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To highlight many of the issues facing the UK’s future pensioners, AXA Wealth has developed a new quantitative index measuring affordability and volatility in retirement saving, and has conducted consumer research which suggests a significant disparity between desired, expected and actual retirement ages.

The AXA Wealth Pension Index shows that a typical male pension saver wanting to retire on a similar pension income to that which they would have achieved five years ago will now need to work for an additional six years and one month, making his ‘pension affordability age’ 71.1 years old.

The male index shows that pension affordability has fallen by almost 40% since the end of 2005 and the average male saver who chooses to go ahead and retire today would face a pension of just over half what they could have obtained five years ago.

The index also indicates that females fare even worse than their male counterparts; the female pension affordability age now stands at 71.3 years – an additional six years and four months, and the index also shows a decline of 40% in the potential realisable pension annuity.

Pension affordability as calculated by the index has improved in the last 18 months; the projected retirement age hit a high of 75.8 for men and 76.1 for women in March 2009. However, AXA Wealth has warned savers not to become complacent in securing their financial futures.

Mike Morrison, head of pensions development, AXA Wealth, commented: “Due to significant market volatility in recent years, pension savers face a significant shortfall in retirement income or a much later retirement age. In the longer term equity markets continue to offer the potential for creating enhanced retirement incomes, but it’s clear that this needs to be afforded some form of protection in periods of extended volatility as we have experienced in the period under investigation. People insure their homes and other valuable assets, but not their financial future.

“Flexibility at retirement is a great idea, but flexibility that can take advantage of an upturn in the market with a guarantee of capital or income, might be even better!”

Mind the Gap: consumer desires, expectations and reality do not match up!

The AXA Wealth Pension Index results contrast with the outcome of a primary consumer research survey also conducted by AXA, which found that the UK public’s desires and expectations in relation to retirement age differ greatly from reality. The survey highlights:

– The average age that people in the UK would like to retire at is 58

– The average age that people in the UK expect to be able to afford to retire at is 64

– The index tells us that the average age that people will be able to afford to retire at is 71.2

Based on this and the Pension Index data there is a ‘desire-reality’ gap of 13 years and an ‘expectation-reality’ gap of seven years. Clearly, UK pension savers need to ‘mind the gap’ when it comes to planning for their retirement income.

Source : AXA Press Release

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Zurich Corporate Pensions announces that it has been named as a 2010 Greenwich Quality Leader in UK Bundled Defined Contribution Corporate Pensions.

The accolade recognises Zurich as a leading provider of bundled defined contribution (DC) corporate pension services in the UK in terms of the overall quality of its propositions.

The Greenwich Associates study seeks to ascertain the views of leading corporate benefit consultants interviewed as part of its research into the UK pensions industry.  Zurich was highly rated by consultants for its well designed and highly flexible investment proposition and it also received top quartile scores for its scheme administration and servicing proposition.

Commenting on the achievement, Simon Foster, Head of Zurich Corporate Pensions commented, “We are delighted to be recognised as a Greenwich Quality Leader by for the second year running.  This award recognises excellence amongst Defined Contribution pensions providers across service delivery, investment propositions and communications.  This is a fantastic achievement and is testament to the strength and dedication of the Zurich Corporate Pensions team, as we continue to deliver our first class proposition through our strategic relationships with Employee Benefit Consultants and their clients”.

Source : Zurich Press Release

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Urgent global action is needed to prevent  the spread of a multi-drug-resistant “superbug” after it was found in water  supplies in the Indian capital, doctors said in research published Thursday.

The study in The Lancet medical journal said that New Delhi  metallo-beta-lactamase 1 (NDM-1) producing bacteria were found in 51 out of  171 samples taken from water pools and rivulets and two out of 50 tap water  samples in the city.

NDM-1, first identified in 2009, is a gene that enables some types of  bacteria to be highly resistant to almost all antibiotics.

Positive samples included those collected in and around the commercial and  business hub of Connaught Place and the Red Fort area.

“International surveillance of resistance, incorporating environmental  sampling as well as examination of clinical isolates needs to be established  as a priority,” the team from Cardiff University in Britain wrote.

Mohammed Shahid, from the Jawaharlal Nehru Medical College and Hospital in  India’s northern Uttar Pradesh state, added that potential for a wider,  international spread of the superbug was “real and should not be ignored.”    The Indian Council of Medical Research (ICMR), a state health unit, called  for calm in the capital city of 16 million residents.

