Scor Sells First Catastrophe Bond Since Lehman Demise

Scor Sells First Catastrophe Bond Since Lehman Demise: "Scor SE, France’s biggest reinsurer, sold $200 million of three-year bonds to transfer the risk of losses on U.S. earthquakes and hurricanes, the first issue of its kind since the collapse of Lehman Brothers Holdings Inc.

“Scor’s deal should be a breakthrough for catastrophe bonds,” said Christian Bruns, a fund manager at Clariden Leu in Zurich. He bought Paris-based Scor’s notes and expects more so- called cat bonds to be sold this year.

The market for catastrophe bonds was hurt by Lehman’s failure in September because some deals relied on the bank to guarantee assets used to make coupon payments. One issuer, Allstate Corp.’s Willow Re Ltd., didn’t make a full interest payment this month, the second cat bond to default in a decade.

Scor’s deal offers investors more information on the assets backing the bonds than on previous transactions, said Karsten Bromann, chief risk officer at Solidum Partners AG, a Zurich- based hedge fund.

“Investors are being updated on a regular basis about the collateral portfolio, which can only be invested in high-grade assets such as government-backed debt,” said Bromann, who bought the Scor bonds.

A $100 million portion of Scor’s issue will pay interest of 11.5 percentage points more than the London interbank offered rate, and two $50 million notes will pay a spread of 12.5 and 14.5 percentage points."

Source: Bloomberg.com

Arch receives Lloyd's approval to establish new syndicate

Arch receives Lloyd's approval to establish new syndicate: "Bermuda-based Arch Capital Group has received approval in principle from the Lloyd's Franchise Board and the Financial Services Authority to establish a new managing agent and syndicate at Lloyd's.

According to the company, the syndicate is expected to begin underwriting during the first half of 2009, subject to obtaining requisite approvals. The syndicate will enhance the company's underwriting platform by providing the company with access to Lloyd's distribution network and worldwide licenses.

Management for the new managing agent will be provided by the company's existing senior team located in London, and the syndicate will be supported by a corporate member that is wholly owned by the company.

In addition, the company has established Arch Reinsurance Europe Underwriting, based in Dublin, Ireland, and its branch office located in Zurich, Switzerland. Arch Re Europe will complement the existing property and casualty treaty capabilities within the company's reinsurance group, while providing greater accessibility to brokers in Europe.

Under the recent European Union (EU) Reinsurance Directive, Arch Re Europe will be able to operate in all EU member states under a single regulatory framework."

Source: Trading Markets

Tysers appoints ex-Cooper Gay's Allan for Caribbean

Tysers appoints broker for Caribbean: "Tysers, the independent international Lloyd’s broker, has appointed Neil Allan as a broker to their North American general insurance business.

Allan specialises in non-marine general insurance that comes from the Caribbean. He has been appointed to assist the continued growth of Tysers and to enhance the company’s reputation as a specialist Caribbean broker.

Allan has been working in the London market for 21 years. He was previously with Cooper Gay Insurance Brokers for 18 years, most recently as executive director of the non marine division with responsibility for the Caribbean region."

Source: Insurance Times

IPC Reports 4Q Results Down

IPC Holdings, Ltd. Reports Fourth Quarter 2008 Results: Financial News: "IPC Holdings, Ltd. (NasdaqGS:IPCR - News) today reported net income for the quarter ended December 31, 2008 of $43.7 million, or $0.79 per common share, compared to $167.0 million, or $2.48 per common share, for the fourth quarter of 2007. For the year ended December 31, 2008 IPC reported net income of $90.4 million, or $1.45 per common share, compared to $385.4 million, or $5.53 per common share, for 2007."

Source: Yahoo! Finance

Montpelier Re Reports 4Q Operating income of $57 Million

Montpelier Re Reports Fourth Quarter 2008 Operating income of $57 Million, or $0.68 Per Share, and a Fully Converted Book Value Per Share of $15.94: "Montpelier Re Holdings Ltd. (NYSE:MRH - News); (the 'Company') reported operating income of $57 million (or $0.68 per share) for the quarter ended December 31, 2008 and $94 million (or $1.09 per share) for the full year.

The Company reported a comprehensive loss of $51 million (or $0.61 per share) for the quarter ended December 31, 2008, which includes $50 million and $59 million of net realized and unrealized investment losses, respectively. The comprehensive loss for the year ended December 31, 2008 was $151 million, which includes $72 million and $170 million of net realized and unrealized investment losses, respectively.

Fully converted book value per share was $15.94 at December 31, 2008, a decrease of 3.6% for the quarter and 9.2% for the year, inclusive of dividends.

