Mapfre profits increase in 2008; revenues up 19% to USD 22.8 billion

Mapfre profits increase in 2008: "MADRID, Spain—Spanish insurer MAPFRE said its net profit rose by 23.2% last year, to €900.7 million ($1.16 billion), driven by growth in its international business, the company announced Wednesday.

Madrid-based MAPFRE said its total revenues rose 19%, to €17.7 billion ($22.8 billion).

Nonlife insurance premium revenues increased 2.6% to €5.8 billion ($7.5 billion),while life insurance premium revenues rose 11% to €2.4 billion ($3.1 billion).

MAPFRE's business from overseas, which represents 45% of the group's total premiums, grew 33.9%, reaching €6.8 billion ($8.8 billion), the insurer said."

Source: Business Insurance

S&P upgrades Axis Capital to A+

S&P upgrades Axis Capital to A+: "Bermuda-based insurer Axis Capital Holdings Ltd. has had the financial strength and counterparty credit ratings of its operating units raised to A+ by Standard & Poor's as a result of consistently strong financial results and its moderate debt levels.

In an announcement yesterday, S&P said it had also raised its counterparty credit and senior unsecured debt ratings on Axis to A- from BBB+.

The company led by chief executive officer John Charman and chairman Michael Butt topped $1 billion in annual net income in just its sixth year of business in 2007.

The upgrade will bolster Axis' competitive position at a time when several competitors have either been downgraded or are struggling to hang onto their current ratings after a tumultuous 2008, which saw large catastrophe losses and investment portfolio shrinkage.

Although Axis posted a $249 million net loss in the third quarter of 2008, largely as a result of hurricane-related claims of around $371 million, analysts expect Axis to swing to a profit in the last three months of 2008. The company plans to release its fourth-quarter and full-year results next Monday.

'The upgrade reflects our view that Axis has consistently outperformed most of its peers,with strong operating results since its inception in 2001," said Standard & Poor's credit analyst Laline Carvalho.

"We believe Axis' earnings quality is also strong, as demonstrated by a history of moderate earnings volatility relative to peers, even including large loss years such as 2005 and 2008."

Source: The Royal Gazette

Faraday staff in restaurant fracas

Faraday staff in restaurant fracas: "According to Insurance Times, police were called following a fracas between two employees from Faraday Group at a London restaurant last week.

Faraday, which owns a Lloyd’s syndicate and reinsurance business, said the police were not taking any action and the incident was closed. Henry Ashton, Faraday’s chief executive, said: “There was an incident at a restaurant last week. Police were informed but are taking no action, so as far as we are concerned the incident is closed.”

Faraday’s last trading statements showed pre-tax profit of £38.1m for 2007, a massive increase from £8.3m for the year before. Faraday describes itself as a market leader in aviation, casualty and property, saying it achieves success by investing in quality service, technology and people."

Source: Insurance Times

Swiss bourse investigating Swiss Re disclosure

Swiss bourse investigating Swiss Re disclosure: "-Swiss bourse investigating Swiss Re disclosure
ZURICH, Feb 4 (Reuters) - The Swiss bourse SIX is investigating an announcement made by Swiss Re (RUKN.VX) last year about its exposure to U.S. mortgage lenders Freddie Mac (FRE.N) and Fannie Mae (FNM.N), it said on Wednesday.

SIX would not provide information during the investigation into whether Swiss Re broke bourse disclosure rules and would announce the outcome of its investigation in due course, it said in a statement.

Swiss Re shares have come under renewed pressure ahead of its full-year results on Feb. 19 on fears it could write down further billions of dollars of toxic assets. [ID:nLF347203]

'Swiss Re is confident that it has acted in compliance with the relevant listing and ad hoc publicity rules,' a Swiss Re spokeswoman said.

