Report shows customer satisfaction increasing at Lloyd's

Report shows customer satisfaction increasing every year: "A survey conducted by Lloyd’s shows that overall customer satisfaction with the market is at its highest level in four years.

Satisfaction with Lloyd’s among its customers has increased steadily every year since 2005, when the survey first took place, and now stands at 7.9 out of 10.

The survey, which polled the views of 703 Lloyd’s brokers, non-Lloyd’s brokers, coverholders and insurance and reinsurance customers, found that 53% of respondents said they thought the processes covered by the survey had improved in the past 12 months.

Lloyd’s scored highest in the speed and accuracy of its quotes. Half of respondents rated Lloyd’s as better than competitors in these areas, while 40% said they were the same as rivals. These scores are an improvement from 2007, particularly with non-Lloyd’s brokers and with reinsurance clients.

More respondents rated Lloyd’s as better, rather than worse, than its competitors in the different categories being surveyed, although between 40% and 57% judged Lloyd’s service as ‘the same’ as competitors in the various areas."

Source: Lloyd's.com

Ten Chubb employees win USD 216 million lottery jackpot

Stewartsville man one of 10 Chubb Insurance employees to win $216 million lottery jackpot :

Filed under the 'we can only dream' heading:

"Ten Chubb Insurance employees are the joint holders of a $216 million Mega Millions lottery ticket sold in a gas station in Toms River, N.J., according to wcbstv.com.

The workers told The Star-Ledger this afternoon they have all been playing the lottery for the past few years. They each put $5 in for the pool. Before this, the most the group ever won was about $7, said Bob Space, of Toms River, who purchased the winning ticket Monday during the snowstorm at the Singin Oil gas station in Toms River.

Stewartsville resident Oscar Oviedo almost missed out on the winnings. He asked Space to spot him the $5 because he didn't have the cash when they were collecting money for the pool. When Space came up to Oviedo asking for the money this morning Oviedo thought his co-worker was being pretty stingy.

'I thought he was being rude,' Oviedo confessed. But he quickly changed his mind after he turned over the money and Space shook his hand to congratulate him for now being a millionaire.

The group has not yet contacted Mega Millions officials. The winners stand to split about $8.1 million a year, before taxes, for the next 26 years as an annuity. The gas station store owner Taner Cetintas, of Jackson, will collect $10,000 for selling it.

Source: lehighvalleylive.com

Ex-Gen Re executive gets 1 year in prison

Ex-Gen Re executive gets 1 year in prison: "former senior vice president at General Re Corp. was sentenced Wednesday to a year and a day in federal prison for an accounting fraud scandal that artificially propped up the stock price of insurer American International Group Inc.

Christopher Garand was also fined $150,000 for his role in the case which authorities say cost AIG shareholders more than $500 million.

Garand is one of five former executives convicted in the case.

Federal prosecutors say New York-based AIG paid Stamford-based Gen Re in a secret deal to take out reinsurance policies with AIG in 2000 and 2001. They say the scheme propped up AIG's stock prices and inflated reserves by $500 million.

U.S. District Judge Christopher Droney noted at Wednesday's hearing that Garand didn't try to benefit personally from the stock manipulation."

Source: Yahoo! Finance

Bermuda's AIG operations so far unaffected

Bermuda's AIG operations so far unaffected: "Staff at the Bermuda offices of American International Group were yesterday told their work would remain unaffected by the turmoil surrounding the New York-based parent company.

George Cubbon, president and chief executive officer of AIG's Bermuda operations, said: 'We are not expecting any impact at all.

'I sent out a note to staff early today saying that very thing.'

AIG employs around 200 people in its building in Richmond Road, Pembroke."

Source: The Royal Gazette

Brazilian News: JMalucelli Re and Hannover Life Re Enter Accord

Brazilian News: JMalucelli Re and Hannover Life Re Enter Accord: "Local Brazilian reinsurer JMalucelli Re and foreign admitted reinsurer Hannover Life Re recently announced that they have entered into a cooperation agreement to offer life and health reinsurance in the Brazilian market. The move has reciprocal benefits for the two companies: (1) Hannover Life Re can now, through the relationship, overcome certain of the market share limitations imposed by Brazilian regulations in the form of cession limits for foreign reinsurers and a “right of first refusal” in favor of local reinsurers; and (2) JMalucelli Re, which previously operated only in the area of guarantee reinsurance, will receive substantial know-how and technical support from Hannover Life Re in developing its life and health reinsurance business."

