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More than a third (35 per cent) of people planning to retire in the UK this year will do so with incomes below the poverty line according to new research from Prudential.

To meet its minimum income standard the Joseph Rowntree Foundation estimates that a single person in the UK needs at least £14,400 a year, yet 35 per cent of those retiring in 2011 will retire with an income below this level, up from 32 per cent in 2010.

Prudential’s Class of 2011 study surveyed people intending to retire this year and also revealed that nearly one in five (19 per cent) will retire on an annual income of less than £10,000 a year.

Women planning to retire this year are even more likely to have incomes below the poverty line. 40 per cent of women retiring in 2011 will have a pension income of less than £14,400 compared with 30 per cent of men. Prudential’s research also found that a quarter (26 per cent) of women compared with 12 per cent of men will retire this year with less than £10,000 a year to live on.

Vince Smith-Hughes, Head of Business Development at Prudential said: “Although our research shows that increasing numbers of those planning to retire will face tough financial decisions, there are many options available to boost retirement income.

“People approaching retirement should seek professional financial advice as a prerequisite to maximising their income. We would recommend that you review your finances with an adviser annually in the years immediately before your planned retirement.

“Following the simple advice to start saving as much as you can as early as you can should help to secure the retirement income you want and need. Making voluntary National Insurance contributions should also help to boost retirement income for people who have had breaks in National Insurance payment during their working lives.”

Prudential’s Class of 2011 research also found that those planning to retire in Wales and south east England this year are most likely to face retirement poverty. 42 per cent of this year’s planned retirees in Wales will do so with an income below the poverty line with 27 per cent expecting an income of less than £10,000. In the south east of England two-fifths (39 percent) of those planning retirement in 2011 will do so with incomes below the poverty line and a quarter expect to live on less than £10,000 a year.

– More than a third of those retiring in 2011 below poverty line

– One in five will retire on less than £10,000 a year

– Women more likely to face pension poverty than men

Source : Prudential Press Release

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Jobseekers will be given training to gain new skills, but will face having their benefits stopped if they refuse the offer of help, Employment Minister Chris Grayling announced today.

Benefit claimants whose lack of relevant skills is a significant barrier to work will get the support they need to move into work through compulsory training. If they fail to attend or complete the course without good cause, they could lose some or all of their benefits.

Employment Minister Chris Grayling said:

“People who are looking for work but are put at a disadvantage by their lack of skills will be given the training they need to improve their prospects of getting a job.

“We want to give people every opportunity to move closer to employment, but those who refuse the offer of help, fail to attend, or don’t finish their course could face sanctions.

“This is part of our new contract with jobseekers – we will give you the right help and support to get you into work and off benefits, but we expect you to play your part.”

Skills Minister John Hayes said:

“Having the right skills can make the crucial difference in helping people to get a job and keep it.  Skills providers offer a wide range of high-quality training that can give jobseekers the boost they need. We want to see more people completing their training and taking the first steps on a path to a fulfilling career.”

The new rules will apply to people claiming Jobseekers Allowance (JSA) and those in the Work-Related Activity Group of Employment Support Allowance (ESA) who need extra support and training before they become job ready.

Jobcentre Plus advisers will assess what type of support each person needs, and refer jobseekers who they judge will benefit from help to a skills training provider, including a Further Education College, or a Next Step adviser. Training will include basic skills such as literacy and numeracy, or work-based training for jobseekers who would benefit from more vocational support.

Source : Department of Work and Pensions Press Release

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According to Swiss Re’s latest sigma study, worldwide economic losses from natural catastrophes and man-made disasters were USD 218 billion in 2010, more than triple the 2009 figure of USD 68 billion. The cost to the global insurance industry was more than USD 43 billion, an increase of more than 60% over the previous year. Approximately 304 000 people died in these events, the highest number since 1976.

In 2010, severe catastrophes claimed significantly more lives than the previous year: around 304 000 were killed, compared to 15 000 in 2009. The deadliest event in 2010 was the Haiti earthquake in January, which claimed more than 222 000 lives. Nearly 56 000 people died during the summer heatwave in Russia. The summer floods in China and Pakistan also resulted in over 6 200 deaths.

Natural catastrophes cost the global insurance industry roughly USD 40 billion in 2010, while man-made disasters triggered additional claims of more than USD 3 billion. By way of comparison, overall insured losses totalled USD 27 billion in 2009. Lucia Bevere, one of the study’s authors, says: “Insured losses were highest in North America in 2010, where they exceeded USD 15 billion. Despite very low hurricane losses due to the absence of hurricanes making direct landfall in the US, a series of lesser storms throughout the year resulted in this high figure.”

High earthquake losses
Earthquake losses accounted for almost one third of all catastrophe losses in 2010. The February 2010 earthquake in Chile and the September earthquake in New Zealand were the two costliest events in 2010, and led to insured losses estimated at USD 8 billion and USD 4.4 billion respectively. Overall natural catastrophe claims in 2010 were in line with the 10-year average due to unusually modest US hurricane losses and in spite of notably high earthquake losses.

Incidentally, earthquake losses for 2011 will also be above average as the total insured claims for the February 22 earthquake in Christ-church, New Zealand, are estimated to be between USD 6 billion and USD 12 billion. The massive Tohoku earthquake that struck Sendai, Japan on March 11 is also expected to trigger significant insured losses.
Balz Grollimund, one of the study’s authors, says: “Although no long-term trend of increasing global earthquake activity has emerged, the number of fatalities and insured losses from earthquakes are on the rise. The main reasons are population growth, the higher number of people living in urban areas as well as rising wealth and rapidly  increasing exposures. Many of these rapidly growing urban areas are located in seismically active areas.”

