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Industry veteran takes Swiss Re back to basics: "Reinsurer Swiss Re (RUKN.VX) has picked industry veteran Stefan Lippe to steer the company back to basics after his investment banker predecessor's short tenure ended in big writedowns and a full-year loss.
Analysts say Lippe, a reinsurance veteran with 25 years experience, is regarded as the only top executive untarnished by Swiss Re's foray into investment banking under the abrasive Aigran, a former JP Morgan banker, who took the helm in 2006.
'He's a bit of a John Major-style character,' said a company source, comparing Lippe to the former UK prime minister. 'Not charismatic (but) grey and always in the background. A solid reinsurer that can guide the company to safety.'
Lippe, a 53-year-old German citizen, graduated in mathematics with business administration from the University of Mannheim and gained his doctorate in 1982.
He joined Swiss Re's executive board in 1995 and became Aigrain's deputy in September 2008 after a successful spell as head of Swiss Re's property and casualty operations.
The new chief executive may prove more popular with the rank and file than Aigrain, regarded as an aloof outsider to the reinsurance sector, the company source said.
'Lippe is more approachable and comes across as extremely professional,' he said.
This could help Lippe to unite demoralised Swiss Re employees behind the world's second-largest reinsurer as it battles to regain profitability and shareholder confidence.
'Stefan Lippe is an ideal internal choice for the replacement. His seniority, proven track record and employees' respect should help (Swiss Re) to find success again,' said Kepler Markets analyst Fabrizio Croce."
Source: Reuters
12 February 2009
Hartford loses access to federal debt facility
Hartford loses access to federal debt facility: "HARTFORD, Conn.—Hartford Financial Services Group must repay $375 million of short-term debt issued under the Federal Reserve Board’s Commercial Paper Funding Facility as it matures because of rating downgrades, the insurer said Thursday.
In a 10-K filing with the Securities and Exchange Commission, Hartford said the Federal Reserve Board authorized the facility on Oct. 7, 2008, and Hartford registered with it to sell it up to $375 million in debt, all of which it had issued as of year-end 2008.
But the company’s debt must be rated A-1/P-1/F1 by at least two rating agencies to be eligible for the program, and recent downgrades by Standard & Poor’s Corp., Moody’s Investors Service Inc. and Fitch Ratings made it ineligible to sell additional commercial paper.
This means Hartford will be required to pay the maturing debt issued “from existing sources of liquidity,” according to its 10-K.
“Future deterioration of our capital position at a time when we are unable to access the commercial paper markets due to prevailing market conditions could have a material adverse effect on our liquidity,” Hartford said in the SEC filing"
Source: Business Insurance News
In a 10-K filing with the Securities and Exchange Commission, Hartford said the Federal Reserve Board authorized the facility on Oct. 7, 2008, and Hartford registered with it to sell it up to $375 million in debt, all of which it had issued as of year-end 2008.
But the company’s debt must be rated A-1/P-1/F1 by at least two rating agencies to be eligible for the program, and recent downgrades by Standard & Poor’s Corp., Moody’s Investors Service Inc. and Fitch Ratings made it ineligible to sell additional commercial paper.
This means Hartford will be required to pay the maturing debt issued “from existing sources of liquidity,” according to its 10-K.
“Future deterioration of our capital position at a time when we are unable to access the commercial paper markets due to prevailing market conditions could have a material adverse effect on our liquidity,” Hartford said in the SEC filing"
Source: Business Insurance News
New Hope For Swiss Re
New Hope For Swiss Re: "Not even Warren Buffett's support was enough to save outgoing Swiss Re chief executive Jacques Aigrain from the chop on Thursday, after the reinsurer's dismal annual loss and planned rights issue sent its shares down by almost 30.0% on Feb. 5. And now that deputy-CEO Stefan Lippe is in the hot seat, there is a good chance the turnaround of the business can begin.
'Lippe is really focused on the core business, the reinsurance business and underwriting,' said Fabrizio Croce, an analyst with Kepler. 'The expectation is that he will unwind the entire structured products portfolio, as well as all the risky stuff, like corporate bonds.'
Shares of Swiss Re (other-otc: SWCEF - news - people ) jumped 6.0%, or 1.14 Swiss francs (98 cents), to 20.08 Swiss francs ($17.28), during early trading in Zurich. The Dow Jones Euro Stoxx 50 index, meanwhile, was down 1.2%.
'I am clear about the challenges that Swiss Re needs to address,' said Lippe, 53, on Thursday. 'Our core re-insurance portfolio is sound.'