“Hospitals should follow appropriate safety norms,” ICMR director-general  V. M. Katoch told the Press Trust of India. “If the report applies to India,  then it applies to Europe also.”

Independent researchers conducted the study in September and October last  year, soon after warning that the superbug could be spread by foreign  nationals coming to India for medical treatment.

At the time, the Indian government dismissed the research as scaremongering  and criticised the naming of the bug after the Indian capital.

But the World Health Organization later called for monitoring after cases  of infection were reported around the globe.

In the latest study, the researchers said the presence of NDM-1-producing  bacteria had “important implications” for New Delhi residents who were reliant  on public water supplies and sanitation.

NDM-1 was found in the bacteria that cause cholera and dysentery, lending  weight to the theory that it was not solely a hospital-acquired infection but  present in the environment.

The research suggested that the transfer of NDM-1 between different  bacteria was highest at 30 degrees Celsius (86 degrees Fahrenheit) — within  the range of temperatures in New Delhi for seven months of the year.

“This period includes the monsoon season, when floods and drain overflows  are most likely, which potentially disseminates resistant bacteria,” the  authors said.

“Oral-faecal transmission of bacteria is a problem worldwide, but its  potential risk varies with the standards of sanitation.    “In India, this transmission represents a serious problem — 650 million  citizens do not have access to a flush toilet and even more probably do not  have access to clean water.”

The authors said it was unclear whether the data could be applied to other  Indian cities but there was an “urgent need” for follow-up studies, including  in Pakistan and Bangladesh, which have also been identified as sources.

New Delhi, April 7, 2011 (AFP)

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Standard Life Investments has today announced, on behalf of its UK Property Fund, the £20.675m freehold acquisition of The Gateway Shopping Park, Trowbridge, Wiltshire UK.

The purchase reduces the cash position in the Fund to 10.70% and the purchase price represents an initial yield of 5.7%.

Purchased from developers Parkridge, The Gateway Shopping Park was completed in 2009 and comprises 6 retail warehouses totalling 56,630sq ft and a 226 space car park. The retail units are let to Next, New Look, Argos, Boots and Brantano.  There is one vacant unit in the development which represents an excellent opportunity for high street brands to join a first class list of retailers.

Trowbridge is the county town of Wiltshire and is located 12 miles south east of Bath and 19 miles south east of Bristol.  Unlike many retail warehouse developments, The Gateway Shopping Park is located in the centre of the town’s retail offering.

Nigel Chapman, Fund Manager of the UK Property Fund, Standard Life Investments, said:

“We are delighted that we have been able to increase the Standard Life Investments UK Property Fund’s exposure to prime retail real estate.  The Gateway Shopping Park provides good diversification in terms of income, reduces the cash balance held in the Fund and provides an attractive yield for investors.”

The investment objective of the UK Property Fund is to provide a return from capital appreciation and income over the longer term.  The current policy of the Fund is to invest primarily in UK commercial property.

Standard Life Investments was represented by Stockford Staunton and King Sturge represented Parkridge.

Source : Standard Life Investments Press Release

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Friends Life, the new group that brings together the UK business of Friends Provident and part of AXA’s UK life and pensions business, welcomes Pension Minister Steve Webb’s plans to create a flat-rate £140-a-week state pension.

The new model provider believes this move could encourage swathes of savers to start setting money aside for retirement, safe in the knowledge their savings will be preserved in future years. Friends Life also believes today’s news will improve simplicity by removing much of the confusion surrounding pension entitlement and offer an easier to understands system for people to get their heads around.

Martin Palmer, head of corporate pensions Friends Life, commented:

“With auto enrolment just around the corner, the timing of today’s announcement is ideal. For far too long now complexity has clouded pension and retirement planning in this country but today’s announcement should go a long way towards removing this. Our research shows a growing trend for savers in the UK to take responsibility for funding their own financial future, and today’s clarification of what individuals might expect from the state come retirement should help them achieve this.”

Friends Life warns however that unless the government avoids the temptation to tinker further with legislation governing state pension provision in the UK, the full potential of today’s announcement would not be realised.

Martin Palmer continued:

“Today’s news is a welcome step towards to simplicity for pensions. But now that we have a nice sensible plan on the table, government must resist the urge to continually tinker with it. Realistically the state pension age will have to be reviewed based on longevity, but any alteration must be sounded well in advance to allow people to plan effectively for their retirement.”

