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Exchange rate factor limits premium growth for top 10 reinsurers
As in previous years, currency exchange rate factors impacted year-on-year premium increases for many companies in our survey, with Munich Re reporting that its overall reinsurance premium volume rose only marginally by 1.2%, mainly because of negative currency translation effects. If exchange rates had remained unchanged, the reinsurer’s premium income would have risen by 7.3%. However, other companies, insulated from the vicissitudes of year-end foreign exchange rates, recorded above-average premium growth in 2008. These included India’s state reinsurer General Insurance Corporation of India (up 29% in local currency, up 41% in US dollars) while Bermudian newcomers Validus, Maiden, and Flagstone generated net premium increases of 35%, 194% and 32%, respectively
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
Investment income buoys Chile’s life results
Premiums were down but overall life earnings multiplied by 16 times during first half 2009
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
Diversity and opportunity in eight separate insurance markets
After the Australian insurance market enjoyed something of a golden age between 2005 and 2007 (when return on equity exceeded 20% for three years in succession), local insurers found themselves relatively unprepared for a rapid succession of external shocks, the most damaging of which is a change in the climatic cycle which has so far produced the Newcastle floods of June 2007, the Sydney hailstorm of December 2007, the Brisbane storm of November 2008, the Queensland floods of January 2009 and the Victoria bushfires of February 2009. These events, most of which have penetrated insurers’ catastrophe protections, have not only produced significant net retained losses but have also led to large increases in catastrophe reinsurance costs. These exceptionally heavy weather losses have been largely responsible for an increase in the market’s net combined ratio to 105% and an underwriting loss of A$1.1bn (US$924.37mn) in the year ending 31 December 2008
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
Record crop insurance indemnity payments in 2008
A record $8.6bn in crop insurance indemnity payments were made to US farmers for losses in 2008 because of droughts and flooding in parts of the country along with substantial price declines for some of the major commodities. Most of the claims came..
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
Stock market recovery provides boost for China’s life companies
Investors are confident the government’s drive to stimulate domestic growth will support the market for much of this year.
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
World loss log: 4 – 17 August 2009
Property and business interruption
8.8, fire
US: ashes and charred pieces of boats were all that remained after a dock caught fire at Starkey Marina, Beaver Lake. The dock and 12 boats were destroyed. Two boats were damaged in the blaze. A faulty..
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
Retaining and engaging underwriting personnel
After investment returns diminished rapidly in the credit crunch there has been a significant shift in focus towards more effective risk management and underwriting profitability by insurers and reinsurers. Risk can take a number of forms including exposure, regulatory compliance, counterparty credit and market forces. However, an area of risk that has yet to be fully investigated, according to Ian Forwood, account director at Eurobase Insurance Solutions, is the operational constraints placed on underwriting staff due to the lack of business critical information in real time
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
European insurers’ net asset values drop for the first time in decade
The sharpest contraction was seen in the life account which was reduced by 16% in nominal terms and by 11% in real terms
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
Weather losses wash away Irish profits
Liability insurance was the one bright feature for Irish insurers in 2008 even though premium volume fell by over 13%. The fall was most pronounced in employers’ liability reflecting Ireland’s severe economic contraction which has particularly affected construction activity. There were fewer new employers’ liability claims in 2008 and overall claims costs also fell significantly but the trend in public liability was adverse with claims rising both in number and cost.
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
Bhutan opens market to new insurer
The Himalayan kingdom of Bhutan has granted a licence to a private company to enter the local insurance market for the first time. Bhutan Insurance Ltd will compete with the state-run Royal Insurance Company of Bhutan (RICB) in the areas of..
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
Insurers repay workers’ comp profits
Excess workers’ compensation profits paid by insurers to Florida businesses so far this year total some $100mn, more than three times higher than the amount paid in 2008, according to the state’s Office of Insurance Regulation. Hartford..
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
India seeks greater commission transparency
India’s insurance agents may soon have to disclose to clients the amount of commission they earn from different products. The move is being considered by a high-level government committee. A panel comprising officials from the finance..
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
Reinsurers are losing the capital argument
Investors do not seem at all convinced that a general hard market is imminent to judge from their rating of reinsurance company shares: most are standing at discounts to book value, and only Arch Capital, Hannover Re and RenaissanceRe are considered worth more than their book value
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
India proposes new fraud controls for insurers
India’s insurance regulator has strengthened know-your-customer (KYC) rules to reduce policy fraud. “While carrying out the KYC norms, special care has to be exercised to ensure that the contracts are not anonymous or under fictitious..
