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First signs of hard market as insurers strain to absorb storm losses
Slovenia is one of the biggest insurance markets in the central and east European transition economies. One reason for the market’s high premium income is the large size of the healthcare account. Slovenian health insurance is a voluntary supplement to the state health insurance system and the high growth rates in 2006 and 2007 were largely the result of structural reforms in this particular sector of the market, which accounts for nearly 30.0% of non-life market premiums. However, competition is intense in most lines of business and growth is likely to be slower in the future. According to preliminary results for the first half of 2008, non-life premiums grew by 8.5% on a year-on-year basis. But the market finally began to harden (with motor casco rates rising by 5% and household and commercial property rates up to 15%) as a result of a series of costly hail and windstorm losses in the summer of 2008. There is also the prospect that the formal privatisation of the Triglav and Sava Re groups will lead to a greater emphasis on shareholder value. There is also the hope that the impact of the global economic crisis locally will encourage insurers in the market to increase the level of their retained profits
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06 July 2009
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Cost of commercial insurance cover fell by nearly 10.0% in 2008
Survey found that compensating agents on a fee basis results in significant savings over commission-based payments
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Foreign investors poised to raise stakes in local firms
The newly elected government is widely expected to lift the limit on foreign direct nvestment in the Indian insurance sector to 49%
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06 July 2009
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Insurers demand independent regulator
Move to merge financial services regulator with the French central bank
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06 July 2009
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Bao Viet debuts as largest entity on Ho Chi Minh stock exchange
Company is major player in both life and non-life markets • Vinare reports 2008 loss • Slower growth forecast for market
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06 July 2009
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AIG Europe’s profits up 51% in 2008
Management of European subsidiary said clients stuck with the firm despite difficulties of parent company in the US
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06 July 2009
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Domestic insurance market shrinks for second consecutive year
There was an increase in large fires in France in 2008, pushing up the loss ratio of the insurance market by by 15 points
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06 July 2009
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Regional pension funds looking to invest in infrastructure projects
As part of this trend of asset diversification, four funds in Uruguay are planning to enter the local mortgage lending market
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06 July 2009
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Storms and floods cost local insurers A$870mn
The proportion of insurance policies offering flood cover has risen from 8% in 2006 to 32% last year
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06 July 2009
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Insurers broadly welcome idea of federal insurance office
The treasury sees a federal charter as a way of addressing the systemic risks posed to the US financial system by insurers
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06 July 2009
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Government extends scope of export credit insurance scheme
All firms with an export turnover of US$2mn or more can now obtain export credit cover, usually at subsidised rates
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06 July 2009
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Climate change and flooding: facing the future
There is currently an uneasy relationship between the UK government, the insurance industry and property owners who have insured their homes against flooding. One in six homes in England and Wales is at risk of some form of flooding and home owners are seeing property prices and insurance premiums affected by flood risk. The government has urged the insurance industry to reduce premiums and excesses for those property owners who have put measures in place to secure their homes against flooding. Currently, homeowners in flood risk areas face higher premiums and excesses but have not seen a similar reduction where they have invested in protecting their properties and reducing their risk. At the same time, estate agencies are now reporting that homeowners will find it much easier to sell houses that have flood defence measures “built in” already. Here, in an edited extract from his speech to the Flood and Coastal Risk Management Conference in Telford, chairman of the UK’s Environment Agency, Lord Chris Smith identifies the impact of climate change - more frequent severe weather and rising sea levels - as particular challenges for the government, the insurance industry and the communities at risk of flooding. In particular, he looks at the lessons learned by the government from the 2007 floods and reviews the measures that have been put in place to defend those at risk. In terms of the future, he outlines, among other developments, the government’s expectations for the Floods and Water Management Bill which is included in the draft legislative programme for the fifth session of Parliament
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06 July 2009
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Regulator seeks approval for new insurance guarantee fund
Insurers will be able to impose a levy on policies to fund the compulsory scheme
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06 July 2009
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Barclays Bank sells stake in Spanish life subsidiary to CNP
CNP will pay Barclays €140.0mn in cash on completion of the sale
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06 July 2009
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Data protection and customer retention
Reports of data loss and security breaches are frequently in the news. Over the past couple of years there have been stories of mislaid laptops and hackers getting hold of transactional data. In this regard, the insurance sector is no exception: in May this year, US health insurance provider Aetna contacted 65,000 current and former employees whose Social Security numbers were at risk of theft by hackers following a data breach on its job application website; life insurance provider Aviva USA recently announced that a data breach caused by malware on an Aviva computer had affected 550 customers who opened accounts in the US, making Social Security numbers and other personal information vulnerable; and Blue Cross Blue Shield of Louisiana, another US health insurance firm, compromised the personal data of around 1,700 brokers via an email exposing information such as Social Security numbers, phone numbers and addresses, when a document containing the data was accidentally attached to a general email notifying brokers of a software upgrade. According to Christine Andrews, Director, Data Quality Management Group Limited (DQM), insurance firms are holding increasing volumes of customer data, which is vital for sales activity, marketing campaigns, customer service and transactional processes. However, Ms Andrews points out that most financial services organisations do not know how to keep this data secure. A recent report by PricewaterhouseCoopers revealed that over half of financial services firms do not know where all their customer and employee data is stored.