Source: InsureReinsure.Com

Colemont appoints quartet of Aviation directors

Colemont appoints quartet of Aviation directors: "Colemont Insurance Brokers Limited has announced a quartet of new directors for its Aviation division.

Andy Edwards, Matthew Farrar, Anthony Frankel, and Doug Ogilvie have been welcomed into their new roles by chief executive officer and chairman of Colemont, Surinder Beerh.

Andy Edwards brings with him over 20 years of experience from within the aviation sector, and has recently worked for both Cooper Gay and Heath Lambert.

Matthew Farrar has worked in the London market for over a decade, has handled risks all over the world and has expertise in both broking and technical aspects of the sector.

Anthony Frankel first worked for specialist aviation broker Dennis Jankelow and Associates Pty Ltd in South Africa, and since then has accumulated some 13 years of experience. In January he moved to London in order to join Colemont.

Doug Ogilvie leaves behind Willis to join the firm, and has worked in insurance for 17 years."

Source: Insurance Daily

Rapporteur hails 'partial breakthrough' on Solvency II

Rapporteur hails 'partial breakthrough' on Solvency II: "The European Parliament’s rapporteur on Solvency II said there was a “partial breakthrough” on the directive during a trialogue Tuesday on the issue of pro-cyclicality, but the stalemate on group support remains.

Representatives of the Parliament, the European Commission and the Council of Ministers met Tuesday to discuss Solvency II, the proposed new risk-based capital regulatory regime for insurers and reinsurers in the European Union.

On the pro-cyclicality of Solvency II, there’s general agreement on the use of an extended dampener to manage periods of boom and bust in capital assets, namely equities and bonds, said Rapporteur Peter Skinner, a U.K. member of the European Parliament Wednesday.

“I think there is real movement on that area,” said Mr. Skinner in an interview Wednesday. “Parliament has moved and the Economic and Financial Affairs Council has welcomed that movement.”

The issue of group support, whereby overseas subsidiaries of companies would be given implicit credit reflecting the capital support of their parent, remains a sticking point, with the Parliament wanting a group support regime included and the Council deleting it from its draft text."

Source: Business Insurance

AIG's AIA Gets Pru (UK), Manulife Offers; CLIC Declines

AIG's AIA Gets Prudential (UK), Manulife Offers; China Life Declines: "The UK's Prudential Plc and Canada's Manulife Financial Corp made preliminary offers for American International Group Inc.'s Asian unit, but Prudential's offer fell short of what AIG wants for the business, sources familiar with the matter said.

Chinese insurer China Life Insurance Co Ltd., which was seen as another large potential bidder, pulled out of the auction for the unit, American International Assurance Co. (AIA), on worries about the quality of the business, a company official said on Tuesday.

'We are no longer bidding for AIA. AIA's asset quality, business direction and brand have all changed,' China Life Chairman Yang Chao said.

The auction of AIA, one of the U.S. insurer's prized and largest assets, has faltered, with bidders dropping out and AIG finding it hard to get people to pay top dollar for the business.

AIG wants between $20 billion and $40 billion for AIA, depending on the size of the stake sold, people close to two parties that have looked at AIA have told Reuters.

Prudential offered a 'modest price,' but its expression of interest did not meet the seller's pricing expectations, a source said. The status of Manulife's bid was not immediately known.

So while AIG said on Monday -- without naming the bidders -- it had received and was reviewing preliminary offers for AIA after a deadline for bids last Friday, it also said it was weighing other alternatives, including a full or partial initial public offering for the unit.

At the same time, the insurer said it would put AIA and American Life Insurance Co -- another large foreign life business it has been trying to sell -- in trusts and give the U.S. government preferred ownership interest in them.

The insurer hopes to reduce the outstanding balance of a Federal Reserve credit line by up to $26 billion in return for the preferred shares in these operations.

AIG, Prudential and Manulife all declined to comment."

Source and Full Article: Insurance Journal

Hartford in talks to sell life unit

Hartford in talks to sell life unit to Sun Life-report: "Hartford Financial Services Group Inc (HIG.N) is in talks to sell most of its life insurance unit to Canadian Sun Life Financial Inc (SLF.TO), Bloomberg reported, citing three people with knowledge of the matter.

Hartford and Sun Life could not be reached for comment by Reuters.