Swiss Re said that Jacques Aigrain would 'support' the transition to a new CEO until Feb. 18, though his resignation was effective immediately. Pressure on Aigrain began to build earlier this month, when Swiss Re unveiled an annual loss of $861.3 million and said it would need to raise capital to the tune of $4.3 billion. Shareholder Warren Buffett offered his support to Aigrain, and promised to provide $2.6 billion worth of the required funds, but it was not enough to keep shares from falling 28.1% on the day.
Franco-Swiss Aigrain was picked to helm Swiss Re in late 2005, when the reinsurer's financial-services division was poised for healthy growth and lucrative securitization returns. But the credit crisis and financial-market meltdown after 2007 ended up cursing Swiss Re with losses, especially from its exposure to risky products like credit-default swaps."
Source: Forbes.com
'Lippe is really focused on the core business, the reinsurance business and underwriting,' said Fabrizio Croce, an analyst with Kepler. 'The expectation is that he will unwind the entire structured products portfolio, as well as all the risky stuff, like corporate bonds.'
Shares of Swiss Re (other-otc: SWCEF - news - people ) jumped 6.0%, or 1.14 Swiss francs (98 cents), to 20.08 Swiss francs ($17.28), during early trading in Zurich. The Dow Jones Euro Stoxx 50 index, meanwhile, was down 1.2%.
'I am clear about the challenges that Swiss Re needs to address,' said Lippe, 53, on Thursday. 'Our core re-insurance portfolio is sound.'
Swiss Re said that Jacques Aigrain would 'support' the transition to a new CEO until Feb. 18, though his resignation was effective immediately. Pressure on Aigrain began to build earlier this month, when Swiss Re unveiled an annual loss of $861.3 million and said it would need to raise capital to the tune of $4.3 billion. Shareholder Warren Buffett offered his support to Aigrain, and promised to provide $2.6 billion worth of the required funds, but it was not enough to keep shares from falling 28.1% on the day.
Franco-Swiss Aigrain was picked to helm Swiss Re in late 2005, when the reinsurer's financial-services division was poised for healthy growth and lucrative securitization returns. But the credit crisis and financial-market meltdown after 2007 ended up cursing Swiss Re with losses, especially from its exposure to risky products like credit-default swaps."
Source: Forbes.com
UK's Serious Fraud Office to probe AIG unit
UK's Serious Fraud Office to probe AIG unit : "LONDON, Feb 12 (Reuters) - Britain's Serious Fraud Office (SFO) has launched a preliminary inquiry into suspected irregularities at a British subsidiary of American International Group Inc (AIG.N), the SFO said on Thursday.
The SFO said its probe into the UK operations of AIG Financial Products Corp (AIGFP) did not concern the insurance operations of AIG in Britain or elsewhere.
'It is right for us to look into the UK operations of AIG Financial Products Corp to determine if there has been criminal conduct,' Richard Alderman, director of the SFO, said in a statement.
'We will use our full range of powers to seek information and to speak to those with an inside knowledge of the company's operations.'
AIG said it was cooperating fully with the SFO investigation.
'As previously disclosed, AIG began the process of unwinding certain of AIGFP's and its subsidiaries' businesses and portfolios, including those in the UK, late last year,' the company said in a statement.
'There are approximately 370 employees in AIGFP worldwide who are working on the winding down of the business.'
The SFO said its probe was separate to two other inquiries into AIGFP being carried out by U.S. authorities and Britain's financial services regulator, the Financial Service Authority."
Source: Reuters
The SFO said its probe into the UK operations of AIG Financial Products Corp (AIGFP) did not concern the insurance operations of AIG in Britain or elsewhere.
'It is right for us to look into the UK operations of AIG Financial Products Corp to determine if there has been criminal conduct,' Richard Alderman, director of the SFO, said in a statement.
'We will use our full range of powers to seek information and to speak to those with an inside knowledge of the company's operations.'
AIG said it was cooperating fully with the SFO investigation.
'As previously disclosed, AIG began the process of unwinding certain of AIGFP's and its subsidiaries' businesses and portfolios, including those in the UK, late last year,' the company said in a statement.
'There are approximately 370 employees in AIGFP worldwide who are working on the winding down of the business.'
The SFO said its probe was separate to two other inquiries into AIGFP being carried out by U.S. authorities and Britain's financial services regulator, the Financial Service Authority."