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06 July 2009
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UK pensions market saw premium income increase by 18% last year
However, life insurance premiums fell by 22% in 2008 after four consecutive years of growth
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06 July 2009
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RSA Insurance Group plc
The group’s sure-footed negotiation of the trading environment last year was in marked contrast to the struggles and crises experienced by an earlier incarnation in the late 1990s and early years of this decade, the venerable but constantly beleaguered, Royal & SunAlliance, the oldest insurance company in the UK. RSA, which celebrated its 250th birthday in 2004, is now a much more streamlined entity after one of the most intensive restructurings in the history of the insurance industry which included disposing of its life insurance operations, exiting a number of loss making non-life markets, most notably the US market where among other challenges it was exposed to asbestos liabilities as a result of business written years earlier by subsidiaries, and a change in senior management. This radical transformation, together with the much more intense focus on bottom line issues, was perfectly symbolised three years ago when the group’s previous name, with all its historical layers and associations, was reduced to just three initials, RSA
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06 July 2009
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China Pacific to have another go at stock exchange listing
Original IPO of China’s third largest insurer was thrown off course by the financial crisis
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06 July 2009
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Investment firm raises stake in Old Mutual to 5.0%
The Jersey based private investment firm, Cevian Capital has increased its shareholding in Old Mutual to 5.01% of the company’s voting rights. The latter corresponds to 64,362,994 shares. At the beginning of June, Cevian Capital disclosed a..
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06 July 2009
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RMS and Aon Benfield in new long term relationship
Reinsurance broker Aon Benfield has selected RMS as its main provider of risk modelling advice and strategies. A particular focus of the new relationship will be catastrophe risk analytics and interpretation of results. Bryon Ehrhart, chief..
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06 July 2009
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New form of legal cover for region
Broker Lockton claims to have introduced the first After-the- Event Insurance cover in Singapore. The product will be underwritten by First Capital Insurance Limited which is owned by Odyssey Re. ATE Insurance is a form of legal expenses insurance..
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06 July 2009
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IAIS prioritises cross border co-operation
The International Association of Insurance Supervisors (IAIS), at the conclusion of its Triannual Meeting in Taiwan, reaffirmed a number of actions being taken to reinforce insurance regulation and improve the resilience of the global insurance..
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06 July 2009
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Sector stocks burnt by sudden spike in investor anxiety
The insurers and reinsurers tracked by WIR suffered another marked decline iin their stock values for the period ending 25 June. But, despite the figures, it was not all gloom for the sector over the two weeks in which the broader market was..
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06 July 2009
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AIG puts banker in charge of asset disposal
AIG has appointed Alain Karaoglan to head up the team within the company charged with disposing of the group’s assets, the proceeds of which will be used to pay down the money owed by the group to the US federal government. In a statement,..
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06 July 2009
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World loss log 9 - 22 June 2009
Late reports
5.6, aircraft grounded
Mexico: authorities grounded the Aviacsa airline temporarily after officials reported irregularities in the maintenance of 25 aircraft. Mexico’s Transportation and Communications Department said the low cost..
