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The Association of British Insurers (ABI) has confirmed that swine flu will be treated no differently from any other illness by travel insurers. People diagnosed with swine flu before they are due to travel abroad, and any immediate family members (spouse, parents and children, with some policies covering other relatives) due to travel with them, will be covered for the cost of holiday cancellation by their travel insurance.

Insurers usually require a doctor’s certificate to confirm that the patient was unable to travel. The government welcomes the comments from the ABI that they would expect insurers to be flexible on the time it takes to obtain such a certificate and that they are considering what other forms of evidence might be acceptable.

Further information:

  • Directgov for essential cross-government information on swine flu, including latest advice on travel, schools and other public services.

Source : NHS Choices

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PartnerRe Ltd. announced that at a Special General Meeting held today, PartnerRe shareholders approved all of the proposals unanimously recommended by the Company’s Board of Directors to effect the Company’s proposed acquisition of PARIS RE, a French-listed, Swiss-based diversified reinsurer.

The proposals PartnerRe shareholders were asked to vote on were: a proposal to approve the issuance PartnerRe common shares in connection with the series of transactions to acquire PARIS RE; a proposal to increase the size of the Board of Directors to 12 from 11; and a proposal to amend the Company’s existing equity plan to increase the number of PartnerRe common shares available for issuance and to increase the number of PartnerRe common shares that may be awarded to employees as restricted shares or restricted share units.

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    AEGON gave tennis in Britain a further boost by becoming the title sponsor of the hugely popular Masters Tennis at the Royal Albert Hall in London until at least 2013.

    The event, which has featured an array of Wimbledon champions including Bjorn Borg, John McEnroe and Pete Sampras every December since 1997, will now be known as the AEGON Masters Tennis, further extending the life assurance and pensions company’s involvement in the sport. Having already become the Lead Partner of British Tennis in January 2009, the title sponsorship of the AEGON Masters Tennis ensures that AEGON is involved in tennis at every level – from grass roots development to international professional tournaments, and now to the sport’s most celebrated champions.

    “We are delighted to welcome AEGON as our new title sponsor,” said Peter Worth, Senior Vice President, IMG. “For the past 12 years, the Masters Tennis at the Royal Albert Hall has been a celebration of the sport – much-loved champions coming together to compete and entertain fans in probably the most unique and iconic tennis arena in the world. In AEGON, we have a title sponsor with a passion for, and commitment to tennis at all levels. With AEGON on board we will continue to drive the event from strength to strength as part of a very exciting end-of-year tennis season.”

    AEGON UK Director of Marketing Steve Clode, said: “AEGON’s partnership with British Tennis supports the sport at all levels, from grassroots development to major tournaments like the AEGON Championships at The Queen’s Club. The Masters celebrates the greatest champions of the sport and is a natural next step for us. Already this year our tennis activity has reinforced our brand credentials, and the AEGON Masters Tennis will enable us to continue this success.”

    The AEGON Masters Tennis takes place between Tuesday 1st December and Sunday 6th December, 2009. Wimbledon champions Goran Ivanisevic and Stefan Edberg, and for the first time, two-time Wimbledon finalist Patrick Rafter, have already signed up to compete. They will form part of an eight-man singles field that competes alongside a highly entertaining and all-star doubles field. Rafter’s arrival means that there could be a repeat of the 2001 Wimbledon final that saw the Australian narrowly losing out to Ivanisevic in one of the most memorable finals of all-time.

    The AEGON Masters Tennis uses a round-robin format, with all players playing at least three matches each. Each day of the tournament, except the final Sunday, features two sessions – an afternoon session starting at 1pm and an evening session starting at 7pm. All sessions will feature a combination of singles and doubles matches. The event is the final tournament on the ATP Champions Tour – a circuit of former World Number One tennis players, Grand Slam singles finalists and Davis Cup winners.

    Tickets for the AEGON Masters Tennis can now be purchased by calling the box office:
    +44 (0) 208 233 5882, or by visiting the tournament’s official website

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    Allianz Commercial has recruited Giles Quartly as casualty underwriting manager for the Company’s London region.

    Giles will be responsible for developing the casualty strategy in the London market, drawing on his experience in the corporate sector. He will also manage the existing underwriting team and provide support to the casualty operations at Allianz Commercial’s Luton and Chelmsford branches.

