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Issue 101 - 14th May 2010
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Arctic Team Reach Pole
An insurance-sponsored team of three British explorers described as 'the world's toughest' reached the North Geographic Pole ending a gruelling 60 day scientific survey across the floating sea ice of the Arctic Ocean this week. The Catlin Arctic Survey’s headquarters in London was contacted on Wednesday evening by team leader Ann Daniels and her colleagues Martin Hartley and Charlie Paton to say they had completed their survey work as they reached the Pole. The team has been collecting water and marine life samples from beneath the floating sea ice as part of the expedition's leading edge science programme which is assessing the impact of CO² absorption on the ocean and its marine life – a process known as ocean acidification. "We called it our Hole at the Pole" said Ann Daniels. "Getting the science work done has always been our top priority, but it is absolutely fantastic to reach the Pole as well. We’re ecstatic." Survey Director and explorer Pen Hadow described the team's achievement as extraordinary. "It's not possible to imagine what this team has had to do to pull off this extreme survey. I consider them to be the world’s toughest to have done this. Together they’re the face of modern exploration helping to advance the understanding of scientists and the public alike about how the natural world works. When, as a country, we are beset by so many challenges, these explorers are a window onto what is possible where there is a will. They make me proud to be British.” The three explorers have travelled over 483 miles (777 kilometres) since 14 March but to reach the Pole have had to increase the amount of trekking time each day. They made it with only hours to spare before a Twin Otter plane was scheduled to land on the ice to collect them. Commenting on the harsh conditions Ann Daniels said: "It has been an unbelievably hard journey over the ice. Conditions have been unusually tough and at times very frustrating with a frequent southerly drift pushing us backwards every time we camped for the night. On top of that we’ve had to battle into head-winds and swim across large areas of dangerously thin ice and open water." The expedition is sponsored by Catlin Group Limited, the international specialty insurer and reinsurer. Chief Executive Stephen Catlin said “It’s great news that the team has completed such an extensive survey and reached the North Pole. Their effort to obtain data that can help to forecast the risk posed by our changing environment is truly impressive.”
Experts warns of Indian terror threat in run up to games
A leading political risk and terrorism experts have warned that the terrorist threat to the Commonwealth Games to be held n Delhi in October is rising. Arvind Ramakrishnan Deputy Head of Asia Forecasting at Exclusive Analysis told a meeting of political risk underwriters and brokers in London, Islamic terrorist groups viewed the games as a major target in the year ahead. Athletes from across the world will be in the Indian capital for three weeks of events and Mr Ramakrishnan said while there was a threat to the games themselves the terrorist were likely to launch attacks in the run up to the game in a bid to scupper them. “The hosting of the games is a major event for the Indian government and the Islamic terrorist groups see it as an opportunity for high profile attacks with the eyes oft hr world on the games.” He added. “As we have seen with the attack on the Indian Premier League cricket match in Hyderabad earlier this year there is a desire to attack international competition. However attacks in the run up to the Commonwealth Games will also be highly likely as for the terrorists they can wreck the games by deterring team and athletes from taking part. It means attacks are likely and the major markets in Delhi are particularly vulnerable because there is limited security and large numbers of people which would make the potential human toll of any attack significant,” Mr Ramakrishnan added that there were a number of sites set to host sports during the games which are in high risk areas but that the security around the stadia would make an all out attack highly unlikely. “The athletes will be housed outside of Delhi and the probability is that if there are attacks on the athletes they will be as they are travelling to and from the venue similar to the attack in Lahore on the Sri Lankan cricket squad.”
