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John Stewart

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Racing to regain control of the health-care debate, two top administration officials signaled Sunday that the White House may be willing to jettison a controversial government-run insurance plan favored by liberals.

As President Obama finishes a western swing intended to bolster support for his signature policy initiative, Health and Human Services Secretary Kathleen Sebelius opened the door to a compromise on a public option, saying it is “not the essential element” of comprehensive reform. White House press secretary Robert Gibbs said on CBS’s “Face the Nation” that Obama “will be satisfied” if the private insurance market has “choice and competition.”

Yet even as the Obama team hinted it could accept concessions that moderate Democrats are seeking, one of the leaders of that faction raised another hurdle for the administration. He warned that Senate Finance Committee negotiators may not meet the president’s Sept. 15 deadline for producing a bill.

“We will be ready when we are ready,”  Sen. Kent Conrad (N.D.) said on “Fox News Sunday.” “We will not be bound by any deadline.”

The on-air deliberations played out against the backdrop of an intense and expensive battle on the ground, with an array of activists using this month to lobby lawmakers in their home states and districts.

“Everybody on the left and the right is very frustrated with the health debate,” said Rep. Jim Cooper (D-Tenn.). He said he has heard anxious stories from constituents who have lost jobs, seen a relative receive poor treatment in a hospital, watched retirement accounts evaporate and fretted about gun rights.

“I have heard every possible reason for anger,” he said in an interview. “The common target is Congress.”

Declining poll numbers, testy town hall meetings and mounting frustration among his allies sent Obama into campaign mode over the weekend. He staged his own forums and wrote an opinion piece published Sunday in the New York Times.

“In the coming weeks, the cynics and the naysayers will continue to exploit fear and concerns for political gain,” he wrote. “But for all the scare tactics out there, what’s truly scary — truly risky — is the prospect of doing nothing.”

Andrew Stern, head of the Service Employees International Union, said that “Obama’s gaining ground” after several sluggish weeks. But he disputed Conrad’s contention that Senate negotiators need additional time to draft a bill.

“Deliberation is fine, but at some point it’s just delaying,” he said in an interview. “A longer wait to make the hard choices on health care is not increasing the odds of success.”

Obama has staked much of his first year in office on a health-care initiative aimed at extending coverage to millions of uninsured Americans and at controlling medical costs.

The president has said that creating a nonprofit, government-sponsored insurance plan — competing alongside private insurers — would provide a lower-cost alternative for consumers and keep the industry “honest.” In Colorado on Saturday, the tone was more conciliatory.

“The public option, whether we have it or we don’t have it, is not the entirety of health-care reform,” Obama said. “This is just one sliver of it.”

The proposal has become a lightning rod, particularly in the Senate, where Finance Committee members are seeking bipartisan consensus.

“The fact of the matter is there are not the votes in the United States Senate for the public option,” said Conrad, one of six panel members involved in the talks. “There never have been. So to continue to chase that rabbit, I think, is just a wasted effort.”

Sen. Orrin G. Hatch (R-Utah) said Democrats are moving toward a European-style, single-payer system. “And this public plan, this public government plan, don’t think for a minute that that will not destroy the current insurance system,” he said on ABC’s “This Week.”

Sebelius and other administration aides have said Obama is open to a nonprofit cooperative model as an alternative to the public option and the existing private plans. Finance Committee members have been studying utility co-ops as a possible model.

Liberal leaders reacted strongly to the idea that Obama would walk away from what they consider a central element of reform.

“I don’t think this bill is worth passing without a public option,” said Howard Dean, head of the grass-roots group Democracy for America.

Rep. Eddie Bernice Johnson (D-Tex.) said it would be difficult to pass a bill in the House without a robust government alternative.

“The private insurance companies have been in charge for so long that I think they feel that nobody else ought to be able to do it,” she said on CNN’s “State of the Union.”

Said Sebelius earlier on the same program: “What’s important is choice and competition. And I’m convinced at the end of the day, the plan will have both of those.”

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Germany and France enjoyed a shock return to economic growth in the second quarter of the year, data showed on Thursday, ending their recessions earlier than many policymakers and economists had expected.

German gross domestic product rose by 0.3% in the second quarter, bringing an end to the country’s deepest recession since World War Two and boosting hopes of recovery in the broader euro zone.

French GDP also grew by 0.3% in the second quarter. The consensus in a Reuters poll of economists had predicted a 0.3% quarterly contraction in both countries.

“The data is very surprising. After four negative quarters France is finally coming out of the red,” French Economy Minister Christine Lagarde told RTL radio.

Germany suffered a calamitous 3.5% contraction in the first quarter of this year to cap four quarters of decline while the French economy shrank by 1.3%.

Euro zone GDP data are due at 0900 GMT with the risks to forecasts of a 0.5% quarterly contraction now clearly to the upside.

“Taking the upward surprise in the German and French data together, the euro zone economy should have been roughly flat in Q2,” said Nick Kounis, economist at Fortis.

Market response to the figures was instant.

European shares and the euro climbed while euro zone government bond futures opened down after the economy figures fueled optimism about the outlook for the single currency bloc’s economy.

Recovery at last?

Evidence is mounting that the worst of the damage wrought by a global financial crisis, which began with a U.S. housing market meltdown in 2007 and took a turn for the worse last year when U.S. bank Lehman Brothers collapsed, is now over.

“The recession has ended. Not just in Germany. The post-Lehman global confidence shock has receded. Firms are investing again,” said Joerg Kraemer at Commerzbank.

The Federal Reserve said on Wednesday the U.S. economy was showing signs of leveling out two years after the onset of the deepest financial crisis in decades.

It was the first time since August 2008 the committee’s statement had not characterized the economy as contracting, weakening, or slowing.

The Bank of England struck a slightly more subdued tone in its quarterly inflation report on Wednesday, saying Britain’s recession would end early next year but that the economy would take a long time to recover properly.

Britain now looks in relatively poor shape, its economy having shrunk by 0.8% in the second quarter.