    Commenting on his appointment, Giles said: “Allianz, with its financial security and strong brand identity, is well-respected in the Commercial insurance market. The opportunity to use this as a platform to significantly grow the casualty account, with the objective of being recognised as a significant insurer within this sector, was a major factor in my decision to join Allianz.”

    Giles, who is a Fellow of the Chartered Insurance Institute, has over 20 years industry experience and joins Allianz from QBE where he was liability portfolio manager.

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    Friends Provident has enhanced its online member tools (“Etools”) to help members of corporate pension schemes better understand their finances and manage their pensions online. The additions were made following feedback from customers, employers and intermediaries.

    Members can now access new tools to help them understand how much they need to save for retirement using a retirement budget calculator which can calculate an income goal based on expectations of their expenses and lifestyle in retirement. Other enhancements include improved risk rating tools and more user-friendly applications available to members via their scheme.

    With increased longevity, lower longer term investment returns and a state pension that has reduced in real terms value over many years, many people have an even greater need to focus on how they will fund their retirement. It is surprising therefore that the current level of employee engagement with company pension schemes is low, particularly when this benefit may be relatively low cost.

    David Millar, pensions communications manager at Friends Provident said: “Pensions are a long term investment and one of the most important investments people will make in their life times. When set against a backdrop of stock market volatility, an ageing population and negative media coverage, retirement planning may feel like a mountain to climb.

    “But the support and tools available to our pension scheme members have never been better. Our potent blend of online tools, evolving literature and communications and face-to-face contact from our employee communications team, give members the help to meet the challenge head on.”

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    Marsh, the world’s leading insurance broker and risk adviser, today announced that Nicholas Bacon, currently Chief Operating Officer, is to become Chief Executive of Bowring Marsh, Marsh’s specialist international placement broker. He will succeed Mark Gregory, who is leaving the company to take up a senior position at a major insurance carrier. Mr Bacon, who will report to Alex Moczarski, CEO of Marsh International, will assume his new responsibilities on November 1.

    Commenting on the appointment, Mr Moczarski said: “We are fortunate in having a senior executive of Nick’s calibre, who combines extensive management experience with deep knowledge of every aspect of the international insurance market. Nick played a pivotal role in Bowring Marsh’s creation 14 months ago and has overseen its day-to-day development ever since.“

    Mr Bacon said: “I am excited to be taking the helm of Bowring Marsh at a time when clients are asking more of their broker in developing and executing their global placement strategies. Bowring Marsh’s robust global platform, built around major geographic hubs, provides significant value to our clients and is a major differentiator for Marsh. I look forward to sustaining Bowring Marsh’s global success as we respond to our clients’ needs and to marketplace opportunities.”

    Mr Moczarski added: “I would like to take this opportunity to thank Mark Gregory for his considerable contributions to Marsh. We look forward to continuing our links with him in his new role.”

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    Euler Hermes adopts a new, more closely integrated, organisation with the aim of better meeting clients’ needs and consolidating its world leadership in credit insurance.

    After several years spent consolidating Euler and Hermes companies, the Euler Hermes group is putting the finishing touches to its integration by introducing a new organisation. The aim is two-fold: to improve the service provided to businesses and to strengthen the Group’s position as the world’s leading credit insurer.

    The “One Euler Hermes” project focuses on implementing the organisational changes needed to create a customer-oriented and even more efficient group. “A key objective is to put in place at all Group entities an organisation that enables them to adapt quickly to new client demands and provide a comprehensive range of solutions”, explains Wilfried Verstraete, Chairman of the Group Management Board. “As a natural consequence, the new organisation will enable us to gain market share and improve cost efficiency. It will also offer our 6,200 employees added opportunities for professional fulfilment, the sharing of skills and inter-group mobility”.

    The new organisation will be in continuity with Euler Hermes’ history, business model and corporate values. It is the result of an in-depth review carried out by the Group over the past few months and is based on two pillars:

    • A new governance system and stronger central functions;
    • A balanced geographic organisation composed of six regions, each with full responsibilities.

    “The new organisation will strengthen Euler Hermes by enabling it to offer clients more services and be more responsive to their demands”, said Wilfried Verstraete.

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      Allfinanz, the Software company owned by Munich RE is launching a new business processing and underwriting automation solutions for life insurers in German-speaking countries
      Life insurers serving the German-speaking markets can now optimise their underwriting processes while increasing efficiency and saving costs.