The Company’s net financial impact from Hurricanes Gustav and Ike did not change significantly during the quarter and currently stands at approximately $140 million. Favorable releases from prior year reserves were $32 million in the fourth quarter and $104 million for the year."

Source: Yahoo! Finance

VK Underwriters Appoints ex-AIG's Collazo

VK Underwriters, an independent Managing General Agent for Latin America and the Caribbean providing a range of specialist insurance and reinsurance products today announced that senior Management Liability practitioner Carlos Collazo will be joining the business effective immediately as a member of the senior leadership team.

He was formerly the Major Commercial Accounts Manager at AIU Latin America and, prior to that, Deputy Country Manager for AIG Chile’s Insurance Company.

Matt Kelly, CUO of VK Underwriters, comments: “Carlos is a prominent and respected figure in the Latin American and Caribbean liability insurance market with over twenty years experience in the industry. He is highly regarded for his technical, commercial and professional approach to his business. All of this makes Carlos a perfect addition to our team. We already have a strong presence in the region and his expertise and relationships with producers, insurers and reinsurers will further enhance our core competencies and reputation. Carlos will undoubtedly prove to be an outstanding addition to our team”.

Bobby Vernon, Managing Director of Howden, LLC comments “We are very excited that Carlos has decided to join our firm. We believe his experience, relationships, and outstanding reputation will complement our growing team and assist us in meeting our ambitious growth objectives.”
In his new role, Carlos will focus on further strengthening and extending market relationships in addition to driving new business opportunities and product development both in his native Puerto Rico and in the Latin America and Caribbean region.

Reinsurers Appear Ready to Flex Muscles, Raise Prices by Double-Digits

Reinsurers Appear Ready to Flex Muscles, Raise Prices by Double-Digits: "Reinsurers' tough talk about raising prices on the risk cover they sell to insurers may have rung hollow before, but this time the promise is credible.

Reinsurance companies such as global leader Munich Re have been flexing their muscles, predicting that the damage to insurers' investment income and capital base from the financial crisis means they have to pay more for cover.

'The turnaround has been achieved,' Torsten Jeworrek, Munich Re board member in charge of reinsurance, said this month, adding that the price fall of the last few years had been stopped.

'There is a very strong expectation of further price increases during the course of the year,' Jeworrek said.

Munich Re was the first to predict the financial crisis would lead to a price surge, but other reinsurers chimed in, with some forecasting double-digit percentage gains in premiums.

Reinsurers have vowed discipline on pricing in the past, only to slide into competitive price wars to seize or defend market share, sacrificing profitability for volume.

This time may be different, says industry observers.

'Overall, we have seen very disciplined behaviour from reinsurers,' said Michael Handler, chairman for continental Europe at reinsurance specialist Guy Carpenter, part of the world's biggest insurance broker, Marsh.

'I expect a price increase in the teens in the course of the year. There are always exceptions, but this is the trend.'"

Source and Full Story: Insurance Journal

Flagstone Re slips to loss in Q4

Flagstone Reinsurance slips to loss in Q4: "Flagstone Reinsurance Holdings Limited reported a loss for the fourth quarter, compared to a profit last year, hurt principally by realized and unrealized losses on its investment portfolio, amid global economic downturn.

Net loss available to common shareholders for the quarter amounted to $75.6 million or $0.89 per share compared to net income of $51.4 million or $0.60 per share in the corresponding period last year.

Gross premiums written for the quarter rose 46.3% to $95.25 million from $65.09 million in the prior year period principally due to significant business production from its global platform as well as firming prices. Net premiums written increased to $84.49 million from $55.79 million in the corresponding period last year.

Net premiums earned rose to $188.5 million from $125.3 million in the year-ago quarter. Net realized and unrealized losses on investment portfolio widened to $111.8 million from $1.6 million in the same period last year, primarily due to the significant declines in the global equity, bond and commodities markets in 2008.

Net investment income slid 85.1% to $3.37 million from $22.6 million in the same period last year principally due to significant decreases in interest rates from the comparable period in 2007, the decrease of the Consumer Price Index during the fourth quarter resulting in negative amortization income from its TIPS portfolio, and changes in its process regarding the allocation to investment income of a portion of general and administrative expenses attributable to investment management expenses."

Source: RTTNews

Paris Re reports 13% drop in renewal premium

Paris Re reports 13% drop in renewal premium : "Paris Re saw its January 1 renewal premium drop by approximately 13% to $583m of written premium in 2009. This was largely the result of its decision to cancel approximately one-third of its proportional business because of inadequate margin expectations.

The reinsurer reported increases in reinsurance rates, particularly classes affected by losses in 2008. Meanwhile, loss-free programmes renewed with very moderate increases or remained flat, and rates in primary insurance showed no sign of hardening.