Source : Friends Life press Release

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Aon Benfield today releases the latest edition of its Monthly Cat Recap report, which reviews the natural disaster perils that occurred worldwide during March.

Published by Impact Forecasting, the firm’s catastrophe model development center of excellence, the report highlights that the mega-earthquake and resultant tsunami that struck the northeastern coast of Japan on March 11 has to date claimed more than 12,300 lives and injured nearly 3,000 people. At least 15,000 people officially remain listed as missing.

More than 830 aftershocks followed the main tremor, and at least 203,000 homes and other structures were damaged or destroyed by ground shaking, tsunami waves, fires or liquefaction, according to the National Police Agency of Japan.

The Japanese government estimated total economic losses of JPY16.2 to 25.3 trillion (USD198 to 309 billion), while the World Bank estimated insured losses of JPY1.1 to 2.7 trillion (USD14 to 33 billion).

Tsunami waves from the Japan earthquake crossed the Pacific Ocean and caused a combined USD88.4 million in damage to coastal locations of Hawaii and California in the U.S. Additional tsunami damage to more than 500 homes was recorded in Peru and Chile

Steve Jakubowski, President of Impact Forecasting, said: “Insurers and reinsurers have long regarded Japan as a global peak peril zone for aggregated exposures. Consequently, robust earthquake modeling tools have been developed for the region, but the resultant tsunami added a further dimension to re/insurers’ exposure profiles and loss assessment will be ongoing for the foreseeable future. At least 57 of the 830 aftershocks that followed the main tremor registered above magnitude-6.0 – all sizeable events in their own right. The earthquake was absolutely devastating to the country’s population and infrastructure, and the relief and rebuilding efforts will continue for years to come.”

Meanwhile, in China, a magnitude-5.4 earthquake struck regions in the southwest, killing at least 26 people and injuring 313 others. According to officials from the Ministry of Civil Affairs, the tremor damaged or destroyed at least 68,000 homes in Yingjiang County, and the Chinese government has allocated CNY105 million (USD16 million) for relief and recovery costs.

Myanmar recorded a magnitude-6.8 earthquake that killed at least 75 people. Myanmar’s official state media reported that at least 3,152 homes, 31 religious buildings, nine government buildings and a hospital were destroyed, with total economic losses listed at MMK23.5 million (USD3.6 million).

Elsewhere, the United States was affected by several severe weather events during March, the first of which resulted in 20,000 insurance claims in the Southeast and the Mississippi Valley with payouts exceeding USD120 million. Separate events at the end of the month were expected to cause at least tens of millions of dollars (USD) of further insured losses across the Southeast.

In Asia, flooding in southern Thailand left at least 51 people dead after more than a year’s worth of rain fell over just six days in some isolated locations. At least 580,000 homes were damaged or destroyed and transportation was severely hampered. The University of the Thai Chamber of Commerce estimated economic damages to potentially reach THB10billion (USD330 million).

Additional flood events in Brazil, Indonesia and Namibia led to tens of thousands of homes being destroyed and millions of dollars (USD) in total economic damages.

Natural disaster declarations were also made in Australia’s New South Wales after more than 800 homes were damaged by floods.

Source : Aon Benfield Press Release

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Research out today of 1,000 small business owners found that over a fifth (21%) employ a family member and of these 43% cited the downturn as a reason for recruiting a relative. This was a positive move as 94% believe that a family hire benefits their businesses.

Trusted experience
The study by specialist SME insurer Hiscox found that, when asked about the main advantages of employing family members, over half (57%) said it came down to trust, followed by reliability (45%), relevant experience (40%) and simply knowing that their family members “will work hard” (44%). Surprisingly only 16% said they chose to employ a relative to actively create a recognised family brand.

Nearly a third (30%) of family run businesses chose to employ a relative to help them find work and just over one in ten (11%) said it was to help those who had been made redundant.

“The silver lining of the tough financial climate has been the discovery of the ‘family talent pool’. The trend of SMEs turning to trusted family members who may be available and have the right experience has strengthened their businesses,” comments John Heaney, SME insurance expert at Hiscox.

Risky business
While the research reveals the benefits of employing family members, it also acknowledges the risks. Almost half (43%) of SME owners believe there is a danger associated with keeping home life and work life separate when becoming your nearest and dearest’s boss and a quarter (25%) thought it would bring family politics into the business.

