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Sofia Ashmore

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As of the National Hurricane Center’s 8:00 am EDT advisory, Category 3 Hurricane Irene is battering the southern Bahamas with sustained winds of 115 mph. According to catastrophe modeling firm AIR Worldwide, Irene is currently 55 miles southeast of Acklins Island and 335 miles southeast of the capital Nassau. The storm is moving to the west-northwest at 9 mph. The center of the storm is headed directly for the Crooked and Acklins Islands, both sparsely populated (estimated population about 880 combined) and characterized by agriculture and small fishing villages.

According to AIR, the dominant residential construction types in the Bahamas are reinforced and unreinforced masonry; commercial structures are commonly made of reinforced masonry and reinforced concrete. Non-engineered structures can experience significant damage to roof and wall claddings when subjected to Category 3 wind speeds and there will be instances of structural damage, particularly to poor-quality homes. Engineered structures can sustain significant non-structural damage and damage to unprotected windows caused by flying debris. Light metal buildings, which are common in small and large industrial facilities in these regions, may sustain significant damage. Building code enforcement in the Bahamas is relatively high.

Given the large number of hotels in the region, business interruption losses may also be significant due both to direct physical damage and damage to supporting utilities. Hotels can suffer significant damage to their outer cladding and contents at Category 3 wind speeds.

 “Yesterday, Hurricane Irene lashed the Dominican Republic with heavy rain and gusty winds, leaving 200,000 households without power,” said Scott Stransky, scientist at AIR Worldwide. “Fortunately, a northward shift in the track kept Irene offshore, leaving coastal exposure on the left-hand, weaker side of the storm. Still, homes and streets were flooded by up to 10 inches of rainfall in some areas, and trees and power lines were downed. AIR currently expects the bulk of insured losses in the Dominican Republic to be the result of flooding.”

Haiti was spared the worst of Irene, as the storm remained well offshore. Heavy and continuing rain could still cause some flooding and mudslides. The government, however, has reported no significant damage.

By the NHC’s 5:00 pm EDT advisory yesterday, Irene had entered an area of vertical wind shear of 10-20 knots and the storm was downgraded to Category 1 as it passed west of the Turks and Caicos Islands. Storm surge was expected to raise water levels 5 to 8 feet above normal tide and rainfall accumulations of 6 to 12 inches were possible in the Turks and Caicos and southeastern Bahamas.

Stransky continued, “By 2:00 am this morning, Irene had regained its Category 2 status. By 8:00 am the storm was a major hurricane—Category 3 with sustained winds of 115 mph. Central pressure is currently 957 mb and sea surface temperatures are warm, and thus favorable for some further intensification. The current intensity forecast from the NHC is for wind speeds to reach 125 mph or more over the course of the next 24 hours and to maintain that intensity as the core of Irene passes New Providence and the capital Nassau.”

 “The current NHC forecast track has Irene passing over the eastern edge of the Bahamas for most of today and tomorrow, east of Nassau, but very close to Marsh Harbour. However, even a slight westward movement could bring much more intense winds to the Bahamas—and it should be noted that some of the dynamical forecast models show the eye of Irene passing directly over Nassau. In any event, the largest cities of the Bahamas—Nassau, Freeport and Marsh Harbour—are likely to experience damaging winds and high waves. Irene is a large storm. Hurricane force winds currently extend outward up to 40 miles from the center and tropical storm force winds extend outward to 205 miles. A storm surge of up to 11 feet above normal tide levels is expected over the low-lying central and northwestern Bahamas.”

Slight eastward shifts in the forecast track throughout the day yesterday calmed nerves in Florida and shifted attention instead to the Carolinas. After passing through the Bahamas, Irene is expected to curve to the north towards North Carolina’s Outer Banks on Saturday. The most likely scenario, currently, is that Irene will brush by the barrier islands, just offshore, and then make its way towards New York City, possibly as a Category 1 hurricane, and Boston by Sunday, possibly as a Category 1. It is important to emphasize, however, that such long-range forecasts are associated with considerable uncertainty. A slight westward—or eastward—shift in the track will have significant implications for damage and loss.

AIR continues to monitor Hurricane Irene closely and is simulating the storm’s effects. Additional information about losses will be made available after the storm has finished impacting all the Caribbean islands, which—on the NHC’s current track—will be by Friday morning EDT.

Source : AIR Worldwide

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New research from Sainsbury’s car insurance shows British drivers have a tendency to not know or understand the driving laws in the countries they visit. The result is for example 2.2 million drivers hitting the road on the wrong side.

The supermarket bank’s research found that, in the past five years, 13% of Britons driving abroad have done so on the wrong side of the road. Men are more than three times as likely as women to drive on the wrong side of the road, with 1.76 million men admitting to this, compared to 483,000 women.

A further 1.3 million Britons admit to driving the wrong way up a one-way street while abroad, with 880,000 British drivers saying they have breached driving laws in foreign countries after misreading road signs and 520,000 claim to have been stopped by police for speeding. In addition 419,000 drivers have been involved in a motoring accident while overseas.

Ben Tyte, Head of Car Insurance at Sainsbury’s Finance said: “Drivers taking their cars abroad need to prepare, not just because they’ll be driving on the other side of the road, but because laws differ from country to country.

“While the Channel Tunnel and numerous ferry crossings make it easier than ever to take your car abroad, motorists need to ensure they have a suitable insurance policy to cover them while overseas and that they understand the legal requirements for driving in the country they are going to.

“Failing to do so could ruin your holiday and leave your severely out of pocket. We strongly encourage people to ensure they have adequate car insurance and breakdown assistance for their trip.”

Havoc on Europe’s roads isn’t the only concern; many of those taking cars overseas also find themselves victims of vehicle crime and other unfortunate incidents.

In the past five years, more than half a million Britons (523,000)have had their car vandalised while abroad, with 310,000 having their vehicle broken into. In addition 400,000 drivers have lost their car keys.

