much as 4 meters.

According to AIR, in the south of France, this storm has caused widespread damage to property and infrastructure. As of November 10, 36 municipalities in France, mainly in the southeastern Var region, had applied for recognition of this event by the insurance industry as a “natural disaster.”

In Italy, the city of Genoa was particularly hard hit. Flash floods throughout the city caused major damage to infrastructure. Residential building stock in this part of Europe is typically of non-engineered masonry construction. When subject to flooding, damage to such structures is typically limited to the basement,  which are present in many single-family homes. The presence of a basement increases the risk of damage to contents, particularly in the case of heavily-used basement areas (i.e., those that enclose recreational rooms, bedrooms, or home offices).

The storm that triggered the flooding in parts of southeastern France and northern and central Italy has now dissipated; no further flooding is expected to occur as a result of this event.

Source : AIR Worldwide

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Aon Benfield has updated its UK terrorism catastrophe model. The model estimates the financial loss to life insurers from potential terrorist events and helps to satisfy the requirements of the proposed European Union Solvency II regulation, which requires insurers to gain a better understanding of their exposures and consequently their reinsurance buying strategy.

The model simulates attacks on more than 2,000 potential UK targets, including places of worship, financial centres, infrastructure, government and military locations.  For each simulated event, it forecasts the consequent impact on an insurer’s exposures which can be used to assess potential financial losses from injuries and deaths.

The model has been developed through a unique collaboration of Impact Forecasting – Aon Benfield’s catastrophe model development centre of excellence – and counter-terrorism experts from Aon Risk Solution’s Crisis Management team, who have provided input on event frequency, credible attack types and damage profiles for various scenarios. The model’s real-world approach highlights:

– The likelihood and probable impact of unconventional attack types – such as chemical, biological and nuclear terrorism  – accounts for 2% of modelled scenarios, consistent with the historical record, both globally and in the UK

– Damage impact is calculated by modelling dispersion of chemical and radioactive particles, amongst other effects, in addition to blast and thermal impacts

– An innovative approach assesses the expected effect of state mitigation on frequency in the aftermath of a major attack, in addition to accounting for the dynamic interaction between terrorist groups and prevention agencies.

Adam Podlaha, international head of Impact Forecasting, commented: “Working with ex-military and security professionals with real-life experience of the impact of terror attacks means we have been able to build a model based on a set of practical and realistic scenarios. For example, we have incorporated expert knowledge about the technical complexity of mounting material non-conventional attacks and the relative probability of such events.”

Andy Cox, Group Protection Actuary from Legal and General, added: “We required a model that provided a more experience-based view of UK terrorism risk and would enable us to gain an even better understanding of our Group Life and Income Protection exposures.  The advent of Solvency II means this is more important than ever, as we work to embed the modelling process into our firm and make important business decisions based on the results.  As we grow our Group Protection business by working in partnership with Aon Benfield, we have been able to access expert opinion and create a model that meets the needs of the industry as a whole.”

Scott Reid, Life Actuary and reinsurance broker at Aon Benfield, said: “Closer examination of terrorism risk is being driven by upcoming European Union regulatory changes. Solvency II has been the catalyst to the further development of our terrorism loss model.  Using expert judgment, we help insurers understand their exposures and optimise the transfer of their risks to the reinsurance market.”

Source : Aon Benfield Press Release

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Electro-encephalography (EEG) helped doctors realise that several patients diagnosed as being in a permanently vegetative state were in fact aware, according to a study published on Thursday in The Lancet.

The technique could be developed as a portable, cheaper way of helping doctors make more accurate diagnoses and establish contact with patients who are immobile but aware, its authors say. A persistent or permanent vegetative state is defined as “wakefulness without conscious awareness of self and environment.”

During a coma, by contrast, a patient lacks both awareness and wakefulness. Researchers led by Adrian Owen and Damian Cruse at the Centre for Brain and Mind at the University of Western Ontario, Canada, carried out a test involving 16 brain-damaged patients in the vegetative state and 12 healthy controls. EEG entails placing sensors on the scalp to record electrical signals that result from activity by brain cells.

Three of the 16 patients accurately and persistently showed a clear EEG response when they were asked to imagine movements of their right hand and toes, according to the paper. Electrical signals on the top of their scalp matched those of the controls when the patients were asked to carry out this motor movement, even though their bodies did not make any motion.