Source: Reuters
QBE confirms it will take 30 staff with Endurance swoop
QBE confirms it will take 30 staff with Endurance swoop: "QBE European today confirmed Post's exclusive that it has acquired the renewal rights to the portfolio of industrial and commercial property business which Endurance Specialty Holdings operating subsidiary, Endurance Worldwide Insurance Limited, currently writes out of the London market.
QBE said the deal - as revealed in Post today - is another significant step forward in its drive to build a major UK property underwriting operation. The Endurance portfolio is mainly UK business, generating some £30m of gross written premium income in 2007.
Under the move, the 30-strong London Endurance Insurance Risk Practice team will relocate to QBE’s Plantation Place offices, adding to QBE’s existing team of experts.
Bernard Mageean, managing director Property, QBE EO said: “This acquisition is as much about people as it is about the portfolio itself. The team has a very similar underwriting culture and the Endurance portfolio works well with QBE’s risk appetite balance and our current London Market property portfolio. In addition to Endurance’s London team of strong, well known underwriters, its Insurance Risk Practice includes both risk engineering and risk analysis specialists, the skills of whom will boost our in-house risk management and geographical analysis capabilities, further enhancing the superior service we provide to our broker panel and clients.”"
Source: Post Online
QBE said the deal - as revealed in Post today - is another significant step forward in its drive to build a major UK property underwriting operation. The Endurance portfolio is mainly UK business, generating some £30m of gross written premium income in 2007.
Under the move, the 30-strong London Endurance Insurance Risk Practice team will relocate to QBE’s Plantation Place offices, adding to QBE’s existing team of experts.
Bernard Mageean, managing director Property, QBE EO said: “This acquisition is as much about people as it is about the portfolio itself. The team has a very similar underwriting culture and the Endurance portfolio works well with QBE’s risk appetite balance and our current London Market property portfolio. In addition to Endurance’s London team of strong, well known underwriters, its Insurance Risk Practice includes both risk engineering and risk analysis specialists, the skills of whom will boost our in-house risk management and geographical analysis capabilities, further enhancing the superior service we provide to our broker panel and clients.”"
Source: Post Online
XL has turned a corner, CEO says
XL has turned a corner, CEO says: "NEW YORK—XL Capital Ltd. expects to reduce its top line and its appetite in some areas but is well-positioned to “take advantage of improving market conditions,” its chief executive officer says.
Despite a $2.55 billion loss for 2008, which XL reported Wednesday, the Bermuda-based insurer and reinsurer’s CEO Michael McGavick said that the company’s core operating performance was positive and reaffirmed the strength of XL’s franchise.
“Under incredible challenge, given all the noise that surrounded the franchise toward the end of last year, XL held together a great book of business, and that’s the foundation to the future. Along with a great book of business, it was held together by a group of great employees who stuck it out. When you have those two things, you have all the opportunity at hand to see XL take advantage of what we think are improving market conditions,” Mr. McGavick said."
Source: Business Insurance
Despite a $2.55 billion loss for 2008, which XL reported Wednesday, the Bermuda-based insurer and reinsurer’s CEO Michael McGavick said that the company’s core operating performance was positive and reaffirmed the strength of XL’s franchise.
“Under incredible challenge, given all the noise that surrounded the franchise toward the end of last year, XL held together a great book of business, and that’s the foundation to the future. Along with a great book of business, it was held together by a group of great employees who stuck it out. When you have those two things, you have all the opportunity at hand to see XL take advantage of what we think are improving market conditions,” Mr. McGavick said."
Source: Business Insurance
Catlin Profits Drop Over $500 million
Catlin FY profits drop over $500m: "Catlin FY profits drop over $500m
Catlin reported a full-year drop in profit $500m, after investment and catastrophe losses hammered profi ts at t he Lloyd's (re)insurer.
The company reported a pretax loss of $13m, down from a pretax profit of $543m in 2007.
Catlin, which also unveiled a $200m rights issue to take advantage of current market conditions (see seperate article), unveiled a $212.4m loss on funds investment in 2008, heavily down from a $29.8m gain in 2007. That result helped to a net investment loss of 1.5%, compared to 2007's net investment return of 4.5%.
The group estimated that Hurricanes Ike and Gustav, which ravaged the US Gulf of Mexico, will cost it $250m, based on total insured loss estimates to the market of $20bn.
The result drove the combined ratio up 11% to 95%, up from 84% in 2007.
Underwriting-wise, everything was strong for Catlin.
Net earned premiums for the year rose 4%, up to $2.596bn, up from $2.489bn the year earlier."
Source: Reinsurance
Catlin reported a full-year drop in profit $500m, after investment and catastrophe losses hammered profi ts at t he Lloyd's (re)insurer.
