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Stabilizing Signs: "More signs of market stability are indicated in the latest commercial lines insurance pricing and profitability trends survey (CLIPS) from Towers Perrin. The survey found that commercial insurance prices declined just 3 percent during the fourth quarter of 2008 — their smallest reduction in the past eight quarters. According to Towers Perrin, product lines and market segments experiencing the greatest reductions in pricing over the last two years, such as workers compensation, property and large accounts, may have begun to stabilize. A press release cites Jeanne Hollister, Towers Perrin managing principal and property/casualty insurance practice leader for the Americas: “Although the property/casualty industry remains strongly capitalized in the aggregate, we expect that the surplus declines in 2008 will result in increased conservatism in companies’ risk appetite and that this, in turn, will cause general price firming to occur in 2009.” The survey comes just a week after online insurance exchange MarketScout reported an average property/casualty rate decrease of 8 percent in February 2009, compared to a double-digit rate decrease of 14 percent a year ago."
For Source and Full Article Click: III's Insurance Industry Blog
17 March 2009
Campbell joins Glacier
Campbell joins Glacier: "Glacier Insurance AG, part of the Switzerland-based Glacier Group, has appointed Alex Campbell as senior property underwriter, based in the company’s London office. In his new role, Campbell will further develop Glacier Insurance’s property UK portfolio and work in tandem with its network of offices on international business. He has 22 years of industry experience in various senior roles and joins the insurer from Arch Insurance Company (Europe), where as vice president he established Arch’s underwriting presence in Europe. Before joining Arch, Campbell led a team of underwriters writing large multinational industrial risks at Allianz Global Risks. Prior to this, he was chief UK underwriter at Skandia Assurance Company."
For Source and Full Article Click: Insurance Day
For Source and Full Article Click: Insurance Day
In a Turbulent Market, London's Top Insurers Seek Growth Beyond the City
In a Turbulent Market, London's Top Insurers Seek Growth Beyond the City: "he top London market insurers weathered storms both financial and natural in 2008, showing results that are not too bad, all things considered.
The financial risks posed in 2009 by a continuing global economic downturn looks like it will provide some underwriting opportunities, but investment risks will force the likes of Chaucer, Hiscox and Brit to balance on a knife's edge, testing their respective skills as perhaps never before. With all business decisions on the table, these insurers are hinting that London's position as a global insurance center might itself be on the line.
In a variety of ways, all three are looking to expand beyond London's trading floors in a business world in a great deal of flux.
Holding Fast Chaucer Holdings plc reported a pretax loss of 26.2 million pounds in 2008, compared with pretax profit of 89.4 million pounds a year earlier. Gross premiums rose 26.9%. Chaucer reported investment losses of 71 million pounds opposed to gains of 41.7 million pounds in 2007, For Brit Insurance Holdings, pretax profit fell 54% to 89.2 million pounds, as gross premiums rose 4.2%. Brit managed investment returns of 7.4 million pounds, compared with 137.4 million pounds a year earlier.
Hiscox plc was also profitable in 2008, though pretax profit fell 55% to 105.2 million pounds. Gross premiums fell 4.3%, and Hiscox reported an investment loss of 80.6 million pounds, compared with investment income of 99.7 million pounds in 2007.
All three insurers see good prospects for rates in their major property/casualty line in 2009, though tight capital markets may make it difficult to take advantage of some opportunities. Brit predicted that the international insurance market will be affected by ?capacity concerns,? which it believes will likely drive rates up.
?Insurance capital has been eroded by the combined elements of significant catastrophe related claims during 2008 and by the varied and significant effects of economic turbulence,? said Brit.
Chaucer sees ?very encouraging? underwriting prospects, and said it is hoping for an average 2009 premium increase of 5.4%. ?The hardening market should gather pace through 2009 and 2010,? Chaucer said, adding that rates should rise in energy, marine, U.K. automobile and catastrophe-exposed property lines.
Loosened Bonds Brit also said it is looking into redomiciling in the Netherlands, citing unfavorable business conditions in the United Kingdom. According to Brit Chief Executive Dane Douetil, the U.K. government has been in the position to assist U.K. businesses, but ?they haven?t done so,? he said. ?And, more particularly, they haven?t created a stability of long-term planning.? Hiscox also suggested the center of gravity may be moving away from London. In its 2008 statement, Hiscox said its Global Markets team 'has recognized that business no longer flows to London as a right, and in 2007 invested in creating teams who were located mainly in Paris and New York.' The Global Markets had since last September 'taken advantage of the disruption caused by the financial crises by recruiting people and working with our USA business' to open new offices in Boston, Kansas City, Lexington and Miami. Hiscox expects to open an office in Los Angeles this year.
Hiscox added that it still considers the London market important in an overall international strategy, but hinted that continued activity through London would have to be justified by cost-cutting and efficiency improvements. 'The key to success in London is a continued investment by Hiscox, and the market as a whole, in efficiency and improving infrastructure,' the insurer said. But this, Hiscox means the hoped-for success of the newly announced Lloyd's Exchange, an electronic trading platform.
Among the goals Chaucer states in its 2008 statement are plans for 'further distribution channel development to complement the Lloyd?s presence in both major and growing markets with our own presence.' The insurer noted that it has successfully done this in Singapore, where 'we continue to support the Lloyd?s Asia platform, which saw further development in 2008.' Chaucer further noted that 'the broking fraternity has followed suit and we have benefitted from the influx of both London and local broking talent to Singapore. The addition of new lines of business, supported by the appointment of a specialist lines underwriter and a property and power team, should support further development of Chaucer Singapore in 2009.' Chaucer also acknowledge that it 'has received a number of take-over approaches,' all of which it is examining. Like fellow London market insurer Kiln, which was acquired last year by Japan's Tokio Marine, Chaucer may find its horizons broadened by a new parent or partner."
For Source and Full Article Click: BestWire via TMC
The financial risks posed in 2009 by a continuing global economic downturn looks like it will provide some underwriting opportunities, but investment risks will force the likes of Chaucer, Hiscox and Brit to balance on a knife's edge, testing their respective skills as perhaps never before. With all business decisions on the table, these insurers are hinting that London's position as a global insurance center might itself be on the line.
In a variety of ways, all three are looking to expand beyond London's trading floors in a business world in a great deal of flux.
Holding Fast Chaucer Holdings plc reported a pretax loss of 26.2 million pounds in 2008, compared with pretax profit of 89.4 million pounds a year earlier. Gross premiums rose 26.9%. Chaucer reported investment losses of 71 million pounds opposed to gains of 41.7 million pounds in 2007, For Brit Insurance Holdings, pretax profit fell 54% to 89.2 million pounds, as gross premiums rose 4.2%. Brit managed investment returns of 7.4 million pounds, compared with 137.4 million pounds a year earlier.
Hiscox plc was also profitable in 2008, though pretax profit fell 55% to 105.2 million pounds. Gross premiums fell 4.3%, and Hiscox reported an investment loss of 80.6 million pounds, compared with investment income of 99.7 million pounds in 2007.
All three insurers see good prospects for rates in their major property/casualty line in 2009, though tight capital markets may make it difficult to take advantage of some opportunities. Brit predicted that the international insurance market will be affected by ?capacity concerns,? which it believes will likely drive rates up.
?Insurance capital has been eroded by the combined elements of significant catastrophe related claims during 2008 and by the varied and significant effects of economic turbulence,? said Brit.
Chaucer sees ?very encouraging? underwriting prospects, and said it is hoping for an average 2009 premium increase of 5.4%. ?The hardening market should gather pace through 2009 and 2010,? Chaucer said, adding that rates should rise in energy, marine, U.K. automobile and catastrophe-exposed property lines.
Loosened Bonds Brit also said it is looking into redomiciling in the Netherlands, citing unfavorable business conditions in the United Kingdom. According to Brit Chief Executive Dane Douetil, the U.K. government has been in the position to assist U.K. businesses, but ?they haven?t done so,? he said. ?And, more particularly, they haven?t created a stability of long-term planning.? Hiscox also suggested the center of gravity may be moving away from London. In its 2008 statement, Hiscox said its Global Markets team 'has recognized that business no longer flows to London as a right, and in 2007 invested in creating teams who were located mainly in Paris and New York.' The Global Markets had since last September 'taken advantage of the disruption caused by the financial crises by recruiting people and working with our USA business' to open new offices in Boston, Kansas City, Lexington and Miami. Hiscox expects to open an office in Los Angeles this year.
Hiscox added that it still considers the London market important in an overall international strategy, but hinted that continued activity through London would have to be justified by cost-cutting and efficiency improvements. 'The key to success in London is a continued investment by Hiscox, and the market as a whole, in efficiency and improving infrastructure,' the insurer said. But this, Hiscox means the hoped-for success of the newly announced Lloyd's Exchange, an electronic trading platform.