The authors say they do not presume to draw conclusions about the “inner worlds” of the three patients on the basis of this experiment. Yet they note that understanding the request and processing it in the brain was complex, requiring sustained attention, selecting the right response and understanding language.

“Despite rigorous clinical assessment, many patients in the vegetative state are misdiagnosed,” the researchers say.

“The EEG method that we developed is cheap, portable, widely available and objective. It could reach all vegetative patients and fundamentally change their bedside assessment.”

The technique is considered less sensitive than functional magnetic resonance imaging (fMRI), which monitors brain flow across the brain and has been used in several important experiments to determine awareness among vegetative patients.  But fMRI scanners are very expensive and cannot be used on patients with metal in their body, often the case with patients whose severe brain damage occurs in a car accident.

EEG diagnosis, if refined, could move beyond simple “yes/no” responses to include methods of communication that are more expressive, the authors say.

Development of techniques for real-time classification of different forms of mental imagery “will enable two-way communication with some of these patients, allowing them to share information about their inner worlds, experiences and needs,” they conclude.

As opposed to brain death, persistent vegetative state is not recognised by legal systems as death. “Lock-in” syndrome describes a condition in which mental functioning is normal, but the body inert and incapable of responding to commands.

Paris, Nov 10, 2011 (AFP)

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Aviva asks European institutions to support action to raise public attention on awareness of how much they will receive in retirement. Aviva’s latest report called “Towards Annual Pension Statements across the EU” in the “Mind the Gap” series) reveals how raising awareness of how much people stand to receive in retirement would encourage them to think about their retirement strategy. 

Europe’s €1.9 trillion annual pension gap cannot be reduced with a single solution, however Aviva believes that once a year, every year, adult EU citizens should receive a single statement integrating state, occupational and private pensions of the income they can anticipate receiving in retirement.

Aviva’s research shows that consumers across the region are ignoring the warning signs about the gap between retirement expectations and levels of saving, leaving them financially underprepared for retirement. For example, only 23% of Europe’s 18-34 year olds take an interest in information on personal finance. This group should be encouraged more to increase their interest in saving and their understanding of the choices they need to make to plan for their retirement. Access to information such as annual pension statements designed in a clear, simple and engaging way – is clearly one of the actions required.

Aviva calls on the European Commission to:

– Consult on the minimum standards that should apply to annual pension statements – and options for public private partnership working – in its forthcoming Pensions White Paper;

– Create forums to share best practice between Member States;

– Hold pilot projects to test the impact of pension statements on decision-making and savings habits.

Launching the report at the European Parliament in Brussels, Igal Mayer, Aviva Europe CEO, said: “Changing people’s attitudes to saving and helping them to better understand the financial choices they need to make is an ambition held by Aviva, and it should be a common objective for EU governments too. Yet our research shows that consumers don’t pay enough attention to information on personal finance.”

“Providing annual pension statements would prompt individuals to take action as a result of seeing clearly what they stand to receive in retirement. Aviva’s report demonstrates that the challenges of doing so are not insurmountable and we hope the European Commission will open a pathway towards this public policy goal in its forthcoming Pensions White Paper.”

Source : Aviva

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A US appeals court panel Tuesday upheld the constitutionality of President Barack Obama’s landmark health care overhaul, in the latest legal challenge to the law which is expected to end up at the Supreme Court. 

The three-judge panel in Washington, in a 2-1 decision, said the most controversial element of the law — mandating that people buy health insurance or face a tax — was not a violation of individual rights.

“It certainly is an encroachment on individual liberty, but it is no more so than a command that restaurants or hotels are obliged to serve all customers regardless of race,” Judge Laurence Silberman wrote in his opinion.

“The right to be free from federal regulation is not absolute, and yields to the imperative that Congress be free to forge national solutions to national problems, no matter how local — or seemingly passive — their individual origins.”

But the case is among several working through the court system in various states, suggesting the US Supreme Court will have to decide on the constitutionality of the law, which Obama has hailed as a key achievement but which conservatives claim oversteps his authority.

Earlier this year, a federal appeals court in Georgia ruled in August that the individual mandate exceeded Congress’s powers. But that court also ruled that the remainder of the health care law, which extended coverage to an extra 32 million people and was a long-held dream of Democrats, was within the bounds of the constitution.