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06 July 2009
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Partner Re launches bid to buy out Paris Re
After the block purchase, Partner Re will target 90% of shares before a compulsory merger under Swiss law
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17 July 2009
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Industry urged to play greater role in climate change mitigation
A report by the Geneva Association finds that insurers are well positioned to support the transition to a low carbon economy
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17 July 2009
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Demand halves for new mortgage-linked applications
Mortgage insurance defaults were 8% up on April but 17% down since January
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17 July 2009
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Thinking the unthinkable
There are currently a great many challenges to global businesses, including the impact of climate change and social upheaval both of which could result in resource shortages and profound supply chain issues. The latter could be exacerbated by the current ‘just in time’ product delivery system that companies across the globe have adopted to keep inventories low. In addition, there are political risks and threats such as piracy, which although age old, are being redefined and evolving in response to the economic downturn. Expropriation of corporate assets is another threat that is moving up the agenda for multinational companies. Businesses also need to move with care when applying innovative technologies such as nanotechnologies or when planning for the impact of pandemics. Addressing the NATO Strategic Concept Conference in Brussels last week, Lord Levene, the chairman of Lloyd’s, highlighted the need for governments and multinational businesses to ‘think the unthinkable’ in terms of understanding the potential risks and threats to stability of the global economy and security. For NATO, the objective of the conference was to outline NATO’s ‘fundamental security tasks’ in a changing global context to representatives of government, business, civil society, NGOs, academia and other multi-lateral organisations and to provide guidance on the political and military means to be used by the Alliance in achieving these objectives
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17 July 2009
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World Loss Log 23 June - 6 July
Late reports
19.6, sinking, fatalities
Vietnam: three seafarers remained missing from product tanker Nhat Thuan which exploded and sank two days previously. The vessel sustained an explosion when weighing anchor close to Vung Tau. Twelve of the 15..
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17 July 2009
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Authorities review insurance legislation as market starts to move beyond the influence of the South African regulatory model
Compared to most other countries in the region, with the exception of South Africa, the insurance industry in Namibia accounts for a fairly substantial proportion of GDP. The insurance industry is surprisingly well developed given the size of the economy. In 2007 Namibia was the 57th largest insurance market worldwide in terms of life insurance, impressive given the size of the population and the fact that only a relatively small proportion of the population insures. The advanced state of the insurance industry reflects South Africa’s involvement in the country up until 1990 and the market’s continuing links with the South African insurance industry. Whilst, however, the Namibian industry trends seem to echo those in South Africa, there is also a trend for Namibian companies to become increasingly independent from their South African head offices
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17 July 2009
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Life business shrinks for first time in 28 years
The financial market turmoil caused average shareholder capital in the life insurance industry to decrease by 30% to 40%
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17 July 2009
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Foreign insurers take shares in China companies
Prudential, Massachusetts Mutual, Metlife and Japanese insurer NIPPONKOA have all taken stakes in local insurers
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17 July 2009
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Agricultural insurance schemes expand across region
Ecuador is to start a scheme in early 2010 following countries such as Peru where cover will get underway in August
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17 July 2009
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Insurance market contracted by 4% in 2008
Profitability in both life and non-life was down, but the French insurance market stayed in the black overall
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17 July 2009
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AIG once more in spotlight as insurers and reinsurers fall further
Insurance sector stocks continued their steep decline for the period ending 9th July with the sector very much following broader market trends as the US unemployment figures for June turned out to be much higher than expected. Once again, the..