The company reported a pretax loss of $13m, down from a pretax profit of $543m in 2007.
Catlin, which also unveiled a $200m rights issue to take advantage of current market conditions (see seperate article), unveiled a $212.4m loss on funds investment in 2008, heavily down from a $29.8m gain in 2007. That result helped to a net investment loss of 1.5%, compared to 2007's net investment return of 4.5%.
The group estimated that Hurricanes Ike and Gustav, which ravaged the US Gulf of Mexico, will cost it $250m, based on total insured loss estimates to the market of $20bn.
The result drove the combined ratio up 11% to 95%, up from 84% in 2007.
Underwriting-wise, everything was strong for Catlin.
Net earned premiums for the year rose 4%, up to $2.596bn, up from $2.489bn the year earlier."
Source: Reinsurance
Space Collision Satellites Not Believed to be Insured
Lost in space: "The collision in space of a Russian and a US satellite was perhaps an accident waiting to happen. Around 6,000 satellites have been sent into orbit since 1957 and although they are in different orbits, it’s getting busy up there.
Tuesday’s crash—the first ever between two large space objects—was between an operational Iridium satellite and a defunct Russian military ‘Cosmos’. The Iridium satellite is one of a constellation launched for mobile phone services.
Neither satellite is believed to be insured. But according to David Wade, Atrium Space Insurance Consortium, the accident raises some important questions over liability and the possible threat posed by debris to other satellites.
“For a time, this will pose an increased risk of debris strike for satellites in similar [low earth] orbits, which includes some of the earth observation satellites that are insured,” he says.
There could be a case for calling into action the UN’s Convention on International Liability for Damage Caused by Space Objects. In practice, because the Cosmos satellite is not thought to have been operational, it’s unlikely that there will be any liability.
Also it would be difficult to prove whether the Iridium satellite crashed into Cosmos or the other way around, Wade says."
Source: The Lloyd’s Risk Blog
Tuesday’s crash—the first ever between two large space objects—was between an operational Iridium satellite and a defunct Russian military ‘Cosmos’. The Iridium satellite is one of a constellation launched for mobile phone services.
Neither satellite is believed to be insured. But according to David Wade, Atrium Space Insurance Consortium, the accident raises some important questions over liability and the possible threat posed by debris to other satellites.
“For a time, this will pose an increased risk of debris strike for satellites in similar [low earth] orbits, which includes some of the earth observation satellites that are insured,” he says.
There could be a case for calling into action the UN’s Convention on International Liability for Damage Caused by Space Objects. In practice, because the Cosmos satellite is not thought to have been operational, it’s unlikely that there will be any liability.
Also it would be difficult to prove whether the Iridium satellite crashed into Cosmos or the other way around, Wade says."
Source: The Lloyd’s Risk Blog
Bank of China to throw water on AIG asset sale?
Bank of China to throw water on AIG asset sale?: "It appears that Bank of China Ltd. isn't bidding for American International Assurance, although it was cited as the preferred bidder heading into the process in reports by Dow Jones and the Financial Times. Let's hope it doesn't dampen or extinguish American International Group Inc.'s effort to sell off assets to pay back the government's $150 billion loan.
First-round bids on a stake of 49% or more in the life insurance unit are due at the end of February, with analysts pegging the sale with an estimate at about $20 billion.
The FT article explains that Bank of China was the preferred bidder for the unit for the so-called 'the crown jewel of AIG,' because its bid might have been backed by CIC, China's sovereign wealth fund.
China's sovereign wealth funds keen to back a single mainland bidder in the auction, and that BoC had overtaken China Life -- the world's largest insurer -- as the most likely candidate. The current thinking in Beijing is that BoC is better equipped to manage foreign assets than China Life, which has more limited overseas experience,' said one person familiar with the matter.
That would mean China Life Insurance Ltd. now has the advantage in bidding. However there are still many other potential bidders for the unit including HSBC Holdings plc, Prudential plc, Manulife Financial Group Inc. and Allianz Insurance Co.
The real question now is why Bank of China dropped out of the bidding. Financing isn't likely the reason with CIC backing the bid. That means there might be a reason that other bidders could drop out of bidding for the unit or the value of the unit could be less than expected."
Source: The Deal
First-round bids on a stake of 49% or more in the life insurance unit are due at the end of February, with analysts pegging the sale with an estimate at about $20 billion.
The FT article explains that Bank of China was the preferred bidder for the unit for the so-called 'the crown jewel of AIG,' because its bid might have been backed by CIC, China's sovereign wealth fund.