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
Challenging start to the year for Hungarian insurers
The tough market conditions are leading to the reshaping of the country’s insurance distribution system which has seen a marked increase in the number of independent agents obtaining authorisation
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
Risk managers concerned for contingent commissions
European risk managers say they are concerned about the implications of a recent ruling in the US on broker commission transparency. The European Federation of Risk Management Associations (FERMA) said: “The contingent commission discussion in..
Online Published Date:
01 September 2009
Appeared in issue:
869 - 31 August 2009
Assessing opportunity and risk in the Costa Rican market
*M. Machua Millett considers the prospects and challenges of the Costa Rican market since the end of the government monopoly in August last year
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Paris Re
Following an underwriting loss of $11.0mn in 2008 (compared with an underwriting profit of $110.1mn the previous year), the combination of unfavourable exchange rate movements and the deterioration in ‘intangible assets’, which collectively represented a direct charge of around $225.0mn on Paris Re’s consolidated income statement, had quite a significant impact on the company’s net loss result of $34.2mn
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
World loss log 18 – 31 August 2009
Late reports
17.8, sinking, fatalities
Taiwan: rescuers continued the search for the 22 seamen on bulk carrier Chang Ying who had been missing for nine days in the waters off Taiwan following typhoon “Morakot”. Authorities in the eastern..
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Prospect of higher capital requirements improves market prospects
Relative political stability has returned to Lebanon, following an agreement concluded in May 2008 between the various pro-western and pro-Syria factions to form a unity government. There appears to be cautious optimism that the political situation will be maintained. In addition, a new insurance law is in the process of being drafted and even though this law may not be introduced until 2010, the move is seen as positive, particularly by foreign investors. The draft law is said to contain provisions entailing a 500% increase in minimum capital for insurance companies and the mandatory separation of life and non-life operations into separate corporate entities. Such measures would lead to the reduction of the number of companies in the marketplace to a more sustainable level
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
RMS issues new models to cover regional earthquake risks
Catastrophe modeller Risk Management Solutions (RMS) has issued 16 new and updated earthquake models for Latin America, which it said bridges the gap in demand for detailed risk analysis in the region. The models focus on countries with the highest..
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Foreign insurers well-positioned for market growth
Changes to compulsory classes of business and growing wealth are expected to drive the market over the next four years
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Investment losses drain first half profits
Underwriting profits were up, but realised capital losses threatened to wipe out pre-tax profits
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Lowering the cost of compliance
Insurers are facing pressures on margins and competitive threats are growing especially from international or new market entrants. According to Christoffel Klimbie, UK Sales Director for Aia Software, a reliance on manual methods of working and legacy systems that require constant patching up has left the insurance industry several steps behind other markets such as banking, where the concept of and projects to implement automated straight through processing (STP) have been commonplace for years. One such area where operational efficiency can be improved is the process of Document Composition which allows business users to create and manage the output for business critical documents and supports templates, intelligent text production and efficient multi-channel communications. It automates key processes as a means to achieve efficiency and compliance. Here, Mr. Klimbie addresses the critical issue of why, if the benefits of document composition software are so clear, are insurers not falling over themselves to sign up for these projects?
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Munich Re focuses on regional life insurance market for growth
• Bolivian insurer suspended for failing policyholders • Insurers pay out in Chile copper mine claim • Venezuela to vote on bill
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Insurers record slowdown in premium growth
While direct premiums experienced some slowdown, reinsurance increased by 17.3% to €241.7mn
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Reinsurers return to positive capital
Reinsurers have started to rebuild their capital, according to reinsurance broker Guy Carpenter. As measured by the broker’s Global Reinsurance Composite, reinsurers’ capital rose by $4.6bn in the first half of this year, a significant..
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Generali opens office in Vietnam
The Generali Group has been allowed to open a representative office in Hanoi, in Vietnam, and the company is hoping to obtain an operating licence in the course of next year. The Vietnamese insurance market, which has a population of 85 million, has..
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
US life sales hit 1940s low
Premiums took another double-digit hit in the second quarter of 2009
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
New capital rules need fine-tuning to reflect crisis, Fitch
The equity risk charge may need to be increased, and correlations between various risk modules may need to be adjusted
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Health insurance troubles small businesses
Small business owners in the US are struggling to provide health insurance for their staff and do not feel confident in determining the health insurance that best fits their employees’ needs, according to a new survey by the National..
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Novae Re launched
UK insurer Novae Group Plc has established an international reinsurance unit to take advantage of improving conditions in the reinsurance market. Novae Re will offer reinsurance products including specialist classes such as agriculture and..