Republican opponents of the law say the government has no power to compel people to buy health insurance and have vowed to repeal the law in the courts and eventually replace it through new legislation.

A group of 26 states and small businesses have called on the Supreme Court to strike down the totality of Obama’s reform, as has the state of Virginia as a separate entity.

If the Supreme Court does decide to weigh the case, arguments would follow and the justices would be expected to rule by the end of their term in June 2012, in a judgment likely to reverberate before the November general election.

Washington, Nov 8, 2011 (AFP)

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Natural catastrophes, exchange rate volatility and the Euro-zone debt crisis hit Munich Re’s earnings in the third quarter.

Munich Re said in a statement its bottom-line net profit plunged by 62.6 per cent to 286 million euros ($393 million) in the period from July to September, despite a 6.7 per cent increase in gross premiums to 12.2 billion euros.

That was much lower than expected, with analysts polled by Dow Jones Newswires pencilling in a third-quarter profit of 542 million euros.

Taking the nine months to September, the drop in profits was even steeper with after-tax earnings slumping 96.2 per cent to 75 million euros, while gross premiums grew by 9.1 per cent to 37.2 billion euros.

“The difficult environment on the financial markets, currency translation effects and heavy burdens from natural catastrophes have all influenced” earnings in the nine months and third quarter, the statement said.

In view of this, chief financial officer Joerg Schneider said he was satisfied.

“Although our result was certainly affected by the capital-market and currency turbulence, our financial position has once again proved comparatively resilient,” he said.

“The low combined ratio in reinsurance in the third quarter and the satisfactory underwriting results in insurance and reinsurance are indicators that our core business is doing well.”

Negative currency effects cost Munich Re 342 million euros in the July-September period and the group said it also took a 230-million-euro charge on its holdings of Greek public debt.    Schneider said he was nevertheless optimistic with regard to the full-year outlook, even if he declined to make a concrete forecast.

“We still envisage a positive consolidated result for 2011 as a whole,” he said.

“Munich Re will not be making a more concrete profit forecast than this because the final amount will be influenced considerably up to the last day of the year by the incidence of major losses and the volatility of the capital markets and exchange rates,” he said.

Frankfurt, Nov 8, 2011 (AFP)

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IMF managing director Christine Lagarde called on Russia and emerging Europe to strengthen policies to guard against rising risks in the global economy.

“The risks emanating from the global economy are serious. Particularly if the storm strengthens further in the euro area, emerging Europe-as its closest neighbor-would be severely hit by lower exports and increased financial strains. We must all be vigilant,” she said in a speech at the State University of the Ministry of Finance in Moscow during a two-day visit to Russia.

Ms. Lagarde said that since the advanced economies are at the center if the current turmoil, they have a special responsibility to undertake policies to restore confidence and lift growth. She added that  recent decisions among the euro area and G20 leaders were steps in the right direction and that they need to be implemented expeditiously.

Recognizing the progress emerging Europe made in the last few years, she drew attention to remaining vulnerabilities–high external debt in many countries, a high share of foreign currency loans, diminished fiscal space, and weakened western parent banks–which  left countries exposed to the current uncertainties and volatilities in the global economy.

On Russia, the IMF Managing Director praised actions taken during the economic crisis to fortify its defenses. But she also noted some important vulnerabilities, especially from drops in commodity prices and potential fallout from distress in core euro-area banks. And she noted that Russia’s budget deficit, excluding oil revenues, has “more than tripled since the crisis, leaving limited space for a flexible fiscal response.”

Ms. Lagarde emphasized that for Russia “a key priority must be to rebuild fiscal buffers while oil prices are still high.” She also called for monetary policy to focus on reducing inflation, and for strengthening banking supervision.

If the outlook deteriorates further, Ms. Lagarde said that Russia could allow the exchange rate to adjust, deploying its reserves to cushion the transition. “It could provide liquidity support to banks as needed. It could let automatic stabilizers operate, allowing unemployment benefits to rise and the tax burden to fall in response to weaker growth.”

“Dealing with clear and present dangers is the key priority at this time,” Ms. Lagarde said. “And doing that effectively will help Russia move to the future it needs– to higher, more sustainable growth that creates enough jobs and benefits the whole population.” This would include policy measures to reduce Russia’s dependence on oil, moving toward a more vibrant and diversified economy, and improving the investment climate.