Breaking Hartford in two and selling most of the life division, which has $248 billion of assets, is among options being discussed and an agreement may not be reached, Bloomberg said.

Hartford held separate talks with MetLife Inc (MET.N) that ended last month, two of the people told the news agency."

Source: Reuters

Ex-Gen Re executive Grand to be sentenced

Ex-Gen Re executive to be sentenced for fraud: "A former senior vice president at General Re Corp. is to be sentenced for an accounting fraud scandal that authorities say cost shareholders of insurer American International Group Inc. more than $500 million.

Christopher Garand is one of five executives convicted in the case. He faces up to 160 years in prison and a fine of up to $29.5 million when he is sentenced Wednesday in U.S. District Court in Hartford.

Federal prosecutors say the scheme involved New York-based AIG paying Stamford-based Gen Re in a secret deal to take out reinsurance policies with AIG in 2001 and 2001. They say the scheme propped up AIG's stock prices and inflated reserves by $500 million.

Garand was a senior Gen Re vice president from 1994 until 2005."

Source: Courant.com

AIG UK to rebrand after new holding company takes reins

AIG UK to rebrand after new holding company takes reins: "The AIG brand is set to disappear from the UK as the insurer is incorporated into a new parent company, AIU Holdings.

Lex Baugh, chief executive of AIG UK, said it was likely a minority stake in the holding company would be listed or sold to a third party sooner rather than later, restoring AIG UK’s financial credibility and giving an indication of its market value.

AIG UK is currently considering new names and reviewing its brand.

But Baugh said the market had been supportive of the insurer and changes to its front-office operations and business strategy would be limited."

Source: Insurance Times

Swift: Wire Transfer Technology for Reinsurance

Swift: how far will it branch out?: "First announced toward the end of Sibos 2008 in Vienna, Swift’s partnership with the reinsurance industry marks a further extension of the co-operative’s reach beyond the banking industry.

A pilot involving three reinsurers - Swiss Re, Munich Re, and Scor - and two brokers - Aon Benfield and Willis, is scheduled to begin in May. The companies involved will handle their reinsurance accounting and settlement transactions using messages defined by Acord, the insurance industry’s electronic standards body, and the Swift platform. If the pilot proves successful, the service will be opened to other market players in May 2010.

The project, called the Rüschlikon Initiative, started in 2007 when a group of reinsurers and brokers (gathered in the charming Swiss city of Rüschlikon) decided to work on setting up an industry-wide shared utility for automated, standardised reinsurance transactions.

“It proved difficult to get such a large and relatively long-term vision funded, and that is when Swiss Re and Swift found each other,” Andrew Muir, marketing manager for industry initiatives at Swift, recently told Banking Technology. “Swift was looking for a way of extending its own value proposition into the insurance world, which has already benefited from use of Acord standards. We had been talking with Acord for some time about a collaboration to tighten up implementation discipline around their standards, using our platform; this seemed an ideal opportunity to put our theories to the test.”

Swift joined the initiative in early 2008 and was officially appointed as the project’s messaging platform last September. “We found the reinsurance industry at about the right time, when it was looking for a way of standardising and harmonising processes,” Muir added. The co-operative will be working with participants to develop additional functionality over time.

Muir explained the reinsurance industry had a wholesale aspect to it, “which appeals very much to the Swift membership,” and poses no problems regarding eligibility. “Reinsurance transactions also tend to be very large in value,” he added. “At Swift, we understand high value, low volume transactions, and our value proposition speaks very well to it.”

It isn’t the first time Swift reaches beyond a strictly-defined banking sector, first by moving into the securities industry some twenty years ago and, more recently, by providing corporate access to its network, although this currently remains limited to corporate-to-bank communications."

Source: Banking Technology

Willis: Mining Industry Faces Insurance Crunch as Scarcity of Capital Changes Dynamics of Sector

"The global mining industry is caught in a “classic insurance market crunch” as mining companies, faced with declining commodity prices and profits, have less to spend on coverage while insurers raise prices and limit capacity as they deal with the fallout of the credit crisis and react to record property damage and business interruption claims from 2008, according to a new report from Willis Group Holdings (NYSE: WSH), the global insurance broker.