When it comes to covering the cost of these incidents, 6% said while they had car insurance in place their policy didn’t cover the incident they faced, a further 2% had their claims turned down as they were not covered. Only 5% of British motorists successfully claimed on their car insurance while driving abroad in the past five years.

Sainsbury’s car insurance suggests the following checklist might be helpful for anyone planning to take their own car abroad:

1) Call your car insurance provider and advise them you are planning to drive abroad; doing this could mean a much smoother process should you need to make a claim. Make sure you check the level of cover you will have whilst abroad and how long you can travel for. Typically they provide fully comprehensive insurance for a few days so if you’re going for more than a long weekend make sure you ask your provider to top it up.

2) Check your car insurance policy for European breakdown assistance, some policies offer this as standard. Sainsbury’s Premier Cover offers up to 90 days.

3)Plan your route: invest in a map or use a European route planner on the internet, to ensure you know where you are going and anticipate any risks in advance.

4)Take your time: Set a realistic timescale for your journey to avoid feeling pressured to drive fast or not take enough breaks. Driving on unfamiliar roads abroad can be even more tiring than usual, so give yourself time and consider planning your route to avoid the centre of major cities where driving is likely to be most stressful.

5) Check the motoring laws for the countries you are visiting. This can be done for free at www.fco.gov.uk/knowbeforeyougo . If you are going to be driving in several countries across Europe make a note of the different rules that apply in each country and take this with you.  Make sure you refer to the notes before you cross the border and enter each country.

6) Do some basic checks on your car to help minimise the risk of breakdowns or accidents, e.g.: check tyre pressures, oil, brake fluid and water levels.

Source : Sainsbury’s

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For those who prefer shopping around on the net, Aviva has launched a new online car insurance brand.

Quote me happy forms part of Aviva’s strategy to continue to grow profitably its UK general insurance business, exploring new routes to market, and responding to changing customer buying habits.

Quote me happy is designed for drivers who like to shop online and via price comparison sites. They want a good quality product but are happy to serve themselves. Research shows that 75% of people now shop for car insurance on price comparison sites.

The new service offers fully comprehensive insurance only and is aimed at lower risk motorists who:

– Are aged between 21 and 75

– Have had no more than one at-fault claim in the past four years

– Own a car that is no more than 13 years old and is worth less than £40,000.

Cover includes personal accident and a courtesy car as standard with a range of options to add on for those wanting more extensive protection.

Steve Treloar, Aviva’s retail director, said: “Quote me happy is an online-only insurance brand, specifically designed for internet shoppers – offering fully-comprehensive insurance for lower risk drivers.

“Customers will be able to get quotes, buy insurance, print documents and manage their policies online.

“This new service builds on the success of our existing motor insurance business. It is deliberately distinct from the Aviva brand – which already gives customers the choice of dealing with us directly online, by phone or through an intermediary or other corporate partner. Quote me happy is designed for people who want a good quality product, but are happy to serve themselves.”

Quote me happy was a successful advertising slogan for home and motor marketing campaigns for us for several years and is still well recognised by customers. Even though the TV advertising ended five years ago there were still more than 45,000 search engine enquiries last year.

Source : Aviva

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Fitch Ratings has affirmed Scottish Equitable GBP250m value of in-force (VIF) securitisation fixed-rate loan notes due 2023 at ‘A’. The affirmation reflects the performance of the transaction, which is in line with Fitch’s expectations, and a review of the projected cash flows for the transaction.

The transaction, referred to as ‘Zest’, is a securitisation of the future profits arising from a book of unit-linked pensions business. Scottish Equitable is the principal UK subsidiary of AEGON N.V. (AEGON; ‘A’/ Stable). The issued notes do not benefit from a financial guarantee insurance policy and there is no recourse to Scottish Equitable.

Although the transaction is a contingent loan with no recourse to the sponsor, the rating of the notes has been established under Fitch’s Corporate Finance methodology (see applicable criteria links below). This is because in Fitch’s opinion, the transaction has no significant structured finance elements.

The rating is based on analysis of the transaction documents, the volatility of underlying profit sources, and analysis and stress-testing of the transaction’s projected cash flows. Fitch’s rating process at the outset of the transaction included a review of the embedded value methodology, assumptions and actuarial model developed by Scottish Equitable. Tillinghast, an actuarial consulting firm of Towers Watson, independently reviewed the model and the assumptions used. These assumptions are updated on an annual basis by AEGON and reviewed by Fitch.

Fitch annually reviews the stress test applied to the projected cash flows from the transaction. It takes the form of a day-one crash in equity and property prices of 45% combined with future lapse rates multiplied by 205% and future investment returns on each class of asset reduced by 100 basis points. The stress test was calibrated using Fitch’s stochastic model tailored to the defined block of business.

Zest’s performance in 2010 was slightly above expectations, with surplus arising over the year slightly ahead of estimates, due to favourable lapse experience and market performance.

Zest could be subject to a downgrade if, in Fitch’s opinion, future cashflows are unlikely to be sufficient to cover the repayment of the loan and interest payments under a ‘A’ stressed scenario or if the transaction underperforms by more than GBP15m in one year or GBP30m on a cumulative basis. The transaction could also be downgraded if Fitch’s opinion of Scottish Equitable’s credit quality deteriorates. Zest could be upgraded if repayments exceed modelled projections by GBP30m (currently GBP6m) cumulatively or by GBP15m in one year.

Source : Fitch Ratings Press Release

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U.K. motor insurer Admiral Group posted record first-half profit as its revenue soared 53%, but its shares fell on concerns that the company’s major competitors are beginning to close the gap in its domestic market.

The Cardiff-based company said pretax profit for the six months to June 30 rose 27% to GBP160.6 million, while revenue increased to GBP1.1 billion from GBP720.5 million a year earlier.

“As one of the lowest cost providers in a commoditized market we are well placed for a future which is shaping up to be the survival of the fittest,” Chief Executive Henry Engelhardt said. “All in all we’re pleased with the numbers for the first half of 2011.”