The IMF Managing Director also addressed the transformation of the global economy brought about by the rise of new centers of growth, drawing particular attention to the role of Russia. “As a leading emerging market, Russia plays an important role on the global stage and in the G20. And in the IMF, Russia is one of our top ten shareholders,” she said.

Source : IMF

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Fitch Ratings has affirmed South Africa-based Momentum Group Limited’s (Momentum) and Metropolitan Life Limited’s (MetLife) National Insurer Financial Strength (IFS) ratings at ‘AA(zaf)’ and National Long-term ratings at ‘AA-(zaf)’. Fitch has simultaneously affirmed both Momentum’s and MetLife’s subordinated debt at ‘A(zaf)’. The Outlooks are Stable.

At the same time, Fitch has also affirmed Momentum’s and MetLife’s parent and the ultimate holding company of the MMI group, MMI Holdings Limited’s National Long-term rating at ‘A+(zaf)’. The Outlook is Stable.

The affirmations are based on the MMI group’s strong capital position, solid domestic franchise, strong and diversified distribution network and robust performance. Offsetting these key rating drivers is some earnings volatility stemming from the group’s exposure to investment markets and the continued challenging South African economic environment.

The MMI group is the product of a merger between two large South African life insurance groups, the Momentum and Metropolitan groups, which became effective 1 December 2010. Fitch believes that the enlarged group has created a stronger and more competitive, insurance-based financial services group both locally and in Africa with businesses in life insurance (spanning all income groups), healthcare administration, asset management and employee benefits. Furthermore, with its enlarged footprint, it is well positioned to expand its activities into additional African countries. The agency expects the MMI group to benefit from growth opportunities, economies of scale (through MetLife’s and Momentum’s complementary target markets and resources), cross-selling of insurance-based financial products and capital efficiencies (through further risk diversification as part of an ongoing capital management programme).

In addition Fitch expects the group to achieve revenue and cost synergies. By end-June 2014, the group expects to reduce its annual costs by ZAR500m. In response to the Competition Tribunal’s condition stating that no staff (except for senior management) may be retrenched during the first two years, the group created a redeployment centre to manage this process and staff movements. The continuity of senior management in the MMI group is not a major concern and is in line with expectations.

In 2011, the group’s segmental diluted core headline earnings were up by 12% at ZAR2,588m (2010: ZAR2,311m) with a return on group embedded value of 11.4%. Although the merger only became effective on 1 December 2010, for comparative purposes all the 2011 figures in this comment assume that the Metropolitan and Momentum groups were merged from 1 July 2010. This is due to the Metropolitan group having a 31 December year-end and the Momentum group having a 30 June year-end. The MMI group has adopted a 30 June year-end. For comparative purposes all the 2010 figures in this comment assume that the Metropolitan and Momentum groups were merged from 1 July 2009.

This increase was driven mainly by the improved performance in the two retail (Metropolitan Retail and Momentum Retail) and health business units. New life business margin on a present value of new business premiums basis strengthened to 1.4% in 2011 (2010: 1.2%). Although the agency considers the group’s capital position to be strong, with a published capital adequacy requirement (CAR) cover ratio of 2.3x at end-2011 (end-2010: 2.2x), it notes that there is some sensitivity to equity market volatility. MetLife and Momentum (the large life licenses of the MMI group) both had CAR cover ratios of 2.3x at end-2011.

Although an upgrade is unlikely in the near term, the key rating drivers that could result in an upgrade in the medium-term include the group achieving the expected merger benefits (revenue and cost synergies), a significant improvement in profitability as indicated by operating return on assets, a sustained strong capital position at current levels, continued maintenance of market share, as well as an improvement in economic conditions.

If there is a substantial, sustained deterioration in capitalisation based on Fitch’s assessment or a sustained drop in the group’s regulatory CAR cover ratio to below 1.7x, and/or a sustained poor operating performance driven by a significant equity market decline, lower new business margins or a severe weakening of market share, this would lead to negative rating action.

Source : Fitch Ratings Press Release 

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The United States is facing an epidemic of lethal overdoses from prescription painkillers, which have tripled in the past decade and now account for more deaths than heroin and cocaine combined. 

The quantity of painkillers on the market is so high that it would be enough for every American to swallow a standard dose of Vicodin every four hours for one full month, according to the Centers for Disease Control and Prevention.