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17 July 2009
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Web 2.0 and the insurance industry
While many people refer to the Web 2.0 phenomenon as a technology, IT research and advisory firm Celent considers it more of an attitude which combines the need for more mobility, faster information flows, a higher degree of openness, and a strong reliance on collaboration and community. In terms of the importance of Web 2.0 to insurers, Nicolas Michellod, senior analyst in Celent’s insurance practice, believes that more than just adopting these technologies, insurers should focus on what the Web 2.0 attitude means for them and how it will affect their business and consumers’ behaviour. According to Mr Michellod, insurers need to carefully assess how Web 2.0 initiatives can impact their internal organization, what kind of risks are involved, and the probability of changes to their value chain in the long run. Here, Mr Michellod reviews the elements of Web 2.0 and defines the technologies supporting the Web 2.0 attitude. He also analyses the current status of insurers’ adoption of Web 2.0 technologies and attempts to identify how insurers evaluate the benefits generated by Web 2.0 initiatives. In addition, he looks at two examples of initiatives launched by European insurers in the Web 2.0 area
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17 July 2009
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Rate declines ease as insurers brace for reduced capacity
Berkshire Hathaway’s decision to limit prop cat capacity is being closely monitored
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17 July 2009
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Aviation insurers face large losses in June
Airline insurers faced their biggest monthly loss in June since the September 11, 2001 World Trade Center attacks. A report from insurance broker Aon Corp said the recent airline crashes, including the Air France jet in the Atlantic Ocean at the..
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17 July 2009
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BIBA names new chairman
UK trade association the British Insurance Brokers’ Association (BIBA) has announced that Patrick Smith, chairman of broker Swinton, will become chairman of BIBA in September. Mr Smith will succeed Derek Thornton, who has completed two years..
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17 July 2009
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Catlin appoints Haas to head EU underwriting
London-listed insurer and reinsurer Catlin Group Limited has appointed Heinz-Walter Haas as chief underwriting officer for Continental Europe. Mr Haas will be based in the Cologne office, responsible for the execution of the group’s..
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17 July 2009
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Takaful research probes governance issues
The separation of chief executive officer and chairman roles was not found to yield significant benefits
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17 July 2009
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Investors back new plan to recover funds
The majority of investors have opted to wait five years to receive 90% of their capital
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17 July 2009
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Good deal for Paris Re but not so good for IPC
Despite the stubborn resistance of their board and the emergence of a white knight in the form of Flagstone Re, IPC shareholders find themselves left with a deal which values their company at 14% below book value based on the Validus closing price of $21.62 on 14 July
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17 July 2009
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Capital returns to reinsurance market encouraged by absence of major losses during first two quarters of 2008
Despite predictions of dramatic rate increases to offset reinsurer losses over the preceding 12 months, the July renewals revealed sufficient capacity in virtually all areas and a reasonably orderly rating environment
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17 July 2009
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P/c insurers post record first-quarter loss
The $2.5bn underwriting loss for Q1 2009 reflected falling premiums and increased claims costs, despite lower cat losses
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17 July 2009
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Caisse Centrale de Reassurance SA (CCR)
The financial crisis had a limited impact on CCR’s balance sheet as the company does not have any significant exposure to financial market risks. However, the company had to set aside €10.0mn as a provision to cover the long term depreciation of assets, the value of which had declined by more than 30.0% over the previous six months. On the underwriting front, CCR’s lack of direct exposure to the US meant it was largely left untouched by the havoc caused by Hurricane Ike (which devastated the results of a great many other reinsurers) in September of last year
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17 July 2009
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AIG sells in Colombia
AIG has agreed to sell its 100% stake in Inversora Pichincha SA and Interdinco SA, which together comprise AIG’s consumer finance operations in Colombia. Banco Pichincha C.A. of Ecuador has agreed to buy the businesses. Terms of the..
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17 July 2009
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Keeling joins Guy Carpenter
Former XL Capital executive Henry Keeling is to join Guy Carpenter as president and chief executive officer of international operations from August 1, 2009. Mr Keeling will chair Guy Carpenter’s International Board and will be responsible for..
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17 July 2009
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Outlook negative for Korea’s non-life market
Rating agency Moody’s has assigned a negative outlook on the Korean non-life insurance sector over the coming 12-18 months. Moody’s said it expects the industry will report lower earnings in an environment of intense competition and low..
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17 July 2009
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Zurich completes AIG motor buy
Zurich Financial Services’s US subsidiary Farmers Group has completed the acquisition of 100% of AIG’s US Personal Auto Group, which includes 21st Century Insurance. The transaction elevates Farmers to become the third largest..
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17 July 2009
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