Among the goals Chaucer states in its 2008 statement are plans for 'further distribution channel development to complement the Lloyd?s presence in both major and growing markets with our own presence.' The insurer noted that it has successfully done this in Singapore, where 'we continue to support the Lloyd?s Asia platform, which saw further development in 2008.' Chaucer further noted that 'the broking fraternity has followed suit and we have benefitted from the influx of both London and local broking talent to Singapore. The addition of new lines of business, supported by the appointment of a specialist lines underwriter and a property and power team, should support further development of Chaucer Singapore in 2009.' Chaucer also acknowledge that it 'has received a number of take-over approaches,' all of which it is examining. Like fellow London market insurer Kiln, which was acquired last year by Japan's Tokio Marine, Chaucer may find its horizons broadened by a new parent or partner."
For Source and Full Article Click: BestWire via TMC
IFEX announces first full year hurricane risk trading figures
IFEX announces first full year hurricane risk trading figures: "Climate Change PLC has announced it’s full year figures for 2008. As the owners of the Insurance Futures Exchange (IFEX) they have numbers to share on how well the hurricane risk trading facility (housed at the Chicago Climate Futures Exchange) has performed in the first full year of windstorm futures trading.
They report that the year has been slow although not dissimilar to how other asset classes trade in their first years of existence. However, the volumes seem to have increased as the year progressed, December 2008 saw record volumes with 4,000 contracts exchanged in that month alone. The total traded volume for 2008 was 10,375 contracts, with open-interest at year end reacing 8,550 contracts with a value of $85m. It would be interesting to see if there is a correlation between the slow down of the catastrophe bond market and the increase in trades on the IFEX towards the latter part of the year, perhaps event-linked futures were being snapped up as an alternate form of capacity to both cat bonds and industry loss warranties?
The Insurance Futures Exchange (IFEX) has done a great job of creating a liquid, electronically traded marketplace for hurricane futures. If they want this growth to continue they really do need to make data more accessible, easy to visualise and easier to find; all successful electronic markets are fully transactable online these days and this is one area where the reinsurance and risk transfer industries fall behind."
For Source and Full Article Click: Artemis.bm
They report that the year has been slow although not dissimilar to how other asset classes trade in their first years of existence. However, the volumes seem to have increased as the year progressed, December 2008 saw record volumes with 4,000 contracts exchanged in that month alone. The total traded volume for 2008 was 10,375 contracts, with open-interest at year end reacing 8,550 contracts with a value of $85m. It would be interesting to see if there is a correlation between the slow down of the catastrophe bond market and the increase in trades on the IFEX towards the latter part of the year, perhaps event-linked futures were being snapped up as an alternate form of capacity to both cat bonds and industry loss warranties?
The Insurance Futures Exchange (IFEX) has done a great job of creating a liquid, electronically traded marketplace for hurricane futures. If they want this growth to continue they really do need to make data more accessible, easy to visualise and easier to find; all successful electronic markets are fully transactable online these days and this is one area where the reinsurance and risk transfer industries fall behind."
For Source and Full Article Click: Artemis.bm
Federal reinsurance regulation gains support
Federal reinsurance regulation gains support: "Support for allowing reinsurers to choose federal rather than state regulation may be growing on Capitol Hill.
During a Tuesday hearing on insurance regulation before the Senate Banking, Housing and Urban Affairs Committee, two senators said federal regulation might make sense for reinsurers.
And the committee's ranking member and former chairman—Sen. Richard Shelby, R-Ala.—said problems with American International Group Inc.'s securities lending operations 'raises some serious questions about the adequacy of state regulation.'
Banking Committee Chairman Christopher Dodd, D-Conn., opened the hearing with a blast at AIG's decision to issue bonuses to employees of its financial products division, whose credit default swap transactions are blamed for much of AIG’s current financial crisis. As the committee heard witnesses speak in favor of and in opposition to allowing insurers to choose federal regulation in place of the current state regulatory regime, some lawmakers voiced support for allowing reinsurers and life insurers to choose federal regulation."
For Source and Full Article Click: Business Insurance
During a Tuesday hearing on insurance regulation before the Senate Banking, Housing and Urban Affairs Committee, two senators said federal regulation might make sense for reinsurers.
And the committee's ranking member and former chairman—Sen. Richard Shelby, R-Ala.—said problems with American International Group Inc.'s securities lending operations 'raises some serious questions about the adequacy of state regulation.'
Banking Committee Chairman Christopher Dodd, D-Conn., opened the hearing with a blast at AIG's decision to issue bonuses to employees of its financial products division, whose credit default swap transactions are blamed for much of AIG’s current financial crisis. As the committee heard witnesses speak in favor of and in opposition to allowing insurers to choose federal regulation in place of the current state regulatory regime, some lawmakers voiced support for allowing reinsurers and life insurers to choose federal regulation."
For Source and Full Article Click: Business Insurance
Willis Launches Facultative Reinsurance Unit
WSH Willis Launches Facultative Reinsurance Unit: "Willis Group Holdings said it has launched Willis Facultative, a new unit that combines the individual facultative units of Willis and Willis Re and consolidates the group?s specialist facultative advocates around the world into a single global business.
The newly formed unit will have responsibility for the development of facultative business globally within the Willis Group (NYSE: WSH). It will also provide a clear entry point for facultative solutions to insurance company clients worldwide.
Willis Facultative will be led by Matthew Keeping as chief executive officer. Reporting to Keeping will be Gianmarco Tosti, who has been appointed managing director of Willis Facultative International, and will be responsible for the development and management of all facultative business outside of the United States. Rich Macrane, managing director of Willis Facultative North America, will be responsible for the development and management of facultative business in North America.
'For the last five years, we have been growing our facultative business consistently through a number of underlying business units, using a decentralized strategy. By centralizing our core teams, we have an opportunity to bring together a range of specialist products under one management structure for the benefit of Willis cedent customers in every corner of the world in a consolidating marketplace where there are now only three global facultative intermediaries,' Keeping said in a statement.
Earlier this month, Willis announced plans to rename the iconic Sears Tower in Chicago the Willis Tower later this year. The London-based insurance broker said it will consolidate five area offices and move nearly 500 employees into the Tower, initially occupying more than 140,000 square feet on multiple floors (BestWire, March 12, 2009).
Chicago is home to the headquarters of Aon Corp., the largest broker in the world based on 2007 brokerage revenue, according to the Best?s Review ranking of global brokers. Willis is the third-largest broker, according to the Best?s Review ranking.
Willis opened its new 28-story global headquarters in the middle of the City of London last year (BestWire, May 13, 2008).
Shares of Willis Group Holdings were $21.51 in morning trading on March 16, up 0.51% from the previous close."
For Source and Full Article Click: Bestwire via Trading Markets
The newly formed unit will have responsibility for the development of facultative business globally within the Willis Group (NYSE: WSH). It will also provide a clear entry point for facultative solutions to insurance company clients worldwide.
Willis Facultative will be led by Matthew Keeping as chief executive officer. Reporting to Keeping will be Gianmarco Tosti, who has been appointed managing director of Willis Facultative International, and will be responsible for the development and management of all facultative business outside of the United States. Rich Macrane, managing director of Willis Facultative North America, will be responsible for the development and management of facultative business in North America.
'For the last five years, we have been growing our facultative business consistently through a number of underlying business units, using a decentralized strategy. By centralizing our core teams, we have an opportunity to bring together a range of specialist products under one management structure for the benefit of Willis cedent customers in every corner of the world in a consolidating marketplace where there are now only three global facultative intermediaries,' Keeping said in a statement.
Earlier this month, Willis announced plans to rename the iconic Sears Tower in Chicago the Willis Tower later this year. The London-based insurance broker said it will consolidate five area offices and move nearly 500 employees into the Tower, initially occupying more than 140,000 square feet on multiple floors (BestWire, March 12, 2009).
Chicago is home to the headquarters of Aon Corp., the largest broker in the world based on 2007 brokerage revenue, according to the Best?s Review ranking of global brokers. Willis is the third-largest broker, according to the Best?s Review ranking.
Willis opened its new 28-story global headquarters in the middle of the City of London last year (BestWire, May 13, 2008).
Shares of Willis Group Holdings were $21.51 in morning trading on March 16, up 0.51% from the previous close."
For Source and Full Article Click: Bestwire via Trading Markets
A.M. Best Affirms Ratings of Evergreen Reinsurance Company, Ltd.
A.M. Best Affirms Ratings of Evergreen Reinsurance Company, Ltd.: "A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of Evergreen Reinsurance Company, Ltd. (Evergreen Re) (Bermuda). The outlook for both ratings is stable.