“The unfortunate and in fact shocking news is that we are in the midst of an epidemic of prescription drug overdose in this country. It is an epidemic but it can be stopped,” said CDC chief Thomas Frieden.

“Now the burden of dangerous drugs is being created more by a few irresponsible doctors than by drug pushers on street corners.”

The CDC Vital Signs report focused on opioid pain relievers, including oxycodone, methadone and hydrocodone, better known as Vicodin, which have quadrupled in sales to pharmacies, hospitals and doctors’ offices since 1999.

Last year, 12 million Americans reported taking prescription painkillers for recreational uses, not because of a medical condition. The number of deaths from overdoses of opioid pain relievers has more than tripled from 4,000 people in 1999 to 14,800 people in 2008.

The epidemic is at its height among middle-aged white men, age 35-54, and American Indians or Alaska natives, the CDC said.  Rural and poor areas tend to have the highest prescription drug overdose death rates, and the severity of the problem varies widely from state to state.

The drugs are highly addictive and people can build up tolerance quickly, according to Michael Lowenstein, who treats patients at his pain clinic in Los Angeles, California and was not involved with the CDC research.

“What happens in a lot of this population is they take the medication for something like knee pain, or surgery,” he told AFP.

“The opiate receptors are very close to the pleasure centers in the brain, so for a period not only does the pain feel better but their anxiety, their depression and their stress is better.

“The problem is it takes more and more medication to maintain that response so someone will be given two or three or four Vicodin to treat their pain and before you know it they are taking 20 and 30 and 40 Vicodin a day.”

Death typically occurs when the patient stops breathing because the drugs can cause respiratory depression, and are particularly lethal when mixed with anxiety medications or alcohol. Lowenstein is co-medical director of the Waismann Method, a $20,000 dollar treatment for opiate dependence that involves sedating the patient for several days in a hospital intensive care unit so that they do not feel the symptoms of withdrawal such as vomiting, nausea and inability to function.

“We can tell what’s happening on the street as far as meds and drugs,” he added.

“When I first started this work 15 years ago, we used to treat a lot of heroin, and now it’s been predominantly Vicodin and Oxycontin for years.”

The CDC said that deaths and hospitalizations have increased in parallel with the boost in supply, and now deaths from prescription drugs account for almost 75 per cent of overdose deaths in which a drug was specified on the death certificate.

The sales rate of the three opioids included in the study reached 7.1 kilograms per 10,000 population last year, or the same as 710 milligrams per person in the United States.

“Enough OPR (opioid pain relievers) were prescribed last year to medicate every American adult with a standard pain treatment dose of five milligrams of hydrocodone (Vicodin and others) taken every four hours for a month,” the CDC said. Even though a relatively small portion of the US population admits abusing prescription painkillers, the costs to health insurance companies are huge — $72.5 billion per year, according to the report.  States could do a better job of regulating the problem via drug monitoring records and insurance claims information that “can identify and address inappropriate prescribing and use by patients,” the report said.

More laws targeting so-called “pill mills,” which are prescribing at higher than normal rates in particularly affected states, could also cut back on the problem, it said.

Washington, Nov 1, 2011 (AFP)

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New York prosecutors charged 11 people over a $1 billion US pension fraud in which retired workers claimed disability benefits despite regularly playing golf and going to the gym. 

Prosecutors laid out an elaborate scheme in which ex-employees of the Long Island Railroad (LIRR) claimed to be disabled for early retirement so they could boost their pensions by tens of thousands of dollars each year.

Those charged included two doctors who falsely certified that the ex-workers were incapable of doing their job due to bad health. The retirees were subsequently found working or exercising without any hint of injury or pain.

“Benefit programs like the RRB (Railroad Retirement Board) disability pension program were designed to be a safety net for the truly disabled, not a feeding trough for the truly dishonest,” said US Attorney for the southern district of New York Preet Bharara.

The criminal complaint said a “pervasive scheme by doctors, facilitators, and retirees” had set out to defraud the retirement fund of a sum that “could cost more than one billion dollars.”

Each doctor would initially receive between $800 and $1,200 for a fraudulent assessment but would then pocket “millions of dollars of health insurance payments for unnecessary medical treatments.”

Gregory Noone, a retiree who receives $105,000 a year in pension and disability payments, claimed in his disability application that he suffered severe pain when gripping and using simple hand tools.