Swiss Re, the world's second-biggest reinsurer, said on July 16 it had $9.6 billion of exposure to debt of Freddie Mac and Fannie Mae, after the U.S. government was forced to pledge them help. [ID:nL16759830]

Freddie and Fannie at the time commanded just under half of the United States' $12 trillion in outstanding mortgage debt. (Reporting by Jason Rhodes; Editing by David Holmes)"

Munich Re Spooked By Renewals

Munich Re Spooked By Renewals: "Munich Re Spooked By Renewals
Lower renewal rates in January are worrying in a market that should be looking up for reinsurers.

Munich Re, the German insurer of insurers that recently said it would benefit from market volatility and adversity to risk, is still off the mark. Shares of the firm fell sharply on Wednesday after it announced a big drop in annual earnings and admitted that that renewal rates on its reinsurance products for January were well below the figure it had hoped for.

Shares of Munch Re (other-otc: MURGF - news - people ) fell 2.7%, or 2.88 euros ($3.72), at 104.62 euros ($135.01), in Frankfurt after the firm announced that annual profits for 2008 had fallen to 1.5 billion euros ($1.9 billion), a 62.0% drop, while fourth-quarter profits fell to 100.0 million euros ($121.1 million), from 600.0 million euros ($774.3 million) in the corresponding period a year ago, largely due to write-downs on the investments it had made using its premium income.

The market had been bracing itself for the write-downs, after Munich Re scrapped its initial forecast of 3.4 billion euros ($4.4 billion) profit for 2008 and gave two profit warnings last year. It finally warned in November that earnings would come in at 2.0 billion euros ($2.6 billion).

However, the main update that seems to have spooked the market is the trend of renewals in January, which came in considerably lower than forecasts and the year before. Two thirds of Munich Re's property and casualty reinsurance portfolio had been up for renewal in January, 17.6% of which was not renewed.

Reinsurers like Munich Re have been contending that a lack of risk appetite would buoy demand for reinsurance, and also give it greater pricing power going forward. In the past few years, competition had forced the industry to cut prices. 'We are surprised that premium volume declined in an environment of rising demand and hardening rates,' said DZ Bank analyst Thorsten Wenzel in a note to investors.

Nevertheless, Munich Re is sticking to its forecast that earnings will be looking up in the year ahead. It also confirmed that it would pay an annual dividend of 5.50 euros ($7.10) a share."

Source: Forbes.com

CNA appoints eSwiss Re's Figes as Casualty Manager to expand European portfolio

CNA appoints casualty manager to expand European portfolio: "CNA appoints casualty manager to expand European portfolio

LONDON—CNA Insurance Co. Ltd. in London said Wednesday it had hired Mark Figes as casualty manager with a goal of expanding CNA Europe's casualty portfolio in Continental Europe and the United Kingdom.

Mr. Figes, who has 28 years of experience in the insurance and reinsurance sectors, was most recently casualty insurance underwriting director at Swiss Re International, where he established a London market transactional business unit, CNA said.

'CNA Europe is uniquely positioned to grow its casualty account throughout Europe and Mark is very well qualified to lead this expansion,' said Julian Enoizi, CEO of CNA Europe. 'His experience encompasses underwriting, management and expanding in to new territories. He has an impressive track record of developing profitable portfolios worldwide.'"

Source: Business Insurance

Ace's profits fall 54% to USD 1.2BN

Ace's profits fall 54% to $1.2bn - 1 February 2009: "Ace's profits fall 54% to $1.2bn

Ace's net income for 2008 has fallen 54% to $1.2bn from $2.6bn in 2007. The full-year figures were affected by fourth-quarter results that saw profits fall to $20m from $572m in the fourth quarter of 2007.

Net investment income was marginally up for the year, to $2.1bn in 2008 from $1.9bn in 2007. Despite hurricanes Gustav and Ike, Ace's property/casualty combined ratio for the year was 89.6%, up from 87.9 in 2007.

Evan Greenberg, chairman and chief executive officer of Ace, said: 'Ace produced strong operating results in one of the most difficult quarters in modern history for financial services companies.'