Ten events each triggered insured losses of at least USD 1 billion
In 2010, ten events triggered insured losses of USD 1 billion or more. The two biggest insured losses were caused by earthquakes – the February earthquake in Chile (USD 8 billion) and the September earthquake in Christchurch, New Zealand (USD 4.4 billion). The third costliest event was winter storm Xynthia in Western Europe, which led to insured losses of USD 2.8 billion. Three storms in the US and two storms in Australia also generated losses of over USD 1 billion. Property claims from the BP Deepwater Horizon explosion in the Gulf of Mexico are estimated at USD 1 billion. Given the complexity of the claims, the latter figure is still subject to substantial uncertainty. The overall insurance loss is higher, as liability losses are not included in the sigma numbers.

Natural catastrophes and man-made disasters cost society USD 218 billion in 2010
In 2010, worldwide economic losses from natural and man-made catastrophes were estimated at USD 218 billion. This represents a sharp increase over 2009, when economic losses totalled USD 68 billion. Asia was the hardest-hit region with total damages of approximately USD 75 billion. Pakistan and several large regions in China experienced extraordinary rainfall during the summer, resulting in devastating floods.

Thomas Hess, Chief Economist of Swiss Re, comments: ”2010 was not only characterised by severe earthquakes that ranked among the deadliest, costliest and most powerful in history, but also by a series of extreme weather events, such as major floods. Some of these flood events sadly affected countries with poor emergency preparedness and underdeveloped insurance markets.”

Hess continues: “These events show the urgent need to strongly improve prevention and post disaster management in order to reduce human suffering. The rapidly increasing wealth in emerging markets should also be used to address these problems. This wealth will also allow insurance to grow and close part of the large insurance protection gap in many emerging markets, the main reason why the financial protection against catastrophes is low in most emerging markets.”

Source : Swiss Re Press Release

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Welsh broker Moorhouse has been praised for its part in a lobbying effort by FairFuelUK prior to the budget, which saw the Government postpone inflation linked fuel rises for nine months.

Moorhouse, via its Constructaquote.com brand, sponsored the FairFuelUK campaign and collected over 10% of the signatures on a petition that was delivered to Downing Street. The petition, which had 150,000 signatures in total, is being hailed as a success as proposals in it were implemented in the budget. The campaign was also sponsored by insurance broker Optin, which is 40% owned by Moorhouse.

Peter Carroll, founder of the FairFuelUK campaign said: “The campaign has achieved a great deal in its continuing objective to realise affordable levels of fuel prices at the pumps.  The fuel escalator is scrapped, the inflation linked rise has been deferred for nine months and we saw an unexpected 1p cut in the rate of duty.  This cut is nowhere near enough, but it is hugely symbolic and represents a very significant change in direction by the Government.”

The campaign is ongoing and continues to attracted strong public support with more signing the campaign’s on-line petition each day.

Carroll continued: “We are particularly grateful for the significant help of Optin Insurance and Constructaquote.com.  These businesses have demonstrated their commitment to the industry they serve [having] swung behind the FairFuelUK campaign almost as soon as it was launched and we couldn’t have achieved this initial success without them.”

Lyndon Wood, chairman of Moorhouse and Constructaquote.com said: “This is a great result as the petition helped to clearly demonstrate the strength of public feeling about this issue to the Treasury. This campaign was and continues to be a great opportunity to give practical support to our driver/haulage customers by getting behind the campaign to halt runaway fuel prices.  UK SME’s are really feeling the strain at the moment and more than ever need support from those prepared to step up as business champions.”

Source : Moorhouse Press Release

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Millions of grandparents are taking on the role of ‘second mum and dad’ to their grandchildren, helping out with everything from childcare to cooking family meals.

New research from Aviva suggests that around half of all UK grandparents – 7 million people – now look after their grandchildren and help around the house while mums and dads work. Of these, 99.5% do so without pay. The study shows that on average, each grandparent will care for two children for around 13 hours a week. With equivalent childminding costs standing at almost £2,400 per child annually, this amounts to an estimated saving of more than £33 billion for UK parents each year.

However, these ‘grand-helpers’ are feeling the pressure as a result of their kindness:

– 32% feel guilty if they ever say ‘no’ to looking after their grandchildren

– 30% actually cancel their own plans to mind their young charges

– 23% feel taken for granted at times

– One in eight (13%) feel financially worse-off as a result of looking after their grandchildren

– One in 20 say they would like to do more paid work but can’t because of childminding duties.

And with Aviva data showing that 68% of people in the UK plan to work beyond the standard retirement age it is possible that future grandparents won’t be available to offer the same level of support.

However, on a more positive note the vast majority of grandparents see clear emotional benefits to helping out their families:

– 88% feel closer to their grandchildren because of the time they spend with them

– 59% say they are more patient with their grandchildren than they were with their own children

Louise Colley, head of protection marketing for Aviva says: “It’s great to see so many grandparents involved in the lives of their families, but it’s a worry to see that some are financially worse off as a result. With grandparents already feeling squeezed, it’s vital that mums and dads take time to think about what would happen if they weren’t around to look after their own children.

“We know from our research that the cost of raising a child to age 21 is more than £270,000, yet we’re also aware that 93%(6) of UK families feel under-protected financially. So while it’s not something people like to think about, it’s crucial parents have life insurance in place just in case the worst happens and grandparents are left holding the baby – and all the costs this entails.”

In addition to childminding, grandparents’ help extends to:

– 15% help out financially with occasional household bills

– 28% regularly do the school run

– 26% cook occasional meals for the family

– 33% help grandchildren with their hobbies

– 13% assist with gardening.