China's sovereign wealth funds keen to back a single mainland bidder in the auction, and that BoC had overtaken China Life -- the world's largest insurer -- as the most likely candidate. The current thinking in Beijing is that BoC is better equipped to manage foreign assets than China Life, which has more limited overseas experience,' said one person familiar with the matter.
That would mean China Life Insurance Ltd. now has the advantage in bidding. However there are still many other potential bidders for the unit including HSBC Holdings plc, Prudential plc, Manulife Financial Group Inc. and Allianz Insurance Co.
The real question now is why Bank of China dropped out of the bidding. Financing isn't likely the reason with CIC backing the bid. That means there might be a reason that other bidders could drop out of bidding for the unit or the value of the unit could be less than expected."
Source: The Deal
Everest Re Posts $16.6 Million Q4 Net Loss; $18.7 Million FY Loss
Everest Re Posts $16.6 Million Q4 Net Loss; $18.7 Million FY Loss: "The Bermuda-based Everest Re Group reported an overall net loss of $16.591 million, or $0.27 per share, for the fourth quarter of 2008 compared to net income of $12.2 million, or $0.19 per diluted share, for the same period in 2007. However, the Group's after-tax operating income, which excludes realized capital gains and losses, was $179.5 million, or $2.93 per share, compared to after-tax operating income1 of $63.2 million, or $1.00 per diluted share, in the fourth quarter of 2007.
For the year ended December 31, after-tax operating income was $562.7 million, or $9.12 per share, for 2008, compared to $776.9 million, or $12.21 per diluted share, for 2007. Including net realized capital gains and losses, Everest Re posted a net loss of $18.758 million for the full year 2008, or $0.30 per share, compared to net income of $839.3 million, or $13.19 per diluted share, for 2007.
Chairman and CEO Joseph V. Taranto commented: 'While this year has been challenging on the investment front, we are pleased with the performance of our core operations. Our capital and underwriting fundamentals remain strong, and we are well positioned to capitalize on future market opportunities.'"
Source: Insurance Journal
For the year ended December 31, after-tax operating income was $562.7 million, or $9.12 per share, for 2008, compared to $776.9 million, or $12.21 per diluted share, for 2007. Including net realized capital gains and losses, Everest Re posted a net loss of $18.758 million for the full year 2008, or $0.30 per share, compared to net income of $839.3 million, or $13.19 per diluted share, for 2007.
Chairman and CEO Joseph V. Taranto commented: 'While this year has been challenging on the investment front, we are pleased with the performance of our core operations. Our capital and underwriting fundamentals remain strong, and we are well positioned to capitalize on future market opportunities.'"
Source: Insurance Journal
Catlin CEO says no interest in buying Chaucer
Catlin CEO says no interest in buying Chaucer:
According to Reuters, Stephen Catlin, CEO of Catlin their rights issue is oversubscribed, and the company is not interested in buying Chaucer. Furthermore, he does not anticipate further material rise in Ike, Gustav losses.
Source: Yahoo Finance
According to Reuters, Stephen Catlin, CEO of Catlin their rights issue is oversubscribed, and the company is not interested in buying Chaucer. Furthermore, he does not anticipate further material rise in Ike, Gustav losses.
Source: Yahoo Finance
Willis profits plummet 35%
Willis profits plummet 35%: "Willis Group Holdings Ltd , the third largest global insurance broker, said Wednesday that its fourth-quarter net income fell about 35 percent, hurt by declines in foreign currency and integration costs from a recent acquisition.
Net income was $62 million, or 37 cents a share, down from $95 million, or 66 cents a share, in the year-earlier quarter.
The company said its acquisition last October of Hilb Rogal & Hobbs Co trimmed about 3 cents off of its fourth-quarter per share earnings. Foreign currency translation - primarily the strengthening of the U.S. dollar versus the British pound - cut into earnings by about 26 cents a share, Willis added.
However, revenue rose about 25 percent to $799 million, largely due to the HRH acquisition."
Source: The Royal Gazette
Net income was $62 million, or 37 cents a share, down from $95 million, or 66 cents a share, in the year-earlier quarter.
The company said its acquisition last October of Hilb Rogal & Hobbs Co trimmed about 3 cents off of its fourth-quarter per share earnings. Foreign currency translation - primarily the strengthening of the U.S. dollar versus the British pound - cut into earnings by about 26 cents a share, Willis added.
However, revenue rose about 25 percent to $799 million, largely due to the HRH acquisition."
Source: The Royal Gazette
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