He added: 'Net income suffered from other-than-temporary-impairment losses related mostly to interest rate spreads in the period. Book value, which declined 6% in the quarter and 10% for the year, was impacted by realised and unrealised investment losses, extreme foreign exchange fluctuation and a loss from a fair value increase in the liabilities associated with our life reinsurance business. We believe most of the losses in the portfolio and life reinsurance business will recover in value over time. Even with this year's decline, our book value has grown at a compound annual growth rate of 12% the last five years.'"

Source: Reactions

Guy Carpenter Briefing Finds Catastrophe Bond Market Resilient in Face of Financial, Property Catastrophes

Guy Carpenter Briefing Finds Catastrophe Bond Market Resilient in Face of Financial, Property Catastrophes

Catastrophe bonds withstood the impact of onerous market forces in 2008, brought on by turmoil in the global capital markets, according to a new briefing on catastrophe bond market activity published by Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist, and GC Securities, a division of MMC Securities Corp*. Available at www.GCCapitalIdeas.com, the cat bond market
update found that as a whole, in terms of issuance volume, 2008 was the market's third most active year since catastrophe bonds were introduced in 1997, accounting for 11 percent of all issuances.


Thirteen issuances, all but two of which occurred in the first half of the year, brought USD2.7 billion in new and renewal capacity to market in 2008, according to Guy Carpenter's findings. After a record-setting year in 2007, cat bond issuance in 2008 fell 62 and 52 percent in terms of risk capital and number of transactions, respectively.


The report also found that after the events of mid-September 2008, several firms that were planning catastrophe bond issuances for the fourth quarter elected to defer those issuances to the first quarter of 2009. As a result, the total amount of risk capital outstanding dropped 14.5 percent, from USD13.8 billion at year-end 2007 to USD11.8 billion at year end 2008.


'Put to the test by the unprecedented circumstances of 2008, the cat bond market proved its resilience as the market absorbed the impact of concurrent financial and property catastrophes,' said David Priebe, Chairman of Global Client Development at Guy Carpenter. 'And, while cat bond spreads did increase during the tumultuous days of September, they did not do so at the same rate as the credit markets generally.'


'We see an increasing number of companies integrating catastrophe bonds into their reinsurance purchase decisions as an important complement to fill gaps in traditional capacity,' said Chi Hum, Global Head of Distribution, GC Securities.


'We expect to see more transparency and tightened collateral requirements in 2009,' added Mr. Priebe. 'Cat bond issuance activity likely will eventually rebound as conditions improve, and as an asset class, cat bonds should offer improved utility for both sponsors and investors.'


Other report findings include:


- Ambiguity became a key factor ' Ambiguity in the (re)insurance market as a whole - and outright distress in the global financial markets - was the primary driver behind the sharp drop in fourth quarter cat bond issuances year-over-year.
- Non-correlation with broader credit markets demonstrated ' Non-correlation initially was called into question in the case of four cat bonds that were marked down due to the loss of their total return swap (TRS) counterparty. As more details emerged, however, the moral hazard issues endemic to other credit related asset classes were ruled out as systemic concerns for the cat bond market, though they are potential areas for improvement for future transactions.
- Risk capital above average ' The USD2.7 billion issued in 2008, which came to market at a time when reinsurers had excess capital on their balance sheets, was higher than the 11-year average of USD2.1 billion. Despite continued buybacks and dividends - and favorable pricing for cedents - carriers saw a benefit to transferring risk to capital markets.
- 2009 Outlook ' Disciplined risk and capital management, as well as funding diversification will persist as critical focus areas during 2009. In this type of environment, the cat bond market offers significant value to both sponsors and investors and therefore issuance activity should revive in the coming year. The extent of the revival will hinge on the prevailing supply and demand conditions for risk transfer capacity in both the traditional reinsurance and capital markets.
Guy Carpenter's intellectual capital website, www.GCCapitalIdeas.com, leverages blog technology, including Real Simple Syndication (RSS) feeds and searchable category tags, to deliver Guy Carpenter's latest research as soon as it is posted. In addition, articles can be delivered directly to BlackBerry® devices and other personal digital assistants (PDAs)."