 

Source : Aviva Press Release

 

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A civil damages case taken by a charity dog walker, which could have had wide-reaching implications for anyone working on a natural surface like grass, has been dismissed following a vigorous defence by specialist insurer Ecclesiastical.

The case of McBride –v– Gables Farm Dogs and Cats Home, which centred on alleged injuries sustained by the dog walker while exercising dogs in the field owned by the animal care charity, was dismissed at Plymouth County Court last month.

Ecclesiastical hailed the judge’s decision as a victory for common sense.

On 8 March 2008, charity dog walker Helen McBride was exercising a dog by walking it around a field owned by her employer, Gables Farm Dogs and Cats Home (GFDCH), when she slipped, sustaining an injury to her hip which she claimed caused pain and discomfort for three years.

Ms McBride subsequently filed a civil action for damages against the charity on the grounds that her employer had a duty to ensure floor surfaces are safe under the Workplace (Health, Safety and Welfare) Regulations 1992. Her argument was that the charity should have provided a footpath in the field in which dogs were exercised.

GFDCH’s insurer, Ecclesiastical, defended the action on the basis that the claimant’s allegations were unsupportable in law. The Ecclesiastical team was also highly concerned about the impact a favourable ruling would have on other animal charities and any school or employer which required staff to work on non-artificial surfaces, such as a grass sports field.

When the case came before Plymouth County Court on 4 February, Deputy District Judge Challan dismissed the action and ordered Ms McBride to pay the defence’s costs. The judge also noted that the field was entirely suitable for the type of work being undertaken by Ms McBride.

David Bonehill, Claims & Risk Services Director of Ecclesiastical said: “This was a very pleasing result and a victory for common sense. The decision to fight the claim really supports what Ecclesiastical is all about.

“A defeat in this case would have forced any employer whose staff work on grass, fields or any kind non-artificial surface to review their practices and potentially spend vast sums of money providing some type of artificial surface. Schools could have found themselves in the position in which outdoor PE lessons would have to be cancelled because conditions were too muddy.

“We identified the potential implications of the result of this case very early on and, as we believed we had a very strong case, we knew it was important to fight this case on behalf of all our customers who might face similar claims in the future. We are very pleased with the result and for being able to help our customer in their hour of need.”

Source : Ecclesiastical Press Release

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Ageas UK (formerly Fortis) acquired Castle Cover Limited for a sum of GBP 52.8 million.

The purchase is part of Ageas UK’s multi-distribution strategy and will increase its customer numbers to around 8 million. Within Ageas UK’s Retail operation, the acquisition will create a combined retail customer base of 2 million and builds on the significant presence it already has in this growing market through over 50s specialist RIAS. The acquisition further consolidates Ageas UK’s position as the fourth largest Personal lines broker in the UK.

With around 280,000 customer policies, the reported revenue of Castle Cover in 2010 was GBP 22 million and would bring Ageas’s total Retail revenues to around GBP 200 million.

Announcing the transaction, Barry Smith Chief Executive of Ageas UK said:

“The acquisition of Castle Cover gives Ageas an even stronger over 50s market presence, adding an established brand to our Retail operation and enhancing our proven knowledge in this growing insurance market. This purchase supports our multi-distribution strategy and will build on our existing expertise which is focused on meeting the needs of this customer group.”

Andy Watson, Managing Director UK Retail said:

“We are delighted that Castle Cover will be joining Ageas UK’s Retail operation. Castle Cover has shown an impressive growth record in the short time that they have been in the market. The combined expertise with RIAS provides a great opportunity for future growth.”

Andy Cole, Marketing Director Castle Cover said:

“This acquisition supports the success that Castle Cover has achieved in its five years of trading. Becoming part of Ageas will allow Castle Cover to grow its customer base further and enhance its reputation as a leading provider of 50+ insurance.”

Castle Cover will continue to operate under its brand name and will become a subsidiary company of Ageas UK which will now employ over 4,500 people in the UK. Janet Connor will be Managing Director of both RIAS and Castle Cover.

Source : Ageas Press Release

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AXA welcomes today the end of the pricing period of the merger of AXA Asia Pacific Holdings.

with AMP Limited and the sale of AXA APH’s Asian business to AXA. The acquisition of AXA APH’s Asian business by AXA is expected to close on April 1, 2011.

The transaction previously received all necessary shareholder and regulatory approvals.

“We are particularly pleased to announce that we are about to close the AXA APH transaction,” said Henri de Castries, Chairman and Chief Executive Officer of AXA. “Our Asian Life & Savings operations were among the fastest growing within the Group in 2010 with very strong new business profitability. This strategic transaction allows us to reinforce our growth profile with a significant increase in our exposure to high growth markets and is fully consistent with our ambition to combine value and growth through an effective capital management strategy.”

Taking into account the reference AMP 10-day Volume Weighted Average Price (“VWAP”) of A$5.32, the final consideration to be paid to AXA APH minority shareholders comprises 0.73 AMP shares and A$2.5464 in cash per AXA APH share.

AMP will acquire 100% of AXA APH’s outstanding shares for A$ 13.3 billion. AMP will buy AXA’s shares in AXA APH for A$ 7.2 billion in cash. As part of the transaction, AXA will acquire from AMP 100% of AXA APH’s Asian operations for A$ 9.8 billion in cash. AXA APH’s Australia and New Zealand businesses price will be A$ 3.5 billion.

The net cash payment by AXA will be A$ 2.6 billion (or ca. Euro 1.8 billion1).