“Understanding the risks to your business means that you can put strategies in place to ensure they don’t become a problem. For example, think about succession planning and set out a long term strategy so all employees within your company are clear on their role and expectations for the future,” comments John Heaney.

Brothers with the edge
Oliver Bolland recently set up Jool Edge, a design and marketing consultancy, with his brother Josh in the hope that one day, their company will be able to support the rest of their family. Bolland explains, “My brother and I realised that by combining our design and web programming skills, we had the knowledge and experience to set up Jool Edge. It felt like a natural progression for us to work together – Josh and I know each other’s strengths and weaknesses, we can be honest with each other and we can really trust each other to make this business work, as ultimately we want our whole family to benefit from its success.”

Grant Gordon, Director General of the Institute for Family Business, said: “Family firms are a proven breeding ground for entrepreneurship and working in a family business encourages greater resourcefulness as well as teaching family members valuable lessons.”

“Overall the family business sector has weathered the recession well and fostering a spirit of entrepreneurship in family members should ensure these firms remain competitive as we emerge from the downturn.”

Source : Hiscox Press Release

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XL Group announced preliminary net loss estimates for the March 11, 2011 earthquake and tsunami in Japan.

The Company’s preliminary loss estimates related to the Japanese Earthquake and tsunami, pretax and net of reinsurance and reinstatement premiums, range from approximately $190 million to $290 million, with approximately 70 percent attributable to XL’s reinsurance segment. The wide range reflects the continued uncertainty regarding the event, including whether coverage levels will be reached under certain policies.

The Company’s estimates are based on a combination of commercial model outputs and its review of individual treaties and policies expected to be impacted along with available client data. The Company’s loss estimates involve the exercise of considerable judgment due to the complexity and scale of the insured event, and are accordingly subject to revision as additional information becomes available. Actual losses may differ materially from these preliminary estimates.

Source : XL Group Press Release

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Specialist healthcare and protection insurer Exeter Family Friendly has announced their latest initiative to make their comprehensive private medical insurance plan Health Cover for Me more attractive to intermediaries.

The Exeter based insurer has announced the launch of a range of excess options on Health Cover for Me for the first time. The latest enhancement comes on the back of a busy 2010; with the introduction of a range of innovative underwriting options and a premium decrease of up to 12.5%, two notable highlights.

Commenting on the latest initiative, Head of Intermediary Sales, Mike O’Brien commented:

“As a provider, we never want to stand still; we know there are many features of Health Cover for Me that intermediaries like; they like it’s simplicity, they like unlimited cancer cover and they like the fact that there are no confusing limits to cover, which makes it different from the rest of the market.”

“But, what they have told us is that they don’t like the co-payment approach of premium control; their customers don’t understand it and as a result they don’t feel comfortable recommending it. As an insurer, it is our job to listen and to make the changes and enhancements that make a difference.”

The new range of excesses will include £100, £250, £500 and £1,000 options, in line with most providers in the market.

O’Brien concluded:

“Our supporters know that it’s not in our nature to follow the crowd, but we have listened and made a change which will allow intermediaries to compare us like for like with other insurers.”

“We’re confident that it is a comparison that they will like the look of. “

Quotes for Health Cover for Me are available from industry portals Insurance Resource and Prognosis, together with the Exeter Family Friendly website.

Source : Exeter Family Friendly Press Release

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The effects of a major natural disaster can linger and cause heart attacks and other health woes for years, according to a study released Sunday of New Orleans residents after Hurricane Katrina.

Four years after the massive hurricane swept through the celebrated southern US city in 2005, residents continued to experience a threefold increase in heart attacks, sustaining a trend witnessed two years after the event, it said.

“This data was surprising for us,” said Anand Irimpen, associate professor of medicine for the heart and vascular institute at Tulane University.    “We thought we would see a trend downward at four years,” said Irimpen, who presented the long-term study of post-disaster health consequences at the American College of Cardiology conference.

Irimpen describes the phenomenon as “Post-Katrina Stress Disorder,” whereby chronic stress exacerbates health problems and may give rise to psychological difficulties, which can also play a role in poor health.    The observational study was based on patients admitted to Tulane University Hospital with heart attacks in the two years prior to Katrina and the four years after hurricane. The hospital, which is inside the city itself, reopened five months after the storm.

The threefold higher rate of heart attacks also came with a new rise in psychiatric problems such as depression, schizophrenia, and bipolar and anxiety disorders — all of which were more prevalent than at the two-year mark.