Investec Securities analyst Kevin Ryan said Admiral’s profit was well ahead of the brokerage’s GBP145 million estimate and represented very strong growth in a stagnant market.

However, he said there was “clear evidence” that the company’s ability to significantly outperform the domestic market was diminishing, citing Admiral’s U.K. combined operating ratio of 90.4% compared to Aviva PLC’s (AV.LN) similar combined ratio of 94%.

Such worries combined with valuation concerns to make Admiral the worst performing stock on the benchmark FTSE 100 index. At 0915 GMT, the company’s shares traded down 7.5% at 1423 pence, while the wider index traded up 0.1%.

Admiral said its U.K. combined ratio had increased from 82.9% a year earlier because of a lower release of reserves, and added this was partly offset by a lower expense ratio and a lower loss ratio on business earned in the first half.

The company said it had continued to increase market share in the U.K. and ended the first half with more than 2.8 million vehicles insured in the country, 33% higher than a year earlier.

Engelhardt said the momentum of vehicle growth and price rises boosted first-half results but warned that injury claims and related costs continue to rise in the U.K.

Outside its domestic market, Admiral’s combined international businesses generated revenue of GBP53.9 million, 45% higher on the year, and ended the first half with 236,000 insured vehicles, 53% higher than a year earlier.

Admiral operates four web-based insurance operations outside the U.K.: Balumba.es in Spain, ConTe.it in Italy, Elephant Auto in the U.S. and L’Olivier in France.

Admiral also operates three price comparison sites outside the U.K.–Rastreator in Spain, LeLynx.fr in France and Chiarezza.it in Italy–and said consumer preference for such shopping methods is growing.

The company announced a 20% rise in the interim dividend to 39.1 pence per share and said more than GBP8 million of shares will be distributed to staff.

London,August 24, 2011 (Dow Jones)

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Worldwide demand for distressed property increased dramatically in Q2 2011, finds this quarter’s RICS Global Distressed Property Monitor. Over 80 per cent of the countries surveyed reported heightened levels of interest from specialist funds in Q2 with three-quarters of these reporting even greater levels of demand than last quarter. Indeed, in over half of the countries covered, the net balance figure for Q2 demand for distressed property outstrips the comparative number for Q3 expected supply, most noticeably in Japan, China, Singapore and Hong Kong.

Investor demand rose most dramatically in Japan and Hungary this quarter, where net balance scores moved from +6 to +68 and +3 to +64 quarter over quarter, respectively. In Italy, Poland and Russia agents reported noticeable shifts in sentiment with demand swinging from negative into positive territory.

The survey does, however, suggest that the supply of distressed property continues to outstrip demand in some countries, most noticeably in the Republic of Ireland, Italy and the UK.

Issued today (24 August, 2011) the RICS Global Distressed Property Monitor is a quarterly report that reveals trends in 25 commercial property markets across the globe. A distressed property is defined as a property that is under a foreclosure order or is advertised for sale by its mortgagee. Distressed property usually fetches a price that is below its market value. An increased rate of distressed properties entering a country’s market can be seen as a negative economic indicator while a decrease may signal recovery.

Rise in supply of distressed property set to continue

Property professionals in the majority of countries surveyed expect the level of available distressed property to rise in Q3 2011. Not surprisingly, the Republic of Ireland, Spain and Italy have the highest readings for the levels of foreclosure, while Brazil, Malaysia and Russia have the lowest. Interestingly, agents in South Africa report a dramatic shift in sentiment and now expect a substantial rise in distressed property for Q3, in contrast to the negative net balance score posted in Q1 2011.

Commenting on the survey RICS Chief Economist Simon Rubinsohn said:

“It is interesting to see agents reporting such a dramatic rise in investor appetite for distressed assets, quarter over quarter. To some extent, this may be seen as an encouraging development reflecting a measure of confidence in the outlook for the real estate sector despite the softer tone to the macro news flow. However, it needs to be borne in mind that the results are very country specific with generally negative numbers coming from those markets where the economic pain is most intense.”

World regional Highlights

UK

The expected supply of distressed property in Q3 looks set to far outweigh investor demand as supply continues to increase (at an even faster rate) and investor demand contracted slightly this quarter. This is despite the Bank of England’s stance on keeping interest rates at just 0.5 percent. The current uncertainty regarding the economic picture should mean the Monetary Policy Committee continues to sit on the policy sidelines for some time to come giving some breathing space for the property sector.

Brazil

Investor demand fell in Brazil this quarter, from a net balance of 0 in Q1 to one of -23. Looking ahead, agents expect the supply of distressed property to fall dramatically in the coming quarter as well, in contrast to last quarter’s expectations for increased listings. That said, the real estate market still remains firm with capital values generally thought likely to rise further over the coming months.

China

Levels of distressed property coming to market in China are still expected to decline in Q3 2011, although somewhat less so than the previous quarter, with net balance scores moving from -34 to -20. Levels of demand by specialist funds, while still positive, also moderated in Q2. Looking ahead, however, demand for distressed property is still expected to far outstrip supply in this country which is consistent with the projection for further price gains in the commercial market.

France

Property professionals in France expect to see distressed property coming to market at a faster rate in Q3 than in previous quarters. This, in conjunction with the fact that, according to the survey, investor demand continues to rise at a broadly steady pace suggests that supply will likely outstrip demand in the coming quarter.

Germany

Respondents in Germany registered only a small rise in the pace of investor demand this quarter. However, agents still expect the supply of distressed property coming to market to increase next quarter albeit at a slower pace than previously as the net balance eased from +24 in Q1 to +15 for Q2. The net balance reading suggests that demand from specialist funds will outstrip expected supply of distressed property in the coming quarter.

India

According to the survey, demand for foreclosed property in India looks set to surpass expected levels of supply in Q3 with demand from specialist funds appearing to rise dramatically in Q2 (the net balance climbed from +23 to +51, quarter over quarter). Meanwhile, the pace of supply is anticipated to rise only slightly.