Source: Guy Carpenter

S&P Foresees 'Tough Times' for Russian Insurers In 2009-2010

S&P Foresees 'Tough Times' for Russian Insurers In 2009-2010: "A report from Standard & Poor's Ratings Services entitled, 'Tough Times Will Challenge Russian Insurers In 2009-2010', published on its RatingsDirect web site, concludes that 'Russia's insurance market is still developing and will come under unprecedented stress in 2009-2010 in reaction to the likely domestic recession.'

S&P noted that of 'more than 800 insurance organizations operating in the Russian Federation, 60 percent of gross premiums are written by the 10 largest companies. The rest of the market is fragmented and is characterized by a large number of small, undercapitalized companies with tiny market shares.'

Credit analyst Victor Nikolskiy pointed out that 'profitability is under pressure, expense ratios are deteriorating, the growth in premiums is slowing, and companies' capital positions are becoming strained.'

S&P also indicated that it expects 'continuing pressure on the insurance sector arising from the overall weak quality of insurance investment portfolios (including bank deposits and corporate bonds). The sharp liquidity squeeze and deteriorating asset quality indicators in the Russian banking sector will only add to the problem.'"

Source: Insurance Journal

Cayman insurance deputy joins Heritage

Cayman insurance deputy joins Heritage: "Cayman insurance deputy joins Heritage

Dean Wickens will be part of the company’s expanding team in the Arabian Gulf

Heritage has appointed Dean Wickens to its London and Middle East captive management team as part of the company’s rapid expansion in the GCC region.

Previously deputy head of insurance at the Cayman Islands Monetary Authority (CIMA), Wickens brings with him more than 15 years of insurance experience, including seven years supervising captive insurance companies at the Guernsey Financial Services Commission and more recently at CIMA. Wickens is an Associate of the Chartered Insurance Institute."

Source: Global Reinsurance

RSA to make €70m acquisition

RSA to make €70m acquisition: "RSA is set to acquire the remaining 50% of its joint venture in Central & Eastern Europe.

In a statement, RSA said: 'Following an article published in the press today in Tel Aviv, RSA confirms that it is in discussions with Direct Insurance Financial Investments, to acquire DIFI’s 50% holding in Intouch Insurance Group BV, a joint venture with market leading direct operations in Poland, the Czech Republic and Russia.

'The consideration for the remaining 50% shareholding and full control of Intouch Insurance Group BV is expected to be €70m, paid in cash.'"

Source: Insurance Times

Greenberg: AIG Has Lost Its Way, Needs to Be Rebuilt

Greenberg: AIG Has Lost Its Way, Needs to Be Rebuilt: "AIG shares slumped to an all-time low in New York trade Tuesday, down 12 percent to close at $1.08. Just a year ago, AIG shares were trading north of $55. Traders were responding to concerns the insurer could need a bigger bailout than the $150 billion it's already received in total support from the U.S. government.

Hank Greenberg, chairman and CEO at C.V. Starr and Co. and former CEO of AIG, told CNBC's Asia Squawk Box that it's clear AIG is more than a troubled company.

'They've really lost their way. Clearly there's a seriously issue and it's hard for me to understand. AIG was the largest most successful insurance company in history ... it's hard to understand how it could fall off a cliff that quickly and that far,' Greenberg said.

When asked about the government taking an 80 percent stake in AIG -- effectively nationalizing it -- and its subsequent 8 percent stake in Citigroup, Greenberg felt that the discrepencies were due to the quick turnaround in the AIG deal.

'AIG ran out of cash and went to the government at the last minute. It was a liquidity problem and not a solvency problem at the time. The terms of the original funds they borrowed were so draconion that they finally had to change that, but the left the 80 percent ownership with the government,' Greenberg said."