Italy, the euro zone’s third largest economy, reported last week its economy dropped by 0.5% in the second quarter.

Data from Austria on Thursday showed it shrank by 0.4% in the second quarter while the Netherlands contracted by 0.9%.

Year-on-year, Germany shrank by 7.1% in the second quarter, the data showed, following a 6.4% drop in Q1.

The government expects the economy to contract by some 6% this year. However, the Economy Ministry had already said the economy probably stabilized in the second quarter.

Lagarde said solid exports and strong public sector investment, fueled by government stimulus measures to counter the global economic crisis, were bolstering growth in France.

Reasons to be cautious

But experts remain cautious with budget deficits spiraling under the weight of government stimulus packages and unemployment levels set to climb for some time.

“The main risk for Germany is a sharp rise in unemployment. If firms decide to start firing people in the autumn rather than putting them on shorter hours, it’s going to have a negative impact on wages and hit consumption,” said Christian Dreger of the DIW economic institute.

And banks in many countries remain in poor shape and reliant on state support.

“The question is how lasting it will be. There are lots of problems we haven’t solved. In particular, the banking sector is still dependent on the state umbrella,” said Jens-Oliver Niklasch, analyst at LBBW.

“As long as it’s not clear that the banks’ capital base is robust, we can’t assume that the crisis is over.”

But if nothing else, the prospect of a 1930s-style depression appears to have been banished.

“It’s good to see that we’re not in a 1929 or 1930s type situation of total collapse,” said Marc Touati at Global Equities in Paris. “But there are risks on growth … With a stronger euro, little room to further cut interest rates and stimulus packages already running out, what is going to sustain us in coming months?”

Source : Reuters

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AEGON aims to raise up to EUR 1 billion through an equity issue via an accelerated bookbuild beginning today. AEGON intends to use the proceeds of the equity issue to repay up to EUR 1 billion of the total EUR 3 billion of core capital obtained last year from its largest shareholder, Vereniging AEGON, funded by the Dutch State. The decision to repay by December 1, 2009, is conditional on AEGON’s capital position and the outlook for the economy and financial markets not deteriorating materially. The repayment further requires the formal consent of the Dutch Central Bank (DNB).

AEGON would effect the repayment by exercising its option to repurchase up to 250 million convertible core capital securities (CCCS) by December 1, 2009 at a price between EUR 4.00 and EUR 4.52 per security depending on both the share price and timing of repurchase. Repurchasing by December 1, 2009 would permit AEGON to avoid having to pay EUR 6.00 per security after December 1, 2009. In addition AEGON would not be required to pay future coupons of at least 8.5% per annum on the repurchased amount.

In order to raise EUR 1 billion, AEGON will use the authorization of the annual shareholders’ meeting to issue new shares up to 10% of the issued common share capital and will issue such number of treasury shares as necessary. Accelerated book building for the equity issue will begin today. Vereniging AEGON is not expected to take part in the offering. Vereniging AEGON is expected, however, to exercise the option to purchase additional class B preferred shares to preserve its share of voting rights.

“It has been our intention to repay the EUR 3 billion to the Dutch government at the earliest opportunity, provided it is both feasible and responsible to do so,” said AEGON CEO Alex Wynaendts. “Our decision to issue equity in the amount of up to EUR 1 billion is the first step towards the goal of full repayment. AEGON’s current excess capital position of EUR 3.5 billion gives us the flexibility to deploy capital in the business and puts us in a better position to work towards the goal of full repayment of the outstanding capital within the terms of our agreement with the Dutch State.”

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    Tremont Group Holdings Inc. and other feeder funds to Bernard Madoff’s defunct investment advisory business have sued insurers, including a CNA Financial Corp. unit, for failing to cover Madoff-related litigation.

    Tremont, a fund of funds in Rye, N.Y., that had about $3.3 billion invested with Madoff, is owned by OppenheimerFunds Inc., a unit of MassMutual Financial Group. Investors have filed more than 18 lawsuits against MassMutual, seeking to recoup Madoff-related losses.

    Liability insurers for MassMutual’s directors and officers, and its primary fidelity bond insurers, have ignored repeated requests to pay defense costs, lawyers for MassMutual and the funds said in a complaint filed yesterday in Delaware Chancery Court. MassMutual seeks a court order declaring that Madoff’s theft resulted in multiple losses that are covered under its insurance policies.

    In addition to CNA’s Continental Casualty Co., the complaint names some underwriters of the Lloyd’s of London insurance market and American Financial Group’s Great American Insurance Co.

    Katrina Parker, a spokeswoman for Chicago-based CNA, had no immediate comment. American Financial Group officials couldn’t immediately be reached for comment.

    CNA, which sold MassMutual its primary directors and officers policy, is at odds with bond underwriters as to their respective obligations to divide liability, according to the complaint. The D&O insurers claim they are liable only for a percentage of the joint defense costs related to executives and directors. Corporate defendants are insured under the primary bond underwriters policy, according to the complaint.

    “The primary bond underwriters have refused to agree to pay any portion of the joint defense costs,’’ lawyers for MassMutual said in the filing.

    Aon Corp., the world’s largest broker, said in January that Madoff’s Ponzi scheme may cost insurers as much as $3.8 billion in claims to reimburse clients for losses and legal expenses. Costs could be as low as $760 million, with the most likely expense being $1.8 billion, the Chicago firm said.

    Madoff, 71, is serving a 150-year prison term after pleading guilty to defrauding investors by using money from new ones to pay off old ones in the $65 billion scheme.

    source : Globe Newspaper Company

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      Royal Bank of Scotland Insurance has announced a £83m decline in operating profit to £217m for the first half of 2009

      For RBS Insurance, insurance premium income was stable at £2,140 million (£2,156 million at the same period in 2008), reflecting 4% growth in the Group’s own brands offset by a 10% decline in the partnerships and broker segment.