These ratings reflect Evergreen Re’s excellent capitalization, consistently strong operating performance and its unique role as the primary insurance carrier for its ultimate parent, Evergreen Group. These positive rating factors are derived from the company’s conservative underwriting standards, low cost operating structure and multiple product line book of business and broad geographic exposure base.
Partially offsetting these positive rating factors is Evergreen Re’s exposure to earthquakes and typhoons in the Asia/Pacific region, though the risk is mitigated by policy sublimits, prudent reinsurance and the wide geographic dispersion of assets insured. Furthermore, the majority of its book of business is generated from one source – Evergreen Group. Nonetheless, the group’s business is diverse in scope, complexity and in its risk profile. In addition, management places great emphasis on risk control and carefully monitors its writings in order to avoid a concentration of risk.
The ratings also reflect the strong level of commitment on the part of the Evergreen Group, whose management incorporates Evergreen Re as an integral component in the overall risk management program of the group. Moreover, Evergreen Re gains from its parent’s global scope and business relationships. These commitments have been developed over the last several years and encompass risks located in a number of countries in East and Southeast Asia. Overall, Evergreen Re benefits from its parent’s strong management experience and market presence, as well as Evergreen Group’s adherence to a philosophy of providing a stable market for global insurance and reinsurance for the Evergreen Group and its operating subsidiaries."
For Source and Full Article Click: BusinessWire
These ratings reflect Evergreen Re’s excellent capitalization, consistently strong operating performance and its unique role as the primary insurance carrier for its ultimate parent, Evergreen Group. These positive rating factors are derived from the company’s conservative underwriting standards, low cost operating structure and multiple product line book of business and broad geographic exposure base.
Partially offsetting these positive rating factors is Evergreen Re’s exposure to earthquakes and typhoons in the Asia/Pacific region, though the risk is mitigated by policy sublimits, prudent reinsurance and the wide geographic dispersion of assets insured. Furthermore, the majority of its book of business is generated from one source – Evergreen Group. Nonetheless, the group’s business is diverse in scope, complexity and in its risk profile. In addition, management places great emphasis on risk control and carefully monitors its writings in order to avoid a concentration of risk.
The ratings also reflect the strong level of commitment on the part of the Evergreen Group, whose management incorporates Evergreen Re as an integral component in the overall risk management program of the group. Moreover, Evergreen Re gains from its parent’s global scope and business relationships. These commitments have been developed over the last several years and encompass risks located in a number of countries in East and Southeast Asia. Overall, Evergreen Re benefits from its parent’s strong management experience and market presence, as well as Evergreen Group’s adherence to a philosophy of providing a stable market for global insurance and reinsurance for the Evergreen Group and its operating subsidiaries."
For Source and Full Article Click: BusinessWire
Reinsurer premiums up in 2008
Reinsurer premiums up in 2008: "Property/casualty reinsurers wrote $23.9 billion in net premiums in 2008, an increase of $1.2 billion compared with 2007 results, according to a survey by the Reinsurance Assn. of America.
The Washington-based RAA surveyed 19 U.S. property/casualty reinsurers and reported that the 2008 combined ratio for the group was 101.8%, up from 94.7% during the same period a year ago. The deterioration of the combined ratio was attributable to a 71% loss ratio and a 30.7% expense ratio, the RAA said in a statement.
While several of the reinsurers surveyed reported underwriting gains during 2008, a few companies had notable underwriting losses, according to the RAA's underwriting report. They included Munich Reinsurance America Corp., which reported a net underwriting loss of $364.3 million; Swiss Reinsurance America Corp., which reported a net underwriting loss of $228.1 million; and White Mountains Reinsurance Co. of America, which reported a net underwriting loss of $134.4 million.
Additionally, the RAA reported the reinsurers' policyholders' surplus was $64.4 billion at the end of 2008, down from $75.9 billion at 2007 year-end."
For Source and Full Article Click: Business Insurance
The Washington-based RAA surveyed 19 U.S. property/casualty reinsurers and reported that the 2008 combined ratio for the group was 101.8%, up from 94.7% during the same period a year ago. The deterioration of the combined ratio was attributable to a 71% loss ratio and a 30.7% expense ratio, the RAA said in a statement.
While several of the reinsurers surveyed reported underwriting gains during 2008, a few companies had notable underwriting losses, according to the RAA's underwriting report. They included Munich Reinsurance America Corp., which reported a net underwriting loss of $364.3 million; Swiss Reinsurance America Corp., which reported a net underwriting loss of $228.1 million; and White Mountains Reinsurance Co. of America, which reported a net underwriting loss of $134.4 million.
Additionally, the RAA reported the reinsurers' policyholders' surplus was $64.4 billion at the end of 2008, down from $75.9 billion at 2007 year-end."
For Source and Full Article Click: Business Insurance
PartnerRe completes $250 million tender offer
PartnerRe completes $250 million tender offer : "Reinsurance provider PartnerRe Ltd. said Monday it completed its tender offer to buy $250 million of 6.44 percent junior subordinated notes due 2066, and will buy about 75 percent worth of those notes.
PartnerRe (nyse: PRE - news - people ) said the deal reduces debt by $186.6 million and used $96.7 million of cash on hand.
A gain of $56.8 million will be reflected in Bermuda-based company's first-quarter results.
A total of $63.4 million in principal of the capital efficient notes remains outstanding and will mature in 2066.
Shares of the company fell 48 cents to close at $59.34."
For Source and Full Article Click: Forbes.com
PartnerRe (nyse: PRE - news - people ) said the deal reduces debt by $186.6 million and used $96.7 million of cash on hand.
A gain of $56.8 million will be reflected in Bermuda-based company's first-quarter results.
A total of $63.4 million in principal of the capital efficient notes remains outstanding and will mature in 2066.
Shares of the company fell 48 cents to close at $59.34."
For Source and Full Article Click: Forbes.com
A.M. Best Assign Ratings to Maiden Reinsurance Company
A.M. Best Assign Ratings to Maiden Reinsurance Company: "A.M. Best Co. has assigned a financial strength rating (FSR) of A- (Excellent) and issuer credit rating (ICR) of “a-” to Maiden Reinsurance Company (Maiden Reinsurance) (Maryland Heights, MO) following receipt of the approved intercompany quota share reinsurance agreement with its affiliate, Maiden Insurance Company, Ltd. (Maiden Insurance) (Hamilton, Bermuda). The outlook assigned to these ratings is stable.
Maiden Reinsurance’s predecessor entity, GMAC Direct Insurance Company (GMAC Direct) (Maryland Heights, MO), was purchased as a shell by Maiden Holdings, Ltd. (Holdings) (Hamilton, Bermuda) [NASDAQ: MHLD] from Motors Insurance Corporation (Southfield, MI), the lead member of GMAC Insurance Group (GMACI). Subsequent to the acquisition, GMAC Direct was renamed Maiden Reinsurance Company.
The ratings reflect Maiden Reinsurance’s strategic importance to Holdings in forming a dedicated U.S. reinsurance platform providing treaty, accident and health and specialty facultative reinsurance. Additionally, the ratings reflect Holdings’ financial commitment and strong balance sheet, as well as management’s commitment to maintain underwriting discipline as former GMAC Reinsurance business is written through Maiden Reinsurance. In support of the transaction, Holdings’ management raised approximately $260 million through a trust preferred offering, which $129 million was infused into Maiden Reinsurance."
For Source and Full Article Click: BusinessWire
Maiden Reinsurance’s predecessor entity, GMAC Direct Insurance Company (GMAC Direct) (Maryland Heights, MO), was purchased as a shell by Maiden Holdings, Ltd. (Holdings) (Hamilton, Bermuda) [NASDAQ: MHLD] from Motors Insurance Corporation (Southfield, MI), the lead member of GMAC Insurance Group (GMACI). Subsequent to the acquisition, GMAC Direct was renamed Maiden Reinsurance Company.
The ratings reflect Maiden Reinsurance’s strategic importance to Holdings in forming a dedicated U.S. reinsurance platform providing treaty, accident and health and specialty facultative reinsurance. Additionally, the ratings reflect Holdings’ financial commitment and strong balance sheet, as well as management’s commitment to maintain underwriting discipline as former GMAC Reinsurance business is written through Maiden Reinsurance. In support of the transaction, Holdings’ management raised approximately $260 million through a trust preferred offering, which $129 million was infused into Maiden Reinsurance."
For Source and Full Article Click: BusinessWire
Overcapacity will delay premium hikes claims advisory group
Overcapacity will delay premium hikes claims advisory group: "Recession hit businesses are not making the most of over capacity in the market to seek cost savings, according to a financial advisory group.