Paris Re reported that credit and bond quota shares saw commission improvement of up to 15%. This class continues to be an important component of Paris Re's portfolio, in spite of the reduction in overall exposure. Agriculture and life, accident and health writings increased in line with the reinsurer's expectations.

Excess of loss business reduced slightly in volume. Paris Re chose to retain a part of its capacity for mid-year renewals in anticipation of a further firming of rates. On a net basis, Paris Re expects excess of loss premiums to increase modestly because of a futher reduction in its level of retrocession on the excess property book."

Source: Reactions

Klaus losses could exceed €I billion: FFSA

Klaus losses could exceed €I billion: FFSA: "The insurance industry is set to face losses of up to €2 billion as a result of the damages caused by windstorm Klaus in France and Spain in the end of January, according to estimates.

The Paris-based Féderation Française des Societés d'Assurances, the French insurance association, estimated that insured losses in France will range between €1.2 billion and €1.4 billion, resulting from about 500,000 claims.

Munich, Germany-based reinsurer Munich Reinsurance Co. projected that insurers and reinsurers will pay claims of up to €1.5 billion in France.

For its part, Newark, California-based catastrophe risk specialist Risk Management Solutions, RMS, has released a forecast of insured losses between €1.0 billion and €1.8 billion in France.

RMS said that Klaus is likely to become the biggest loss event in France since windstorm caused destruction in the north of the country in 1999. According to RMS, Martin would have caused losses of up to €2 billion in France, had it taken place in 2009."

Source: Business Insurance

U.S. RE to Enter Brazil Market

U.S. RE to Enter Brazil Market: "U.S. RE, the international financial services and reinsurance brokerage firm, announced plans to form a reinsurance broker subsidiary in Sao Paulo to serve the insurance industry in Brazil. The announcement was made by Tal P. Piccione, U.S. RE Chairman and CEO.

The new company, U.S. RE do Brasil Corretora de Resseguros, Ltda. (U.S. RE Brazil Reinsurance Broker, Ltd., LLC) will offer all categories of reinsurance, including proportional, facultative, excess-of-loss, and catastrophe protection to insurers in Brazil.

'We are proud to bring new capacity and global expertise in reinsurance placement to Brazil,' Piccione declared. Massimo Dominici, a prominent insurance broker in Brazil, will represent U.S. RE in the Sao Paulo office.

Legislation recently was enacted to permit foreign reinsurance brokers to do business in Brazil. 'By combining U.S. RE's international experience and access to worldwide reinsurance markets with the Dominici Group's strong presence in Brazil, we will provide innovative, competitive products to the Brazilian insurance industry,' Piccione stated."

Source: EarthTimes

NamibRe appoints MD for another term

NamibRe appoints MD for another term: "Anna Nakale-Kawana contract at NamibRe has been renewed for the next five years, effective from March 2009. Motivating their decision, the board said Nakale-Kawana consolidated the operations of NamibRe and strengthened its confidence in the local market.

As a result, NamibRe’s turnover (gross premium income) increased from N$34.8 million in 2004 to about N$70 million in 2008. During the same period, net profits averaged N$8.8 million per annum and for the last consecutive five years, the corporation paid dividends to the shareholder, Chairperson Maria Dax said.

The board urged management to keep up the high standards because the success of NamibRe depends on this rating, amongst others. NamibRe has rolled-out a five year business plan to 2013, which includes underwriting of reinsurance business from foreign markets, mainly in southern, eastern and central African markets.

NamibRe is the only reinsurance company registered in Namibia. It was established in 1998 to promote reinsurance business in Namibia, to sustain local retention capacity of insurance and reinsurance business and to minimise the placement of reinsurance business outside the country. The corporation provides insurance and reinsurance cover of international standard both within and outside Namibia."

Source: Republikein

PERILS set up to aggregate and distribute European catastrophe loss data

PERILS set up to aggregate and distribute European catastrophe loss data: "A new joint venture company has been set up to provide aggregation and distribution services for European natural catastrophe loss data. It’s aiming to provide a similar service to the U.S. Property Claims Service. PERILS has been set up by a number of European companies who are all equal shareholders in the new venture. Participants are Allianz, AXA, Groupama, Guy Carpenter, Munich Re, PartnerRe, Swiss Re and Zurich.

PERILS is going to provide two subscription services to subscribers (subscribers are expected to be mostly insurers, reinsurers, brokers, risk modellers and banks):

1. Aggregated industry-wide insurance exposure data (insured values), which will be catalogued by risk type and CRESTA zones (defined European geographical zones for natural catastrophe insurance). The data will be provided on an annual basis;
2. Industry loss estimates per risk type and CRESTA zones, following large natural catastrophe events.