Willis’ first annual Mining Market Review reports that in 2008, the mining industry submitted an unprecedented USD 3.5 billion in property claims against a sector premium of USD 600 million, meaning mining underwriters lost nearly six dollars for every dollar of premium income. Under these conditions, at least 12 insurers have withdrawn or are considering withdrawing from the sector at this time, and those that remain are finding tighter limits on their own reinsurance arrangements. The report found that reinsurers will be restricting available capacity from a 2007 maximum of USD 1.75 billion to between USD 1 billion and USD 1.25 billion by the end of the first quarter of 2009.

“In addition to record claims, the mining industry has been hit hard by the economic climate and commodity prices and profits are significantly down. This has created cash flow problems for many companies, with even the giants of the industry having to look very closely at every use of capital, including insurance,” said Steve Higginson, Willis Mining Co-Practice Leader. “Clients are responding by looking into self-insurance and capital market solutions as alternatives to traditional insurance.”

The report finds no pattern to the cause of the 2008 losses, which were spread between natural catastrophes, fire and machinery breakdown. Tellingly, however, 80 percent of claims arose from Business Interruption, as mining companies sought to recoup lost revenues at the peak of the commodity bull market when they experienced operational downtimes of even a few days. The problem was exacerbated by equipment manufacturers that were stretched to capacity and were unable to keep pace with the demand for new equipment and replacement parts.

Andrew Wheeler, Willis Mining Co-Practice Leader, said, “The mining ‘super cycle’ drove mines to work to capacity and possibly beyond tolerance. When the very large risk losses hit at the end of 2007 and the beginning of 2008, they were consequently grossly underestimated by insurers, most of whom failed to fully appreciate the potential for such Business Interruption claims.”

An insufficient number of mining specialist adjusters to service all of these claims has led to an increase in claims disputes, the report said, noting that the volume and complexity of the operational claims has created a service “expectation gap” between many clients and the markets due to the perceived slow pace of the claims process. The report noted that “only a few markets have grasped the PR advantages available to them from differentiating their claims service against their peers’ in the shop window of the industry.”"

Source: Willis.com:

SCOR records net income of EUR 315 million

SCOR records solid results with a net income of EUR 315 million, supported by an outstanding liquidity position of EUR 3.7 billion: "SCOR generated solid results for the twelve months of 2008, despite a financial market environment that continues to be very challenging and a higher than average natural catastrophe year. The results mark a solid underlying operating performance in Life and Non-Life business, whilst the Group maintains a very prudent asset management policy. SCOR's business model is based on strong business and geographical diversification, with a clear focus on traditional reinsurance, very limited exposure of reinsurance liabilities to economic activity risks and no material off balance sheet exposure.

- Net income for the full year stands at EUR 315 million, with an annual return on equity (ROE) of 9.0% and twelve months' earnings per share (EPS) of EUR 1.76, SCOR achieves a net profit of EUR 35 million in the fourth quarter 2008.

- Top-line performance is in line with expectations, with 2008 gross written premiums standing at EUR 5,807 million, up 22.0% compared to 2007 published performance. On a pro-forma basis and at constant exchange rates, premium volume rose by 3.2%.

- Business engines are performing well: Non-Life reports a combined ratio of 98.6%, despite major natural catastrophe events such as hurricanes Ike and Gustav and snow storms in China. Life delivered a solid operating margin of 6.0%.

- Pre-tax annual synergy targets of EUR 71 million will be achieved by the end of 2009, reducing the Group's total costs by 18% compared to 2007.

- The Group maintains a strong focus on liquidity management, with EUR 3.7 billion in cash and short-term investments and a high generation of operating cash flow (EUR 779 million).

- A defensive investment portfolio, which is nonetheless affected by asset impairments and write-downs of EUR 260 million (pre-tax). The volatility in investment income is expected to continue throughout 2009.

- Very robust shareholders' equity of EUR 3.4 billion at 31 December 2008. Book value per share stands at EUR 19.01.

- SCOR proposes a dividend of EUR 0.80 per share for 2008, representing a payout ratio of 46%, subject to approval by the Annual General Meeting on 15 April 2009.

Denis Kessler, Chairman and Chief Executive Officer of SCOR, comments: 'SCOR demonstrated its strong franchise value in 2008 with solid results, despite the advent of the first genuine global financial crisis. Our traditional and cautious business approach, combined with very conservative, cash-oriented financial management, enabled us during 2008 to weather the financial storm and to continue to provide our clients with reinsurance skills and capacity. We believe that the current financial and economic crisis is reshaping the competitive landscape in a dramatic way and may offer new growth opportunities to the most competitive players. At SCOR the policy for 2009 is to maintain our prudent strategic focus and take advantage of the anti-cyclical nature of the reinsurance industry.'"