Robert Cholmondeley, director of the corporate insurance division of Taylor Patterson, added insurance companies are still being flexible with prices in order to keep a share of a market.
He continued: “I am expecting premiums to increase in time. However, there is still a lot of capacity resulting in a number of companies out there fighting for market share. This means competitive premiums are still available.
“A recession is a perfect time to have a spring clean of costs but many businesses often fail to look at their insurance premiums which can, in some cases, be reduced without harming the level of cover obtained.”"
For Source and Full Article Click: Post Online
Robert Cholmondeley, director of the corporate insurance division of Taylor Patterson, added insurance companies are still being flexible with prices in order to keep a share of a market.
He continued: “I am expecting premiums to increase in time. However, there is still a lot of capacity resulting in a number of companies out there fighting for market share. This means competitive premiums are still available.
“A recession is a perfect time to have a spring clean of costs but many businesses often fail to look at their insurance premiums which can, in some cases, be reduced without harming the level of cover obtained.”"
For Source and Full Article Click: Post Online
Cuomo details AIG bonus payments
Cuomo details AIG bonus payments: "Seventy-three employees of American International Group Inc. received bonuses of more than $1 million dollars out of the more than $160 million in bonus payments that sparked widespread outrage this week, according to New York Attorney General Andrew Cuomo.
In a letter Tuesday to Rep. Barney Frank, D-Mass., chairman of the House Committee on Financial Services, Mr. Cuomo detailed some of the bonus payments that AIG paid out to members of its financial products subsidiary last week.
Mr. Cuomo urged Rep. Frank to use the information, compiled as a result of his office's ongoing investigation into executive compensation at AIG, when the committee takes up the issue at a scheduled hearing Wednesday.
'These payments were all made to individuals in the subsidiary whose performance led to crushing losses and the near failure of AIG,' Mr. Cuomo said in the letter. 'Something is deeply wrong with this outcome,' he said.
The highest bonus was $6.4 million, with six other employees receiving more than $4 million, and 22 individuals receiving bonuses of $2 million or more, according to Mr. Cuomo. In addition, he said, 11 of the individuals who received 'retention' bonuses of $1 million or more are no longer working for AIG.
Mr. Cuomo issued a subpoena to AIG on Monday seeking the names of individuals who received the bonuses. In a letter to AIG Chief Executive Officer Edward Liddy earlier on Monday, Mr. Cuomo demanded the names of the employees, their positions, their job descriptions, information on their performance, and details of their employment contracts.
According to Mr. Cuomo, his office has also obtained the contracts under which AIG decided to make the payments, which include a 'shocking' provision that required most individuals’ bonuses to be equal to their 2007 bonuses 'despite obvious signs that 2008 performance would be disastrous in comparison to the year before,' he said.
AIG has argued that it had to pay the bonuses because of existing contracts. AIG declined to comment."
For Source and Full Article Click: Business Insurance
In a letter Tuesday to Rep. Barney Frank, D-Mass., chairman of the House Committee on Financial Services, Mr. Cuomo detailed some of the bonus payments that AIG paid out to members of its financial products subsidiary last week.
Mr. Cuomo urged Rep. Frank to use the information, compiled as a result of his office's ongoing investigation into executive compensation at AIG, when the committee takes up the issue at a scheduled hearing Wednesday.
'These payments were all made to individuals in the subsidiary whose performance led to crushing losses and the near failure of AIG,' Mr. Cuomo said in the letter. 'Something is deeply wrong with this outcome,' he said.
The highest bonus was $6.4 million, with six other employees receiving more than $4 million, and 22 individuals receiving bonuses of $2 million or more, according to Mr. Cuomo. In addition, he said, 11 of the individuals who received 'retention' bonuses of $1 million or more are no longer working for AIG.
Mr. Cuomo issued a subpoena to AIG on Monday seeking the names of individuals who received the bonuses. In a letter to AIG Chief Executive Officer Edward Liddy earlier on Monday, Mr. Cuomo demanded the names of the employees, their positions, their job descriptions, information on their performance, and details of their employment contracts.
According to Mr. Cuomo, his office has also obtained the contracts under which AIG decided to make the payments, which include a 'shocking' provision that required most individuals’ bonuses to be equal to their 2007 bonuses 'despite obvious signs that 2008 performance would be disastrous in comparison to the year before,' he said.
AIG has argued that it had to pay the bonuses because of existing contracts. AIG declined to comment."
For Source and Full Article Click: Business Insurance
Capital Management: Zero in: Target Capitalization
Capital Management: Zero in: Target Capitalization: "Capitalization means choice, and freedom can be a burden. In selecting the sources from which to acquire capital - and in what proportions - insurers and reinsurers implicitly shape many future decisions. Each type of capital comes with specific advantages and disadvantages, and quirks that can influence a carrier’s strategy. Thus, determining a target capitalization that balances cost, flexibility, and growth potential should be a principal concern for insurance and reinsurance management teams.
Carriers tend to diversify capital sources. In this effort, four major types of capital are typically evaluated:
* Equity issuances (public and private)
* Debt issuances (public and private)
* Retained earnings
* Reinsurance
In establishing their target capitalizations, insurers and reinsurers are forced to balance the costs and limitations of a particular type of capital against its advantages.
Most insurers and reinsurers prefer equity capital. This source of long-term capital is permanent (i.e., it does not have to be repaid, as debt capital does), and as an asset, it corresponds to a shareholders equity entry on the balance sheet-not a liability. This advantage is not cheap. Public and private equity issuances are usually the most expensive ways to raise capital. Further, the cost of equity capital tends to be highest when you need it most.
Debt issuances are less expensive than equity … but for good reason. Because returns are less uncertain, investors do not expect the profits from debt securities that they do from equities, and they have their principal returned after a fixed period of time-capital is merely rented out to insurers and reinsurers. Thus, this form of capital is transient. The asset entry from the capital infusion has a corresponding liability. Leverage and financial risk are increased … but return on equity (ROE) is, too. Debt can make a smaller amount of equity more productive, but it requires a tradeoff.
In the current economic climate, debt capital is not as easy to acquire as it was in the past. The ongoing financial crisis began in credit markets, which is where the effects continue to be most pronounced.
Retained earnings, unlike equity and debt, have been “acquired” already. This form of capital tends to be less expensive than outside sources, but its availability depends on firm profitability and shareholder expectations of dividends and buybacks. Decisions pertaining to the use of retained earnings usually involve availability rather than cost. While retained earnings may seem like the optimal form of capital for insurers and reinsurers, remember that:
* Profits may not be predictable, making third-party capital easier to acquire consistently
* The use of retained earnings may erode surplus
* There must be sufficient retained earnings available to satisfy the firm’s investment need
There should always be a place for retained earnings in a firm’s target capitalization, but it should be determined carefully.
Often overlooked as a form of capital, reinsurance can be particularly effective. The price of this form of capital does vary; perils, ratings, and risk profiles can influence the cost of reinsurance capital for a particular insurer or reinsurer. The overwhelming advantage of this type of capital, though, is that the terms and forms available are quite flexible. Carriers can get almost exactly what they need quickly and easily. This is especially true when the insurer is hit by a big loss that the reinsurance pays but would otherwise impair capital, further increasing the costs of raising new capital and even the incentives to do so.
More than just another form of capital, reinsurance can make capital from other sources more productive. For example, securing protection via reinsurance can protect earnings, ensuring the availability of retained earnings to fund growth, reducing the chance of having to raise costly new outside capital and ultimately increasing firm value.
When juggling these different forms of capital, each of which has a place on a carrier’s balance sheet, the overall objective should be to maintain a sensible distribution of sources. The exact mix will vary from one firm to the next, but should maximize the productivity of equity, use debt judiciously, and rely on retained earnings only as appropriate. Reinsurance capital should be engaged to manage volatility and secure some predictability."
For Source and Full Article Click: GCCapitalIdeas.com
Carriers tend to diversify capital sources. In this effort, four major types of capital are typically evaluated:
* Equity issuances (public and private)
* Debt issuances (public and private)
* Retained earnings
* Reinsurance
In establishing their target capitalizations, insurers and reinsurers are forced to balance the costs and limitations of a particular type of capital against its advantages.
Most insurers and reinsurers prefer equity capital. This source of long-term capital is permanent (i.e., it does not have to be repaid, as debt capital does), and as an asset, it corresponds to a shareholders equity entry on the balance sheet-not a liability. This advantage is not cheap. Public and private equity issuances are usually the most expensive ways to raise capital. Further, the cost of equity capital tends to be highest when you need it most.