The transaction is expected to be accretive on underlying earnings per share in 2011. The following estimated impacts on AXA are also expected in 1H 2011:

– Ca. Euro 0.7 billion2 exceptional gain in net income related to the disposal of Australia & New Zealand operations

– -1 pt on Solvency I ratio, which was 182% at December 31, 2010

– +4 pts on debt gearing, which was 28% at December 31, 2010. This impact is mainly due to the net cash payment and to a decrease in shareholders equity of ca. Euro 1.6 billion.

New management structure in Asia

Effective immediately following closing of the transaction, John Dacey, a member of the AXA Group Executive Committee, will assume the new role of Vice-Chairman for Asia Pacific, reporting to Henri de Castries. In this position, he will focus on the continued expansion of AXA’s businesses in the region. He was previously Chief Executive Officer of AXA’s Japan & Asia Pacific business unit, which will be restructured into AXA Asia and AXA Japan.

Mike Bishop, a member of the AXA Group Executive Committee, is appointed Chief Executive Officer of AXA Asia, reporting to Henri de Castries. Mike was previously CEO of AXA Asia Life, a division of AXA APH.

In his new role, he will continue to head AXA’s Life & Savings business in Asia (China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore and Thailand) and will manage the development of AXA’s P&C business in this region (China, Hong Kong, India, Indonesia, Malaysia, Singapore, Thailand and Vietnam). Gaëlle Olivier, the new Chief Executive Officer of AXA Asia P&C, will report directly to Mike.

Jean-Louis Laurent Josi, Chief Executive Officer of AXA Japan and a member of the AXA Group Executive Committee, will report directly to Henri de Castries.

After 20 years of service, Andrew Penn, Chief Executive Officer of AXA Asia Pacific Holdings, has decided to leave the Group.

“On behalf of AXA’s Board of Directors and Management Committee, I would like to thank Andy Penn for his contribution to the development of AXA’s franchise over the years in Asia, Australia and New Zealand. I wish him the very best in all his future endeavours.

I would also like to thank John Dacey for his work in structuring the region and for his key role in the AXA APH transaction. I look forward to continuing working with him on the expansion of our operations in Asia.

I am very confident that Mike Bishop and Jean-Louis Laurent Josi will benefit from the engagement and the quality of their teams to develop further the business in the region and accelerate growth”, said Henri de Castries, Chairman and Chief Executive Officer of AXA.

Source : AXA Press Release

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Liberty Syndicates, a member of Liberty Mutual Group, has moved to a new office in Paris to accommodate the Lloyd’s underwriter’s growing team based in the French capital.

The Liberty Syndicates team has relocated to larger premises in the Washington Plaza building, close to the Arc de Triomphe. The management believes this location will provide sufficient space for the existing underwriting teams while also providing room for expansion as further opportunities arise to develop the Syndicates’ presence in Paris.

Liberty Syndicates launched in Paris in 2003 with a team of 12 staff. Its range of business lines now include property reinsurance, contingency, trade credit and surety and, most recently, agriculture reinsurance, creating a diversified book.

Liberty Syndicates’ chief underwriting officer Matthew Moore said: “With ready access to European markets and a significant pool of French underwriting talent, Paris is a strategically important location for us. We have taken significant steps to grow the team over the past seven years and it remains our intention to continue looking for underwriting teams and classes of business that will create opportunities for us both in Europe and globally.”

Liberty Syndicates’ new office in Paris is located in the Washington Plaza building at Immeuble Monaceau, 31 Rue de Berri, 75008, Paris.

Source : Lyberty Syndicates Press Release

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    Government is being asked to reduce escalating threat from Somali pirates. These are becoming extremely more audacious in attacking ships and are choking supply routes costing the industry up to $12bn per year.

    Pirates captured 1181 people in 2010 – more than in any year since the International Maritime Bureau (IMB) has kept records. During last year, 53 ships were hijacked—another record.

    Somali pirates were responsible for nearly all of these ship seizures. And although piracy has been a problem ever since ships have sailed, Somali gangs have turned it into a particularly lucrative pastime.

    “They have changed the game,” says Neil Smith, Head of Underwriting at the Lloyd’s Market Association. “Before, pirates would board smaller ships, ransack them for cash or belongings and get off as quickly as they could. Now the Somali pirates recognise that by taking hostages they can bargain with the owners for the return of the vessel and its cargo.”

    An escalating problem
    So far in 2011, Somali pirates have hijacked 13 ships, taken 243 hostages and killed seven people, according to the latest available IMB figures. Currently they hold 33 vessels and 711 hostages.

    Not only has there been a steep rise in attacks by Somali pirates in the past five years, but the ransoms paid to them have also skyrocketed. In 2005 they averaged  $150,000; in 2010 that figure had jumped to $5.4 million, says Oceans Beyond Piracy (OBP).

    The growing problem has alarmed vessel owners and operators. They launched a new campaign in March – called “SOS: Save Our Seafarers” – to try to force governments to crack down on piracy.

    “Piracy is out of control. The pirates’ extended reach through the use of hijacked merchant ships (so-called mother ships) means that for tankers coming from the Gulf, there is no longer an optional route to avoid the risk of hijacking,” says Graham Westgarth, Chairman of INTERTANKO, the international association of independent tanker owners. “Governments need to protect the world’s shipping lanes by showing political will, not political indifference.”

    The Irene: a gamechanger?
    The seizing of the Irene SL on February 9 is a landmark in the escalating piracy problem and has sent shockwaves across the world. The hijacking represents a step change, firstly for the value of its cargo and secondly for the location of the attack.

    The Irene was carrying 2 million barrels of Kuwaiti oil bound for the US – equivalent to a fifth of the country’s daily oil imports and was attacked 900 miles off the coast of Somalia, astonishing the shipping industry.

    Shipowners have argued the attack is evidence of growing lawlessness on the oceans, but the LMA’s Smith suggests the pirates’ shift in tactics is a result of the success international naval forces have had in combating piracy in the Gulf of Aden.