He also claimed to have pain in his knees, shoulders and back from bending and crouching.  “Nevertheless, Noone regularly plays tennis several times per week, and in a nine-month period in 2008, Noone signed in to play golf at a particular course on 140 days,” the charges state.  Joseph Rutigliano, a former rail conductor and union president who applied for and received RRB disability benefits after retiring in 1999, worked more than 500 hours of overtime the previous year and took no sick leave.

But a doctor then fraudulently stated that Rutigliano broke his spine in 1988, without explaining how the decade-long injury had not affected his ability to work overtime.  “Golf course records and law enforcement surveillance performed in July 2008 indicate that Rutigliano played golf at one particular course about two times per month,” according to the charge sheet.

Sharon Falloon, a LIRR human resources manager who said standing and walking caused her “disabling pain,” and for whom stairs were “very difficult,” was fraudulently certified by a doctor as disabled and receives $90,349 a year.

“Nevertheless, in January 2011, Falloon was surveilled vigorously exercising at a gym, including 45 minutes in a step aerobics class.”

All 11 defendants are charged with conspiracy to commit health care fraud and mail fraud, which carries a maximum sentence of 20 years imprisonment, prosecutors said.

New York, Oct 27, 2011 (AFP)

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For the first nine months of 2011, Axa’s revenues were down 2% to Euro 65.9 billion. Strategically, the insurer confirms its objectives for the “Ambition 2015” plan.

Axa reports a third quarter 2011 results broadly in line with those observed during the first 6 months of the year. Thus, the insurer announced a turnover of Life & Savings down 5% to Euro 39.7 million, mainly because of a 9.3 % decline in life insurance related to a significant slowdown on the euro contracts. The latter recorded a net outflow of Euro 1.7 billion while the unit-linked contracts show a positive net inflow of Euro 2 billion. Axa finally recorded net inflows of 4.1 billion for the welfare and health general fund.

Property and casualty turnover in progresses by 3% to Euro 21 million (the specific activity increased by 4%, largely driven by higher average rates of 4.6%). Finally, the sales of asset management increased by 4% to Euro 2.4 million and assets under management were down 1% to Euro 837 billion.

In a statement, Axa claims a strong balance sheet with a solvency ratio estimated at over 190% and an estimated economic solvency ratio over 150%. According to Denis Duverne, Deputy CEO of Axa, the insurer continues its policy of selectivity in all its business lines. “Going forward, we will continue to deliver on our strategic priorities and benefit from the strength of our balance sheet which allows us to navigate through the current market conditions”. Indeed the insurer confirms its objectives, the “Ambition 2015” plan provides for an annual average growth of 10% of earnings per share and return on equity of 15% within 4 years.

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Pharmaceutical giants and the UN intellectual property agency have launched a collaboration to share certain patented drug information with public organisations. 

The cooperation is aimed at the development of new drugs and vaccines for around 20 diseases, including neglected tropical diseases, malaria and tuberculosis, and will involve major drug makers including Novartis, AstraZeneca, GlaxoSmithKline, Pfizer, Merck and Sanofi.

AstraZeneca chief executive David Brennan said the British pharmaceutical giant would make all its patents available to the collaboration called WIPO Re:Search.

“WIPO Re:Search has the potential to make a real impact on global health, which is why we are proud to make all patents owned by AstraZeneca available to this important initiative,” he said.  Under the scheme, the intellectual property licences on these drugs would be available free of charge for the world’s poorest countries, said Francis Gurry, who heads the World Intellectual Property Agency.

Developed nations meanwhile would have to negotiate for the licences, although Gurry said the fee levied would be “modest.” Some tropical diseases are regarded to be “neglected,” as just one per cent of the 1,400 drugs developed between 1975 and 1999 were targeted at illnesses, which affect one in every six persons, according to the World Health Organisation.  These diseases threaten the lives of a billion people in the world, the health agency added.

Medecins sans Frontieres however, criticised the WIPO initiative, noting that it offers royalty-free licences to least developed countries only. It noted that many people affected by the diseases are not in the least developed countries. These countries would have to negotiate for access to patents on a case-by-case basis.

“WIPO is taking an unacceptable step in the wrong direction by setting the bar for access too low,” said the medical NGO.

Geneva, Oct 26, 2011 (AFP)

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