      This reflects the division’s strategy of maximising profitability while focusing on growth in the Group’s own-brand businesses. Investment income declined by 36% to £115 million, largely as a result of a year over year reduction in interest rates. The division has a very conservative investment policy for its £8.4 billion of invested funds, with 84% in short duration deposits and fixed income bonds. Net fees and commissions payable were 7% lower, mainly as a result of lower sales of the creditor product. Operating profit in the first half was £217 million, a decline of £83 million or 28% from the first half of 2008, of which £71 million directly related to lower investment returns and impairment losses.

      In the UK motor market, the Churchill and Privilege brands continued to be successfully deployed on selected price comparison web sites. Direct Line, Churchill and Privilege motor policy numbers increased by 2%, 22% and 13% respectively over the period. In total, over previous year, own-brand motor policy numbers have increased by 8% to 4.8 million.

      In own-brand non-motor insurance RBS Insurance has continued to achieve strong sales through RBS and NatWest, where home insurance policies in force increased by 16%. Direct Line has achieved a 2% increase in the number of policy renewals in the period. In addition, Privilege and Churchill have grown home policies by 223% and 29% respectively, mainly due to successful entry onto price comparison websites. Overall own-brand non-motor policies in force have grown by 8% to 5.9 million.

      Direct expenses improved by 4% to £260 million, mainly driven by lower staff costs and reduced marketing spend.

      Net claims were 2% higher at £1,551 million due to increases in creditor claims, home claims relating to the very cold weather in the first quarter of 2009, and a rise in personal injury motor claims costs. Impairment losses of £6 million reflect impairments of available for sale securities.

      Gross written premium increased by 2% over the period, reflecting the strong growth in own-brand businesses. Own-brand motor gross written premium increased by 10% year on year and own-brand home gross written premium increased by 11%.

      The UK combined operating ratio for the first half of 2009, including manufacturing costs, rose to 95.3%, compared with 94.8% a year earlier, eflecting a higher loss ratio partly offset by an improved expense base.

      In April 2009 the Group disposed of its 50% stake in Linea Directa to Bankinter, its joint venture partner. In 2008 it also disposed of its 50% stake in Tesco Personal Finance. All financial data have been restated to exclude Linea Directa and Tesco Personal Finance.

      Stephen Hester, Group Chief Executive comments :

      “This was a momentous half year for RBS. We gave a full and clear account of our vulnerabilities to the ‘credit crunch’. We set out comprehensive restructuring plans, now with clear performance targets.
      And implementation is well under way, though uncertainties remain. Our first half results, as we had clearly warned, are poor with a net attributable loss of £1,042 million. However, they highlight well our core business potential, the hard work of our people in difficult times, the strength of our customer franchises and the vulnerabilities and economic headwinds we grapple with.”

      full report available here

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        Swiss Re reports improvement in excess capital at the AA level to CHF 4.5 billion – Net loss of CHF 381 million for the second quarter of 2009 – Significant progress made in de-risking the Legacy portfolio

        In the second quarter of 2009, Swiss Re further increased its capital strength and estimates that its excess capital at the AA level has improved to CHF 4.5 billion. The Group also made significant progress in de-risking its Legacy portfolio. Solid underlying earnings in the core business were offset by mark-to-market losses on hedges and impairments. This resulted in a net loss of CHF 381 million for the quarter.

        Stefan Lippe, Swiss Re’s Chief Executive Officer, said: “During the second quarter of 2009, our core business, despite the reported loss, continued to deliver strong underwriting results and solid earnings power. Most importantly, the measures we implemented to improve our capital base have proven to be effective, considerably increasing our excess capital at the AA level. We have also made significant progress in de-risking Legacy with the termination of substantially all of our portfolio credit default swap contracts. This powerful combination increases our confidence in delivering on our targets.”

        Net loss despite solid underlying earnings
        Swiss Re reported a net loss of CHF 381 million for the second quarter of 2009, compared to a profit of CHF 564 million in the same period of the previous year. Earnings per share were CHF –1.13.

        The net loss was mainly driven by three factors that offset solid underlying earnings in the core business. First, by mark-to-market losses on hedges on corporate bonds of CHF 1.1 billion; the unrealised gains on these corporate bonds of CHF 1.9 billion are reflected in shareholders’ equity but not in net income. Second, by impairments of CHF 0.6 billion, primarily on securitised products. Third, while Swiss Re’s credit spreads improved considerably in the quarter, US GAAP requires Swiss Re to record the effects of its own credit spreads in certain financial liabilities. This resulted in a charge of CHF 431 million on net income for the quarter.

        Shareholders’ equity increased to CHF 23.8 billion at the end of June 2009, compared to CHF 23.6 billion at the end of March. Annualised return on equity was –7.4%, compared to 2.9% for the first quarter of 2009. Basic book value per common share was CHF 60.69, compared to CHF 61.39 at the end of the first quarter of 2009. As of the end of June, Swiss Re estimates that its excess capital at the AA level improved to CHF 4.5 billion.

        Property & Casualty delivers excellent underwriting result
        Property & Casualty operating income increased to CHF 1.0 billion in the second quarter of 2009, compared to CHF 0.9 billion in the second quarter of 2008. The combined ratio improved to 89.4% (or 87.6% excluding unwind of discount) compared to 91.0% (89.0%) in the same period of the previous year. This result is primarily due to disciplined underwriting and strict expense management.

        Life & Health impacted by markets
        Life & Health reported an operating loss of CHF 10 million for the second quarter of 2009, compared to a profit of CHF 535 million in the prior year period. While premium and fee revenue increased slightly compared to the prior year period, the result was strongly impacted by the discontinued variable annuity business, mainly due to the mark-to-market impact of improvements in the Group’s own credit standing. As Swiss Re’s credit spreads narrowed in the quarter, this resulted in a mark-to-market loss of CHF 375 million. The benefit ratio increased to 78.6%, compared to 77.5% in the same quarter of 2008. This increase primarily reflects the prior year favourable mortality and morbidity experience within the traditional life and health segments. The benefit ratio continues to be satisfactory.