Debt issuances are less expensive than equity … but for good reason. Because returns are less uncertain, investors do not expect the profits from debt securities that they do from equities, and they have their principal returned after a fixed period of time-capital is merely rented out to insurers and reinsurers. Thus, this form of capital is transient. The asset entry from the capital infusion has a corresponding liability. Leverage and financial risk are increased … but return on equity (ROE) is, too. Debt can make a smaller amount of equity more productive, but it requires a tradeoff.
In the current economic climate, debt capital is not as easy to acquire as it was in the past. The ongoing financial crisis began in credit markets, which is where the effects continue to be most pronounced.
Retained earnings, unlike equity and debt, have been “acquired” already. This form of capital tends to be less expensive than outside sources, but its availability depends on firm profitability and shareholder expectations of dividends and buybacks. Decisions pertaining to the use of retained earnings usually involve availability rather than cost. While retained earnings may seem like the optimal form of capital for insurers and reinsurers, remember that:
* Profits may not be predictable, making third-party capital easier to acquire consistently
* The use of retained earnings may erode surplus
* There must be sufficient retained earnings available to satisfy the firm’s investment need
There should always be a place for retained earnings in a firm’s target capitalization, but it should be determined carefully.
Often overlooked as a form of capital, reinsurance can be particularly effective. The price of this form of capital does vary; perils, ratings, and risk profiles can influence the cost of reinsurance capital for a particular insurer or reinsurer. The overwhelming advantage of this type of capital, though, is that the terms and forms available are quite flexible. Carriers can get almost exactly what they need quickly and easily. This is especially true when the insurer is hit by a big loss that the reinsurance pays but would otherwise impair capital, further increasing the costs of raising new capital and even the incentives to do so.
More than just another form of capital, reinsurance can make capital from other sources more productive. For example, securing protection via reinsurance can protect earnings, ensuring the availability of retained earnings to fund growth, reducing the chance of having to raise costly new outside capital and ultimately increasing firm value.
When juggling these different forms of capital, each of which has a place on a carrier’s balance sheet, the overall objective should be to maintain a sensible distribution of sources. The exact mix will vary from one firm to the next, but should maximize the productivity of equity, use debt judiciously, and rely on retained earnings only as appropriate. Reinsurance capital should be engaged to manage volatility and secure some predictability."
For Source and Full Article Click: GCCapitalIdeas.com
Chicagoans In Disbelief A Day After Announcement That Sears Tower Will Become Willis Tower
Chicagoans In Disbelief A Day After Announcement That Sears Tower Will Become Willis Tower - : "The Sears Tower will be known as the Willis Tower in a few months, and Chicagoans are in disbelief a day after the announcement.
As CBS 2's Mike Parker reports, the iconic tower of steel and glass has anchored the city's skyline for more than 35 years, and almost looks like it was constructed in tribute to the city's big shoulders. But with the name change looming, few Chicagoans seemed to be willing to shrug it off.
What do you think of the name change?
The managers of the iconic building announced on Thursday that its name will be changed to the Willis Tower, effective this summer. The London-based insurance broker Willis Group Holdings Ltd. announced Thursday that 500 of its employees now scattered throughout Chicago are moving in, and will gain naming rights as part of the deal with the owners of the building.
On Thursday, all through the floors of the Sears Tower, the phones jangled all day with complaints."
For Source and Full Article Click: cbs2chicago.com
As CBS 2's Mike Parker reports, the iconic tower of steel and glass has anchored the city's skyline for more than 35 years, and almost looks like it was constructed in tribute to the city's big shoulders. But with the name change looming, few Chicagoans seemed to be willing to shrug it off.
What do you think of the name change?
The managers of the iconic building announced on Thursday that its name will be changed to the Willis Tower, effective this summer. The London-based insurance broker Willis Group Holdings Ltd. announced Thursday that 500 of its employees now scattered throughout Chicago are moving in, and will gain naming rights as part of the deal with the owners of the building.
On Thursday, all through the floors of the Sears Tower, the phones jangled all day with complaints."
For Source and Full Article Click: cbs2chicago.com
Shelf Offerings 100% of 2008 Cat Bond Issuances
Shelf Offerings 100% of 2008 Issuances » Print: "Shelf offerings have become increasingly common in the catastrophe bond market. First introduced in 2002, this concept of creating a platform for multiple note issuances evolved from the medium-term note programs developed for corporate debt issuers in the capital markets. The advantages of shelf offerings are substantial when compared to the serial approach to catastrophe bond issuance which preceded this innovation. Issuers appear to value the structure, as 100 percent of the catastrophe bonds issued in 2008 used the shelf offering structure. This unanimity among issuers is a profound endorsement of shelf offerings.
The catastrophe bond shelf offering platform was introduced in 2002 with the Pioneer transaction, which accounted for USD386.5 million of risk capital via three takedowns during the year. Once introduced, however, the use of shelf offerings began to grow. Two of seven issuances in 2003 were shelf offerings, accounting for 24 percent of the total risk capital issued. Despite a drop in the number of issuances in 2004, from seven to six, shelf offerings held steady at two (representing 34 percent of risk capital issued). After a short dip in 2005, the shelf offering “share” of total risk capital issued increased to 54 percent in 2006, 70 percent in 2007 … and finally, in 2008 100 percent of risk capital issued.
It is hardly surprising that issuers have been drawn to shelf offerings, as their multi-peril issuance capability enhances risk and capital management. Using a shelf offering, an issuer can construct an issuing platform that mirrors its portfolio of risk perils, which can then be used for price discovery of any (or all) of the perils covered. This also supports a flow of communication that can facilitate reverse inquiry issuances. Because a substantial portion of issuance costs have been paid once (up front), incremental usage of the program amortizes this fixed cost over many issuances. In recent years, the incremental cost and time required to create a “reusable” shelf program (relative to a non-shelf, single issuance facility) has fallen. Accordingly, catastrophe bond sponsors have elected to use shelf programs to secure a substantial improvement in protection utility in exchange for a nominal increase in expense.
However, it is important to note that frictional cost management is often over stated as a motivation for shelf program usage. On a more strategic level, shelf programs have more to do with opening new and consistent alternatives to securing the most competitive capacity available. Critically, shelf programs enable sponsors to access additional capacity opportunistically. Instead of going to the market with a fixed issuance amount and potentially paying an extra premium to clear a large deal, sponsors can approach the market over the course of several (individually smaller) issuances that could aggregate to a larger targeted amount.
Because shelf offerings encourage repeated interactions between sponsors and catastrophe bond investors there is ample opportunity for increased familiarity (and trust) between market participants to develop. Often the benefits of this familiarity can manifest themselves through improved pricing and terms for consistent repeat issuers, and more favorable secondary market pricing for existing bonds in the aftermath of a potentially significant catastrophe event.
The reduced cost and increased flexibility afforded by shelf offerings have advanced the utility of catastrophe bonds for risk and capital management. In 2008, issuers perceived the benefits and voted for this structure with their capital. Generally steady growth since 2002 has confirmed the advantages of shelf offerings, but the market does not stand still. Risk transfer instruments will evolve alongside issuer demand for new ways to protect their capital.
*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd., which is authorized and regulated by the Financial Services Authority. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product."
For Source and Full Article Click: GCCapitalIdeas.com
The catastrophe bond shelf offering platform was introduced in 2002 with the Pioneer transaction, which accounted for USD386.5 million of risk capital via three takedowns during the year. Once introduced, however, the use of shelf offerings began to grow. Two of seven issuances in 2003 were shelf offerings, accounting for 24 percent of the total risk capital issued. Despite a drop in the number of issuances in 2004, from seven to six, shelf offerings held steady at two (representing 34 percent of risk capital issued). After a short dip in 2005, the shelf offering “share” of total risk capital issued increased to 54 percent in 2006, 70 percent in 2007 … and finally, in 2008 100 percent of risk capital issued.
It is hardly surprising that issuers have been drawn to shelf offerings, as their multi-peril issuance capability enhances risk and capital management. Using a shelf offering, an issuer can construct an issuing platform that mirrors its portfolio of risk perils, which can then be used for price discovery of any (or all) of the perils covered. This also supports a flow of communication that can facilitate reverse inquiry issuances. Because a substantial portion of issuance costs have been paid once (up front), incremental usage of the program amortizes this fixed cost over many issuances. In recent years, the incremental cost and time required to create a “reusable” shelf program (relative to a non-shelf, single issuance facility) has fallen. Accordingly, catastrophe bond sponsors have elected to use shelf programs to secure a substantial improvement in protection utility in exchange for a nominal increase in expense.