Russia

Property professionals in Russia anticipate a continued decline in the level of distressed property for Q3, albeit at a slower pace than in seen previously. In contrast, agents report a full-scale positive swing in investor demand as net balance scores moved from -11 in Q1 to +17 in Q2. It therefore looks likely that distressed property prices in this country will stabilise over the course of the coming quarter.

Iberia

Spain witnessed a rather strong surge in investor demand this quarter, moving from a Q1 net balance score of +24 to +56. Portugal saw an even stronger surge in the rate of demand, however, as net balance scores moved from +4 in Q1 to +53. Both Spain and Portugal are in the top five in terms of expected levels of distressed property supply for Q3 2011, however, with net balance scores of +70 and +60, respectively. Not surprisingly, therefore, property professionals in both countries report that expected Q3 supply will outstrip current levels of demand by specialist funds, which could add to the existing downward pressure on prices.

Source : RICS Press Release

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Comparison website Gocompare.com surveyed Brits returning from holiday and found that not everyone is feeling relaxed and refreshed.

The poll of 3,000 holidaymakers reveals that only 39% believe that what they paid for their holiday was money well spent, while almost a fifth of travellers admit they will still be paying off their 2011 summer holiday in 2012.

Over 14 per cent said they came home feeling tired or stressed and 13 per cent said that they had spent too much money.  Meanwhile, four per cent wished they had never gone on holiday!

The Holiday Hangover top ten

% of holidaymakers
Things costing much more on holiday than expected

31%
Bad weather

25%
Resort not living up to the brochure description

23%
Travel delays getting there or back

18%
Disappointing food

17%
Member of party ill or injured

14%
Behaviour of British holidaymakers abroad

14%
Unfriendly or rude resort staff

12%
Not able to switch off from work

9%
Member of party being the victim of a crime

6%

Value for money concerns topped the list of holiday spoilers for Brits with 31 per cent saying things cost much more on holiday than they thought they would.  23 per cent said the resort didn’t live up to the brochure description.

Over 18 per cent of travellers had suffered delays either getting away or coming home, 14 per cent said a member of their party had taken ill or was injured while away and six per cent of holidaymakers reported being a victim of a crime.  Yet, over a quarter of holidaymakers admit they don’t always buy travel insurance when going abroad.  Seven per cent say they never buy it while four per cent don’t buy it because they have an EHIC (European Health Insurance Card).

Jeremy Cryer, head of travel at Gocompare.com commented, “While there is little we can do about the weather spoiling our holiday, we can take steps to be better organised financially and better protected should the worst happen when we are abroad.  Budgeting for a holiday should include some contingency planning for extra meals out, trips or gifts.”

“If you have overspent it is probably time to look for a better deal on your credit card to ensure the damage is limited and the debt is paid off as quickly as possible.  Look for an interest free balance transfer card so that you are not paying sky-high interest rates on your holiday debt.

“There’s no excuse for heading abroad without travel insurance these days.  There are plenty of good value policies available and it is easier than ever to shop around for a good deal.  As this survey shows, holidays don’t always go to plan, so being prepared for all eventualities is a sensible part of planning any trip.”

Source : Gocompare.com Press Release

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Just before 8pm last night, Hurricane Irene achieved Category 2 strength, buoyed by low wind shear and warm sea surface temperatures. According to the National Hurricane Center’s (NHC) 11 a.m. EDT advisory today, Irene is 70 miles south of the popular cruise destination, Grand Turk Island. Maximum sustained winds are 100 miles per hour. In addition to strengthening last night, the storm track shifted slightly east, which will keep Irene over open water longer as it tracks north this week, possibly allowing it to undergo more significant intensification than had previously been forecast. 

 “Today, Irene is expected to track offshore of the northern coast of the Dominican Republic and Haiti, where tropical storm conditions will continue to be felt for the next several hours,” said Scott Stransky, scientist at AIR Worldwide. “Four to 8 inches of rain are possible. Irene will approach the Turks and Caicos Islands and the Southeastern Bahamas tonight.”

Stransky continued, “Currently, Irene’s hurricane-force winds currently extend outward about 50 miles, while its tropical storm-force winds extend up to 205 miles. The storm has a much more symmetrical wind footprint than it had yesterday. Given its forecast track, damaging winds will be impacting the Turks and Caicos Islands and Southern Bahamas throughout the day today.  Already, tropical storm conditions are spreading over these regions, which could receive 5 to 10 inches of rainfall and may experience storm surge up to 13 feet. In the Central Bahamas, to the north, tropical storm conditions from Irene are forecast to impact land as early as late tonight, with hurricane conditions expected there by tomorrow morning. By Thursday, when the storm may reach Category 4 strength, it will be impacting the northern Bahamas, including the three largest cities: Nassau, Freeport, and Marsh Harbour.”

A hurricane warning is now in place for the Turks and Caicos Islands, as well as entire Bahamas. Meanwhile, the hurricane warning that had been in effect for the north coast of the Dominican Republic this morning has been downgraded to a tropical storm warning. A tropical storm warning is also in effect along Haiti’s north coast.

Irene is the Atlantic basin’s first hurricane of the 2011 season; it achieved this status yesterday morning (Monday, August 22) when its winds strengthened to 75 miles per hour as it exited Puerto Rico’s northern coast. Strong winds and heavy rain from Irene disrupted electricity to 800,000 people in Puerto Rico. In total, Irene has cut power to more than a million people on the island. The storm also dumped 10 inches of rain in Naguabo and seven inches in the island municipality of Vieques. These heavy rains caused several rivers to burst their banks and many trees and power lines to fall across roadways.