        Asset Management continues to focus on de-risking
        For the second quarter of 2009, return on investments decreased to 0.5%, compared to 2.9% in the prior year period, mainly due to the impact of hedges on corporate bonds and the impairment charges. Swiss Re maintained a cautious stance on corporate bonds and increased the allocation to lower risk assets such as cash, short-term investments and government securities in its investment portfolio.

        Legacy risk significantly reduced
        Legacy generated a net operating income of CHF 71 million for the second quarter of 2009. Legacy also took a significant step in its de-risking plan, terminating substantially all of its remaining portfolio credit default swap contracts and decreasing corresponding notional exposure in its Legacy portfolio from CHF 13.9 billion at the end of March 2009 to CHF 842 million at the end of June 2009.

        Successful renewals
        Conditions in the reinsurance market continued to improve in the second quarter of 2009. Swiss Re sees the strongest immediate improvements taking place in some life segments, especially the US, and many natural catastrophe markets. In several other segments, the softness of the market has slowed but has not yet really reversed. In the July 2009 Property & Casualty renewals, Swiss Re achieved a rate increase of 4%, reflecting the shift in its reinsurance portfolio from Casualty lines towards more profitable Property non-proportional business, as well as a gradual hardening of the market. More importantly, though, the company succeeded in raising long-term price adequacy. Overall, the renewals in the first six months of 2009 demonstrated that Swiss Re’s client franchise is strong and that the company has sufficient capacity to provide the capital relief its clients need.


        Fully in line with operational efficiency target
        Several major milestones in the company’s efficiency programme were achieved in the second quarter of 2009. Swiss Re optimised its global office network and initiated the closure of 14 of its 73 offices across the globe to serve clients more effectively, while consolidating support functions in regional hubs. These measures translated into running cost savings, before restructuring costs, of more than CHF 300 million in the first half of 2009. Net savings, after restructuring costs, are now expected to exceed CHF 150 million in 2009, compared to our original target of CHF 100 million.

        Outlook
        Swiss Re has succeeded in increasing its capital strength and remains a strong partner for its clients. For Property & Casualty, the company expects further modest rate increases. The company is likely to surpass its combined ratio target of 95% for the underwriting year, provided that natural catastrophe events remain within expectations. However, the economic environment remains uncertain and the company’s investment and Legacy portfolios remain exposed to market volatility. The financial market volatility and the shift towards lower risk investments, which allowed Swiss Re to reduce its exposures significantly, may adversely impact future earnings.
        Stefan Lippe concluded: “We believe the underlying operating trends are positive and we have the ability to allocate significant capacity to lines of business that offer an appropriate return on our capital.”

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        American International Group Inc, AIG is close to selling its asset management business to a consortium that includes private equity firm Crestview Partners for $300 million to $400 million, a source familiar with the matter said on Monday.

        A deal for the business would come months after it was put on the market.

        AIG’s unaffiliated client assets under management, including retail mutual funds and institutional accounts, were $63.5 billion as of March 31, down from $94.6 billion the previous year.

        AIG and Crestview declined to comment.


        The source was granted anonymity because talks are private.

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        Operational cash generation and performance

        • On target to generate £450m of net cash in 2009

        Net cash generated in H1 of £302m (FY 2008: £320m)

        • Cost reduction programme on track

        £50m annualised cost reduction expected by year end

        • IFRS operating profit £31m (H1 2008: £391m)

        Result reduced by negative investment variances of £351m

        • EEV operating profit £657m (H1 2008: £589m), up 12%
        • New business APE £746m (H1 2008: £806m)

        Sales robust – action on product mix, pricing and commissions

        Improved EEV margin on UK new business

        • Capital and cash flow outlook supports reduced dividend of 1.11p (H1 2008: 2.01p)

        10% progression from rebased 2008 dividend

        Balance sheet

        • IGD surplus £1.9bn at 30 June 2009, after dividend of £65m

        Excludes £0.3bn of qualifying lower tier 2 bonds issued in July

        Proforma coverage ratio increased to 192% (FY 2008: 169%)

        • Non profit annuity credit default provisions increased to £1.3bn (FY 2008: £1.2bn)

        Available release of short term default provision retained in reserves

        Aggregate provision 74bp p.a. over the run off of the portfolio (FY 2008: 68bp)

        Group Chief Executive, Tim Breedon, said:

        “We have made strong progress in improving our net cash generation, strengthening our balance sheet and reducing costs. Management actions in the first half ensured that Risk and Investment management remain strongly cash generative and the Savings business has turned the corner. We have strengthened the balance sheet with proforma IGD surplus at £2.2bn and we expect to realise annualised cost savings of £50m by the end of 2009. IFRS operating profit has been reduced by £351m of negative investment variances in the period.

        “The Board has therefore decided to pay an interim dividend of 1.11p reflecting our growing confidence in cash generation and our continued determination to strengthen the balance sheet during the ongoing economic uncertainty while rewarding shareholders.

        “Our focus remains on capital strength, net cash generation and cost reduction. As a Group we benefit and continue to exploit substantial synergies between Risk, Savings and Investment management to service our customers and create value for shareholders. Confidence has started to return to markets but we expect some continued uncertainty for the remainder of 2009. As a result of the actions we have taken in the first half of this year and will continue to take in the second half of the year, Legal & General is better positioned to take advantage of new opportunities to grow profitably as the economy recovers.”

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        The rating agency said it saw risks of payment deferral on AIG’s hybrid securities and downgraded the junior subordinated and preferred securities by five notches to “BB”.

        “The possibility of increased future political or other incentives to defer payments on hybrid instruments in order to preserve cash to support repayment of taxpayer funded capital is a concern for AIG’s deferrable hybrid securities,” Fitch said in a release.

        Standard & Poor’s affirmed its “A-” counterparty credit rating on AIG and removed the ratings off watch negative. It has a negative outlook on the company.