However, it is important to note that frictional cost management is often over stated as a motivation for shelf program usage. On a more strategic level, shelf programs have more to do with opening new and consistent alternatives to securing the most competitive capacity available. Critically, shelf programs enable sponsors to access additional capacity opportunistically. Instead of going to the market with a fixed issuance amount and potentially paying an extra premium to clear a large deal, sponsors can approach the market over the course of several (individually smaller) issuances that could aggregate to a larger targeted amount.
Because shelf offerings encourage repeated interactions between sponsors and catastrophe bond investors there is ample opportunity for increased familiarity (and trust) between market participants to develop. Often the benefits of this familiarity can manifest themselves through improved pricing and terms for consistent repeat issuers, and more favorable secondary market pricing for existing bonds in the aftermath of a potentially significant catastrophe event.
The reduced cost and increased flexibility afforded by shelf offerings have advanced the utility of catastrophe bonds for risk and capital management. In 2008, issuers perceived the benefits and voted for this structure with their capital. Generally steady growth since 2002 has confirmed the advantages of shelf offerings, but the market does not stand still. Risk transfer instruments will evolve alongside issuer demand for new ways to protect their capital.
*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd., which is authorized and regulated by the Financial Services Authority. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product."
For Source and Full Article Click: GCCapitalIdeas.com
Hannover Says Cat Bonds Are Too Costly After Lehman
Hannover Says Cat Bonds Are Too Costly After Lehman: "Hannover Re, Germany’s second- biggest reinsurer, said it doesn’t plan to renew $200 million in securities linked to natural disasters that expired in December because prices are too high.
“The three catastrophe bonds we saw since the Lehman collapse have doubled in prices compared to the times before Lehman,” Ulrich Wallin, a management board member, said today at the Hanover-based company’s annual analyst conference. “We are not willing to renew our Kepler Re bonds in those conditions and will wait and see how the market develops.”
The market for catastrophe bonds was hurt by Lehman Brothers Holdings Inc.’s collapse in September because some deals relied on the bank to guarantee returns on securities backing the notes. One issuer, Allstate Corp.’s Willow Re Ltd., didn’t make a full interest payment last month, the second catastrophe bond to default in a decade.
Hannover Re sold the Kepler Re securities in March 2007 to protect against losses from catastrophic events worldwide, according to a statement on the company’s Web site published at the time of the transaction. The deal expired in December 2008.
Scor SE, France’s biggest reinsurer, sold the first catastrophe bond since Lehman’s failure in February, a $200 million transaction to transfer risk on U.S. earthquakes and hurricanes. Paris-based Scor’s Atlas V Capital Ltd. deal paid interest of 11.5 percentage points more than the London interbank offered rate on a $100 million portion, according to data compiled by Bloomberg. Two $50 million notes will pay 12.5 and 14.5 percentage points over Libor, the data showed.
Aspen Insurance Holdings Ltd.’s Ajax Re Ltd., another of the four catastrophe bonds that used swaps with Lehman, is likely to default on an interest payment this month, Standard & Poor’s said in a March 3 statement."
For Source and Full Article Click: Frontiers of Risk Management
“The three catastrophe bonds we saw since the Lehman collapse have doubled in prices compared to the times before Lehman,” Ulrich Wallin, a management board member, said today at the Hanover-based company’s annual analyst conference. “We are not willing to renew our Kepler Re bonds in those conditions and will wait and see how the market develops.”
The market for catastrophe bonds was hurt by Lehman Brothers Holdings Inc.’s collapse in September because some deals relied on the bank to guarantee returns on securities backing the notes. One issuer, Allstate Corp.’s Willow Re Ltd., didn’t make a full interest payment last month, the second catastrophe bond to default in a decade.
Hannover Re sold the Kepler Re securities in March 2007 to protect against losses from catastrophic events worldwide, according to a statement on the company’s Web site published at the time of the transaction. The deal expired in December 2008.
Scor SE, France’s biggest reinsurer, sold the first catastrophe bond since Lehman’s failure in February, a $200 million transaction to transfer risk on U.S. earthquakes and hurricanes. Paris-based Scor’s Atlas V Capital Ltd. deal paid interest of 11.5 percentage points more than the London interbank offered rate on a $100 million portion, according to data compiled by Bloomberg. Two $50 million notes will pay 12.5 and 14.5 percentage points over Libor, the data showed.
Aspen Insurance Holdings Ltd.’s Ajax Re Ltd., another of the four catastrophe bonds that used swaps with Lehman, is likely to default on an interest payment this month, Standard & Poor’s said in a March 3 statement."
For Source and Full Article Click: Frontiers of Risk Management
ARIG / Takaful Update
ARIG/Takaful, Exchange: "Standard & Poor's Ratings Services has affirmed its 'BBB' long-term counterparty credit and insurer financial strength ratings on Bahrain-based non-life and life reinsurer Arab Insurance Group (B.S.C.) (ARIG). S&P then withdrew the ratings at the company's request, and it is no longer subject to ongoing surveillance. 'At the time of withdrawal, the rating reflected the company's very strong capitalization despite the 19 percent reduction in shareholders' equity in 2008, and the company's good competitive position,' S&P noted. 'These factors were offset by marginal operating performance despite some improvement in the combined ratio, and execution risk relating to both business lines, and geographic expansion. The outlook at the time of withdrawal was stable and reflected our view that ARIG will maintain surplus capital in excess of the 'AA' (very strong) level in 2009. Also, the company is likely to continue to lag regional and international peers in terms of operating performance. In a related announcement S&P said that the ratings and outlook on Dubai-based reinsurer Takaful Re Ltd. (TRL; BBB/Stable/--) 'are unaffected by the withdrawal of the ratings on Arab Insurance Group (B.S.C.) (ARIG) at ARIG's request. ARIG is the majority shareholder of TRL, with a 54 percent holding, and is also the major service provider.'"
For Source and Full Article Click: TAKAFUL ( ISLAMIC INSURANCE ) BLOG
For Source and Full Article Click: TAKAFUL ( ISLAMIC INSURANCE ) BLOG
Ajax Re catastrophe bond makes interest payment but remains at risk
Ajax Re catastrophe bond makes interest payment but remains at risk: "The Ajax Re catastrophe bond deal (one of those affected by Lehmans collapse) sponsored by Aspen Insurance Holdings Ltd. has managed to make it’s latest interest payment in time. The interest payment was due yesterday (Monday) and was paid as expected say Standard & Poor’s. Despite this fact S&P say the Ajax Re cat bond remains at risk of default and so the ratings remain unchanged at ‘CC’ and the deal is still on CreditWatch negative.
The Ajax Re notes were originally put on CreditWatch with negative implications because the issuer informed S&P that they were unlikely to make the forthcoming coupon interest payment. It seems that the collateral account contained sufficient funds to make the payment in full.
Ajax Re remains at risk as S&P fear they will not have the funds available at maturity, due May 8th 2009, to repay the principal. ‘Based on the quality of the assets in the collateral trust we expect significant impairment and therefore principal default’ says S&P. This statement shows how important it is that cat bond issuers are working to improve the quality of assets used and optimise the way deals are structured. These enhancements need to continue if issues such as this are to be avoided in future."
For Source and Full Article Click: www.Artemis.bm
The Ajax Re notes were originally put on CreditWatch with negative implications because the issuer informed S&P that they were unlikely to make the forthcoming coupon interest payment. It seems that the collateral account contained sufficient funds to make the payment in full.
Ajax Re remains at risk as S&P fear they will not have the funds available at maturity, due May 8th 2009, to repay the principal. ‘Based on the quality of the assets in the collateral trust we expect significant impairment and therefore principal default’ says S&P. This statement shows how important it is that cat bond issuers are working to improve the quality of assets used and optimise the way deals are structured. These enhancements need to continue if issues such as this are to be avoided in future."
For Source and Full Article Click: www.Artemis.bm
Paris Re's 2008 net operating income falls 42%
Paris Re's 2008 net operating income falls 42% : "Paris Re Holdings Ltd. has reported net operating income of $158 million for 2008, down from $271.7 million for 2007.
The Zug, Switzerland-based reinsurer said net operating income for the fourth quarter of 2008 was $61 million compared with $67.9 million for the fourth quarter of 2007.
Paris Re said it recorded a loss of $130 million from Hurricane Ike, and $25.8 million more from the combination of Windstorm Emma, Hurricane Gustav and Hailstorm Hilal.
The company's combined ratio for 2008 was 102.7%, up from 91.1% for 2007.
Paris Re said net investment income for 2008 was $225.8 million, down 2.3% compared with the previous year.
The reinsurer’s gross written premiums fell to $1.40 billion in 2008 compared with $1.46 billion a year earlier. Paris Re said the decline was caused mainly by its decision to stop writing windstorm coverage in the Gulf of Mexico and its withdrawal from certain other catastrophe exposures."