 “After impacting Puerto Rico yesterday, Irene continued west-northwest toward the Dominican Republic and Haiti,” commented Stransky. “Because most of Irene’s winds were to the north of the storm at the time, however, the Dominican Republic and Haiti were spared the worst winds yesterday, meaning the most significant damage on the island of Hispaniola has been from precipitation. Today, tropical storm conditions will continue in this region; Irene could produce rainfall amounts of 4 to 8 inches in northern Hispaniola, with isolated maximum amounts of up to 15 inches possible in the mountains. This heavy rain could lead to flash floods and mud slides.”

According to AIR, Irene’s strong winds and forecast track could result in significant damage in the Bahamas, although Nassau, with its concentration of exposure, is currently expected to be on the left-hand, weaker side of the storm. As always, however, it is important to note that there is considerable uncertainty with respect to Irene’s future track.

Both in the Turks and Caicos Islands and in the southern islands of Bahamas, the dominant residential construction types are reinforced and unreinforced masonry. According to AIR, unreinforced masonry may sustain moderate damage from a Category 2 hurricane, but damage to reinforced masonry structures should be limited to roofs and openings. Commercial structures in these regions are commonly made of reinforced masonry and reinforced concrete; these construction types should not sustain significant damage from storms of Category 2 strength, as Irene is now. Meanwhile, light metal buildings, which are common in small and large industrial facilities in these regions, may sustain significant damage. Building code enforcement in the Bahamas is relatively high.

According to AIR, in the Turks and Caicos islands, insured commercial, residential (and auto exposure) is estimated to be USD 3.1 billion (in 2009 dollars). In the southernmost Bahamas islands—Inagua, Mayaguana and Crooked Island—insured exposure (in 2009 dollars) is USD 218 million. However, these islands are relatively unpopulated, accounting for less than 0.50% of the total Bahamas population, as of 2010. It should be noted that over the next few days, Irene will be moving into much more populated areas.

Stransky continued, “Again, there is considerable uncertainty in the forecast path for Irene later this week. Current forecasts place the storm on a track that could bypass Florida and make landfall in North Carolina on Saturday. Some forecast tracks show Irene impacting the Northeast coast after that, while others keep Irene off the coast entirely, and out over open water. The last hurricane to make landfall in the U.S. was Ike, a Category 2 storm that had maximum winds of 95 mph and struck Texas and Louisiana in 2008.”

Hurricane Irene is the ninth named storm of the 2011 Atlantic hurricane season and the first hurricane. AIR continues to monitor Hurricane Irene closely and will provide updates as warranted. (Additional information about losses will be made available after the storm has finished impacting all the Caribbean islands, which—on the NHC’s current track—will be by Friday morning EDT.)

Source : AIR Worldwide

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Two-thirds of Britons would not talk openly about inheritance, yet 40% of Britons expect an inheritance.

Britons are still reluctant to talk openly with their parents about any expected inheritance, according to new figures released today by Aviva.  Almost two-thirds (63%) have not, or would not talk about the subject openly with their parents, despite the fact that 40% of people still expect an inheritance and may even build it into their retirement planning.

Despite this expectation, encouragingly more than three-quarters (76%) of those asked would still be happy for their parents or grandparents to take money from their property, often seen as the ‘holy-grail’ of inheritance, so that they may enjoy their retirement.

As highlighted in Aviva’s recent Real Retirement Report, the rising cost of living has meant that the average unsecured debt of over-55s is £17,112, including debt on credit cards (30%), personal loans (14%), overdrafts (10%) and store cards (7%).

For many over-55s, the home is their most valuable asset.  While property values are no longer racing ahead as they once did, house prices have more than doubled over the last 20 years, and the average house price for over-55s is £231,306 (May 2011*). This is much higher than the national average of £160,519 (May 2011*).

As house prices have risen, equity release has become increasingly popular, as more cash-strapped retirees consider how to fund the lifestyle they want.  Turning to their home in order to fund their later years has been a solution for many, with the over-55 population holding an estimated £1.9 trillion* in equity in the UK.

Clive Bolton, ‘at retirement’ director at Aviva, said:

“Despite the British taboo of discussing inheritance, it seems that three-quarters of Britons are happy for their parents to use the cash in their property to enjoy a better lifestyle in retirement. Retirees should be encouraged to talk openly with their families about their plans and dreams for the future.

“Not everyone has the funds in place to support the retirement they once thought possible and we encourage those approaching retirement to look at their full range of assets, including pensions, investments and property. Equity release could be a solution for some, as it allows people to turn the potentially dormant capital in their homes into cash without having to move, thereby helping them make the most of their retirement years.”

Source : Aviva Press Release

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The crucial role the insurance industry plays in a healthy UK economy is revealed today in a tax report from the ABI and PWC.

The industry made a total contribution of £10.4bn to the Exchequer – which would cover the entire £10.2bn Home Office budget. Insurance companies in the Hundred Group paid the third highest corporation tax of any sector.

The independent report’s main findings are:

– Corporation tax paid by insurers was £2.7bn in 2010 – or 6.4% of total Government corporation tax receipts. This is a 50% jump in corporation tax paid out by ABI members since 2009.

– Insurance companies in the Hundred Group paid the third highest corporation tax of any sector.

– The £10.4bn Total Tax Contribution breaks down as £4.6bn taxes borne and £5.8bn taxes collected on behalf of Government including Insurance Premium Tax.

Otto Thoresen, Director General, ABI said:

 “The tax paid by the UK insurance industry could pay for the whole of the Home Office budget, or fund the budgets of the Departments for Transport, Communities and the Foreign Office put together. Insurers are crucial to the economy. Our total tax contribution is now higher than it was before the recession showing the important role the insurance industry is playing in the recovery and how resilient the industry is during tough times.”

Otto continues: “These figures highlight the importance of consistent, competitive tax rules which could help the industry to grow further so that it can continue to make an important contribution to the UK coffers. We are talking to the Government about how to make the UK tax system an asset for the UK when it comes to retaining and attracting insurers to the UK. It is important we encourage our good, successful UK businesses to expand and grow rather than having rules which make the UK a less attractive place to base a business.”