Irimpen said that researchers had ruled out that traditional risk factors such as high blood pressure, obesity and diabetes had any more effect on the heart attack rate than they usually did.

Mainly, the community is just too occupied with rebuilding the basic trappings of their lives to focus on staying healthy, he said.

“Many of the patients we see are not yet back to their pre-Katrina residences, have not regained employment and are too stressed to pay attention to ideal health practices,” he said.

“They are more likely to smoke, overuse alcohol or other substances, and are less likely to comply with treatment plans that can prevent heart attacks.”

He noted that psychiatric problems were not a major factor in heart attacks two years on, but became more significant as time passed, suggesting there may be a lag between the “somatic manifestation” of mental illness into a heart attack.

The findings offer lessons for communities dealing with future disasters around the world, he said, suggesting that mobile pharmacy units or “trailer gyms” bringing portable exercise equipment into afflicted regions could help.

“Some sort of emphasis on health care post-major disaster will be very important in the future,” he said.

Hurricane Katrina, the costliest natural disaster in US history, swept through the famed jazz city in August 2005, killing at least 1,500 people, smashing levees, and condemning whole neighborhoods and communities to rot and ruin.

New Orleans, April 3, 2011 (AFP)

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An FSA report showed combined complaints against Coutts and Towry breached the 2,000 mark in the second half of 2010.

The study also showed leading banks Barclays, Santander UK and Lloyds TSB accounted for a collective 460,014 complaints reported to the regulator during the second half of 2010. According to the data, complaints opened against the country’s stalwart lenders hit six figures last year, when complaints at the firm level between 1 July 2010 and 31 December were gathered and analysed.

Complaints against Coutts & Co’s banking division reached 748, the FSA revealed, adding that a further 54 relating to Coutts’ investments, 24 relating to home finance and 8 linked to its general insurance, protection, decumulation and life and pensions were also received and looked into by the firm. Within each category, at least 67% of the complaints were upheld at a firm level, the FSA said.

Towry EJ received 1,284 complaints relating to investments, the bulk of which, 97%, were upheld.

The Royal Bank of Scotland (RBS), which owns private bank Coutts, also suffered a string of complaints over the same stretch.

The FSA said more than 30,000 complaints were received from disgruntled clients, with 167 of these relating to investments and a total of 30,218 in respect of banking.

The Bank of Scotland received in the region of 62,371 complaints, and HSBC were hit with 58,392, according to the FSA figures. Of these complaints relating to the firms’ banking arms, a respective 39% and 32% were upheld at a firm level.

Source : Reuters

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Over the past couple of decades the UK housing market has seen sharp swings in prices – creating house price ‘bubbles’ and adding to the volatility of the economic cycle. In response, RICS has examined whether there is a different approach the monetary authorities could take to prevent this.

RICS economics looks at a new and fundamentally different policy response from Sweden’s central bank, Riksbank, which RICS has termed ‘soft signalling’. This is a concerted strategy to condition public opinion by constantly raising the level of debate and drawing attention to the possible risks of a bubble emerging.  RICS believe this could serve as a template for other central banks around the world including the Bank of England.

RICS examines the benefits of soft signalling:

– It is highly flexible; it doesn’t require the lead-time of a regulatory response

– It is low cost; it doesn’t need any supervisory backup

– It is low risk; the authorities can’t be blamed for being asleep at the wheel

Commenting, RICS Senior Economist, Josh Miller, said:

“The Bank of England should consider adopting the soft signalling approach developed in Sweden to complement the regulatory tool kit. The UK has been a major victim of house price bubbles over the years as people have over-extended themselves to chase rising prices. Unless the on-going imbalance between demand and supply of residential property is addressed the market will remain prone to volatility. However, following the lead provided by the Riksbank may help lessen the extent of future fluctuations in the UK.”

Source : RICS Press Release

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As the Financial Services Authority (FSA) publishes the latest round of complaints data on individual financial businesses for the last six months in 2010, Which? Chief Executive Peter Vicary-Smith says:

“A 63% increase in the number of Payment Protection Insurance (PPI) complaints shows the widespread mis-selling that’s been going on for years.  With almost half a million PPI complaints made in six months, the industry has to stop trying to wriggle out of its responsibility to customers. We’re also seeing a worrying trend of banks using the Judicial Review as an excuse to delay processing complaints.

“When bonus structures reward staff for selling products which may be unsuitable, is it any wonder that we’ve been left with this mess? We really need bonus schemes that are linked to the fair resolution of complaints.”