        Moody’s also cut AIG’s subordinated debt ratings by four notches to “Ba2”, but affirmed its “A3” rating on the group’s senior unsecured debt. Its rating outlook for AIG is negative.

        “The rating confirmation for AIG and its core property and casualty operations reflects the benefits to policyholders and senior creditors from the restructuring steps announced today,” said Bruce Ballentine, Moody’s lead analyst for AIG.

        Moody’s expects the government would provide “incremental support as needed to ensure that AIG can meet its obligations through this period of severe economic recession and market turmoil,” Ballentine said.

        Source : Reuters

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        Zurich Financial Services Group congratulates the 69 successful graduates of its Global Associate Program (GAP) 2008/2009. At a graduation ceremony in Zurich, the 29 female and 40 male graduates, representing 17 nationalities, together with senior managers from Zurich, looked back on their 44-weeks deep dive into the world of insurance.

        Zurich’s GAP focuses on providing in-depth on-the-job-experience, both at home and abroad, as well as on intensive classroom training. Every associate signs up for a core business area from a variety of disciplines such as Underwriting, Claims, Finance, Marketing and Distribution or IT where they want to play an important role right from the beginning. Besides the extensive technical training in their chosen discipline, the program includes an assignment to a different business area as well as an international rotation to further develop and deepen their knowledge.

        Peter Goerke, Global Head of Human Resources, said: “Helping our people grow and develop has never been more important than in challenging times like these. People management therefore remains one of our four strategic cornerstones. The Global Associate Program is a powerful building block in our efforts to equip our employees with the right skills at the right time so that they can help Zurich to capitalize on the opportunities this market environment provides.”

        Inga Beale, Global Chief Underwriting Officer and Head of Organizational Transformation, said: “The best way of learning is to prove oneself in a real business environment, and this is exactly what GAP is all about. But the program is not just beneficial for the graduates, but also for Zurich. Having worked with Global Associates in the last couple of months, I especially appreciate their dedication and the fresh ideas they bring to the organization.”

        Urs Basler, Group Head Learning & Development, added: “Introduced three years ago, already more than 200 young talents from across the globe have attended our Global Associate Program. But what is probably more remarkable is the fact that more than 90% are still with Zurich. Unlike common graduates programs, Zurich’s GAP is unique in that the global associates have to deliver from the very first day in a real business environment including taking part in an international rotation.”

        To learn more about Zurich’s GAP program click here

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        Odyssey Re Holdings Corp. today reported net income available to common shareholders of $121.8 million, or $2.03 per diluted share, for the quarter ended June 30, 2009, compared to $65.2 million, or $0.99 per diluted share, for the quarter ended June 30, 2008.

        Operating income after tax was $85.9 million, or $1.43  per diluted share, for the second quarter of 2009, compared to $35.5 million, or $0.54 per diluted share, for the second quarter of 2008.  Included in second quarter 2009 net income available to common shareholders were after-tax net realized investment gains of $35.9 million, or $0.60 per diluted share, compared to after-tax net realized investment gains of $29.7 million, or $0.45 per diluted share, for the second quarter of 2008. For the six months ended June 30, 2009, net income available to common shareholders was $122.7 million, or $2.04 per diluted share, compared to $314.2 million, or $4.66 per diluted share, for the comparable period of 2008.

        Highlights for the second quarter of 2009:

        • Shareholders’ equity of $3.14 billion as of June 30, 2009, an increase of $310.6 million, or 11.0%, compared to December 31, 2008, and a 15.7% increase compared to March 31, 2009;
        • Book value per common share(2) of $51.90 as of June 30, 2009, an increase of $6.53, or 14.4%, compared to December 31, 2008, and an increase of $8.10, or 18.5%, compared to March 31, 2009;
        • Total invested assets and cash of $8.1 billion as of June 30, 2009, an increase of $197.6 million, or 2.5%, compared to December 31, 2008; and
        • During the second quarter of 2009, 1.2 million shares of the Company’s common stock were repurchased and retired at an aggregate cost of $47.5 million; 532,000 shares of the Company’s common stock were repurchased and retired from July 1 through July 29, 2009 at an aggregate cost of $21.6 million.

        Gross premiums written for the quarter ended June 30, 2009 were $511.4 million, compared to $566.2 million for the quarter ended June 30, 2008. Gross premiums written related to the Company’s worldwide reinsurance business decreased 10.3%, due largely to our non-U.S. dollar denominated business. Gross premiums written related to the Company’s insurance business decreased 8.4% compared to the quarter ended June 30, 2008. Net premiums written for the second quarter of 2009 were $459.8 million, an 8.7% decrease compared to second quarter 2008 net premiums written of $503.5 million.

        The combined ratio for the second quarter of 2009 was 96.5%, compared to 98.7% for the second quarter of 2008. Results for the quarter ended June 30, 2009 reflect after-tax net current year catastrophe losses, principally related to our EuroAsia division, of $9.1 million, or $0.15 per diluted share, compared to $23.2 million, or $0.36 per diluted share, for the second quarter of 2008. For the six months ended June 30, 2009 and 2008, the combined ratio was 96.5% and 98.5%, respectively.

        Net investment income amounted to $93.0 million for the second quarter of 2009, compared to $64.7 million for the second quarter of 2008. Net pre-tax realized investment gains were $55.2 million for the second quarter of 2009, compared to $45.6 million for the second quarter of 2008. Net pre-tax realized investment gains were reduced by $45.3 million and $0.3 million for the quarters ended June 30, 2009 and 2008, respectively, related to other-than-temporary write-downs of investments. Net unrealized investment gains, after tax, were $346.3 million at June 30, 2009, compared to $75.2 million at December 31, 2008.

        For the quarter ended June 30, 2009, cash flow from operations was a negative $1.5 million, compared to positive cash flow from operations of $15.2 million for the quarter ended June 30, 2008.

