AIG in talks to sell auto unit to Zurich-source

UPDATE 1-AIG in talks to sell auto unit to Zurich-source : "American International Group (AIG.N) is in advanced talks to sell its U.S. personal lines business, which sells auto insurance, to Swiss insurer Zurich Financial Services AG (ZURN.VX), a source familiar with the matter said on Tuesday.

The U.S. personal lines business sells auto insurance, and products to high net-worth individuals through its AIG Private Client division. AIG Chief Executive Edward Liddy has said that the private client division is not being sold.

AIG and Zurich both declined to comment."

Source: Reuters

Swiss and Aspen Re Hurrican Ike Claims Figures Continue to Climb

2 reinsurers' Ike figures continue to climb: "Guy Carpenter reports that Swiss Re Group has revised its Hurricane Ike losses upward by 64%, while Aspen Insurance Holdings' increased its by 23%. In dollar amounts, Swiss Re's losses stand at $503 million and Aspen's are at $223 million."

Source: NAMIC

Validus Opens in Asia; Office Headed by Munich Re Singapore's ex-CEO Haushofer

Validus Announces the Opening of an Asia-Pacific Reinsurance Representative Office: Validus Holdings today announced the opening of an Asia-Pacific reinsurance representative office located in Singapore. The new office will represent Validus Reinsurance, Ltd. ('Validus Re'), the Validus group's Bermuda-based reinsurance operation which focuses on short-tail classes of business, including property, marine, and other specialty.

Marc Haushofer, an experienced Asian sector specialist, has joined Validus Re as Chief Representative and head of the new Asia-Pacific representative office. Mr. Haushofer, 47, is the former Chief Executive Officer of Munich Re's Singapore Branch Office for South-East Asia and former Deputy Chairman of the Singapore Reinsurers' Association. He has approximately 25 years of insurance and reinsurance industry experience, with nearly half of this time dedicated to the Asian marketplace.

Source: Validus

Novae in Due Diligence for Chaucer

Novae in Due Diligence for Chaucer: The Board of Novae Group today confirmed that "it has entered into discussions with Chaucer and due diligence has commenced with a view to confirming the expected material benefits that could arise from a combination of the companies' complementary operations."

It further indicated that "This process is likely to continue beyond the expected completion of Chaucer's proposed capital raising.

Source: Novae

Fortis CEO: 'No' Vote Could Lead To Bankruptcy - Report

Fortis CEO: 'No' Vote Could Lead To Bankruptcy - Report: "Fortis NV (FORB.BT) will face the threat of bankruptcy if its shareholders vote against its carve-up Wednesday, Fortis' CEO Jan-Michiel Hessel said Tuesday in an interview with Dutch daily Het Financieele Dagblad.

Hessel said Fortis will fall EUR2.3 billion short if shareholders block the transaction of Belgian Fortis units to BNP Paribas (13110.FR).

If the deal is blocked, 'we're threatened by a bankruptcy, which will leave the shareholders empty-handed,' Hessel said.

The CEO said Fortis will need the EUR2.3 billion in order to protect the firm against toxic assets on its balance sheet. The Belgian government has promised Fortis financial support against these toxic assets, on the condition that the break-up is approved by its shareholders."

Source: Morningstar

Swiss Re to Close Bermuda Office

Swiss Re to Close Bermuda Office: "Swiss Re is to close its Bermuda office with the loss of five jobs as the company seeks to cut costs.

The office, which is located on the fourth floor of Mintflower Place on Par-la-Ville Road, will be effectively shut down by the end of June this year, Swiss Re spokeswoman Alayna Tagariello told The Royal Gazette yesterday.

'We employ five people at the Bermuda office and all of those positions will be eliminated,' Ms Tagariello said. 'We are focused on achieving cost efficiences. Any business going through our Bermuda office can be handled through other offices.'

The news is the latest bout of job losses in Bermuda's international business sector to come to light this year, after accountancy firm Ernst & Young released an undisclosed number of staff and then fund managers Butterfield Fulcrum Group said it was releasing around 30 employees from its Island operation."

Source: The Royal Gazette

Travelers Syndicate 5000 Restructures Marine Division

Travelers Syndicate 5000 has today announced the restructure of its marine division: "Travelers Syndicate 5000 has today announced the restructure of its marine division.

The main changes include Graham McManus, who is currently cargo underwriter, taking over the management of cargo, terrorism, specie and fine art. He is supported by the new specie and fine art underwriter, Mark Apinall and new Cargo underwriter, Andrew Corton who have both been promoted from their current deputy underwriter roles.

Graham Gorsuch, who is currently Hull underwriter, will take over the management of hull and yacht. Yacht, which was an expansion for Travelers in 2008, continues under the direction of John Higham.

Lee Martin who currently underwrites the liability account will become manager of liability and UK marine.

UK marine is the marine portfolio for UK domiciled business across both Travelers syndicate and the UK insurance company and will continue to be underwritten by Graham Harrison.

Mark Clifford, the ports & terminals underwriter will become manager of Galatea, an underwriting agency who was acquired by Travelers in 2007. Chris Childs remains the underwriter of Galatea."