    EU Navfor, the European Union’s anti-piracy mission, along with ships from other navies, managed to halve the number of attacks in the Gulf of Aden last year. “The naval units in the seas off the Horn of Africa should be applauded for preventing a huge number of piracy attacks in the region,” says the IMB in its 2010 Annual Report on Piracy.

    Is there a solution?
    What can be done to tackle the surge of piracy on the high seas? “There is not an insurance solution or even a military solution that is possible. A political solution on the land will be the only way to tackle the problem,” says Smith.

    The IMB agrees. “It is vital that governments and the United Nations devote resources to developing workable administrative infrastructures to prevent criminals from exploiting the vacuum left from years of failed local government. All measures taken at sea to limit the activities of the pirates are undermined because of a lack of responsible authority back in Somalia from where the pirates begin their voyages and return with hijacked vessels,” the organisation says.

    Source : Lloyd’s

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    A project to establish the sustainable management of the Chon-Aksuu River watershed in Central Asia has won the 9th Swiss Re International ReSource Award 2011. The project, submitted by the Regional Environmental Centre for Central Asia (CAREC) will receive prize money of USD 100 000. The award was handed over at Swiss Re’s headquarters in Zurich today.

    Kyrgyz project integrates two economic schemes

    The winning project aims to implement a sustainable mechanism for the entire watershed situated to the north of Lake Issyk Kul in Kyrgyzstan. Unsustainable grazing practices have aggravated soil erosion in upstream areas of the watershed, causing river sedimentation and water shortage, and seriously affecting drinking water quality further downstream.

    The project integrates two separate schemes. The scheme “Payment for ecosystem services” will link upstream and downstream populations on the basis of long-term contracts. These agreements will require upstream farmers to adjust their agricultural activities and ensure better conditions for water resources. The downstream population will benefit from the new upstream farming practices and in turn will provide the incentive for the upstream population by paying for the ecosystem services they receive.

    A coordination committee including buyers, sellers and local authorities has been established to ensure transparent management of the fund. The signed contracts will facilitate the sustainable management of water resources in the watershed and provide new sources of income for upstream farmers. The integration of the second scheme to “Reduce emissions from deforestation and degradation” will ensure the long-term sustainability of the mechanism.

    Honduran projects wins runner-up prize

    A project which aims to conserve 7 000 hectares of forested micro-watersheds in northern Honduras and provides drinking water to some 2 100 families in 27 rural communities has won the runner-up prize.

    EcoLogic, the organisation responsible for the project, aims to conserve the micro-watersheds by establishing and strengthening the regional association of municipal water boards in the southern buffer zone of Pico Bonito National Park. The association develops and implements water management plans for 14 shared micro-watersheds in the Aguan river valley, just south of Pico Bonito National Park.

    Source : Swiss Re Press Release

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    The European Insurance and Occupational Pensions Authority (EIOPA) launched today the second Europe-wide stress test for the insurance sector. The stress test is conducted in cooperation with the respective national supervisory authorities and will be carried out between now and the end of  May, based on 2010 financial results. EIOPA expects to publish the aggregated results of this exercise in July 2011. The test is targeted towards the European insurance sector and will include a minimum of 50% of insurance companies per country measured by gross premium income. The Swiss Financial Market Authority (Finma) has decided to join the stress test in addition to member states of the European Union and European Economic Area (EEA).

    The stress test is one of a range of supervisory tools for assessing the strength of individual institutions and evaluating the stability of the insurance sector. Furthermore, it helps supervisors to understand the capital positions of insurers and insurance groups in adverse situations.

    This stress test intends to replicate macroeconomic scenarios and aims to identify and quantify the impact of three different stress scenarios: baseline, adverse and inflation scenario. The baseline scenario is defined as severe stress whereas the adverse scenario includes an even more severe market deterioration in the main macroeconomic variables. The inflation scenario assumes an increase in inflation, which forces central banks to rapidly increase interest rates.

    To run this exercise, EIOPA considered the macroeconomic assumptions that were applied to the banking stress test, in particular the assumptions underlying the macroeconomic adverse scenario provided by the European Central Bank. EIOPA further enhanced the definitions of those stress scenarios to address the actual market environment of the insurance industry.

    Stress tests are a regular supervisory tool and the execution of periodic exercises is set down in EIOPA’s regulation. The regulation defines EIOPA’s composition, powers, tasks and decision making process.

    Source : EIOPA Press Release

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    German reinsurance group Hannover Re said  Wednesday that the Japanese disasters would cost it around 250 million euros  ($350 million), six times less than global giant Munich Re.

    Any assessment of losses is “still subject to considerable uncertainty,” a  statement noted, but based on a preliminary analysis, Hannover Re estimated  its losses at 250 million euros.

    The world’s biggest reinsurance company, Munich Re, said late Tuesday that  the March 11 Japanese earthquake and tsunami would result in claims payments  of around 1.5 billion euros.

    After initially posting marked drops on the Frankfurt stock exchange,  shares in the two groups recovered in late morning trades.

    Swiss Re, the second biggest global reinsurance group, has estimated it  will have to pay out 1.2 billion dollars (850 million euros) in claims related  to the quake and tsunami.

    In Japan, the government estimated the total cost of the quake and tsunami  could hit 25 trillion yen ($309 billion), and that growth would be affected in  the next fiscal year.

    Shares in Hannover Re showed a loss of 0.26 percent at 38.62 euros in  Frankfurt trading.    Munich Re shares were essentially unchanged at 110.05 euros, while the Dax  index on which they are listed was 0.14 percent higher overall.