Which? believes that people could claim billions of pounds in mis-sold PPI. To make the process easier, it has created an online PPI complaints tool – www.which.co.uk/ppiclaim.

Which? recommends that anyone who wants to complain but is stalled by their financial provider, should take their compliant to the Financial Ombudsman (FOS).

Source : Which? Press Release

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Fitch Ratings has affirmed Zurich Insurance Company’s (ZIC) Insurer Financial Strength (IFS) rating at ‘A+’ and Long-term Issuer Default Rating (IDR) at ‘A’. The Outlook is Stable. ZIC is the core part of the Zurich Financial Services (ZFS) group. A full list of rating actions is provided at the end of this release.

The affirmation follows Fitch’s review of ZFS’s full-year 2010 results as well as the company’s announcement that it will enter into a 25-year strategic distribution agreement with Banco Santander SA (Santander). ZFS will pay USD1.67bn upfront plus an earn-out mechanism for its 51% participation in Santander’s insurance operations, including the respective distribution agreements. ZFS intends to finance the majority of the upfront payment with existing cash resources and the issuance of hybrid debt.

Fitch believes that the acquisition is marginally negative for ZFS’s capital position but in line with its strategic goals to grow its life business and increase its presence in Latin America. Fitch recognises that the transaction will be immediately accretive to earnings and cash flow positive. However, Fitch notes that the issuance of hybrids will increase financial leverage and that the transaction will likely result in additional goodwill and intangible assets on ZFS’s balance sheet.

The rating rationale is based on ZFS’s solid level of capitalisation, continued strong earnings generation and conservative investment portfolio. These positives are offset by the company’s significant amount of goodwill and intangibles, relatively high use of financial leverage, and the headwinds the company faces due to the difficult economic environment, competitive market conditions and declining investment yields.

Fitch views ZFS’s capitalisation as supportive of the current rating level and recognises substantial improvements in capital adequacy since year-end 2008, mainly reflecting the increase in shareholders’ funds. This was primarily driven by an increase in unrealised gains on investments, and retained earnings, which have been only partly offset by dividend payments.

Based on Fitch’s assessment, ZFS’s capital adequacy further benefited from a decrease in capital charges for its non-life book due to a reduction in premium volume, offset by an increase in equity charges due to the revaluation of ZFS’s investment in New China Life Company Ltd. Fitch notes that the quality of ZFS’s capital is negatively affected by goodwill and intangibles, which totalled USD8.1bn at end-2010 (end-2009:USD9.3bn), or 24% of shareholders’ funds, and the agency regards this as relatively high compared with peers.

Fitch views ZFS’s financial leverage as relatively high but within acceptable levels for the current rating level. Positively, operational debt declined in 2010, mainly due to decreasing repurchase agreements.

ZFS’s asset quality remains high, with equity, hedge fund and private equity exposure amounting to only 5% of total group investments at end-2010. ZFS has a sizeable corporate bond portfolio (31% of total group investments) and ABS/MBS portfolio (13%) but the credit quality is high. Exposure to troubled sovereign debt is moderate at 5% of total group investments and predominately relates to Italy and Spain.

Fitch notes that ZFS’s mortgage loan portfolio within its non-core operations deteriorated in 2010, which resulted in impairment charges. The agency believes there is potential for further losses on this portfolio in 2011-2012, although given the small size of the portfolio the charges are unlikely to have a material impact on capital.

The ratings continue to reflect ZFS’s good operating performance and the strength of the group’s business position in its key markets. Underlying earnings remain broadly in line with Fitch’s expectations in light of challenging investment and market conditions. The reported combined ratio increased to 97.9% in 2010 (2009: 96.8%) due to increased levels of major catastrophe and large-claim losses partially offset by 4.7 percentage points from prior- year reserve development.

Fitch views favourably ZFS’s plans to offset the impact of declining investment yields by reducing run-rate operating expenses, re-underwriting its poorest-performing books of business and improving its claims-handling process. Other positive rating factors include the strength of ZFS’s relationship with the Farmers Exchanges and the stable and reliable income stream that this generates, as well as the solid new business margins that continue to be achieved in the life business.

Fitch believes that ZFS is well-positioned in terms of liquidity and believes that the company’s access to capital markets is strong, as evidenced by several debt and equity issuances in 2009 and 2010. The agency notes that the group has access to a number of credit facilities, which were unused at end-2010.