      Allfinanz is a leading provider of web-based new business processing and underwriting automation software to the life insurance industry. Founded over 20 years ago, the company was acquired by Munich Re in November 2007, and now operates as an independent software house within the Group.

      “Allfinanz is recognised as the market leader internationally in the delivery of new business processing and automated underwriting solutions to life insurers around the globe,” said Wolfgang Wielinger, Allfinanz Sales and Marketing Director for Germany, Austria and Switzerland. “We have achieved this through our unrivalled track record of successful delivery coupled with the most sophisticated solution available in the market today. We are delighted to bring this expertise gained in international markets to benefit life insurers in Germany, Austria and Switzerland.”

      “Extending Allfinanz’ leading-edge technical expertise and comprehensive product set to the German-speaking world will be a tremendous benefit to life insurers,” commented Joachim Wenning, member of Munich Re’s Board of Management. “When offered in combination with Munich Re’s underwriting excellence, this service will allow Munich Re’s life insurance clients to benefit from a unique added value proposition from a single source.”

      The Allfinanz subsidiary team, providing sales, consulting and support services in Germany, Austria and Switzerland, has already completed its first implementation of the Allfinanz Underwriting Rules Engine and Rules Designer products at KarstadtQuelle Versicherungen, the first German life insurer to go live with a new life insurance offering using the Allfinanz system.

      You can contact Allfinanz by clicking here

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      Legal & General Mortgage Club has launched a high net worth lending service to allow brokers to source funding up to £50 million for their clients. All lending is arranged on a case-by-case basis and is tailored to each client’s individual needs. Legal & General’s high net worth lending panel includes specialist lending units within high street banks, private banks and boutique lenders.

      Ben Thompson, Director, Mortgages at Legal & General said: “There’s evidence that there is no real shortage of buyers interest for prime property in London and beyond because of reduced prices and an advantageous exchange rate. There also however appears to be a shortage of properties for sale, which is generating competition amongst potential purchasers and we feel that the time is right to start offering a high net worth lending service.

      “Again we’re showing that the Legal & General Mortgage Club is not just a place to come for standard products. So far this year we have added a personal loans service, expanded our commercial finance service and now added a high net worth lending service. We’re offering highly competitive terms and top procuration fees on exchange.”

      Legal & General expects that the addition of high net worth lending will be an opportunity for more advisers to generate business in the form of referrals, and cross sales and that it will attract more top-end brokers. This new service also provides lending for lower mortgage advances which are highly in demand as well.

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      PowerPlace today announces the strengthening of its management team with the appointment of Matthew Reed as its new Chief Executive Officer which reflects the successful growth of the business and continuing development of its strategy.

      Matthew’s appointment is effective from October 1st and he was formerly Sales & Marketing Director for Towergate Risk Solutions having joined in 2008.

      Since its launch earlier this year over 300 brokers have signed up to PowerPlace which has so far reached an annual premium run rate in excess of £20m, with monthly new business levels of over £1.5m. Towergate Partnership Executive Chairman, Peter Cullum, expects the business to be writing £100m GWP by the end of 2010.

      Insurer interest in PowerPlace continues to increase, and they expect to be adding shortly to the seven leading insurance providers (LV=, NIG, Zurich, Groupama, Fortis, MMA Insurance and Towergate Underwriting) and their 30 live products.

      Peter Cullum said, “Our team has done a fantastic job of establishing PowerPlace as a revolutionary proposition that really delivers – we’ve seen first hand from rolling it out in our own broking offices. PowerPlace has quickly achieved critical mass and have new insurers in the pipeline with specific product builds in play. This means we are in a position to focus more on a steep growth curve so the time is right to bring in additional sales focus.  Matthew has already made a difference to our retail business and has the drive to help PowerPlace fulfil its enormous potential.

      I’m not a ‘techie’ but I have to say that, in my 30-odd years in the business, I have never been so excited about technology – this will impact the whole market place”

      PowerPlace CEO Matthew Reed said, “I was enjoying my previous role, but this is simply not the sort of opportunity you can refuse – PowerPlace really will change so many brokers’ lives. It won’t be too long before we all look back and ask how we managed to cope for decades with the labour intensive processes most brokers endure for commercial business. Full EDI for Commercial lines exists within PowerPlace and signals a major leap forward in saving on process costs and, crucially, delivering a much improved customer service – a powerful combination!”