Marsh warns volcanic ask is hampering supply chainsz
Broker Marsh has warned that the traditional supply chain covers are being put to the test by the volcanic ash could which has crippled global aviation requiring a new type of product. It said traditionally, insurance coverage for supply chain disruption has required physical damage to the insured’s assets to trigger a claim. However, following ongoing air traffic disruption caused by the eruption of Iceland’s Eyjafjallajökull volcano, as well as industrial action in key transport sectors and civil unrest overseas, Marsh said it has seen increased interest from organisations wanting supply chain insurance that includes coverage for losses from non-physical damage. “As they reduce costs and improve efficiency, organisations are creating supply chains that are both increasingly global and more complex; however, the volcanic eruption has exposed their inherent fragility,” it said. “Organisations that depend on air for transporting materials, semi-finished products, finished goods, or those that use air to expedite the flow of goods to customers, are at significant risk from the restrictions.” Caroline Woolley, Property Practice Leader, Europe, Middle East and Africa (EMEA) at Marsh, said: “We have seen a significant increase in interest for specialist non-physical damage supply chain insurance, such as those Marsh has created with leading insurers. Supply chain insurance would provide cover for some of the business interruption losses suffered by companies when the volcanic ash cloud disrupted their supply chain. As a result, an increasing number of organisations want to bolster their supply chain resilience through a supply chain assessment and the use of such innovative insurance solutions.”
Chartis in reinsurance capital deal
Chartis announced that it had entered into a reinsurance transaction with Lodestone Re, which will provide $425 million of protection to Chartis against U.S. hurricanes and earthquakes. “This represents a substantial increase from the $250 million of protection originally sought by Chartis,” it said in a statement. “To fund its obligations to Chartis, Lodestone Re issued a catastrophe bond in two tranches – $175 million of Class A notes and $250 million of Class B notes.” The transaction closed on May 12, 2010 and provides Chartis with fully collateralized coverage against losses from U.S. hurricanes and earthquakes on a per-occurrence basis until May 2013 using an index trigger with state-specific payment factors. Risk analysis for the transaction is based on Risk Management Solution’s (RMS) Hurricane Model Version 9.0 and RMS North America Earthquake Model Version 9.0. Kristian P. Moor, President and Chief Executive Officer of Chartis, said, “As part of our first effort to obtain reinsurance coverage supported by capital market instruments, this transaction represents another important milestone in Chartis’ pursuit of increasing financial flexibility and enhancing our risk management capabilities.” Lodestone Re is a special purpose insurer, incorporated in Bermuda, which has established a program structure enabling potential future catastrophe bond issuances. BNP Paribas, was joint bookrunner, and said: “ Investor response to the deal was very strong with an order book substantially in excess of the initial target of $250m. Investors spanned locations across the globe.
Tax expert enters U.S. offshore bill row
A U.S. tax expert has challenged a report circulated by lobbyists for foreign insurers, saying it misleads Congress about a bill that will “increase U.S. competitiveness and recover billions in U.S. tax revenue”. The bill (H.R. 3424), introduced by Rep. Richard Neal, will aim to eliminate a loophole that allows foreign insurers to avoid billions in U.S. taxes by moving their U.S. profits offshore to low-tax or no-tax jurisdictions. David Rosenbloom, Director of the International Tax Program at New York University’s School of Law and former International Tax Counsel at the U.S. Treasury, denounced the report for misrepresenting H.R. 3424. “The report is inaccurate and its core findings mischaracterize the Neal bill,” Mr Rosenbloom said. He did however confirm the bill does not violate U.S. tax treaties, citing a recent conclusion of the Staff of the Joint Committee on Taxation. Mr Rosenbloom said the staff had correctly observed that “payments leaving U.S. taxing jurisdiction may, in appropriate circumstances, consistent with U.S. tax treaties, be subjected by the United States to tax that would not be imposed on a payment to a U.S. person.” In his analysis, Mr Rosenbloom also observed that the election under the bill to be treated similarly to a U.S. company “should be sufficient by itself to ensure that the Neal bill is non-discriminatory.” Mr Rosenbloom also dismissed any notion that the bill was protectionist, saying “it dissipates with the false claim of discrimination.” According to Mr Rosenbloom, the United States clearly has the right to close a gap in the tax law currently favouring foreign-owned insurers over their domestic competitors. “Neal’s bill will level the playing field for U.S. insurers and capture billions in tax dollars currently being siphoned offshore,” Mr Rosenbloom said. “It is fair to insurers, fair to insurance customers, and fair to U.S. taxpayers.”
Jon Guy
Editor
Global Broker & Underwriter
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