        In the second quarter of 2009, OdysseyRe paid a cash dividend of $0.075 per common share on June 30, 2009 to common shareholders of record as of June 16, 2009

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          “The financial crisis is hitting companies with great ferocity”. Interview with Dr. Gerd-Uwe Baden, CEO of Euler Hermes Kreditverischerungs AG (Germany), member of Euler Hermes Group Management Board, supervisor of Euler Hermes Group Risk Activities.

          Dr. Baden, the latest survey of insolvency administrators which Euler Hermes conducted again this year indicates that we face the prospect of a record number of insolvencies in 2010 at the latest. What are the reasons for this?

          Dr. Baden: The main reason is doubtless the serious financial and economic crisis. Quite simply, companies’ order intake has slumped drastically. This is exacerbated by knock-on effects caused by insolvencies on the part of customers or suppliers. Companies which are owned by private-equity investors are particularly at risk. And restrictive bank lending practices are also making themselves felt, of course.

          How many insolvencies can we expect in Germany?

          Dr. Baden: We currently project around 39,000 insolvencies in 2010, which is roughly on a par with the previous record measured in 2003. The insolvency administrators whom we questioned, who are currently handling around 21,000 cases, estimate that 34 percent of the insolvency applications are due to the present crisis. The financial crisis is hitting companies with great ferocity, with small mid-size enterprises languishing in particular.

          Are there any other factors in addition to the economic crisis resulting in corporate insolvencies?

          Dr. Baden: Management errors continue to be a frequent trigger of insolvency. In times of crisis, strategic mistakes in particular may have dire consequences for a company. Examples include insufficient reserves, a lack of flexibility and the rigid retention of antiquated business models. In a recession, mistakes such as these tend to take their toll more quickly than in good times. So the economic crisis amplifies these effects.

          Märklin, Rosenthal, Schiesser, Woolworth and now also Arcandor – there is no shortage of prominent examples. What mistakes did these companies make?

          Dr. Baden: Frequently, a whole series of factors leads to insolvencies. Each individual case has its own unique characteristics and its own momentum. That’s why we as a credit insurer must examine each risk on a case-by-case basis and avoid making decisions based solely on individual criteria such as the sector involved. Even in currently critical sectors, there are solid companies which are weathering the crisis effectively.

          What role are credit insurers playing at the moment? Recently, credit insurers’ practices have been facing considerable criticism – also in connection with Arcandor, for which you again increased the deductibles shortly before the insolvency application was lodged.

          Dr. Baden: First of all, I want to make it quite clear that the change in deductibles from an average of 25 to 40 percent shortly before this company went into insolvency only related to deliveries on or after the date of change – none of the existing contracts were affected. Such precautions are taken to address a further drastic deterioration in the risk situation. Arcandor is a very good example of the fact that credit insurers do not leave their customers to their own devices when the going gets tough despite the frequent claims to the contrary. We remained committed to Arcandor right up to insolvency. Accordingly, our customers and, thus, several hundred companies from a whole range of different sectors, were able to rest assured that they would not lose outstanding amounts upon Arcandor going into insolvency.

          How high is the loss which your company has sustained as a result of the Arcandor insolvency?

          Dr. Baden: The potential loss stood at between EUR 30 and 40 million as of the date of insolvency. The actual amount ultimately depends on the outcome of the insolvency proceedings.

          Arcandor is not the only major claim which you have had to digest in the past few months. Your claims expense has surged in the wake of the crisis; as a result, claims expense exceeded premium income in the first quarter. How long can you withstand this?

          Dr. Baden: Like all other insurers, we are required by law to set aside fluctuation reserves to provide for difficult times. And this is precisely what we have done. To this extent, we are well equipped to face the crisis and have sufficient capital.

          What is your view on government aid for credit insurers? There has been discussion on this matter for months in Germany and the German government is under pressure to take action. When will the aid eventuate and what form will it take?

          Dr. Baden: Talks between the ministries and the industry association are still ongoing, so no results have merged yet. It is important to realize that the current difficulties in obtaining insurance cover for commercial credit are being experienced by the debtors and not by the credit insurers. The private-sector credit insurers have sufficient capital and liquidity and therefore do not require any government assistance. However, if the government takes the view that it must support businesses during the crisis by providing them with credit insurance which they would not receive in the private sector, then this is a political decision. Needless to say, we would respect this decision and assist the government in implementing it. On the one hand, we would be able to help our customers and the German economy in this way and, on the other, the credit insurers are the only entities able to handle such tasks on account of their risk analysis skills.

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            Report shows importance of insurance to the economy – recommendations must be implemented in full

            Responding to publication today of the Insurance Industry Working Group, co-chaired by the Chancellor, Alistair Darling MP, and Andrew Moss, Group Chief Executive of Aviva, the ABI’s Director General, Stephen Haddrill, said:

            “This report paints a comprehensive picture of the importance of the insurance industry to the UK economy. Insurance is not banking, and because of this it has been able to weather the storm of the financial crisis. But the industry is not complacent, and the report’s recommendations represent a solid set of ideas for both insurers and policymakers about how best to build on the strength of the sector, improve its competitiveness and support UK plc. Its focus on boosting customer confidence is of particular importance, and the ABI is already engaged in a number of initiatives in this area.

            “A competitive insurance sector, able to provide a wide range of risk management tools, will bring good consumer outcomes. Achieving the best results will depend on all the report’s recommendations, which the ABI wholly support, being implemented in full – doing so will create the ‘virtuous circle’ referred to in the report. We will be working with our members to achieve this, and we urge the Government and FSA to do the same.”

            You can download the Insurance Industry Working Group report on the HM Treasury web site: www.hm-treasury.gov.uk/fin_insurance_index.htm

            or download it here

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            Car thieves are targeting more top-of-the-market vehicles, according to figures today.

            The average value of a motor theft claim rose 38% in the first five months of this year compared with the same period in 2008, according to a study of statistics by a car insurance company.

            The study also revealed the average age of a stolen vehicle has fallen from 10 years to eight years in the last five years, however, the number of cars being stolen dropped by 11% between 2007 and 2008.

            London is the likeliest area for car theft, followed by Manchester, Cardiff, Leeds and Birmingham.

            A spokesperson said: “Over the last few years there had been a significant decline in the numbers of cars being stolen but a sharp increase in the value of cars being targeted by thieves.

            “Cars have better security measures on them than ever before so many opportunist thieves simply don’t bother anymore. It would appear that the cars that are being stolen are specifically targeted by thieves who will often break into the owner’s property to steal the keys.

            “Many of these cars are then exported to be sold overseas. Owners of top-end vehicles, like Porsches, BMWs and Jaguars need to be even more vigilant to keep their cars safe.”

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            As the number of people planning on staying in the UK for their holiday rises, holidaymakers have to ensure they are covered by travel insurance.

            Domestic holidays, particularly the short break kind, are growing in popularity as people look closer to home for their rest and relaxation. Recent domestic tourism stats show that the number of people planning a short break in the UK has increased from 40% to 46% as they look for alternatives to taking short breaks abroad and to supplement the annual holiday abroad. Furthermore, 21% of holidaymakers plan on switching their foreign holiday to a domestic holiday in order to cut costs. 51% of people are put off from travelling abroad because of flight costs and 36% are worried about the unpredictability of tour operators1.

            What holidaymakers may not realise is that travel insurance has a place in the UK holiday market – many of the mishaps that occur abroad can equally occur closer to home and can help prevent a well-earned break turning into a costly experience. For a single trip policy in the UK prices start at around £12.

            AXA’s own claims data shows that cancellation, baggage and curtailment are the most common claims made for domestic holidays. Half of all claims AXA receives for domestic holidays are for cancellation, at an average cost of £396, although claims can be much higher if you’re going for a week or a fortnight.

            Loss or damage of baggage and personal belongings are the second most common claim, costing £183 on average. If you’re taking any valuables on holiday, it’s always advisable to keep them on you or in a locked safe, as claims for lost or stolen items will otherwise be declined.

            Curtailment claims, which are made if you need to cut short your holiday, cost £339 on average. However, medical curtailment, when you need special transport home after an accident, could cost as much as £2,000 depending on the circumstances. Travel insurance can also help to bring a friend or family member to assist you if you fall ill or are injured.

            Alison Patrick, Head of Travel at AXA, says: “People really value their holidays and aren’t looking to forgo them altogether even though times may be tough. Domestic tourism research shows that more people are looking to holiday in the UK to cut costs. But even if you’re only flying up to Scotland or taking a beach holiday in Cornwall, having travel insurance can help provide security and assistance. Buying an annual travel policy will ensure that you are covered for those short UK breaks as well as any trips abroad.”

            UK Holiday Tips

            • Check if you’re covered: Some annual policy automatically includes UK cover, but a single policy doesn’t. UK single trip cover for a couple for 10 days from 14-24th of August without baggage cover is £12.34, with baggage and independent travellers cover it’s £18.52. For a single person and the same time period the cover without baggage is £11.75 and with baggage and independent travellers cover it is £13.23. When you book a weekend break for a couple in the UK at the end of July the price, including baggage and independent travellers cover is £11.75. An annual multi trip policy for a couple under 65 to Europe excluding baggage cover (but including UK trips) is £40.19.
            • Declare any medical conditions – even though treatment is covered by the NHS, getting yourself home after an accident will come out of your own pocket if you haven’t declared these.
            • Most insurers require you to have several nights of pre-booked accommodation in order for a claim to be valid. So if you’re staying with a friend, it won’t count. However, if you’re one of those who’ve taken up the recent trend of house-swapping, this normally involves a pre-booked element and will be valid.
            • Be aware that your policy may have different limits depending on whether you’re in the UK or abroad. The limits on AXA’s direct policy are the same apart from kennel/cattery fees and missed departure.
            • If you’re planning on doing any sports or activities on holiday, check what you’re covered for.
            • Do you need baggage cover? If you have home contents insurance, you won’t need this on your travel insurance and can bring the cost of your policy down.
            • And if you’re taking bicycles with you then you these may be covered by your home insurance or even your car insurance.
            • If you’re using your car to get to your holiday, check you’ve got breakdown cover on top of travel insurance. If you need to be towed, your travel insurance won’t cover you.
            • For those taking a caravanning break, ensure you get yourself proper caravan cover as well as your car insurance and travel cover. Travel policies will not cover you for damage or theft of the caravan although will cover you for possessions in the vehicle.

            1 – ‘Economic Downturn: Impact on Domestic Tourism’, carried out by Olive Insight Feb/March 2009, online questionnaire, 1000 GB respondents. Undertaken for Visit Britain, Visit London.

              3 4

              The government today launched the National Pandemic Flu Service, a new online service that inform about swine flu and, if required, provide an authorisation number that can be used to collect antiviral medication. (please find the click at the end of the post)

              This service is for patients who may have flu.

              The purpose of this service

              This service will assess the patient’s symptoms and, if required, provide an authorisation number, which can be used to collect antivirals from a local Antiviral Collection Point.

              This service is only for people with high temperature and other symptoms which are likely to be caused by swine flu.

              You can get more information about flu symptoms from www.nhs.uk and the Swine Flu Information Line on 0800 1 513 513.

              If you have severe symptoms which are not like flu you should contact your GP or call NHS Direct on 0845 4647 in England, NHS 24 on 08454 24 24 24 in Scotland or NHS Direct Wales on 0845 4647.

              What you will need to use this service

              To use this service you will need the following information about the patient:

              • Their date of birth
              • Their current symptoms
              • Their history of any serious medical conditions
              • Their home address including postcode

              You will also need a pen and paper to write down information we give you.

              If you do not have all of these, please go and get them before carrying on with the service.

              Swine flu information

              To use the National Pandemic Flu service, click here

              Residents of England, please go to www.nhs.uk or www.direct.gov.uk/swineflu or call the swine flu information line on 0800 1513513

              Residents of Scotland, please go to www.nhs24.com .