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      DUAL Corporate Risks, the UK’s largest specialist Directors’ & Officers’ and Professional Indemnity underwriting agency for mid-market companies, has reported strong growth for its financial services insurance cover DUAL Focus. The company also expects a significant increase in demand for this range of products in the next 12 months.

      DUAL Focus, which was launched in April 2009, specialises in insurance solutions for more complex financial institution based risks, building on what DUAL has historically been recognized for.

      In addition DUAL has added its own wording for investment managers as part of an overall initiative to further develop the DUAL Focus product. The new wording was produced in collaboration with specialist insurance legal firm Kennedys, and has already been piloted with four specialist brokers. This latest development will be underpinned by two new appointments, to be announced shortly.

      Commenting on the progress of DUAL Focus, Russell Kilpatrick, Executive Chairman of DUAL Corporate Risks, said: “The economic downturn has put the financial services industry under a great deal of scrutiny which has boosted the demand for specialist Directors’ and Officers’ and Professional Indemnity cover. As a result we are on target to write more business for DUAL Focus this year than initially budgeted for and have agreed with our capacity provider Arch, that our premium volumes will be increased from the 1st October.

      “Our new wording for investment managers is also a good example of how we are evolving the product to meet the needs of our clients. And with the imminent high profile appointments, clients can look forward to an even more expansive product range with wider expertise at their disposal – which is what underpins the quality of DUAL’s product portfolio.”

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      The Hartford Financial Services Group, Inc., announced today the formation of Hartford Life Distributors (HLD), a newly combined sales and distribution organization for its investment and retirement products. This new structure will increase the firm’s focus on its distribution partners while enhancing the overall experience for financial advisors and their clients.

      Hartford Life Distributors brings together the internal and external sales units, marketing and sales support teams, strategic relationship management groups and business development areas that support The Hartford’s mutual funds, annuities, 401k plans and 529 college savings program. These businesses represent $25 billion in deposits for the twelve months ended June 30, 2009 and are supported by a field sales force of 240 professionals. Through this combination, the firm expects to achieve greater alignment and consistency across its sales, marketing and service teams while continuing to leverage its product specialist capabilities to support specific customer needs within each of these distinct markets.

      The Hartford has appointed Kevin Connor, 49, to lead HLD. In a newly expanded role, Connor will oversee all aspects of HLD, including internal and external sales and sales support, marketing, strategic relationship management and business development. Connor, an executive vice president, most recently led marketing, relationship management and business development for investment and retirement products. A life insurance industry veteran, he has held several important leadership positions with The Hartford in a nearly 30 year career focused on sales and distribution management within the retirement arena.

      “Hartford Life Distributors is a major step toward accomplishing our goal of providing investment and retirement solutions that are both transparent and easy for our customers to use. It further enhances our focus on the needs of our distribution partners and our customers,” said Jim Davey, executive vice president and director of The Hartford’s investment and retirement division. “With the creation of HLD and the appointment of Kevin Connor, we have the right products, structure and leadership to accelerate growth in this very important business area for The Hartford.”

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      LV= Broker today announced that it has recruited Tony Venus to head up its operational development and control team. He will report to operations director Kevin Gill.

      Tony will oversee operational development in line with LV= Broker’s significant growth plans, and will also have responsibility for regulatory compliance, audit and risk management. Tony will be based in LV= Broker’s head office in Croydon, South London, but will travel extensively to other LV= offices around the UK.

      Tony has over 20 years’ experience in the insurance industry. Most recently he was head of branch support at NIG, where he held a number of management roles across the regional office network. Before that he worked at the Sterling Insurance group as a specialist underwriter. He also spent eight years at Legal & General in a range of underwriting positions.

      Tony will be supported in his new role by Alison Ecob who has also recently joined from NIG as quality and control manager.

      Kevin Gill, operations director of LV= Broker, said: “I am very pleased to have secured someone with Tony’s experience for this important role at LV= Broker. We have significant growth plans for the years ahead and Tony will help to ensure that we are at the forefront of industry developments. Providing a first class customer service to brokers is a top priority for LV=. Tony and the operations team will play a key part in ensuring this continues to be the case.”

      Tony added: “LV= is a company that is doing exciting things in the broker market and I am delighted to join and become part of the success story. Since the company launched just two years ago it has established itself as an insurer that does things differently and I look forward to bringing my industry knowledge to the team.”

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      Aviva is set to unveil its latest advertising series, designed to recognise the key moments of an adviser’s career.

      The campaign, which can be seen in financial trade titles from 14 September onwards, has been devised following qualitative research of a range of intermediary online forums. It highlights significant moments such as achieving qualifications and finding the right solutions for clients, while demonstrating how Aviva offers support at every stage.

      As part of the campaign, Aviva is also launching an exclusive competition which encourages advisers to share their own career-defining “moments” for a chance to win a Sony HDD Handycam worth more than £500. The occasion can be an individual achievement or one accomplished as part of a team. To enter, advisers simply need to submit their “moment” by text, picture or video to www.aviva.co.uk/adviser/moments.

      This dedicated adviser activity builds on Aviva’s current consumer advertising activity which explores the “moments that matter” in everyday life, such as retirement and the birth of a child.

      The initiative has also been launched to coincide with the start of the Aviva Roadshow1 which, from 12 September, will tour 11 locations across the UK to help consumers improve their financial wellbeing. The roadshows will offer visitors a free financial “health check” and will show consumers how to seek financial advice. At five of the events there will also be top athletes from the Aviva GB & NI team ready to talk with visitors about the benefits of a healthy lifestyle.

      Angela Seymour-Jackson, intermediary and partnerships director for UK Life, Aviva said: “Every adviser will have key moments that define how their career evolves. We have developed this campaign to encourage advisers to share those experiences and in turn help others at similar points in their careers.

      “At Aviva, we are fully committed to providing the right support at the right time throughout an adviser’s career. This campaign is another significant step, complementing programmes such as the Aviva Financial Adviser Academy which supports ongoing professional development, and the Future Adviser Programme that encourages new entrants to the profession.

      “The Aviva Roadshows are yet another example of how we are striving to raise consumer awareness of the importance of money management. The roadshows promise to be really exciting events that will make a positive impact on people’s financial understanding and drive demand for financial advice.”

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        US financial institutions (FI) saw premium increases of 15% on average in Q2, according to Aon’s Quarterly D&O Pricing Index. UK FIs experienced similar increases. However, renewals have been mixed and will continue to depend on specific risk factors and financial performance.

        The Q2 2009 Index, which tracks premium changes relative to the base year of 2001, delves into the trends seen year over year for this essential line of coverage. The analysis finds that pricing increased 4.07 percent in the second quarter as compared with the second quarter of 2008.

        Current rates in the S&P Financials sector (banks, diversified financial, insurance and real estate) are up 14.77 percent. The economic turmoil means rates are increasing significantly, capacity is constricting and coverage terms are tightening.

        Meanwhile, all other S&P sectors (service, manufacturing, technology, etc.) were flat, marking the first time in more than three years that rates did not decrease. Exceptions seen in the commercial realm stem from industries rife with bankruptcies. But in the UK, abundant capacity for most buyers means that those prepared to shop around can still find bargains in the market.  This is more so in the excess than the primary market as we see new entrants fighting the established players for market share.

        One notable difference in cross-Atlantic premiums is in the automotive sector.  While the US has seen two very high profile bankruptcies in the second quarter, the UK D&O market has not experienced the same challenges.  Pricing in the related sector in the US is up nearly 44% (consumer discretionary).  In the UK it is flat with premium reductions available in certain instances.

        Adam Codrington, executive director at Aon’s financial services group, said: “There has been a definite rise in UK claims activity but mostly confined to the primary layer of programmes.  We anticipate that this will lead to frictional erosion of margin for primary players, while excess players continue to be relatively unencumbered by non FI related claims.

        “As such, we are seeing attempts to increase premiums in many incidents but they are being held up by competition in the market.”

        “The delicate balance between the forces holding D&O prices down and the need for rate increases could soon shift in the favor of underwriters,” said Michael D. Rice, II, national practice leader of Aon’s financial services group in the US. “Fortunately for Aon’s clients, pricing in the D&O marketplace continues to remain at soft levels.”

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        Commenting on publication of aggregate financial services complaints data by the FSA, Maggie Craig, the ABI’s Director of Consumer Strategy, said:

        “The ABI’s member companies understand that consumers need meaningful information to help them make effective financial choices. How complaints are handled is part of this.

        “But we need to show this in context, and in a way that gives meaningful information to consumers. It’s important that any published data is clear, fair and not misleading. The FSA’s aggregate data does not reflect the fact that there are 160 million general insurance and 82 million life insurance policies in force – overall, that’s just 1 complaint for every 1,200 policies during the second half of 2008. However, the insurance industry acknowledges that more work needs to be done to improve performance, and the ABI is leading the way on initiatives to achieve this.

        “The current format to be used by the FOS, and later the FSA, for publishing company-specific data, will not help consumers because it doesn’t allow them to compare the performance of different companies for specific products, such as motor or home insurance, on a like for like basis. Without this level of detail, the published data will be of no real help to consumers and, without the right context, we remain very concerned that it might even be misleading.”

        Commenting on publication of aggregate financial services complaints data by the FSA, Maggie Craig, the ABI’s Director of Consumer Strategy, said:

        “The ABI’s member companies understand that consumers need meaningful information to help them make effective financial choices. How complaints are handled is part of this.

        “But we need to show this in context, and in a way that gives meaningful information to consumers. It’s important that any published data is clear, fair and not misleading. The FSA’s aggregate data does not reflect the fact that there are 160 million general insurance and 82 million life insurance policies in force – overall, that’s just 1 complaint for every 1,200 policies during the second half of 2008. However, the insurance industry acknowledges that more work needs to be done to improve performance, and the ABI is leading the way on initiatives to achieve this.

        “The current format to be used by the FOS, and later the FSA, for publishing company-specific data, will not help consumers because it doesn’t allow them to compare the performance of different companies for specific products, such as motor or home insurance, on a like for like basis. Without this level of detail, the published data will be of no real help to consumers and, without the right context, we remain very concerned that it might even be misleading.”

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        American International Group, Inc. (AIG) today announced an agreement to sell a portion of its investment advisory and asset management business to Bridge Partners, L.P., a company owned by Pacific Century Group  (PCG), the Hong Kong-based private investment firm. AIG is retaining its in-house investment operation that oversees approximately $480 billion  of assets under management.

        The purchase price of approximately $500 million consists of a cash payment of approximately $300 million at closing, plus additional future consideration that includes a performance note and a continuing share of carried interest.

        “After conducting an extensive and rigorous auction process, we concluded that this transaction provides fair value for AIG and achieves the greatest long-term stability and potential for the business, its clients, business partners and employees,” said Alain Karaoglan, AIG Senior Vice President – Divestiture.

        The units being sold operate in 32 countries and manage approximately $88.7 billion of investments of institutional and retail clients across a variety of strategies, including private equity, hedge fund of funds, listed equities and fixed income. Win J. Neuger will continue as Chief Executive Officer of the new business and the existing management team will remain in place.

        Monika M. Machon will continue in her role as Senior Vice President and Chief Investment Officer of AIG, overseeing AIG’s investment operation.

        UBS Investment Bank acted as financial advisor to AIG and Perella Weinberg Partners acted as financial advisor to Pacific Century Group on this transaction. Debevoise & Plimpton LLP served as legal advisor to AIG.

        The transaction is subject to receipt of regulatory approvals and other consents.

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          Aon Benfield, the world’s premier reinsurance intermediary and capital advisor, today releases its annual Insurance Risk Study, which quantifies underwriting volatility and correlation by line and country. This year’s Study documents increases in many risk measures and provides a greatly expanded scope. The 2009 Study covers core business lines across 26 countries which together account for 85 percent of global premium.

          The report, Modeling the Global Market, reveals that many measures of insurance risk increased during 2009. Five of the eight major U.S. lines (private passenger auto, workers compensation, commercial multi-peril, medical malpractice and other liability occurrence and claims made) showed increases in measured risk and none showed a decrease. In Europe, motor and liability risk increased in the UK but remained constant or decreased in Germany and France.   Meanwhile, Fidelity & Surety is the most volatile major line of business in nearly every country where figures are reported, with up to 93 percent volatility in European countries, and up to 136 percent in the Americas.

          Risk in the Americas is higher than in Europe or Japan for comparable lines. Liability volatility in Europe ranges from 16 to 26 percent compared to 36 percent to 84 percent in the Americas. Motor volatility in Europe ranges from 7 to 12 percent compared to 16 percent in the U.S. despite being a lower limits coverage.  As in previous editions of the Study, commercial lines are more risky than personal lines.

          The Study identifies and quantifies correlation between lines within a country and between countries. It adds an estimate of correlations in reserve risk, demonstrating material correlation in development between different lines of business. Finally, its analysis of macroeconomic correlations reveals that changes in surplus are more highly correlated with stock returns, stock price volatility and credit spreads than they are with underwriting combined ratios or the number of insurance company insolvencies.

          The Study highlights that, in wake of the global financial crisis, rating agencies, regulators and investors are demanding that insurers provide detailed assessments of their risk tolerance, and quantify the adequacy of their capital models.

          Despite the recent global economic turmoil, levels of insurance volatility are historically still far greater than levels of volatility in the equity markets. Furthermore, the level of correlation between global equity markets adds a significant level of risk to international insurers’ equity portfolios.

          Stephen Mildenhall, Executive Vice President and Chief Actuary of Aon Benfield Analytics, said: “Over the past two years, the global financial crisis has caused considerable volatility in equity prices. However, over the past three decades, insurance lines have generally experienced far greater volatility than the stock market; for instance, by the end of July this year, stock volatility was at approximately the same level as commercial motor volatility – which is historically one of the less volatile business lines for insurers worldwide.”

          Andrew Appel, Chief Executive Officer of Aon Benfield, added: “The Insurance Risk Study highlights that managing volatility is an issue for insurers globally. Our latest research shows that there is a clear correlation between volatility and market valuations. Those insurers that successfully manage volatility can help to increase their relative market valuation – which is especially important in today’s lower valuation ranges. Aon Benfield’s in-depth research into this topic allows us to develop effective reinsurance solutions designed to address insurers’ individual challenges. These solutions are delivered through a worldwide network of more than 4,000 dedicated and experienced colleagues.”

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          Munich Re redefines its positioning in reinsurance: Emphasis on expanding risk knowledge and creating individual solutions for clients. Munich Re sees a steady shift in requirement trends in insurance and reinsurance. Risks are becoming more complex and new risks are constantly emerging. Munich Re wants to place much more emphasis on using its extensive risk knowledge to develop individual solutions for its clients in response to complex issues. Financial solidity allied to forward-looking competence form the cornerstones of its positioning.

          In reinsurance, three fundamental business models are clearly crystallising: 1. Comprehensive providers of a wide range of (re)insurance and capital market solutions that also offer their clients consulting and service; 2. Low-cost, pure providers of capacity, and 3. Transfer to the capital markets. With its profound risk knowledge, high level of expertise in risk modelling and proven track record in risk management, Munich Re is clearly positioning itself as a comprehensive provider in the area of risk assumption and risk transfer. It recognises the opportunity of being the first port of call for clients in connection with all risk matters and in future of occupying new and profitable business sectors where special know-how is needed.

          Torsten Jeworrek, member of Munich Re’s Board of Management, at the Monte Carlo Rendez-Vous: “As every year, the insurance industry in Monte Carlo will again be focusing on existing business, prices and the state of the cycle.” However, Jeworrek does not regard these as the real challenges facing reinsurance: “Highly sophisticated balance-sheet management, coverage of altered and complex risks, and expanding the insurability of risks – these are the issues we have to address.”

          Owing to its good risk management and financial stability, Munich Re has so far managed to steer a safe and steady course through the economic crisis. As a result, it had sufficient scope to redefine its strategic positioning even more precisely: a key pillar of its strategy involves leveraging holistic (re)insurance solutions individually for clients. Even more so than in the past, it will offer its clients specialist consulting services also for internal processes such as balance-sheet management, risk modelling or asset-liability management. Client management was specifically reorganised with this in mind.

          A further focus of attention is on devising innovative coverage concepts for new and complex risks. For this reason, Munich Re is constantly expanding its risk knowledge and investing substantially in enhancing actuarial and underwriting skills.

          As a third pillar, Munich Re wishes to broaden its client base: it will actively expand its business with insurance pools or in public-private partnerships and in specialist primary insurance niche segments in which risk expertise is the decisive success factor.

          Jeworrek: “Traditional reinsurance is our core business and will remain so. But we should aim to deploy our know-how even more precisely in future. We want to be the first port of call for our clients when it comes to solving complex underwriting issues. The solutions we put forward derive particular credence from the fact that we too assume the risks and are thus in the same boat as our partners.”

          Jeworrek illustrated this by means of two examples. In preparation for Solvency II, Munich Re is offering its clients a broad range of services, including consulting, workshops and tools. They can thus optimise their risk management, save risk capital or enhance the return on investment with the same risk capital.

          In connection with construction projects, Munich Re offers a one-stop service: from risk assessment in the planning phase and insurance know-how, reinsurance capacity and risk inspections during the construction phase to completed risks cover after the end of the project. A dedicated unit was specially set up to manage the extensive range of offers for construction projects.

          In order to make the spectrum of Munich Re’s business model clearer to external observers, all of the reinsurance units will in future appear under the uniform brand of Munich Re. In addition, Managing General Agencies (MGAs) and insurance units that operate specialised primary insurance activities out of the reinsurance segment will in the medium term be designated Risk Solutions under the same brand. In this way, all of the companies whose business model is also based on specialised know-how will profit from a name that has been synonymous with risk knowledge since 1880.

          “The new brand symbolises the sharper value proposition to our clients,” said Jeworrek. “The clear visuality corresponds to our solution- and future-oriented company.”

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          According to Swiss Re’s new sigma study, “The role of indices in transferring insurance risks to the capital markets”, both (re)insurers and investors benefit when clearly defined and regularly updated indices are used in insurance-linked securities (ILS) and other risk-transfer instruments. These instruments provide (re)insurers with an additional capital management tool, while investors gain access to an attractive, diversifying asset class.

          Insurance-linked securities (ILS) and related instruments can be used to transfer insurance risks to the capital markets. These include securitisations, industry loss warranties (ILWs) and a variety of derivative contracts. These products are mainly used to transfer peak natural catastrophe risks and weather-related risks. Catastrophe or “cat” bonds and weather derivatives are quite commonplace and can be traded on public exchanges or privately. The markets for other products – such as mortality and longevity swaps – are still in an earlier stage of development.


          Use of indices may help create more liquid markets

          Many of the above-mentioned instruments involve the use of indices. A typical index-linked contract in (re)insurance links payments to an index that tracks, or approximates, the development of insurance losses (eg the intensity of an earthquake in a certain region). For investors, indices are often more transparent and easier to understand than individual insurance risks. In addition, index-based instruments may be standardised more easily, which lowers costs and could help create greater liquidity in insurance risk markets.


          New loss index initiative to boost ILS in Europe

          A good index needs to be transparent, accurate, reliable and supplied by an independent party. In the United States, for example, Property Claims Services (PCS) provides information on insured property losses. The breakdown of losses by state and different insurance business lines allows protection buyers to customise an index and thus minimise the basis risk, which is the risk that actual losses will deviate from payoffs received under the contract. In Europe – until recently – such reliable and independent information on insured losses had been lacking.
          The recently created company PERILS (Pan-European RiskInsurance Linked Services) will fill this gap by collecting and aggregating industry-wide claims data for Europe. The initiative is a joint effort of the major European players in the insurance and reinsurance industries. According to Thomas Hess, Swiss Re’s Chief Economist, the new PERILS industry loss index should help stimulate the development of new products and create more liquid insurance risk markets in Europe.

          Cat bonds have weathered the financial crisis well

          After rapidly growing between 2005 and 2007, the issuance of cat bonds slowed in 2008 due to the financial markets crisis. However, interest in cat bonds has recovered recently. In the first half of 2009, Swiss Re Capital Markets underwrote 4 cat bonds with a total notional amount of USD 585 million.

          Martin Bisping, head of Non-life Risk Transformation at Swiss Re, said: “During the first seven months of this year, 11 cat bonds with a total notional amount of USD 1.8 billion were issued. Trading volumes of cat bonds have held up even during a time when liquidity in other market segments dried up.”

          ILS and related instruments hold strong growth prospects

          Despite the potential of ILS, the share of insurance risks transferred to the capital markets represents just a small share of overall (re)insurance capacity. To date, the volume of outstanding cat bonds is USD 14 billion. Together with an estimated market volume of roughly USD 10 billion for ILWs and cat derivatives, this amounts to USD 24 billion or 12% of the aggregate global cat reinsurance capacity. Martin Bisping noted: “This share may well expand in the future, boosted by recent efforts to reach a higher degree of  product standardisation, as well as by the creation of new indices, such as the European market loss index by PERILS.”

          According to the sigma study, significant untapped opportunities also exist for mortality and longevity index-linked risk transfer, supported by increasing pandemic concerns and the savings and retirement needs of an ageing global population.

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