The PERILS initiative will no doubt increase clarity of losses for the insurance community and it’s great to see a European source of data come to light. This will help to improve the understanding of the frequency and severity of losses which impact re/insurers significantly. It’s initially going to focus on European windstorm data but plans to expand to other perils in the future.

However, where this could have the biggest impact to the market is the potential for it to be used as an industry wide index of catastrophe losses to help facilitate the establishment of more accurate and robust loss triggers for both industry loss warranties (ILW), catastrophe bonds and potentially exchange traded products. This announcement should be warmly received by insurance linked securities market participants as it will help them to structure deals more transparently and it will also instill greater confidence in investors that the trigger mechanism is of a high enough standard (particularly important given the financial market issues of late). It will be interesting to see how this initiative progresses!

PERILS aims to be fully operational in the latter half of 2009, focusing initially on Belgium, Denmark, France, Germany, Holland, Ireland, Luxembourg, Switzerland and the UK. Expansion to other European countries is anticipated to follow in 2010."

Source: Artemis.bm

First Signs of US Regulatory Reform this Year

The First Signs of US Regulatory Reform this Year: "The first signs of Congressional activity affecting business in London appears to be the re-introduction of legislation which would standardise the regulation of surplus lines business and even reinsurance.

Given the speculation of what we might expect, this development, which emanates from the House Financial Services Committee, is welcome. Earlier versions of this Bill received broad support from both industry and Congress but failed to reach the President’s desk for signature for various reasons. Other Bills seeking to introduce Federal options to regulate insurance and, of course, overall financial turmoil, served to push the surplus lines bill onto the back-burner.

The London market writes substantial amounts of surplus lines business which by its very nature is often hard to place within the local US market. To write this business London insurers have to currently comply with individual regulatory requirements on a State by State basis. The new Bill would provide a uniform and consistent framework of surplus lines regulation at a State level. It could even, for example, create regulatory harmonisation which would allow 50-State surplus lines eligibility to be obtained by IUA member companies by merely being approved in a single State.

Interestingly, the Bill also has a reinsurance section. This does not on the face of it seem a natural fit and is currently drafted to introduce certain regulatory consistency for US reinsurers. This section however could provide a medium for the Reinsurance Task Force’s new reinsurance framework to be implemented. This would however require substantial re-drafting of the current re-introduced Bill’s language to cater for non-US reinsurers’ interests.

Many were predicting that this Bill would be re-introduced given its previous wide-spread support. It will be interesting to see how much reliance the NAIC will be placing on it at their forthcoming Spring meeting."

Source: Dave Matcham / IUA

Unnatural catastrophes; man-made loss events becoming more frequent

Unnatural catastrophes; man-made loss events becoming more frequent: "The topics covered by us here at Artemis are mostly devoted to natural catastrophes and the methods utilised for hedging against them to protect the
balance-sheet of re/insurers and cedents. Guy Carpenter have published a report looking at the volume of man-made losses and types of events which caused them during 2008. The annual average losses for these types of events is $4.8b, 2008 delivered 46% more than that and final loss figures are around $7b. Nineteen known events resulted in losses of more than $50m each.

Those are large figures, all of which will impact re/insurers in the future (if not already). So what’s being done to hedge exposure to these types of events? Currently not very much. Catastrophe bonds seem limited to natural catastrophes and exchange traded instruments don’t really seem suitable in their current form to help companies trade these risks as a way to get them off the balance sheet.

We thought it would be interesting to begin a discussion on man-made disasters and whether the risk transfer instruments used to hedge against weather and catastrophe risks could be put to some use to help protect companies from the losses incurred from unnatural catastrophes. We’d like to know what you think, so please comment!

You can download the full report from Guy Carpenter here. A list of the major losses mentioned in the report is below."

Source: Artemis.bm

Market Reform Group in new electronic policy move

Market Reform Group in new electronic policy move: "Market Reform Group in new electronic policy move

The Market Reform Group (MRG) has announced that with effect from 1 March 2009, all requests for a policy will be submitted to Xchanging electronically via the Insurers’ Market Repository.

The e-policy service has been available from Xchanging for approximately eighteen months and more than 10,000 policies have now been produced electronically. In January, 79% of policy submissions were made electronically.

Willis, which piloted the service. said that the service saves between five and seven days on the end-to-end process of getting a policy to their client.

A key target of the MRG is to reach full usage of this service, with paper only used for those few cases where it is a genuine reflection of client need.

This is another milestone achieved on MRG's 'finish what we have started agenda' announced by Peter Harmer at the beginning of the year."

Source: Reinsurance