World Insurance Report

The last 10 years in the Czech Republic have seen the formation of a series of financial services groups normally led by banks, comprising composite insurance companies, voluntary pension funds, fund managers, mortgage lenders and leasing companies. The trend towards financial agglomeration has been reinforced by the sale of state-owned banks to foreign bancassurers. But along with the growing importance of the bancassurance channel (which had a 24.0% share of the Czech life insurance market in 2007), the other potentially big opportunity, as well as challenge, for foreign insurers (a change in the regulations permitting) is health insurance. Other than dental insurance policies there is no private healthcare insurance in the Czech Republic. Under current legislation, if an insurer were to offer a product, the cost would have to be the same as that of the state health insurers. However, since the beginning of this year, new laws oblige employers to increase the payment of sickness benefit from the current three to 14 days. This may, in the long term, present an opportunity for insurers to provide some form of indemnity cover on an excess basis. This would be particularly beneficial for the smaller companies as under the new rules each person off sick represents a potential five-fold increase in statutory sickness benefits

There is now less concern about capital among companies. At the end of June, the combined shareholders’ equity of the 11 companies which have reported so far is $6.4bn or 14.4% higher than at the end of 2008. So, with the exception of XL, all have largely made good the losses inflicted by the capital markets last year

Late reports 2.7, Air France crash France: the Air France Flight 447 flight was intact at the point at which it slammed belly first into the Atlantic Ocean at a very high speed according to Alain Bouillard, the investigator who is leading the..

French reinsurers’ return on equity almost halved in 2008 but remained in profit at 8.3%

Although the Brazilian reinsurance market was significantly liberalised by the new statute and regulations, it is not yet entirely unfettered. Here, M. Muchua Millett* reviews the implications of several significant limitations (such as the ‘right of first refusal’ accorded to local reinsurers and the imposition of cession limits) on the role of foreign reinsurers in the market. He also looks at the use of co-operative agreements between local and foreign companies to overcome these challenges

The US non-life reinsurance industry produced a positive underwriting result in the first quarter of 2009 but overall profitability remained in the red as the financial crisis continued to impact investment returns

The current economic and financial crisis is the worst in decades. It has led to unprecedented turmoil in financial markets and has triggered an economic downturn not seen in 60 years. At the same time, the policy response is massive. Mainly as a lesson from the policy mistakes of the 1930’s, monetary and fiscal policy adopted an ultra-loose stance. This field of tension has left investors wondering what the ultimate outcome of the crisis will be both in terms of economic growth and financial market impact. Dr Klaus Wiener, Chief Economist of Generali Investments, Cologne believes that investors must take their clues more from fundamental developments in the global economy. To exploit these, he argues, a more active asset management approach is needed. In particular, he stresses the importance of tactical asset allocation in the investment process and the constant monitoring of success rates. According to Dr Wiener, simple buy-and-hold strategies which may have worked during the days of “excess liquidity” or in the presence of strong secular trends like the 30-year decline in inflation will not work as well any more

Excluding pension funds, gross written premiums for life insurance contracts rose 1.1% to €76.3bn in 2008

The insurance and reinsurance stocks tracked by WIR staged their strongest recovery for the two weeks ending 23 July since the sector’s spectacular rebound in March. The current resurgence was largely due to a significantly improved..

Catlin’s underwriting result deteriorated by 43.5% from a profit of $803.09mn in 2007 to a profit of only $454.0mn in 2008. The group was equally hard hit on the investment front where total returns for 2008, was a loss of $91.0mn compared to a return of $211.1mn in 2007. In addition, Catlin’s shareholders’ funds was impacted by an investment related ‘comprehensive loss’ charge of $325.0mn. The group does not provide a great deal of detail on this figure, but the category tends to relate to unrealised investment asset impairment or currency adjustments losses which might or might not be recoverable in the medium to long term

A new report targets shifting the balance from state to private provision for pensions, accident & health and income protection

Paul Boyle, the outgoing chief executive of the UK’s Financial Reporting Council (FRC), recently argued in a speech to the FRC Annual Open Meeting against proposals to use accounting as a public policy tool to reduce pro-cyclicality and challenged the proposition that accounting measures that show volatility should be adjusted to create an impression of stability. Part of the FRC’s remit is to instil public confidence in corporate reporting and governance in the UK by influencing market participants to do a better job than they would have otherwise done. This influence is exerted by setting standards which are, normally, expected to be followed, by drawing attention to current risks and providing guidance, by monitoring the application of standards - which raises awareness that there is a risk that poor practice will be identified - and by the FRC’s investigation and enforcement activities, the object of which is to further increase the incentives for good performance. The operating bodies of the FRC are: the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Professional Oversight Board, the Financial Reporting Review Panel and the Accounting and Actuarial Discipline Board. The following is an edited version of Mr Boyle’s speech to the FRC’s Annual Open Meeting in London

Market profitability halved in 2008 and is one-third of the profit recorded in 2004

The market reported net earnings three times higher at $77mn

Standard & Poor’s has increased the rating of Polish insurers PZU SA and life associate PZU na Zycie SA to A with a stable outlook from A-. The A rating is on par with the rating assigned to the Polish state. PZU noted that this was the..

France’s life insurers collected premiums of €71.8bn ($101.9bn) during the first six months of this year, which was an increase of 6% from the corresponding period last year. The bulk of this was for traditional policies denominated in..

The Brazilian Capitalization Companies Federation (FENACAP) reported that the capitalization market keeps expanding. The Brazilian economy bond market posted a revenue of R$3.8bn (US$1.97bn) over the first five months of 2009, 8% more than in 2008...

The Nicaraguan insurance market closed the first half year of 2009 with a 45.8% in after-tax profits that reached U$S5.87bn against $4.03mn in 2008, according to a report prepared by Enrique J Lopez Peña (SEGUROS AMERICA) based on figures..

Broker Jardine Lloyd Thompson has appointed Martin Trumper to the role of joint managing director of its Asia aviation business. Mr Trumper, who will be based in Hong Kong, joins JLT from rival broker firm Aon. Alan Griffin, chairman and chief..

New investors are keen to benefit from the upswing in China’s fortunes

Size alone is not a sufficient indicator of systemic risk, according to the PCI. The threat to the system, it argues, does not reside in companies that are too big to fail, but rather in those whose activities are “too risky, cyclical and interconnected”

French reinsurer SCOR is to acquire a US life reinsurance unit of the Bermudan insurer/reinsurer XL Capital in a move aimed at strengthening SCOR’s services in the mortality-protection field and boosting its position in the US market. SCOR..