The authoritative snapshot of the major events in the industry each week. If you would like to register for A Week In the Market just click here
Issue 93 - 18th March 2010
---------------------------------------------------------------------------------------------
Solvency deadline will not be delayed says Van Hulle
The man charged with the development of Solvency II has said the October 2012 implementation date is not for moving. Prof. Karel Van Hulle, Head of Insurance and Pensions at the Internal Market Services Directorate General, was speaking to underwriters and brokers at Lloyd’s yesterday when he was asked to comment on a press report that the senior member of the German regulator had suggested that it would seek to push back the implementation date. Prof. Van Hulle replied: “I presume you are talking about a press report recently. I have had a conversation with the person in question and they tell me that they were quoted incorrectly. As we stand I do not envisage any reason why the implementation will be delayed and as far as I am concerned it will remain October 2012.” He added that the driving force behind the solvency II regulation had not been impacted by the recent financial crisis and said the final version would seek to drive a consensus for the market. “We know that we will never get a total agreement on almost anything and that has been proved by our experience to date,” he said. “We have 27 member states which all think that they are right. They are all right, but we have to find a consensus which can be applied to all.” He added that the individual regulators would have the ability to put in place a system to ensure that Solvency II was implemented and supervised as they saw fit but added that the EU would become involved if any of the regulators should try to adapt or fail to implement the laws. Prof. Van Hulle said the financial crisis had highlighted the fact that there had been failures in risk management within the insurance industry but added the industry had weathered the financial storm far better than their peers in other areas of the financial services sector. He said the aim remained to ensure that the underwriters had the ability to deliver products to mitigate the current range of risks and the liabilities of the future.
Hartford to pay back federal funding
US Insurance group The Hartford Financial Services public offering in a bid to buy back the shares it issued to the US Treasury as part of the Treasury’s Capital Purchase programme. Under the scheme which saw the federal government see to bolster the country’s financial services industry the Treasure was issued with $3.4 billion of Hartford shares and now the firm is set to launch a public offering to repurchase the shares effectively returning the money it received from the Treasury during the worst of the financial crisis. “We appreciate the critical role the government and the American taxpayers have played in stabilizing the financial markets and we are pleased to announce a plan to repurchase Treasury’s investment in fewer than 10 months,” said Liam McGee, The Hartford’s Chairman, President and Chief Executive Officer. “The Hartford always viewed this investment as temporary capital and intended to return it as soon as it was prudent. As we have said, we ended the year in a strong capital position, and our fourth quarter results reflected The Hartford’s third sequential quarter of improving core earnings.” The offerings will consist of $1.45 billion of common stock and $500 million of mandatory convertible preferred stock, represented by depositary shares. The debt offering related to the repurchase of the government's preferred stock will consist of $425 million of senior notes. In addition, the company will pre-fund the repurchase of its senior debt maturing in 2010 and 2011 through the issuance of an additional $675 million of senior notes. The announcement said: “The company plans to use the proceeds of the offering to repurchase the Treasury’s preferred shares once it has received approval to do so. Following the repayment, the U.S. Treasury Department will continue to hold warrants to purchase approximately 52 million shares of The Hartford’s common stock at an initial exercise price of $9.79 per share. The company does not intend to repurchase the warrants.”
Industry cannot expect to get off so lightly again warns Hess
Swiss Re Chief Economist Thomas Hess has said he fears the industry may well face a year when catastrophe claims top the record of $120 billion sooner rather than later. Mr Hess made his comments as Swiss Re’s research arm, Sigma, issued its report on the cost of catastrophes to the industry for 2009. He said: “The probability that we see nat cat losses as low as those in 2009 is less than 35%. We have already seen significant events in 2010 with winter storm Xynthia in Europe or the earthquakes in Chile and Haiti. The industry is therefore well advised to prepare for much higher losses. Given their high volatility, losses could easily be three to five times what they were in 2009. In 2005, insured losses set a record when they soared to $120 billion. I would not be surprised if this record is broken in the not too distant future." The report said natural catastrophes and man-made disasters claimed approximately 15000 lives and cost insurers $26 billion in 2009. The overall cost to society was $62 billion. Insured losses were below average due to a calm US hurricane season. On a worldwide basis, natural catastrophes cost insurers $22 billion in 2009, while man-made disasters cost an additional $ 4 billion. Insured losses were highest in North America, where they cost insurers over $12.7 billion. The death toll was the highest in Asia, where nearly 9400 of the world’s 15000 catastrophe victims lived. Insured losses in the region were approximately $2.4 billion.