Insurers are major contributors to the UK economy and crucial to its future growth. One of the biggest private employers in the country, the wider insurance industry employs over 275,000 people of which 152,000 work for ABI member companies, who pay employment taxes worth £2.64bn.

Source : ABI Press Release

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As of the 6 October, many medium-large law firms in the UK will take the opportunity to break free from the shackles that have regulated the way they manage their business, which hasn’t changed for hundreds of years.

Under the amendment to the Legal Services Act 2007, ownership and investment restrictions will be lifted, allowing non-lawyers to effectively have a large stake in an alternative business structure (ABS) and a seat on the board. In addition, there’s consolidation in the legal services sector where UK and international law firms have merged to create global professional practices.

Over the previous 12 months Brit Insurance has witnessed an increase in claims from corporate law firms where they have attempted to diversify the range of professional services they offer compared with the number of claims made by specialist or boutique firms.
According to Mark Figes, class underwriter for professional indemnity at Brit Insurance – leading the UK and international team – many law firms must think more carefully about the challenges they now face in managing newly merged as well as multi-disciplinary practices where new owners come from outside the legal profession.

“As a general rule of thumb, as people start dabbling, the risk goes up. And the risks that these new types of businesses face are two fold – many of their clients are trading in difficult conditions that have increased the risk of business failure and bankruptcy. This has led to an increase in PI claims against professional advisors as the claimants hope they’ll succeed in getting substantial payouts for purported negligent advice. The second business jeopardy is that many of the partners of these ABS practices may lack relevant management experience of working in such structures and with multi-disciplinary teams such as lawyers, accountants and loss adjusters, for example.

“As a result, we’ve responded to help these practices manage such risks by working closely with specialist professional indemnity agency Libra in determining the PI policies required to mitigate such exposures whilst at the same time allowing greater flexibility and freedom for solicitors practices to manage their businesses and maintain a stable environment for their premiums in the future,” he says.
Ed Pickard, managing director, Libra – a professional indemnity insurance agency – adds: “We are delighted to be working with one of the world’s most respected and experienced PI insurers who have demonstrated significant leadership in the professional advisor market segment by increasing their appetite for excess layer risks.”

The core team at Brit Insurance has increased in capability and experience with the recent hire of Patrick Ruffell as a specialist underwriter of this class who has over a decade of UK and professional services sector experience in understanding risks, procedures and protocols.
Figes concludes: “This is an exciting time in the evolution of legal firms in the UK and internationally and we are delighted to be at the forefront in assisting these practices through a combination of innovative PI products supported by a world class team to help meet the needs and requirements of the legal services sector.”

Source : Brit Insurance Press Release

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Weak banks in the European Union could add pressure to that region’s sovereign debt woes and lead the world into a second financial crisis, a researcher at a Chinese think tank said in an opinion piece Tuesday.

“Is the sovereign debt crisis dragging down banks, or is the banking crisis worsening the sovereign debt crisis? What is certain is that risk contagion is unavoidable, and these risks could very well spread to the global financial system. That situation would be no better than what the world faced in 2008,” Zhang Monan, a researcher at the State Information Center, wrote in the Securities Times.

The center is part of the National Development and Reform Commission, China’s economic planner.

Zhang’s comments come ahead of a visit to Beijing by French President Nicolas Sarkozy on Thursday to discuss the global economic situation amid intensifying investor worries over the euro-zone debt crisis.

As more euro-zone countries seek collateral in exchange for their loans to Greece, the cost of the Greek bailout is set to rise for governments across the currency bloc, Zhang said. That trend would likely dry up liquidity in the region’s banking system, raising the risk that the rescue of Greece will have to be aborted, she said.

“Judging from the current situation, governments will neither be able to take over banks’ bad debt, nor will the banking system be able to finance the bulk of sovereign debts as they did at the start of the global financial crisis,” Zhang said.

This vicious cycle is bringing the world another step closer to a new global financial crisis, she said.

In a separate opinion piece also published Tuesday in the state-run Shanghai Securities News, Zhang argued that a tax on global financial transactions is necessary and “inevitable.”

Profit-seeking cross-border capital has pushed up prices and currencies in emerging economies, destabilizing government efforts to tame inflation and prevent asset bubbles. A financial transactions tax, sometimes known as a Tobin Tax, may be a way to reduce volatility in the market, Zhang said.

French President Nicolas Sarkozy and German Chancellor Angela Merkel said last week that their respective finance ministers will propose a tax on financial transactions in September.

Shanghai, August 23, 2011 (Dow Jones)

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A week after downgrading Google Inc.’s stock, Standard and Poor’s has reversed course and has upgraded it, saying the Internet search leader’s shares have fallen so much they’ve now become a good deal.

Analyst Scott Kessler wrote in a research note Monday that he was upgrading the stock because it had slipped below the $500 price target he had set last Tuesday, after Google announced its unexpected $12.5 billion acquisition of cellphone maker Motorola Mobility, a deal driven less by Motorola’s hardware than its treasure trove of more than 17,000 patents.

Kessler said Google’s 20 percent drop in stock price over the past month has made the shares “fairly valued,” and he has upgraded them to “hold” from “sell.” Kessler had downgraded the stock from “buy” to “sell” a week ago.

He wrote at the time that he worried the Motorola deal may not protect Google’s Android smartphone software from all intellectual property lawsuits, and that absorbing the hardware maker would hurt Google’s growth prospects and profitability. He cut his 12-month price target at the time to $500, from $700 per share.

On Monday, Kessler noted that he still had concerns about the deal. The stock rose $7.25, or 1.5 percent, to $498.17 during the regular trading session, and fell 42 cents to $497.75 in extended trading.

Source : OfficialWire

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AXA Real Estate Investment Managers announces that it has completed €2.13 billion of transactions in Europe on behalf of clients in the first half of 2011. In line with the strategic objectives of major clients, there has been a shift in geographical focus compared to 2010, with investment flows moving away from France into other core European markets, in particular towards the UK.