Source: MarketWire

Avalon Re catastrophe bond maturity extended (again)

Avalon Re catastrophe bond maturity extended (again) : "The maturity date of the Avalon Re catastrophe bond from Oil Casualty Insurance Ltd has been extended extended again according to Standard & Poor’s. The original terms of the deal allowed for it to be extended by a period of three months up to eight consecutive times from the original maturity date depending on the potential for losses.

Standard & Poor’s now reports that after this latest extension, maturity is now expected on the 9th June 2009. The deal keeps getting extended as the estimated net losses to Avalon Re keep getting closer to the trigger or attachment point. Paid and reserve losses attributed to the deal amount to $347m now; $147m for hurricane Katrina and reserves of $200m for the Buncefield oil depot explosion and a steam pipe explosion in New York in July 2007. Ratings of both the Class B and C tranches of notes have not been changed and remain ‘CCC’ and ‘CC’ respectively.

The deal can be further extended an additional four times up to the 8th June 2010 and is likely to be until final losses are fully calculated, note holders continue to receive interest during the extension period. Investors must however be on tenterhooks as the further this deal gets extended the higher the expectation of a loss to both Class B and C note holders becomes."

Source: Artemis.bm

CRESTA Zone Updates

CRESTA ZONE Updates: "Swiss Re and Munich Re, which are responsible for Catastrophe Risk Evaluating and Standardising Target Accumulations (CRESTA1) boundaries, have recently made some major updates to the zones in a number of countries. In the Asia-Pacific region, the CRESTA boundaries for Australia, China, Japan, and New Zealand have undergone significant changes.

Australia, which originally consisted of 49 CRESTA zones, has been changed to align with the four-digit postcode boundaries. The CRESTA list now contains 2629 four-digit postcode boundaries.

China, which originally consisted of 59 CRESTA zones, has also been changed to align with the four-digit postcode boundaries. The CRESTA list now contains 2473 four-digit postcode boundaries.

Japan, which originally consisted of 12 CRESTA zones, has been changed to align with municipality boundaries. There are now no sub-CRESTA zones and the CRESTA list now contains 1958 municipality code boundaries.

New Zealand, which originally consisted of 17 CRESTA zones, has been changed to align with the four-digit postcodes. The CRESTA list now has1055 four-digit postcode boundaries.

These changes could be considered a reflection of how the insurance industry in the Asia-Pacific region now relies more heavily on catastrophe model-based assessment. The underlying methodology for many CRESTA zones (CRESTA was set up by the insurance industry in 1977) was to establish a system that allowed for accumulation risk control based on insured values and the actual natural hazard risks to which a company is exposed. Since then, computer-based risk assessment has become predominant, and in many cases, analysis has been occurring regularly at a higher resolution than the original CRESTA zonation."

Source: GC Capital Ideas

Willis: Hardening Market Tempered by Increase in Overall Market Capacity, Downturn in Energy Industry

"With capacity levels up at the start of 2009, the energy insurance market remains relatively stable, despite insurers seeking rate increases and the energy industry trying to maintain profitability and reducing asset values in the face of plummeting commodity prices and demand, a new report from Willis Group Holdings (NYSE: WSH), the global insurance broker, has found. Willis Energy held a press briefing and webcast in London today on these and other key findings.

The latest Energy Market Review from Willis reports that, with little or no withdrawals from the energy insurance market in January 2009, stated capacity levels for energy risks have increased by approximately five percent.

Insurers, meanwhile, are seeking rate increases to shore up long-term profitability in this sector, as recapitalization becomes an increasingly expensive prospect. Since the third quarter of 2008, underwriters’ profitability has been buffeted by larger-than-expected windstorm losses from Hurricane Ike and a reduction in investment income due to the global financial crisis. Added premium that was generated by higher asset values, brought on by the “superheated” commodity prices of the past, is now coming under pressure as those asset values fall. Without that prop to offset a soft market, insurers now are seeking to maximize underwriting profitability through higher rates.

The prospect of a hardening market, while tempered in the short-term by increased market capacity, will also face resistance from energy companies as they seek to shore up their own profitability in the face of plummeting demand and crude oil prices that are now a third of their 2008 peak. These developments have implications for future capital expenditure plans and existing asset values, and could lead to reduced premium income for energy insurers."

Source: Willis.com: