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Issue 104 - 3rd June 2010
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World Cup terror worry sees South Africa upgraded in broker terror list
The threats from Islamic terror groups to the FIFA World Cup which kicks off next week has seen South Africa’s threat level increased by broker Aon’s Crisis Management Division’s annual terrorism map published yesterday. At a press conference to launch the map David Claridge Managing Director, of Janusian Security Risk Management, which co-authored the map, said the fears over the event had seen the country’s threat level increase from 2009. “It is about the World Cup and the threats that have been received. There has been a great deal of internet chatter from Al-Qaeda in Iraq talking about the potential to attack the event,” he added. Organisers have already held a press conference to reassure the thousands of fans set to attend the vent that they have the security measures in place and England’s opening game on June 12 against the United States has been viewed as one of the most attractive targets to the Islamic terror groups. Mr Claridge said intelligence had pointed to communication between an Al-Qaeda offshoot in Mali and groups in South Africa. Elsewhere the map shows that international counterterrorism efforts appear to be stifling the ability of terrorist groups to mount significant attacks on the scale of those of September 11, 2001. The UK is under threat according to General Richard Myers, retired Chairman of the U.S. Joint Chiefs of Staff and a member of Aon’s board of directors who warned the flow of members of the country’s Pakistani community heading to training camps in Pakistan and then returning to the UK ready to launch terror attacks was a serious concern at a time when the counter terrorism efforts in the United States and the UK have thwarted the ability of Al-Qaeda to mount a “spectacular” major attack on the scale of September 11. Paul Bassett, Chief Executive of Aon Crisis Management, explained: “2009 and 2010 have been years of tactical innovation for terrorist groups. During the closing months of 2009, we saw two attempts to carry out underwear bombings, a recent innovation intended to subvert airport-style security measures. We have also noticed an increasing trend for suicide bombers who do not fit an expected profile. In the U.S., for example, a blonde-haired blue-eyed female Muslim convert allegedly threatened to carry out an assassination. Since 9/11, it is apparent that al-Qaida has been unable to find the momentum it needs to mount an operation of similar scale or impact. In part, this can be attributed to the commitment shown by governments to tackle international terrorism on many levels, from military to financial. But we remain concerned that terrorists will seek to achieve mass casualties, perhaps preferring swarm tactics of the kind used in Mumbai in November 2008.”
Chubb Launch at Lloyd’s
Chubb Insurance Europe (Chubb) is to launch a new syndicate operation at Lloyd’s it has revealed. The underwriter said it has received approval from the Lloyd’s Franchise Board to establish the Syndicate which will be named Chubb 1882. The new Syndicate will commence underwriting from 14 June for business incepting from 1 July 2010. It has named the syndicate Chubb 1882 after the year Chubb was founded. It will be managed by a newly created Lloyd's managing agency, Chubb Managing Agent Limited ("CMAL"), and will write a broad range of business including traditional marine and professional indemnity business and several specialist classes such as technology. “These are businesses in which Chubb has an established reputation in the insurance market,” said the firm in a statement. Rob Cage will become the active underwriter and the syndicate will have a capacity of £41.5 million for the remainder of the year. Mr Cage said: “Chubb has been writing business in Lloyd’s since 1994 and becoming a full Syndicate is a natural step for us. We believe we are bringing something truly different to the marketplace by pairing the unique underwriting stance of Chubb with the unrivalled underwriting platform of Lloyd’s.” CEO Michael Casella added: “We are pleased that Lloyd’s has approved the formation of Chubb 1882 as the establishment of a presence at Lloyd's fulfils a key strategic objective of providing a new distribution channel for our products. We will now have access to the international markets in which Lloyd’s operates. We have assembled an outstanding team with exceptional experience and are confident that Chubb 1882 will be very successful.”
Horizon loss threatening to spill over to ancillary companies
As the 2010 hurricane season arrived this week the ongoing efforts to stem the flow of the oil seeping from the ruptured oil well which had been drilled by the Deepwater Horizon prior to its explosion continue. However, fears are growing that there will be a raft of law suits on firms which have tenuous links to BP and Transocean. The slick continues to threaten the southern coast of the United States and the real concern is that if there is an early hurricane the storm surge will push the slick onto the southern coastline. Already President Obama has described the spill as the worst ecological disaster in the country’s history and the administration has said they will launch a criminal and civil investigation into the spill. There is now a six month moratorium on new offshore drilling off the coast of the USA and President Obama says he will bring all those deemed to have played a part in the explosion and subsequent spill to book. Embattled BP has been told they will be asked to compensate the states and businesses affected but the fears from insurance industry insiders is that the scale of the loss will see lawyers looking to drag ancillary firms into the mix to increase the size of the insurance pot available. One leading Louisiana broker said: “The offshore oil industry brings a great deal of business into the Southern USA and small business supply services to the likes of Transocean and BP. There are those who fear that they might well be dragged into the whole issue if the lawyers get worried the money is running out and they look for other firms to sue.” Australian insurance group QBE has been forced to issue a statement to the Australian Stock Exchange to clarify their exposures to the loss after rumours swept across the market as to the scale of their liabilities. QBE said the losses were in line with the statement they issued in April adding they had comprehensive reinsurance programmes in place.
Rating fears over Solvency II capital requirements
Fitch Ratings has warned the devil in the detail of the latest QIS5 Solvency II regulatory capital proposals may increase capital requirements for European insurers compared to earlier proposals. It said the feared increase would be dependent on insurers’ specific characteristics adding that “depending on the severity of the increase in capital requirements, Solvency II may have rating implications for European insurers that are unable to raise additional capital or sufficiently reduce required capital through de-risking.” "We expect that the proposals are likely to raise capital requirements for the industry in aggregate, although the impact of QIS5 compared to QIS4 on the solvency capital ratios of individual insurers will depend on the insurer's business mix and movements in the balance sheet from 2007" said Clara Hughes, Associate Director in Fitch Ratings' Insurance team. "This could have rating implications for individual insurers if final Solvency II requirements are significantly more onerous than under the current regime". The firm’s report said there remained a number of options available for companies with shortfalls in available capital to meet Solvency II requirements, “however the last 12-24 months have shown that insurers may not always be able to access capital markets at times when there is the strongest need for capital”.
Registration opens for HMIS
Delegates have been signing up for the 45th Houston Marine Insurance Seminar (HMIS) to be held from19-21 September. The event which is viewed as the premier global gathering of marine and energy underwriters and brokers regularly attracts over 750 attendees and this year will move back to Houston’s Westin Galleria Hotel. While the agenda has been set it looks very likely that the event will be the first opportunity for the market’s energy specialists to discuss the full impact of the Deepwater Horizon explosion and the subsequent major oil spill which has dominated the headlines in recent weeks and shows no signs of abating. The HMIS raises money to be donated to scholarships and library assistance to further education in marine and energy Insurance and Admiralty Law and the 2009 event saw $110,000 donated to various causes. Delegates can use the on-line registration facility on the HMIS website to register for this year’s conference and to find out more information and updates on the programme and speakers. The website can be found at www.houstonmarineseminar.com.
Jon Guy
Editor
Global Broker & Underwriter
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