As forecasted, total transactions over the first half have increased significantly across Europe, with 80 transactions comprising €1.19 billion of acquisitions and €939 million of sales completed during the period, compared to €2.7 billion of transactions undertaken for the whole of 2010.

There has been a geographical change in transactional activity over the last six months, reflecting particular client strategies. This has resulted in 46% of acquisitions taking place in the UK, compared to 25% last year and 19% in France compared to 18% last year. In addition, over 60% of sales undertaken in the first half were in France.

This shift in geographical focus was further evidenced by the announcement following the half year of the creation of a joint venture between AXA France Insurance Companies and Norges Bank Investment Management, whereby AXA Real Estate, on behalf of its client, sold to Norges Bank a 50% interest in seven assets from a Central and Paris region office portfolio with a total value of €1.4 billion. AXA France Insurance Companies expects to reinvest the equity across Europe to create a more geographically diverse portfolio.

Other notable transactions during the first half of 2011 have included the acquisition, on behalf of one of AXA Real Estate’s clients, of 20 Gresham Street, a 240,000 sq ft fully let prime central London office, a portfolio of 28 petrol stations in northern Spain on behalf of the Alternative Property Income Venture and the commitment by AXA Real Estate’s Development Venture III to develop a major office project located next to Balard, the future site of the French Ministry of Defence in Paris.

Anne Kavanagh, Global Head of AXA Real Estate Property Services Group commented:

“We have continued to accelerate our transactional activities following the progress we made last year, delivering a number of key deals to support our clients’ strategies. We have completed 80 transactions in the first half of the year, only made possible by our specialist in-house teams located across our key territories. With a further €3 billion of deals already at various stages of due diligence, we expect to continue our strong momentum for the rest of the year.”

Source : AXA Real Estate Press Release

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With a number of insurers reducing capacity and/or contracting their distribution for Motor Trade business, MMA Insurance is expanding its range with the introduction of a Motor Trade Combined product.

MMA’s Motor Trade Combined offers cover on a comprehensive road risks basis and includes material damage, business interruption, combined liability, goods in transit, money and assault. The product also includes the option to include engineering, legal expenses, loss of MOT licence and equipment breakdown.

As an added incentive, the first 500 policyholders will each receive their own MMA DNA+ forensic coding pack free of charge. The product can be used to mark vehicles and other valuable items, thus providing irrefutable proof of ownership for traders in the event of a theft. DNA+ warning labels, which can be displayed on the motor traders’ premises, also act as a significant deterrent to thieves.

MMA’s Director, Commercial Underwriting, Paul Hodgson said: “The decision to launch our Motor Trade Combined product comes as a direct result of broker feedback and demand. Our product offers highly competitive, market-leading cover for its target customers.

 “The launch of Motor Trade Combined builds on MMA’s longstanding position as a leading insurer in this sector through our Road and Internal Risks and Motor Serv products. The new product will be a bespoke proposition underwritten through our seven regional offices, further strengthening our capability for combined business.”

Source : MMA Press Release

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British holidaymakers spend an average £610 on meals and snacks during a fortnight abroad, splashing out over £43 a day per person, reveals research by Churchill Travel Insurance.

And we clearly enjoy indulging in the local cuisine, as Brits spend nearly four hours a day enjoying leisurely meals while on holiday and over four in ten (45 per cent) say that they eat more food during their travels than they would at home.

Holidaymakers who opt for all-inclusive packages seem to be the most over-indulgent at meal times, as 52 per cent of travellers take advantage of the hotel buffet and eat more than usual when they’re abroad. Furthermore, nearly one in three (30 per cent) all-inclusive travellers treats themselves to more sugary and high-fat foods while they’re away.

One in four (25 per cent) all-inclusive holidaymakers also admit that they try and get their money’s worth out of their holiday package by drinking as much free alcohol as they can during their stay.

After all this over-indulgence, it’s perhaps no wonder that many holidaymakers return to home soil feeling sluggish and in need of a detox. A quarter (23 per cent) of Brits admit that they have to go on a health kick to lose their holiday pounds after eating to excess on holiday.

Annette Fox, spokesperson for Churchill Travel Insurance, commented: “It seems that British travellers are making the most of the cuisine on offer in other countries while they are abroad. However, remember to check that the food is safe to eat if you’re eating away from your hotel, and be safe and know your limits when drinking alcohol.”

Source : Churchill Press Release

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Allianz Insurance has launched a new apprenticeship programme, which will give students with A-level qualifications the opportunity to work within its Retail division.

The scheme has been specifically created for talented young people who are academically capable, but might not wish to attend university, especially in light of the recent fee increases.

Those who win a place on the three-year scheme will be given the chance to gain technical skills across many areas, including  motor, home, lifestyle and animal health as well as pricing development, fraud and business standards.

The new programme will combine hands-on working experience with a professional study programme, as all of the apprentices will also be working towards a Chartered Insurance Institute (CII) qualification.

Tom Moss, Retail technical director, said: “This is a great opportunity for bright and talented individuals to gain key technical skills and qualifications, which will allow them to gain a head start in their career development without going to university.”

He adds: “We recognise that the capabilities of our people are essential to a successful business. This new apprenticeship scheme demonstrates our commitment to training and developing staff, which we are confident will ensure that we meet the technical and leadership requirements of the future.”

Source : Allianz Press Release

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According to catastrophe modeling firm AIR Worldwide, the seventh named storm of the Atlantic hurricane season, Tropical Storm Gert, is approaching Bermuda and is expected to skirt the island before turning back out to sea, away from the U.S. east coast.

The tropical depression that is now Gert formed in the Atlantic late Saturday night, and was upgraded to tropical storm status by Sunday afternoon. As of today’s 11:00 AM EDT advisory from the National Hurricane Center (NHC), Gert was located about 95 miles southeast of Bermuda. With maximum sustained wind speeds of 60 mph, the storm is moving north at 12 mph and is expected to speed up over the next day.