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Insurers’ direct debit interest charges under fire
New report suggests that practise by car insurance providers in the UK to charge interest on monthly repayments of car insurance premiums may not be sustainable in the long term
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Economy weighs heavy on insurance potential
The economic growth picture which averaged over 10% a year from 2005 to 2007 and is now expected to be minus 10% in 2009
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Investments offset heavy catastrophe bill at Suncorp Metway
The group’s natural catastrophe bill more than doubled in the year to June
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Lexington V Wasa & AGF: the importance of governing law provisions
On Thursday 30 July 2009, the House of Lords handed down their long awaited decision in Lexington Insurance Company v Wasa International Insurance Company Limited & AGF Insurance Limited (2009). It is perhaps fitting that such a keenly anticipated judgment should also earn historic status for being one of the last seven rulings by the House of Lords prior to its demise to make way for the Supreme Court.In a dramatic conclusion to the long running saga, the House of Lords unanimously overturned the Court of Appeal’s decision and allowed the appeal of reinsurers, Wasa and AGF. Their Lordships held that reinsurers were not liable to indemnify Lexington under the terms of the facultative reinsurance. Ling Ong*, a Partner in the London Market Team of law firm, Weightmans LLP explains why the case highlights the importance of the governing law provisions in insurance and reinsurance contracts and why both reinsurers and reinsureds should take particular care in considering the wider ramifications of these clauses when entering into the reinsurance contract
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Dr. Jochen Messemer, chairman of the management board, Ergo International
Within the Ergo Insurance Group, the operations of the International Division are not only the fastest growing but also the most profitable. However, despite its undoubted potential, Ergo International faces a number of challenges, mainly related to the global financial crisis. Here, Dr. Jochen Messemer, who took charge of the Group’s international operations at the beginning of this year, comments on the tougher trading environment that now prevails in the bancassurance sector, on the challenges of identifying appropriate joint venture partners in the life insurance markets of India and China, on the impact of negative exchange rate movements, particularly on Ergo’s flourishing business in the CEE region and on the restructuring of the Group’s operations in Italy, the only market where Ergo International wrote less business in 2008 than it did in 2007
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Investor confidence up as AIG ends August as top performing stock
The two week period ending 3 September represented something of a recovery for US and Bermudian insurance and reinsurance stocks which, with some exceptions had seen a sharp deterioration in their value over the preceding period. For the most part..
Online Published Date:
14 September 2009
Appeared in issue:
870 - 14 September 2009
Uncertain future for local bancassurance model
The Portuguese non-life market, in common with many developed western markets, is suffering the effects of the global financial and credit crisis. Falling investment, a marked reduction in imports and exports, a construction sector in crisis and the disappearance of a manufacturing industry have combined to drive competition to new levels. The predominant financial interests in the Portuguese market are local conglomerates dominated by banks. However, some of these groups are now seeking to divest themselves of their insurance interests, a trend which is expected to increase as a result of the global financial crisis. Indeed, in 2008 the problems of the Banco Portugues de Negocios (BPN), owner of Real Seguros, had a major negative impact on the insurer, and efforts to sell Real Seguros began in September 2008. However, as other insurers are also said to have financial problems, some merger and acquisition activity, which should help to reduce the level of competition and rate cutting in the market, is likely in the immediate future. But for many observers, the strong presence of foreign groups such as Allianz, Ergo and AXA in Portugal attests to the underlying potential in the market
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Double-digit market growth attracts new entrants
Austria is the largest investor in the Romanian insurance sector, followed by France, Holland and the UK
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
The world has changed and what are we doing?