Caribbean cat fund looking to grow to keep up with cost of risk
The Caribbean Catastrophe Risk Insurance Facility (CCRIF) has said it needs to drive higher levels of coverage in the aftermath of the Haiti earthquake. The facility was established by 16 Caribbean governments three years ago to provide a parametric insurance facility against hurricanes and earthquakes. It now says in light of the recent earthquakes in Haiti and Chile, many of those countries are re-examining their preparedness for natural catastrophes, including their levels of coverage under CCRIF. It comes after facility revealed that its payment to Haiti of $7.75 million, or 20 times that country’s premium, highlighted the need for increased levels of coverage that would result in larger payouts which could do even more to stabilise government services and provide a springboard to more rapid and comprehensive recovery. Dr Simon Young, CEO of Caribbean Risk Managers, the facility supervisor of CCRIF: “We believe that there is a very strong case to be made to the international development community to assist CCRIF’s member countries (and potential new members) in upscaling the role that risk transfer plays in post-disaster financing. In so doing, CCRIF would become an even stronger example of a successful, innovative public-private partnership addressing a core barrier to sustainable development, particularly in the face of climate change.” Prior to its response in Haiti, CCRIF had paid out almost $1 million to the Dominican and St Lucian governments after the November 2007 earthquake in the eastern Caribbean and about $6.3 million to the Turks & Caicos Islands after Hurricane Ike made a direct hit on Grand Turk in September 2008.
Atlantic win is OAR-some says insurer
A two-man team including an Assistant Underwriter from QBE Europe has won the pairs class in the 2009 Woodvale Atlantic Rowing Race. QBE, sponsored the ‘The QBE Insurance Challenge’ and its team of James Croome and Oliver Back, who finished the race in just 59 days, 16 hours and 17 minutes, within their target of a sub-60 day crossing. It made the pair only one of an elite club of 122 which have made a successful two man east-to-west Atlantic crossings to date. The race, had to be put back into 2010 due to bad weather conditions so the duo eventually left on 4 January 2010. They faced a 2500 nautical mile voyage from La Gomera in the Canary Islands across the Atlantic to Nelson’s Dockyard English Harbour in Antigua. Billed as one of the toughest tests of endurance on earth, the event is said to be the equivalent of running a marathon a day whilst battling with sleep deprivation, hunger and often treacherous weather. In addition to fulfilling their personal ambitions, the team raised significant support, awareness and funds for their two chosen charities: East Anglia’s Children’s Hospices (EACH) and The Multiple Sclerosis Society. James is Assistant Specie Underwriter at QBE Marine & Energy Syndicate 1036 and the firm were delighted with their man’s achievement. Colin O’Farrell, Managing Director Marine & Energy, QBE European Operations, added: “Finishing in first place in the race’s pair’s class is an extraordinary achievement and we are extremely proud of both James and Oliver. James is an integral part of the Marine and Energy team and we have all been following the progress of ‘The QBE Insurance Challenge’ with a mixture of awe and trepidation.”
Jon Guy
Editor
Global Broker & Underwriter
---------------------------------------------------------------------------------------------
A Week In the Market is the free E-zine brought to you by the publishers of Global Broker & Underwriter Magazine
It is completely free.
Please forward this e-mail to your work colleagues or any one else who it may be of interest to.
To register for your own copy click here
---------------------------------------------------------------------------------------------
Editorial-Solutions Ltd
The Annexe
7 Birchin Lane
London EC3V 9BW |