    Frankfurt, March 23, 2011 (AFP)

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    Aon Hewitt announced today it was ranked as the clear leader in HR Outsourcing (HRO), according to Datamonitor’s 2010 Black Book of Outsourcing.

    Datamonitor, the global business analyst, conducted an online survey of more than 800 HRO customers globally in late 2010, focused on measuring customer satisfaction with outsourced services, including benefits administration. The results show Aon Hewitt as the number one HRO provider in 10 of 11 categories, such as problem resolution, partnership approach, risk mitigation, and skills and resources. However, what’s most impressive is Aon Hewitt’s number one ranking in overall customer satisfaction for HRO and benefits administration. In fact, Aon Hewitt earned a customer satisfaction rating nearly 20 percent higher than the next benefits administration provider.

    The Black Book of Outsourcing Ranking
    Category Aon Hewitt Ranking
    Overall Customer Satisfaction – HRO 1
    Overall Customer Satisfaction – Benefits Administration 1
    Problem Resolution 1
    Risk Mitigation 1
    Skills and Resources 1
    Financial Benefits 1
    Partnership Approach 1
    Shared Goals 1
    Corporate Reputation 1
    Requirement Awareness 1
    Future Orientation 2

     

    “Clearly, these results suggest Aon Hewitt is the front runner in the HRO and benefits administration space,” said Eamonn Kennedy, research director at Datamonitor. “Earning the top spot in 10 of 11 categories, and a number two ranking in the eleventh, speaks to the depth and breadth of Aon Hewitt’s solutions and expertise. In the rebounding HRO industry, Aon Hewitt is well positioned to benefit from the renewed interest.”

    The report covered firms offering benefits administration, recruitment and staffing, performance management, records management, payroll, and training and development services.

    “It’s an honor to be recognized by Datamonitor and our clients,” said Jim Konieczny, chief executive officer, HR business process outsourcing, Aon Hewitt. “We’re pleased that the quality of our service, the strength of our relationships, and our continuous innovation are delivering meaningful results for our clients.”

    Additional Report Highlights

    – The HRO industry’s performance was its strongest in 2010 (January – October) since 2008, with six deals earning a Total Contract Value (TCV) between $100 million and $1 billion, compared to just two in 2009.

    – There has been a significant increase in TCV and Annual Contract Value (ACV). From January – October 2010, the aggregate TCV was approximately $1.7 billion, 113 percent more than 2009, while the ACV for 2010 was $354 million, 105 percent more than 2009.

    – The U.S. and UK accounted for the majority of contracts signed between 2006 and 2010.

    – In 2010, manufacturing, the Federal Government and banking represented the top three sectors utilizing HRO (by number of deals).

     

    Source : Aon Hewitt Press Release

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    Fitch Ratings has assigned Allianz SE’s (rated ‘AA-‘/Stable) EUR2bn subordinated debt issue a ‘A’ rating.

    The subordinated debt has been issued by Allianz Finance II B.V. and is guaranteed on a subordinated basis by Allianz SE. The scheduled maturity date is in 2041, and the first ordinary call date (subject to certain conditions) is in 2021. The coupon has been set at a fixed rate of 5.75% payable annually until the first call date, after which interest is payable quarterly at a variable rate (3m EURIBOR + 3.349%).

    The terms of the issue include compulsory interest deferral conditions, with triggers based on regulatory solvency and legal insolvency – in addition, the regulator can prohibit payments.

    The notes have been structured with a view to getting Tier 2 regulatory treatment under the proposed Solvency 2 regime. Since the Solvency 2 requirements are not yet known with certainty, the terms of the notes allow for early redemption if the desired regulatory treatment is not achieved. The impact of this issue on both gross leverage and equity-adjusted leverage is minimal.

    Source : Fitch Ratings Press Release

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    US authorities sought Wednesday to  reassure Americans that there is minimal health risk here of radioactivity  from Japan, as a US iodide pill maker reported an “enormous” run on the drug.

    Demand for potassium iodide, which can protect against the effects of  radioactive iodine, was strongest on the US West Coast, where some fear a  cloud spewing from Japan’s Fukushima nuclear plant could be blown, drug  company Anbex said.

    The firm, which says it is the only US maker of the pills, was flooded with  thousands of orders for its Iosat drug after last Friday’s earthquake and  tsunami, which has triggered an ongoing nuclear crisis.

    “The spike is enormous … we were out of stock by Friday night,” said Alan  Morris, president of Anbex, which supplies the drug to individuals and  retailers, including online.

    “The demand mostly is coming from the West Coast of the US, but there are a  significant number of inquiries, requests, orders coming from Japan, Korea,  all over the Far East,” he told AFP.

    A random survey of Los Angeles pharmacies by an AFP photographer found no  lines of people trying to buy the drug, although some retailers said they had  received some requests, but did not have supplies.

    The surge in demand came as the head of the US Nuclear Regulatory  Commission warned of “extremely high” radiation levels from the Fukushima  plant.

    US authorities have repeatedly said there is minimal risk of radioactivity  reaching the US mainland, while meteorologists say it is difficult to predict  exactly how far a radioactive cloud would spread across the Pacific.

    The California Department of Public Health’s interim director, Howard  Backer, also stressed the risks involved in taking potassium iodide  unnecessarily.

    “We urge Californians to not take potassium iodide as a precautionary  measure,” he said.

    “It is not necessary given the current circumstances in Japan, it can  present a danger to people with allergies to iodine, shellfish or who have  thyroid problems, and taken inappropriately it can have serious side effects,”  Backer added.

    In one apparent miscommunication, US Surgeon General Regina Benjamin  appeared to contradict the reassuring message during a visit to San Francisco  on Tuesday.