For many years, the G7 countries could count on having a steady 65% of overall GDP in the world. But the world is changing. James Wolfensohn, investment consultant and former president of the World Bank, warns that the developed countries are now confronted with “the fiscal realities of life”, where heavy debts incurred by bailing out their banks will make it increasingly difficult for governments to meet spending commitments and stimulate their economies back into growth. Here, in an edited extract from his keynote speech last week to the Lloyd’s City Dinner at the Merchant Taylors’ Hall in London, an event attended by senior figures from the worlds of insurance, banking and politics, Mr Wolfensohn says that developed countries also have to deal with the growing economic might of India and China. Over the coming decades these two countries will expand to account for nearly 25% of global output by 2025 and almost half by 2050. A dynamic which, Mr Wolfensohn argues, is occurring virtually unobserved and which represents the true challenge to the City of London and all its institutions as well to the G7 countries
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Climate change forecasts increase economic losses
A scenario of high climate change could increase related catastrophe losses by up to 200% over the next 20 years
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Peru’s authorities call for action on dollar-indexed pensions
Funds linked to local inflation levels have performed better than US dollar linked funds
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Risk transfer buyers favour indices
The total volume of issued securities is currently valued at $24bn, or around 12% of total catastrophe reinsurance capacity
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Customer assumptions in the Indian health insurance market
India’s national expenditure on health services is on the rise and considerably higher than that of several similar developing countries. The share of health expenditure is approximately 6% of India’s GDP. However, the Indian government’s share of public expenditure is only 2% of this 6%, way below the stipulation of at least 5% of GDP as per the World Health Organization’s recommendation. According to IT research and advisory firm Celent, in the light of this new-found push for health insurance products, both from the regulators and from the health insurance companies, it has become critical to understand customer reaction to and expectations of health insurance services in the Indian market. In particular, Celent points out, there is a profound lack of knowledge on the part of the insurance industry generally of the behavioural factors in the purchase of healthcare insurance products in India. Against this background, Celent conducted a detailed survey of the Indian health insurance market earlier this year. Here, Ravi Nawal, an analyst in Celent’s insurance practice, comments on the survey and its findings. The survey looks at a number of areas including the role of employer provided health insurance in the market, penetration, levels of coverage, the primary sources of health care information for consumers and healthcare product knowledge, claims settlement and the main reasons for non ownership of a healthcare plan or policy
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Banks prominent in customer complaints to financial watchdog
Only one insurer featured in the top 10 of complaints filed to the Financial Ombudsman Service
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Waging war against organised insurance fraud
South Africa’s high crime rates have huge financial implications for, and adversely affect, the short-term (non-life) insurance industry because the higher the incidence of crime, the more insurance companies have to pay out in claims. Tackling these crimes is now a priority for the South African government. Here, Hugo Van Zyl, the Chief Operating Officer of the recently established South African Insurance Crime Bureau, outlines the context within which the SAICB operates. Working closely with local police, prosecuting authorities and the commercial client court, the SAICB makes every effort to ensure insurance companies collect all the necessary information to assist with investigations against crimes which affect the industry
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Industry reports first half premium growth
But foreign insurers are not keeping up with the levels of market share set by domestic firms
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
US fraud claims jump 13%
Insurers report more suspicious claims for all non-life policies
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Japanese catastrophe losses top $1.75bn
The industry is lobbying for higher cat loss reserves to cover major events
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Low cat losses in 2009 threatens year-end rates, Aon
The property market experienced only a mild hardening in rates during the first half of 2009 despite heavy losses last year
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Zurich Financial Services
In terms of ZFS’s reduced net result, it was in the ‘Other Business’ segment that the group was hardest hit, largely as a result of the segment’s exposure to financial market volatility in the shape of adverse equity market movements, widening credit spreads and the need to increase reserves in order to compensate for deterioration in the run-off of certain portfolios. A notable factor in the loss suffered by this particular operating segment was the deterioration in the valuation of hedge fund investments by Zurich Capital Markets
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Life market growth
In contrast with many local markets. Singapore’s life insurance market reported a healthy 7% expansion during 2008, although this was well down on the previous year’s 18% growth rate. However, this small market, with a population of only..
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
World loss log: 1 - 14 September 2009
Property and business interruption
4.9, industrial action
UK: some of the country’s largest oil refineries and power stations faced being shut down after workers voted to stage official action over the hiring of cheaper foreign labour. The..
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Fortis/BNP take controlling stake in Italian carrier
Fortis and BNP Paribas Assurance are to take a majority stake (50% plus one share) in Italian insurer UBI Assicurazioni. Fortis and BNP Paribas agreed to pay €120mn ($176mn) in cash on completion of the deal, plus up to €40mn ($59mn) of..
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
State plans under duress
The finances of a number of US state government-managed residual market property plans in hurricane-exposed states are on shaky ground, according to a recent Insurance Information Institute white paper which argues that the credit crunch and..
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Sector recovery underlined by bid for Odyssey Re
The insurance and reinsurance stocks tracked by WIR, with a few exceptions, posted some pretty decent gains over the two week period ending 17 September. As usual, the current upturn for sector stocks was on the back of a wave of confidence in the..
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
Groupama renames Bulgarian acquisitions
The French insurer Groupama has renamed its Bulgarian acquisitions Groupama Zastrahovane and Groupama Jivotozastrahovane. They were formerly the non-life and the life businesses of DSK Garancia. Groupama said it sees significant growth potential for..
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009
M&A activity to pick up in 2010
The size and scale of insurance companies was becoming increasingly important for rating agencies, investors and clients, according to Tony Ursano, chief executive of Willis Capital Markets & Advisory, a unit within the Willis insurance broking..
Online Published Date:
29 September 2009
Appeared in issue:
871 - 28 September 2009