Source: Business Insurance
The Zug, Switzerland-based reinsurer said net operating income for the fourth quarter of 2008 was $61 million compared with $67.9 million for the fourth quarter of 2007.
Paris Re said it recorded a loss of $130 million from Hurricane Ike, and $25.8 million more from the combination of Windstorm Emma, Hurricane Gustav and Hailstorm Hilal.
The company's combined ratio for 2008 was 102.7%, up from 91.1% for 2007.
Paris Re said net investment income for 2008 was $225.8 million, down 2.3% compared with the previous year.
The reinsurer’s gross written premiums fell to $1.40 billion in 2008 compared with $1.46 billion a year earlier. Paris Re said the decline was caused mainly by its decision to stop writing windstorm coverage in the Gulf of Mexico and its withdrawal from certain other catastrophe exposures."
Source: Business Insurance
Arch Re Announces New Appointments
Arch Reinsurance Company Announces New Appointments: "rch Reinsurance Company today announced that John Rathgeber has been appointed Chairman and Chief Executive Officer and Tim Olson has been appointed President and Chief Operating Officer with effect from March 1, 2009. Mr. Rathgeber served as President and Chief Executive Officer and Mr. Olson as Chief Underwriting Officer prior to their new positions. In addition, Barry Golub, who had served as the Company’s Controller, has been appointed as Chief Financial Officer with effect from March 1, 2009.
Mr. Rathgeber joined Arch Re in December 2001 and has nearly 30 years of experience in various actuarial, underwriting and senior management positions in the reinsurance industry. Mr. Olson has been with the Company since 2001 and has over 29 years of experience as a reinsurance broker and underwriter in the United States and Europe.
Marc Grandisson, Chairman of the Arch Worldwide Reinsurance Group, commented: “Both John and Tim have done a great job building up and establishing our U.S. reinsurance operation as a quality provider in its field. The new positions recognize their accomplishments and strengthen our leadership in the U.S. for the future.”"
Source: insurancenewsnet.com
Mr. Rathgeber joined Arch Re in December 2001 and has nearly 30 years of experience in various actuarial, underwriting and senior management positions in the reinsurance industry. Mr. Olson has been with the Company since 2001 and has over 29 years of experience as a reinsurance broker and underwriter in the United States and Europe.
Marc Grandisson, Chairman of the Arch Worldwide Reinsurance Group, commented: “Both John and Tim have done a great job building up and establishing our U.S. reinsurance operation as a quality provider in its field. The new positions recognize their accomplishments and strengthen our leadership in the U.S. for the future.”"
Source: insurancenewsnet.com
Berkshire Hathaway Finalizes Swiss Re Funding
Berkshire Hathaway Finalizes Swiss Re Funding: "Berkshire Hathaway (BRK-A) and Swiss Re have finalized the terms of the funding arrangement initially announced on February 5, 2009. While the main elements of the deal have been known for some time, this is a good opportunity to revisit the terms of the arrangement and the overall nature of this investment.
Berkshire Takes 3 Percent Stake in January 2008
In January 2008, Berkshire Hathaway took a 3 percent stake in Swiss Re and also agreed to take 20 percent of Swiss Re’s property and casualty business for five years. At the time, this move was interpreted as a major display of confidence in the quality of Swiss Re’s underwriting capabilities. Berkshire purchased the 3 percent stake on the open market and Swiss Re traded around CHF 76 when the initial investment was announced. Since that time, Swiss Re shares have plummeted and closed at CHF 14.88 on Friday, March 13.
By January 2009, Swiss Re was in danger of losing its AA Rating due to heavy investment portfolio losses suffered during 2008. The decline in capital related to mark to market losses on the investment portfolio in 2008 more than offset strong underwriting results. This led to the current capital infusion from Berkshire that was finalized late last week. Swiss Re’s press release on February 5, 2009 goes into more detail."
Source: GuruFocus.com
Berkshire Takes 3 Percent Stake in January 2008
In January 2008, Berkshire Hathaway took a 3 percent stake in Swiss Re and also agreed to take 20 percent of Swiss Re’s property and casualty business for five years. At the time, this move was interpreted as a major display of confidence in the quality of Swiss Re’s underwriting capabilities. Berkshire purchased the 3 percent stake on the open market and Swiss Re traded around CHF 76 when the initial investment was announced. Since that time, Swiss Re shares have plummeted and closed at CHF 14.88 on Friday, March 13.
By January 2009, Swiss Re was in danger of losing its AA Rating due to heavy investment portfolio losses suffered during 2008. The decline in capital related to mark to market losses on the investment portfolio in 2008 more than offset strong underwriting results. This led to the current capital infusion from Berkshire that was finalized late last week. Swiss Re’s press release on February 5, 2009 goes into more detail."
Source: GuruFocus.com
Fitch Places White Mountains IDRS and Debt on Rating Watch Negative
FITCH PLACES WHITE MOUNTAINS IDRS AND DEBT ON RATING WATCH NEGATIVE; IFS OUTLOOK TO NEGATIVE: "Fitch Ratings has placed on Rating Watch Negative the 'BBB+' Issuer Default Ratings (IDRs) of White Mountains Insurance Group, Ltd. (White Mountains), its wholly owned intermediate holding company, White Mountains Re Group, Ltd. (White Mountains Re), and its 75.5% owned intermediate holding company, OneBeacon U.S. Holdings, Inc. (OB Holdings).
In addition, Fitch has placed on Rating Watch Negative the 'BBB' senior debt ratings of White Mountains Re and OB Holdings.
Fitch has also affirmed the following Insurer Financial Strength (IFS) ratings:
--OneBeacon Insurance Group (see member list below) at 'A'.
White Mountains Re's reinsurance subsidiaries
--White Mountains Reinsurance Company of America (WM Re America) at 'A-';
--Sirius International Insurance Corporation (Sirius International) at 'A-'.
--White Mountains Re Bermuda Ltd. (WM Re Bermuda) at 'A'.
Fitch has revised the Rating Outlook on all IFS ratings to Negative from Stable."
Source: AdHoc News
In addition, Fitch has placed on Rating Watch Negative the 'BBB' senior debt ratings of White Mountains Re and OB Holdings.
Fitch has also affirmed the following Insurer Financial Strength (IFS) ratings:
--OneBeacon Insurance Group (see member list below) at 'A'.
White Mountains Re's reinsurance subsidiaries
--White Mountains Reinsurance Company of America (WM Re America) at 'A-';
--Sirius International Insurance Corporation (Sirius International) at 'A-'.
--White Mountains Re Bermuda Ltd. (WM Re Bermuda) at 'A'.
Fitch has revised the Rating Outlook on all IFS ratings to Negative from Stable."
Source: AdHoc News
New Swiss Re sigma study: 2008 one of the worst years for catastrophe losses
New Swiss Re sigma study: 2008 one of the worst years for catastrophe losses: "2008 was one of the worst years for catastrophe losses. More than 240 500 people lost their lives. Insurers across the sector paid out USD 52.5bn to compensate for property claims, and the total impact on the economy caused by natural and man-made catastrophes around the world added up to USD 269bn.
2008 was exceptional in terms of fatalities and losses. Statistics confirm a trend towards an increase in the number and costs of natural catastrophes and man-made disasters.
According to Swiss Re’s latest sigma study, “Natural catastrophes and man-made disasters in 2008”, 137 natural catastrophes and 174 man-made disasters occurred in 2008. Asia suffered the most in terms of the number of lives lost, while the US was worst hit in regard to insured property losses. Europe was less impacted with only minor losses compared to last year.
Natural catastrophes cost property insurers more than USD 44.7bn …
High catastrophe claims in the US were driven by Hurricanes Ike and Gustav as well as thunderstorms during the first half of 2008. Europe’s losses, down from last year, represented slightly more than a tenth of the world total in 2008, largely due to lower storm and flood damages. In early 2008, China suffered losses amounting to more than USD 1.3bn, driven by an unusually cold winter with record amounts of ice and snow.
... and more than USD 7.8bn for man-made catastrophes.
Major man-made disasters caused losses of USD 7.8bn in 2008, with large-scale industrial fires, explosions and losses in the energy sector at the top of the list. Man-made catastrophes resulted in 5 600 deaths in 2008; shipping and boating accidents as well as bombings and social unrest caused the most casualties.
Losses in Asia extremely high, likely to spur need for insurance.
In 2008, the total damages to the economy amounted to USD 269bn worldwide. Almost half this amount can be attributed to the earthquake that struck China in May, which caused costs to the economy of USD 124bn. This corresponds to approximately 3% of China’s GDP.