              Residents of Wales, please go to www.nhsdirect.wales.nhs.uk or www.wales.gov.uk/health .

              Residents of Northern Ireland, please go to www.dhsspsni.gov.uk or www.publichealth.hscni.net or call the Northern Ireland Swine Flu Help Line on 0800 0514142.

              0 1

              A major new survey has revealed that RAC is number one for customer service amongst breakdown service providers in the UK.

              The UK Customer Service Index (UKCSI), a national measure of customer service, asked 25,000 adults how well companies and organisations performed in key areas such as professionalism, quality and efficiency, ease of doing business, problem solving and timeliness.

              RAC not only achieved a higher score than any other breakdown provider at 86 out of 100, but of the 156 UK businesses measured, RAC was ranked 5th overall across all sectors including retail, services and automotive.

              Neil Thompson, director of rescue service delivery RAC, said: “I am immensely proud of this achievement; it is fantastic news for RAC as it clearly demonstrates our ability to deliver exceptional service to our members when they call us for help. RAC staff genuinely pride themselves on being the best customer service professionals in our industry. This is a clear indication of their level of professionalism not only because we are seen as the best in the Rescue and Recovery industry but also as one of the best customer service organisations in the UK.”

              About RAC

              Aviva bought RAC in May 2005. The acquisition brings together RAC’s powerful brand and customer base with the expertise and leading position in motor insurance of Aviva UK Insurance (formerly Norwich Union Insurance). Aviva is the UK’s largest insurer with a market share of around 15%.

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              Environmental Finance magazine has named SCOR as the winner of this year’s “Catastrophe Risk Transaction of the Year” award for its “Atlas V” transaction carried out in February 2009. Environmental Finance is a leading monthly industry magazine covering the ever-increasing impact of environmental issues on the lending, insurance, investment and trading decisions affecting industry.

              On 19 February 2009, SCOR closed the three series of its “Atlas V” catastrophe bond, the first “cat bond” issued worldwide in six months. The multi-year property catastrophe (“CAT”) agreement with Atlas V Capital Limited (“Atlas V”) provides protection of USD 200 million of protection for exposures to earthquakes and hurricanes in the USA and Puerto Rico. At SCOR, Emmanuel Durousseau, Head of Retrocession Management, and Augustin Gas, Head of ILS and Alternative Retrocession, pioneered the Atlas V transaction.

              The award recognises the fact that SCOR effectively re-opened the catastrophe bond market after the collapse of Lehman Brothers in September 2008 and highlights the innovative features that have become trademarks of the “Atlas V” cat bond, notably the new and substantially improved transparency and security standards for investors.

              In particular, Environmental Finance distinguishes the improvements in managing counterparty risk for SCOR and investors by employing a much-enhanced total return swap structure and the full and permanent transparency regarding the asset development of the collateral for investors. The use of US-government-backed debt obligations as the underlying securities and the top-up “margining” facility by the total return swap counterparty, which guarantees that the collateral will constantly be replenished in the event of a drop in the underlying security were also considered to be key features of innovation.

              Jean-Luc Besson, SCOR’s Chief Risk Officer commented: “SCOR is honoured to receive this prestigious award, as judged by an editorial panel of senior risk editors and staff writers, and congratulates the team who structured the transaction for this recognition. Risk management at SCOR has historically relied on traditional retrocession and catastrophe bonds. With seven transactions completed, SCOR is a frequent issuer of Insurance Linked Securities and a global leader in this field.”

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              The Financial Services Authority (FSA) has fined three HSBC firms over £3 million for not having adequate systems and controls in place to protect their customers’ confidential details from being lost or stolen. These failings contributed to customer data being lost in the post on two occasions.

              HSBC Life UK Limited (HSBC Life) was fined £1,610,000, HSBC Actuaries and Consultants Limited (HSBC Actuaries) was fined £875,000 and HSBC Insurance Brokers Limited (HSBC Insurance Brokers) was fined £700,000.

              During its investigation into the firms’ data security systems and controls, the FSA found that large amounts of unencrypted customer details had been sent via post or courier to third parties. Confidential information about customers was also left on open shelves or in unlocked cabinets and could have been lost or stolen. In addition, staff were not given sufficient training on how to identify and manage risks like identity theft.

              Despite increasing awareness of the need to protect people’s confidential details, all three firms failed to put in place adequate procedures to manage their financial crime risks. In April 2007, HSBC Actuaries lost an unencrypted floppy disk in the post, containing the personal information of 1,917 pension scheme members, including addresses, dates of birth and national insurance numbers. In July 2007, all three firms were warned by HSBC Group Insurance’s compliance team about the need for robust data security controls. However, in February 2008 HSBC Life lost an unencrypted CD containing the details of 180,000 policy holders in the post. The confidential information on both disks could have helped criminals to steal customers’ identities and commit financial crime.

              Margaret Cole, director of enforcement at the FSA, said:

              “These breaches are very disappointing. All three firms failed their customers by being careless with personal details which could have ended up in the hands of criminals. It is also worrying that increasing awareness around the importance of keeping personal information safe and the dangers of fraud did not prompt the firms to do more to protect their customers’ details.

              “Fraud, particularly identity theft, is a major concern to everyone and firms must ensure that their data security systems and controls are constantly reviewed and updated to tackle this growing threat.

              “In areas where we have previously warned firms of the need to improve, people can expect to see fines increase to deter others and change behaviour in the industry.”

              The firms have taken a number of remedial actions to address the concerns raised, including contacting the customers concerned, improving their staff training and requiring that all electronic data in transit is encrypted.

              HSBC Insurance Brokers, HSBC Actuaries and HSBC Life co-operated fully with the FSA in the course of its investigation. All three firms agreed to settle at the early stage of the FSA’s investigation and qualified for a 30% discount. Without the discount, the fines would have been £1m for HSBC Insurance Brokers, £1.25m for HSBC Actuaries and £2.3m for HSBC Life.

              Source : The Financial Services Authority

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