Source: CNBC.com

Munich Re sees wind storm cost below 100 mln eur

Munich Re sees wind storm cost below 100 mln eur: "FRANKFURT, Feb 4 (Reuters) - Munich Re (MUVGn.DE) expects the hit from a wind storm in France and Spain last month to cost it less than 100 million euros ($130 million), it said on Wednesday.

The storm killed at least 15 people, destroyed roofs, felled trees and left millions in southwest France and northern Spain without power late last month. It is expected to cost the insurance industry around 2 billion euros, Munich Re board member Torsten Jeworrek told a conference call with journalists.

'For Munich Re... the (cost at most) should be in the high double-digit million euro area,' Jeworrek said.

Spain alone accounted for about 400 million euros of insured damages in the storm but the Spanish government was likely to pick up some of the bill, Jeworrek said."

Source: Reuters

Ex-Employers Re CEO Ahlmann Joins RLI Board

RLI Appoints Kaj Ahlmann to Board of Directors: Insurance industry veteran Kaj Ahlmann has joined the RLI board of directors. Ahlmann is a retired chairman, president and CEO of Employers Reinsurance Corporation, a division of GE, and currently operates his own consulting business, Six Sigma Ranch, LLC, offering advice to financial services firms, including insurance companies .

He also serves as a director for the Deutsche Bank Advisory Council, Cyrus Re, the American Institute for Chartered Property Casualty Underwriters, and is a past chair of the Reinsurance Association of America. Ahlmann and his family also own and operate the Six Sigma Ranch, Vineyards and Winery in Lower Lake, California.

Ahlmann holds a master's degree in mathematical statistics from the University of Copenhagen, a bachelor of science in mathematics and a masters's degree in actuarial science from the University of Aarhus.

'Kaj brings a wealth of insurance industry knowledge to the table,' said RLI President & CEO Jonathan E. Michael. 'His insights and skills will strengthen our board, and enhance the guidance it gives to our company leaders.'

RLI is a specialty insurance company serving 'niche' or underserved markets. With a diverse portfolio of property and casualty coverages and surety bonds, it has achieved an underwriting profit in 28 of the last 32 years, including the last 13. RLI and subsidiaries - RLI Insurance Company, Mt. Hawley Insurance Company and RLI Indemnity Company - are rated A+ 'Superior' by A.M. Best Company and A+ 'Strong' by Standard & Poor's. RLI operates in all 50 states from office locations across the country."

Source: MarketWatch

AIG falls on fears more gov't cash needed

AIG shares fall on fears more gov't cash needed: "NEW YORK, Feb 3 (Reuters) - Investors concerns that American International Group (AIG.N) could need more cash than the $150 billion taxpayer bailout it received last year sent its shares as low as 16 percent on Tuesday to an all-time low.

'People are getting nervous with companies that received money from the government ... concerned about whether money will be available for these troubled companies,' said William Lefkowitz, an options strategist at brokerage firm vFinance Investments in New York.

'As a result of this thinking, AIG is trading down today,' Lefkowitz said.

AIG's Chief Executive Edward Liddy has said he hoped the government's $150 billion rescue package would be adequate, but he did not rule out seeking more government money."

Source: Reuters

A.M. Best Downgrades Ratings of New Castle Reinsurance Company Ltd.

A.M. Best Downgrades Ratings of New Castle Reinsurance Company Ltd.: "OLDWICK, N.J. - (Business Wire) A.M. Best Co. has downgraded the financial strength rating to B++ (Good) from A- (Excellent) and the issuer credit rating (ICR) to “bbb” from “a-” of New Castle Reinsurance Company Ltd. (New Castle Re) (Bermuda). A.M. Best has also downgraded the ICR to “bb-” from “bbb-”of New Castle Reinsurance Holdings Ltd. (Bermuda). All ratings have been removed from under review with negative implications and assigned a negative outlook. Concurrently, A.M. Best has withdrawn the ratings at the company’s request and assigned an NR-4 to the FSR and an “nr” to the ICRs. These rating actions reflect management’s decision to withdraw from A.M. Best’s interactive rating process."

Source: Earthtimes