    “We can’t be overprepared — we learned that with 9/11, we learned that  with Katrina and we learned that this week with the tsunami,” she told an NBC  reporter. “Even if it’s one life we save by being prepared, it’s worth it.”

    A spokeswoman clarified her position on Wednesday, saying Benjamin had not  heard about panicked California residents stocking up on potassium iodide.    “She commented that it is always important to be prepared. However she  wouldn’t recommend that anyone go out and purchase (the drug) for themselves  at this time,” said spokeswoman Kate Migliaccio, according to the Los Angeles  Times.

    Anbex chief Morris said his drug company, which developed the product after  the Three Mile Island nuclear disaster in 1979, hoped to have new stocks of  potassium iodide pills ready to ship in two weeks.

    His company was the only US manufacturer of potassium in pill form, he  said, adding that there was a liquid form available from a company called  Fleming Pharmaceuticals.

    A statement on the Fleming’s website said the firm was “running nearly  around the clock as employees ship potassium iodide to Japan.”

    Radioactive iodine from a nuclear event can pollute the air and contaminate  the food supply. Experts believe many cancer cases after the Chernobyl  disaster in Ukraine in 1986 were linked to milk from contaminated cows.

    Thyroid glands quickly absorb radioactive iodine, causing damage. But  iodide pills can block radioactive iodine from being taken into the thyroid  gland, according to a fact sheet by the US Centers for Disease Control.

    Los Angeles, March 16, 2011 (AFP)

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    Hawaiians are rushing to get iodide pills  to protect against radioactivity from a quake-crippled Japanese nuclear power  plant, store owners on the Pacific island US state said Wednesday.

    While officials on Hawaii — 4,000 miles (6,500 kilometers) east of Japan  — warned that taking potassium iodide could have unwanted side effects,  health food and other stores said they had sold out of stocks over the weekend.

    “As soon as people heard about the first explosion (in Japan), people wiped  our shelves clean,” said Amber Simone of the Honolulu branch of the Down to  Earth health food store chain, which has five branches.

    “We’ve been inundated,” she added, saying her store had a waiting list of  184 people, and every few minutes another five to 10 people were being added.

    The store usually carries bottles of iodine supplements for people with  thyroid issues, but it is being seized upon as a possible way to protect  against radiation.

    Potassium iodide “is a salt of stable (not radioactive) iodine. Stable  iodine is an important chemical needed by the body to make thyroid hormones,”  a US Centers for Disease Control (CDC) fact sheet explained.    Radioactive iodine from a nuclear event can pollute the air and contaminate  the food supply. Experts believe many cancer cases after the Chernobyl  disaster in Ukraine in 1986 were linked to milk from contaminated cows.

    Thyroid glands quickly absorb radioactive iodine, causing damage. But  iodide pills can block radioactive iodine from being taken into the thyroid  gland, according to the CDC fact sheet.

    Meteorologists say it is impossible to predict the strength or path of  radioactivity from Japan’s quake-hit Fukushima power plant, although some  suggest that the jet stream will blow it eastward toward the US West Coast.    Celestial Natural Foods on the main island of Oahu’s north shore sold out  of its stock of iodine supplements on Tuesday, said store manager Melody  Allen.

    Customers have been buying supplements with smaller amounts of iodine such  as bladderwrack, red clover burdock, kelp, and several types of dried seaweed,  she said. People were calling with inquiries every half hour, she said.

    The Hawaii Department of Health is warning Hawaii residents not to take  potassium iodide pills as a precaution against radiation exposure unless told  to do so, because of the side effects.

    “If a need should arise for residents to start taking potassium iodide to  guard against effects of radiation exposure, the Hawaii State Department of  Health … will inform the public,” said interim health director Loretta Fuddy.

    “We do not anticipate this need,” she added.

    Honnolulu, March 16, 2011 (AFP)

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    XL Insurance announced the promotion of Gavin Bruce-Smythe to Chief Underwriting Officer for its International Property & Casualty business.

    Previously Chief Underwriting Officer (CUO), Excess Casualty International, Mr. Bruce-Smythe’s new responsibilities as CUO will include underwriting oversight across XL Insurance’s property and casualty operations outside of North America.

    He is based in London, reporting to Eileen McCusker, Chief Executive of XL Insurance’s International P&C operation. Commenting on Mr. Bruce-Smythe’s promotion, Ms. McCusker said: “As Chief Underwriting Officer, Gavin will work closely with our different P&C underwriting units to identify market opportunities and client needs and to ensure a continued focus on underwriting excellence.

    He will also co-ordinate with different units on complex account transactions and actively promote product development. “We believe a CUO function across different lines of business is vital in providing a fully integrated approach for clients and brokers, and Gavin, with his extensive market and underwriting experience as well as proven track record in understanding emerging trends and risk management needs, is best suited to this central role.”

    Mr. Bruce-Smythe has more than 25 years of experience in the insurance industry. He joined XL Insurance in Dublin in 1995 as an excess liability underwriter and progressed to client relationship management. In 2001 he moved to London to manage the UK region’s primary liability portfolio taking additional responsibility for the Dublin and London excess units in 2008. In late 2009 he was appointed Chief Underwriting Officer, Excess Casualty International.

    Source : XL Press Release

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    The massive earthquake that struck Japan  will exact a massive economic toll estimated at between $14.5 billion and  $34.6 billion, a leading risk analysis firm said Sunday.

    AIR Worldwide (AIR) said its catastrophe modeling showed that property  losses from Friday’s disaster is preliminary, but estimates insured property  losses likely will be “between 14.5 billion USD and 34.6 billion USD.”