Source : Fitch Ratings Press Release

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Today’s Government announcement on civil litigation reform will put the brake on runaway legal costs and mean a better deal for genuine claimants and insurance customers, says the ABI. The ABI has been campaigning for reforms to the current system, especially reducing the high level of legal costs in settling personal injury claims, one of the major reasons for the general rise in the motor insurance premiums.

Nick Starling, the ABI’s Director of General Insurance and Health, said: “These reforms are good news for genuine claimants, who too often struggle to get fair compensation under the current system. The ABI has long campaigned for reform that puts the genuine claimant at the heart of a simpler, faster, more cost-effective system. “For too long ambulance-chasing lawyers and claims management firms have encouraged many people to believe that there is a compensation culture to exploit. The result has been a slower process for genuine claimants, and out of control legal costs that end up being paid for by all consumers through higher insurance premiums. Currently, for every £1 motor insurers pay out in compensation, an extra 87 pence is paid in legal costs. “By implementing in full the recommendations of Lord Justice Jackson’s review of civil litigation, the Government has addressed the injustices of our civil justice system. And motorists, who are paying an extra 10% on their motor insurance as a result of high legal costs in settling personal injury claims, can look forward to cheaper insurance in the future. “The final part of the reform process must be the abolition of referral fees and we urge the Government to ban them”.

Source : ABI Press Release

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Younger Brits are more likely to take advantage of early access to pension money than their babyboomer parents, according to research from AXA Wealth.

Over 40% of people aged between 16 and 34 who currently invest in a pension said they would like to access their pension pot early. This comes at a time in their lives when many will be contemplating getting on to the property ladder and/or starting a family, so additional funds are generally likely to be welcomed. In contrast, less than 30% of 45 to 54 year olds, the babyboomer generation, said that they would access their pension money early.

However, 58% of younger people said early access would encourage them to increase their current retirement savings contribution, suggesting an overall positive intention toward long-term saving. But, this appears to conflict with the most common reasons cited for accessing savings, which would be to alleviate financial burdens such as paying off debts and avoiding house repossession.

Andy Zanelli, head of technical sales, AXA Wealth, said: “The research suggests that younger people are perhaps focusing too much on satisfying short-term financial goals rather than realising that they may well spend as much time in retirement as they will working. If they access their pension money early, will they be able to fund the lifestyle they want when they retire?

“It is important that steps are taken to ensure that younger people recognise that long-term saving is as important as ‘living for the moment’. If they would access money early to rectify financial difficulties, what funds would they use if they had to pay back extra into their pensions?”

Source : AXA Press Release

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Commercial lines underwriting specialist Arista Insurance has recorded an EBITDA profit during 2010 of £682,471 compared with an overall loss in 2009 of £941,716.

The figures for 2010 show improvement across the board and were achieved despite continuing investment in resources at all its regional offices and expanding its geographic footprint to support regional trading with its 350 select broker partners.

The full year figures, released today, showed gross written premiums increased by £7m to £67m, while turnover improved by almost £2m from £7.9m to £9.5m. Arista also achieved its challenging ambition to improve efficiency while growing business volumes with expenses as a percentage of GWP improving from 15.7% to 13.3%.

The figures also demonstrate the effort invested in renewal business with a 23% improvement in its proportion of activity to 67% compared with the 44% of activity from renewal in 2009.

The results are in line with the expectations of chief executive Charles Earle who commented: “Arista continues to make strong progress as a high-service alternative to the major established insurers in the UK. Despite the continued soft market and low investment return environment business levels and results have continued to meet expectations. We remain determined to act consistently in underwriting risks on their merits and to work closely with brokers to negotiate  pricing changes where exposures and claims records merit them. This may have constrained growth in 2010 but it will yield rewards in the longer term.  Once again Arista’s high quality people have risen to the challenge of delivering the best service to our select broker panel through technical competence, experience, dedication and understanding of the brokers position.”

– Gross written premium                     £67m                (2009 £60m)

– Turnover                                         £9.5m               (2009 £7.9m)

– Expenses as % of GWP                  13.3%               (2009 15.7%)

– Managed broker relationships          355                   (2009 336)

– Renewal income as % of GWP         67%                  (2009 44%)

– EBITDA                                          £683k               (2009 (£942k))

Source : Arista Press Release

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Scottish Provident’s critical illness claims report released today reveals it paid out over £88 million to critical illness policy holders during 2010. The report shows that 90 per cent of all claims made in 2010 were paid, and just three per cent of claims were declined due to non-disclosure.