Many governments in Asia face significant financial risks when catastrophes occur. Given the rapid development of income and wealth in Asia, the financial exposures will swiftly rise. This is likely to increase the focus on prevention and ex-post disaster management. It will also give rise to the development of insurance as a tool to cope with the financial consequences of catastrophes. It is expected therefore, that in Asia, insurance will play a more important role in the future than it does today.
Nevertheless, such development needs time. Given the high percentage of people with low incomes in this part of the world, public private partnerships are critical to the development of effective and accessible insurance solutions. Global and regional insurers and reinsurers also play an essential part in the further establishment of insurance in Asia, on the one hand by sharing their knowledge and expertise, and on the other by helping to absorb the rising risks in these marke"
Source: The FINANCIAL
2008 was exceptional in terms of fatalities and losses. Statistics confirm a trend towards an increase in the number and costs of natural catastrophes and man-made disasters.
According to Swiss Re’s latest sigma study, “Natural catastrophes and man-made disasters in 2008”, 137 natural catastrophes and 174 man-made disasters occurred in 2008. Asia suffered the most in terms of the number of lives lost, while the US was worst hit in regard to insured property losses. Europe was less impacted with only minor losses compared to last year.
Natural catastrophes cost property insurers more than USD 44.7bn …
High catastrophe claims in the US were driven by Hurricanes Ike and Gustav as well as thunderstorms during the first half of 2008. Europe’s losses, down from last year, represented slightly more than a tenth of the world total in 2008, largely due to lower storm and flood damages. In early 2008, China suffered losses amounting to more than USD 1.3bn, driven by an unusually cold winter with record amounts of ice and snow.
... and more than USD 7.8bn for man-made catastrophes.
Major man-made disasters caused losses of USD 7.8bn in 2008, with large-scale industrial fires, explosions and losses in the energy sector at the top of the list. Man-made catastrophes resulted in 5 600 deaths in 2008; shipping and boating accidents as well as bombings and social unrest caused the most casualties.
Losses in Asia extremely high, likely to spur need for insurance.
In 2008, the total damages to the economy amounted to USD 269bn worldwide. Almost half this amount can be attributed to the earthquake that struck China in May, which caused costs to the economy of USD 124bn. This corresponds to approximately 3% of China’s GDP.
Many governments in Asia face significant financial risks when catastrophes occur. Given the rapid development of income and wealth in Asia, the financial exposures will swiftly rise. This is likely to increase the focus on prevention and ex-post disaster management. It will also give rise to the development of insurance as a tool to cope with the financial consequences of catastrophes. It is expected therefore, that in Asia, insurance will play a more important role in the future than it does today.
Nevertheless, such development needs time. Given the high percentage of people with low incomes in this part of the world, public private partnerships are critical to the development of effective and accessible insurance solutions. Global and regional insurers and reinsurers also play an essential part in the further establishment of insurance in Asia, on the one hand by sharing their knowledge and expertise, and on the other by helping to absorb the rising risks in these marke"
Source: The FINANCIAL
Is Buffett the Biggest Bubble of All?
Is Buffett the Biggest Bubble of All?: "Warren Buffett is having a tough time of it too. His wealth is down $25 billion, and his huge bets on world stock markets are currently underwater. Has Buffett lost his golden touch?
Has Warren Buffett just been lucky all these years?
It feels like sacrilege, but in light of recent events, including his shocker of a 2008, I have to ask the question. After all...
* His company, Berkshire Hathaway (NYSE: BRK-A), has reported $10 billion in writedowns on its equity put options -- i.e., derivatives.
* His hefty positions in financial shares, including Wells Fargo (NYSE: WFC), US Bancorp, and American Express (NYSE: AXP), have been absolutely throttled in this banking crisis.
* He loaded up on shares of oil titan ConocoPhillips (NYSE: COP) at the height of the oil bubble last summer -- a mistake for which he expresses regret in his letter to shareholders.
I'm not the only one questioning the Oracle of Omaha's investing prowess. One of the ratings agencies took away Berkshire's pristine AAA debt rating. The price of Berkshire credit-default swaps (which are basically insurance against Berkshire defaulting) is at levels more usually found with companies rated as junk. And finally, shares of Buffett's holding company are trading at half of last year's prices.
So is it time to conclude that Buffett's investing legend has been nothing more than extreme luck and excessive risk-taking -- the ultimate bubble waiting to pop?"
Source: Motley Fool
Has Warren Buffett just been lucky all these years?
It feels like sacrilege, but in light of recent events, including his shocker of a 2008, I have to ask the question. After all...
* His company, Berkshire Hathaway (NYSE: BRK-A), has reported $10 billion in writedowns on its equity put options -- i.e., derivatives.
* His hefty positions in financial shares, including Wells Fargo (NYSE: WFC), US Bancorp, and American Express (NYSE: AXP), have been absolutely throttled in this banking crisis.
* He loaded up on shares of oil titan ConocoPhillips (NYSE: COP) at the height of the oil bubble last summer -- a mistake for which he expresses regret in his letter to shareholders.
I'm not the only one questioning the Oracle of Omaha's investing prowess. One of the ratings agencies took away Berkshire's pristine AAA debt rating. The price of Berkshire credit-default swaps (which are basically insurance against Berkshire defaulting) is at levels more usually found with companies rated as junk. And finally, shares of Buffett's holding company are trading at half of last year's prices.
So is it time to conclude that Buffett's investing legend has been nothing more than extreme luck and excessive risk-taking -- the ultimate bubble waiting to pop?"
Source: Motley Fool
Munich Re proposes new members for supervisory board
Munich Re proposes new members for supervisory board: "Munich Re has proposed four new members for its supervisory board, to be elected at the company’s AGM on 22 April 2009.
Six existing representatives have also been put forward for re-election.
Peter Gruss, Peter Löscher, Anton van Rossum, and Thomas Wellauer have been nominated as new candidates.
Hans-Jürgen Schinzler, Henning Kagermann, Wolfgang Mayrhuber, Karel Van Miert, Bernd Pischetsrieder and Ron Sommer have been proposed for re-election.
Gruss, 59, is President of the Max Planck Society, where he also serves as a Scientific Member and Director of the Department of Molecular Biology.
Gruss is a member of various national and international scientific bodies, and is a member of the supervisory board of Siemens AG.
Löscher, 51, is chairman of the board of management at Siemens AG.
He has formerly served in senior positions at Merck & Co, General Electric, Aventis, and Hoechst.
Van Rossum, 63, is a member of the board and risk committee at Credit Suisse Group.
He formerly served as chief executive officer of Fortis.
Wellauer, 53, is a member of the executive committee of Novaritis International AG.
Previously, Wellauer served as chief executive of Winterhur Insurance and Credit Suisse Financial"
Source: Insurance Daily
Six existing representatives have also been put forward for re-election.
Peter Gruss, Peter Löscher, Anton van Rossum, and Thomas Wellauer have been nominated as new candidates.
Hans-Jürgen Schinzler, Henning Kagermann, Wolfgang Mayrhuber, Karel Van Miert, Bernd Pischetsrieder and Ron Sommer have been proposed for re-election.
Gruss, 59, is President of the Max Planck Society, where he also serves as a Scientific Member and Director of the Department of Molecular Biology.
Gruss is a member of various national and international scientific bodies, and is a member of the supervisory board of Siemens AG.
Löscher, 51, is chairman of the board of management at Siemens AG.
He has formerly served in senior positions at Merck & Co, General Electric, Aventis, and Hoechst.
Van Rossum, 63, is a member of the board and risk committee at Credit Suisse Group.
He formerly served as chief executive officer of Fortis.
Wellauer, 53, is a member of the executive committee of Novaritis International AG.
Previously, Wellauer served as chief executive of Winterhur Insurance and Credit Suisse Financial"
Source: Insurance Daily
Senator intimates AIG execs might consider suicide
Senator intimates AIG execs might consider suicide: "A prominent U.S. senator has intimated that executives of the troubled insurer American International Group Inc. might consider suicide, adopting what he called a Japanese approach to taking responsibility for their actions.
Sen. Charles Grassley, R-Iowa, who is the top Republican on the Senate Finance Committee, made his comments on the Cedar Rapids, Iowa, radio station WMT on Monday.
'The first thing that would make me feel a little bit better toward them (is) if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide,' Sen. Grassley said.
'And in the case of the Japanese,' he added, 'they usually commit suicide before they make any apology.'"
Source: Business Insurance
Sen. Charles Grassley, R-Iowa, who is the top Republican on the Senate Finance Committee, made his comments on the Cedar Rapids, Iowa, radio station WMT on Monday.
'The first thing that would make me feel a little bit better toward them (is) if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide,' Sen. Grassley said.
'And in the case of the Japanese,' he added, 'they usually commit suicide before they make any apology.'"
Source: Business Insurance
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