    “Search and rescue efforts are still underway and damage assessment has  only just begun, while considerable uncertainty still remains in the  parameters that define the event,” the company said in a statement.

    The company said the AIR Earthquake Model for Japan does not account for  the effects of tsunami, which, when calculated, will result in a “significant”  increase in the damage estimate.

    “AIR’s loss estimates reflect insured shake and fire-following damage to  onshore residential and commercial buildings and contents, and to properties  in AIR’s agricultural line of business,” the company’s statement said.

    “Many of the properties destroyed by the tsunami first sustained damage  from ground shaking and fire, as witnessed by videos of tsunami waves sweeping  along entire buildings ablaze,” said AIR.

    The Boston, Massachusetts-based company added that it at a later time will  issue an independent estimate for loss from the tsunami and provide a loss  estimate “that avoids double-counting in the affected areas.”

    AIR is one of the leaders of risk modeling software and consulting  services, providing risk assessment from natural catastrophes and terrorism in  more than 50 countries.

    Washington, March 13, 2011 (AFP)

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    On Friday, March 11 a powerful magnitude 8.9 Mw (moment magnitude) earthquake occurred offshore the east coast of Honshu, Japan (02:46pm local time). The Unites States Geological Survey (USGS) has released a preliminary epicentral location around 80 miles east of Sendai and approximately 231 miles northeast of Tokyo, and reported a fixed focal depth of 15.2 miles. Because of the size of the event, the amount of energy released, and the exact location (depth and coordinates), the effects of the earthquake are difficult to calculate immediately after the event.

    “The subduction zone along the Pacific coast of Honshu has always been something of a puzzle in terms of earthquake hazard,” said Dr. Robert Muir-Wood, chief research officer at RMS. “The last major subduction zone earthquake along the Pacific coast to the east of Tokyo was in 1677.  While this earthquake caused a major tsunami, the shaking from the earthquake inland was not so strong. In 1896 and 1933, there were major earthquakes in the northern part of the subduction zone, off Northeastern Japan, which generated very large tsunamis.”

    “There remained a seismic gap of about 500-600 km on the subduction zone – the northern two thirds of which now appears to have broken. This means there could be potential for another major earthquake to occur along the adjacent southern section of the subduction zone, located to the east of Tokyo and Chiba, although it’s impossible to say when, ” added Dr. Muir-Wood.

    Aerial footage of the area shows inundation in many northern coastal towns after the tsunami, approximately 10m in height, struck the coast. Water was seen rushing up the Natori River in Sendai and flooding low lying agricultural land. In Kamaichi, in northern Japan, a smaller tsunami swept boats, cars and trucks away.

    Japan Insurance Summary

    Japan ranks as the fourth largest non-life market after the US, Germany, and the U.K., with direct non-life premium income amounting to JPY 10.8trn (USD 104.9bn) in the year ended March 31st, 2009. Approximately 70% of this income is derived from personal lines. Despite the size of the market in gross premium terms, insurance penetration and density is very low when compared to leading western markets, particularly in commercial and industrial lines.

    It is estimated over 50% of households have building insurance and 40% of vehicle owners hold motor damage policies. Earthquake, including shock, fire, and tsunami, is available as an optional peril on properties covered by a basic household policy. In 2010, it is estimated less than 50% of policy holders insured through conventional insurance companies took this option. These figures do not include co-operative household policies, which although excluded from The Law Concerning Earthquake Insurance (1966), tend to offer earthquake coverage automatically and are the largest provider of domestic earthquake insurance.

    Commercial and industrial lines are significantly under-insured, with many large corporations insuring their properties on an indemnity basis only, with no loss of profits or earthquake insurance. Many small to medium sized business are completely uninsured.

    All household and most commercial fire polices are automatically extended to include earthquake fire expenses insurance.

    Electricity Supply

    The extent of disruption to the electricity supply is not yet clear, but it is likely to be severe in regions inundated by the tsunami. It has also been reported that 4 million homes in Tokyo suffered power outages. Isolated reports have been received from affected facilities. Reactors at Hokuriku Electric Company’s Onagawa nuclear facility in northern Japan shut down automatically after the quake, although no nuclear leaks were reported. Electric Power Development (J-Power) also suspended operations of its thermal power plant in Isogo, Yokohama.

    Commercial and Industrial

    Car manufacturing plants, electronics factories, and oil refineries have suspended operations across large parts of Japan. Nissan and Toyota have closed several of their facilities. Sendai and the surrounding region host major industrial and manufacturing areas, with many chemical plants. The extent to which these have been damaged is not clear, but there are numerous reports of disruption, in part because of damage to the power grid.

    Japan’s largest oil refiner has suspended operations at three refineries in Sendai, Kashima, and Negashi.

    Additionally, a major fire has broken out at an oil refinery in Chiba, east of Tokyo, and smoke has been reported from Yokahma’s Isogo area. Several areas in the port were flooded, including the carpark of Disneyland Tokyo. Smoke was seen rising from at least 10 locations throughout the city.

    Transport

    Sendai Airport was inundated by the tsunami triggered by the quake. The airport ramp and surrounding runways were completely flooded, but there were no obvious signs of damage to terminal buildings. Haneda and Narita Airports, which serve Tokyo, were also closed after the earthquake struck. Neither has reported major damage and Haneda has already reopened. A spokeswoman has confirmed Narita is able to re-open, but has not stated when this will happen.
    Local transport links in the Sendai region have been severely disrupted by the tsunami, with reports of damaged bridges, overpasses, and rail links. Bullet train services north of Tokyo were also suspended.

    The tsunami also caused severe damage to Sendai port and there are reports that all ports in the country have been closed.
    RMS will continue to monitor the situation and update accordingly.

    Source : RMS Press Release

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