The report reveals that the average payout during the year was £84,873 with the largest claim being a payment of £1,090,362. The average age of claimants in 2010 was 46 years old.

During the course of the year over £57 million was paid out for cancer claims and over £9 million in claims for heart attacks.  Cancer accounted for 63 per cent of total claims paid, with heart attacks making up 12 per cent of the claims.  Women accounted for 60 per cent of cancer claims, compared to only 40 per cent of men.

Susan Barclay, Head of Marketing, Scottish Provident said:

“When they first bought critical illness cover it was for peace of mind, but last year over 1000 individuals and their families benefitted from that cover providing a financial safety net to help maintain their financial stability.

“Our report also highlights that the average age across all illnesses is 46 years old, showing how important it is for the working generation to give more thought to protecting themselves and their families in the event of a long term illness.”

During 2010, Scottish Provident paid out almost £1 million for children’s critical illness.  Overall children’s critical illness was the fifth highest claim paid, behind cancer, heart attack, multiple sclerosis and stroke.

Susan Barclay added: “No parent likes to think that their child will ever suffer from a critical illness; however, being prepared for this eventuality provides comfort and peace of mind should this happen.”

Source : Scottish Provident Press Release

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Hiscox has undertaken a first estimate of the impact of the 2011 New Zealand earthquake and the 2011 Queensland floods. The Group also makes an early comment on the Japanese earthquake and tsunami of 11 March.

Based on an insured market loss of US$10 billion for the New Zealand earthquake, and US$2.4 billion for the floods in Queensland, Hiscox estimates net claims of approximately £60 million and £15 million respectively.

Any estimate of the insured loss from the very tragic and severe earthquake in Japan is still at an early stage so considerable uncertainties exist. Hiscox’s exposure to this event is primarily through its underwriting of global and regional reinsurance and retrocessional programmes. Twice a year Hiscox publishes its expected losses for modelled catastrophes, including exposure to a Japanese earthquake. According to the latest published model1, from an insured market loss of approximately US$24 billion, Hiscox could incur net claims of between $60 million and $150 million with a mean loss of $100 million. Initial investigations suggest that this range remains valid.

Bronek Masojada, Chief Executive, commented; “The tragic impact of the Japanese earthquake is ongoing. Insurance exists to help rebuild communities after the havoc caused by catastrophes – paying claims after such events is what we are here for.”

Robert Childs, Chief Underwriting Officer, commented; “These events will only minimally impair our own reinsurance programme. In the reinsurance we underwrite, we have seen significant increases in rates for the affected regions and expect this pressure to become widespread.”

Source : Hiscox Press Release

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Fitch Ratings has downgraded Novae Group plc’s (Novae) Issuer Default Rating to ‘BBB-‘ from ‘BBB’ with a Stable Outlook and subordinated debt issue to ‘BB’ from ‘BB+’ and removed both ratings from Rating Watch Negative (RWN) Fitch has subsequently withdrawn the ratings as they are no longer considered to be relevant to the agency’s coverage.

The downgrade reflects a decrease in Novae’s risk-adjusted capital adequacy, as calculated by Fitch, as well as the agency’s expectation that the group’s 2011 earnings will be significantly reduced by net claims from a number of catastrophe events that occurred in Q111.

The reduction in risk-adjusted capitalisation reflects the repatriation of GBP32.9m to its shareholders in 2010 and strong premium growth in 2010. Prior to the reorganisation of Novae’s operations in 2009/2010, capital had been a supportive rating factor.

The Stable Outlook reflects the agency’s expectation that the reduced capital base has stabilised at a level commensurate with the new rating, assuming expected catastrophe losses are in line with Novae’s published exposure limits.

Fitch put Novae on RWN in December 2009 following its decision to transfer the business of Novae Insurance Company Ltd (NICL) into the group’s Lloyd’s Syndicate and return residual capital to its shareholders. At the same time, NICL’s Insurer Financial Strength rating was downgraded to ‘BBB’ with a Negative Outlook, and simultaneously withdrawn, meaning that Fitch stopped providing analytical or rating coverage for NICL from that point.

London-based Novae provides insurance and reinsurance underwriting services to international and UK provincial market and operates through its Lloyd’s operation Novae Syndicates. In 2010, the group recorded a profit before tax of GBP35.1m (2009: GBP4.2m).

Source : Fitch Ratings Press Release

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