Source: Post Online

Message Leaving XL for Torus

Torus gets the Message: "David Message will lead offshore underwriting team after completing duties at XL

Torus has appointed David Message, currently at XL Insurance, to take charge of the Torus offshore underwriting team in London, at a date to be determined.

Market losses following hurricanes Gustav and Ike indicate insurance for offshore assets remains very testing for both buyers and sellers.

The appointment of David Message “adds strength in depth” to Torus’s existing resources at an important time and underlines Torus’ growing commitment to this area of business, a company statement said."

Source: Global Reinsurance

Former QBE MD Fitzgerald Joins Delta

Former QBE MD joins loss adjuster: "Stephen Fitzgerald has joined Delta Claims Services as non-executive chairman.

Stephen, previously managing director of DA Constable Syndicate (386 at Lloyd's) and divisional director of QBE, is the second senior person to join the company since it was created in November 2008. Owen Gorman was the first to join the company last week as a director.

Delta added that Mr Fitzgerald will work with founding director Simon Burley and Mr Gorman to deliver key business objectives and drive the organisation in 2009."

Source: Reinsurance

S&P cuts Hartford credit rating to A-

S&P cuts Hartford credit rating to A-: "Standard & Poor’s Corp. has downgraded Hartford Financial Services Group Inc.’s counterparty credit rating to A- from A and put the insurer’s other ratings under review with negative implications.

New York-based S&P cited Hartford’s deteriorating business as well as the current economic conditions as reasons for the move.

“Because of the sharply lower equity markets, Hartford’s earnings from equity-linked products have decreased, and actual and potential reserve and capital requirements have increased,” analyst Robert A. Hafner said in a statement.

“Compounding these pressures are concerns that investment losses could increase beyond expectations for the ratings unless general economic conditions stabilize,” Mr. Hafner said.

S&P said it expects to resolve the company’s CreditWatch status within a month, following further review of its investment exposures, capital needs and earnings prospects.

S&P said it will likely either affirm the ratings and assign a negative outlook or lower the ratings by one notch."

Source: Business Insurance

Axis Capital Q4 Profit Declines Over 50%

Axis Capital Q4 Profit Declines Over 50% "Axis Capital Holdings Ltd. (AXS: News ) reported fourth quarter net income available to common shareholders of $131 million, or $0.88 per common share, compared to net income of $306 million or $1.89 per common share, for the corresponding period in 2007.

Operating income for the fourth quarter of 2008 was $163 million, or $1.09 per share, compared with $296 million, or $1.83 per common share, for the fourth quarter of 2007.

Analysts polled by Thomson Reuters expected the company to report earnings of $1.00 per share. Analysts' estimates typically exclude special items."

Source: RTT

2008 Was a Short, Defining Year for Cat Bonds*

A Short, Defining Year for Cat Bonds*: "The catastrophe bond year ended back in July, and two quarters of virtual silence have signaled an abrupt change in the market. After 2006 and 2007, we had become accustomed to record-setting issuance years. Hopes were high for 2008, which was on track with the previous year through the beginning of the third quarter. Then, everything just stopped. Given how 2008 progressed, we cannot judge the catastrophe bond market as we would in a normal year. A worldwide financial meltdown affected the insurance and reinsurance industry deeply, creating conditions that will make 2009 unpredictable. Nonetheless, catastrophe bonds did demonstrate their resilience, indicating their likely importance this year.

In 2008, USD2.7 billion in catastrophe bond principal came to market, a 62 percent plunge from the USD7 billion in 2007. The number of transactions dropped by more than half, from 27 to 13. New catastrophe bond limits were down 40 percent (from USD3.9 billion). While the market was markedly slower last year than in 2007, it was fairly close to 2006 issuance rates. Yet, after a mid-July issuance of USD320 million, the market came to a halt. The prior year, USD1.2 billion was brought to market in the third quarter, with another USD1.8 billion coming in the fourth quarter. The normal flurry of activity in December was deferred, with execution planned for the first quarter of 2009.

The market changed dramatically and suddenly. Several factors were responsible. Catastrophe losses increased substantially relative to 2007, due in large part to Hurricanes Gustav and Ike. A financial catastrophe joined the hurricanes in September, ripping through the world’s financial centers with unparalleled ferocity. These two events squeezed the world’s financial markets and made the recent renewal season one of the most unusual in several decades. With widespread uncertainty through the end of 2008 as the result, the only viable course of action for issuers was to wait and see.

Catastrophe activity increased in 2008, following two relatively quiet years. Potential issuers watched carefully to see if any catastrophe bonds would attach in the wake of Hurricanes Gustav and Ike. While principal remained untouched, the storms did have an effect on issuer perspectives, as fears mounted about having to pay higher interest rates for new catastrophe bond issuances. Also in September, the turmoil experienced by several high-profile financial institutions caused concerns that credit risk would leak into catastrophe bond structures. Again, the apparent exposure was worse than the market result, but the threat nonetheless caused carriers to take a second look at how they transfer risk.

Access to capital tightened last year, particularly in mid-September, making capital markets less attractive to (re)insurers. Increased redemption rates in the alternative investment space rendered these institutions less willing (or able) to invest in insurance risk, and the situation was exacerbated by the withdrawal of many multi-strategy hedge funds from the ILS asset class. Constraints on leverage also limited the amount of capital available for investment, and credit markets around the world showed signs of drought.

The overarching factor, of course, was uncertainty as to the direction of traditional reinsurance rates. As cedents and markets headed toward the year-end milestone, pricing showed little uniformity. Line of business, geography, and loss history influenced pricing, making most attempts at generalization futile. Few could say with confidence that they knew where reinsurance rates were going, and the market’s ambiguity led carriers to wait for the overall implications of the January 1, 2009 renewal to become evident before pursuing issuances.

Despite the obvious challenges of 2008, catastrophe bond performances (for investors) held up rather well. Unlike other credit instruments, catastrophe bonds are linked to physical events — such as earthquakes and hurricanes — rather than the issuer’s likelihood of default. For this reason, advocates have claimed that catastrophe bonds are not correlated with broader credit markets. Aside from the four bonds that many worried had been infected by the credit crisis, claims of non-correlation appear to have been confirmed."

Source: Guy Carpenter

Chaucer in Talks with Potential Buyers; Asked Not to Pursue Fundraising

Chaucer in talks with potential buyers but still aiming to raise new cash: "Chaucer is in talks with a number of potential buyers, one of which has requested that the company does not press ahead with plans to raise £75 million through the placing and open offer that was announced in January.

The company’s decision to raise new cash triggered a number of approaches, which it said may or may not lead to an offer being made. However, it noted that all approaches were at an early stage and were subject to a number of pre-conditions. One of those companies involved is fellow London-listed insurance group, Novae.

Despite the request to pull out of the proposed fundraising, Chaucer said it still intended to proceed with the move. It added that its insurance franchise benefited from a number of core strengths which would need to be fully reflected in proposals and, in turn, in the board's recommendation to shareholders."

Source: SmallCapNews

Losses for Australian Fires May Exceed A$2 Billion; May Increase

Australia Bushfire Damage Cost May Top A$2 Billion, S&P Says "Australia’s bushfires may have caused total damage of more than A$2 billion (USD 1.34 billion), Standard & Poor’s said in a report.

“Early estimates from the market suggest insurance losses of more than A$500 million and total damage including infrastructure exceeding $2 billion,” the ratings company said in an e-mailed statement. “Given the metrics of devastation to date, we believe these figures are likely to increase.”

Although the financial impact on insurers will be material, the industry exposure is manageable under “robust reinsurance arrangements and capital support initiatives,” S&P said."

Source: Bloomberg

Aspen Announces Director Rosenthal Will Not Be Standing for Re-Election

Aspen Insurance Holdings Limited Announces Director Will Not Be Standing for Re-Election: "Aspen Insurance Holdings Limited, parent company of Aspen Re, et al, today announced that Dr. Norman L. Rosenthal will not be standing for re-election to the Board of Directors when his current term expires at the next Annual General Meeting on April 29, 2009.

Dr. Rosenthal has been a Director of the Company since June 21, 2002, and is a member of the Audit Committee and the Corporate Governance and Nominating Committee.

“Aspen has benefited greatly from Norman’s loyal and diligent service to our Board. As a former financial analyst, Norman has provided an invaluable perspective on our business in general and communications with our shareholders in particular. I would also like to thank Norman personally for the substantial contribution he has made to Aspen during the time he has served on our Board. ” said Chris O’Kane, Chief Executive Officer"

Source: Earthtimes

1/1 Rates Followed Exposure in UK with Little Movement Seen

1/1 Rates Follow Exposure in UK, Little Movement: "In the UK, catastrophe pricing ranged from -2.5 percent to 5 percent on a risk-adjusted basis, with rate changes closely linked to exposure. Deductibles were similar to 2008, and catastrophe buying was driven more by capital management considerations with reinsurance being seen as an efficient means of securing contingent capital, especially against the background of the financial crisis. Risk excess pricing was between -5 percent and flat, driven by experience rather than exposure."

Source: Guy Carpenter

Glencairn Forms Energy Division; Brooks Appointed its CEO

Glencairn Forms Energy Division: "The London-based Glencairn, a company within Faber & Dumas, the third-party wholesale insurance broker established by Willis, has announced the establishment of an energy division within the London market and the appointment of Alan Brooks as the Chief Executive of Glencairn Energy.

Brooks is a Chartered Insurance Broker and has been a high-profile figure in the global energy insurance market since joining Jenner Fenton Slade (JFS) in 1985 directly from the oil industry, where he worked for Britoil plc. After JFS was acquired by Aon in 1994, Brooks headed its International Upstream broking team. In 2000, Brooks joined Willis where, as Managing Director of the Energy division, he was credited with revitalizing and rebuilding the company's energy practice.

Glencairn's Chairman and Chief Executive, Steve Hearn, commented: 'We have for some time now been seeking an energy capability that will complement the products and services we offer our broking partners around the world, and we are delighted to have been successful in appointing an individual of Alan's capability and standing to lead this initiative.'"

Source: Insurance Journal