“Although the storm is in an area of low vertical wind shear, which is favorable for storm development, it will enter an area with colder sea surface temperatures tomorrow,” said Scott Stransky, scientist at AIR Worldwide. “However, forecasters at the NHC do not anticipate Tropical Storm Gert has enough time to develop into a hurricane. Still, some strengthening is possible in the next 24 hours while it is over warmer water. The NHC has given Gert a 33% chance of becoming this season’s first Atlantic hurricane.”

Stransky continued, “The most likely forecast track takes Gert just east of Bermuda later today, bringing one to three inches of rainfall to the island. Given that the radius of tropical storm force winds is about 70 miles (mainly to the north and east of the system), Bermuda will be right on the borderline of tropical storm-force winds, but will escape Gert’s strongest winds. Wind damage is expected to be minimal. A tropical storm warning was recently discontinued in Bermuda.”

According to AIR, Bermuda’s building code is extremely strict; homes, which are typically built of limestone or concrete blocks, and commercial buildings, which are typically reinforced concrete, are required to be built to withstand sustained winds of 110 mph and gusts of up to 150 mph. Gert’s tropical storm force winds are not expected to cause structural damage.

Source : AIR Worldwide Press Release

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Dutch insurer Aegon published a second-quarter 2.0-percent dip in net profit saying that a fall of the dollar and increased life expectancy in the Netherlands were the main factors.   

The group reported net profit of 403 million euros ($574 million), exceeding forecasts of 310 million euros compiled by Dow Jones Newswires.

“The weakening of the US dollar had a notable impact on Aegon’s reported results,” said group chief executive Alex Wynaendts in a statement.

Unfavourable exchange rates weakened the outcome by 44 million euros.

In addition, Aegon provisioned for 23 million euros in the Netherlands where average life expectancy for men in 2010 stood at 78.8 years and 82.7 years for women.

The insurer previously said it expected to provision for about 20 million euros per quarter to offset the increase in Dutch life expectancy, which is forecast to reach 80.64 years and 84.05 respectively by 2020 according to the Dutch central statistics office.

Longer life expectancy means the group will have to pay more in pensions as part of its pension-saving schemes.    The group’s turnover came to a total of 1.26 billion euros, a drop of 15 per cent year-on-year from 1.47 billion euros. US and British-based sales of new life insurance also declined on the back of price increases.

Aegon said its exposure to sovereign debt of “peripheral European countries” (Greece, Spain, Italy, Ireland and Portugal) was “limited” to 866 million euros, 745 million euros of which it held in Spanish state bonds.

The group said in June it paid back a final instalment of 1.1 billion euros to the Dutch state, which had provided it with three billion euros of support in October 2008 at the height of the financial crisis.

Aegon had now paid back a total amount of 4.1 billion euros, it said.

The Dutch insurer announced on Wednesday the completion of the sale of US-based firm Transamerica Reinsurance to French-based reinsurer Scor for $1.4 billion dollars after tax, which enabled it to raise funds for the repayment.

Aegon employs about 30,000 people and has 40 million customers worldwide, mainly in the Netherlands, United States and Britain.

The group’s share price fell by 1.14 per cent to 2.93 euros per share on the Amsterdam AEX index in morning trading.

The Hague, Aug 11, 2011 (AFP)

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A US court has dealt a new blow to the health care reform law seen as President Barack Obama’s proudest domestic achievement, declaring its centrepiece provision unconstitutional.   

The Eleventh Circuit appeals court, based in Atlanta, ruled Friday that the law’s individual mandate, which requires everyone to own health insurance in America’s mostly private system or pay a penalty, exceeded Congress’s powers. But the court 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.

About 50 million Americans lack basic health insurance. As a result, hospitals and taxpayers are forced to pay about $43 billion a year to cover the costs of those who are treated but cannot pay. The ruling increased the likelihood that the US Supreme Court will be called upon to rule on the health care law’s constitutionality, possibly as soon as next year, in the heat of a presidential election campaign.

Republicans strongly oppose the law, which they have dubbed “Obamacare,” as an infringement on individual liberty, and have sworn to repeal it. By a 2-1 margin, the Eleventh Circuit affirmed a ruling by a lower Florida court that the individual mandate was unconstitutional, in a case brought by 26 state governors and attorneys general, most of them Republican.    But the judges overturned another part of the Florida court’s ruling that the entire health care law, passed in 2010, was unconstitutional.

“The individual mandate exceeds Congress’s enumerated commerce power and is unconstitutional,” wrote Chief Judge Joel Dubina.

“This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their  entire lives.”

The White House said it strongly disagreed with the decision and was confident that the law would ultimately be upheld as constitutional. It also pointed out that four courts, including the Sixth Court of Appeals, had endorsed the law.

“Those who claim this provision exceeds Congress’s power to regulate interstate commerce are incorrect,” said Stephanie Cutter, a special assistant to Obama.

She argued that those who chose not to buy insurance in the US private medical system hurt everyone else, because taxpayers end up subsidizing their care when they are taken to emergency rooms.

The White House also justifies the individual mandate by saying that without it, people would wait until they get sick to apply for coverage, which would cause insurance premiums for everyone to rise.    But the ruling cheered Republicans who see the health care law as an unacceptable intrusion by government into individual freedoms.

“Forcing Americans to buy health insurance approved by the government was an unprecedented, unwelcome, and unconstitutional expansion of federal power,” said Mitch McConnell, the top Republican in the Senate.

Rick Perry, the conservative Texas governor who is launching a presidential campaign this weekend, described the law as an “egregious violation of our constitutional rights.”    Republican House of Representatives Speaker John Boehner vowed to repeal  “the entire abomination.”

Though the health care law is one of Obama’s most significant achievements, its controversial nature means he has reaped little gain from a victory that required a huge investment of political capital.

A CBS News poll taken in June found that 37 per cent of those asked approved of the health care law, while 48 per cent opposed it.

Washington, Aug 13, 2011 (AFP)

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