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Facing up to the challenges of deteriorating underwriting environment and reduced investment earnings

Online Published Date : 15 October 2009 | Appeared in issue: 872 - 12 October 2009

The historically profitable New Zealand market has been hit by what one observer describes as a “perfect storm”. Over the last two years there has been an upsurge in severe weather events and an increase in the number of total loss fire claims affecting the household and food processing sectors. These factors have helped push the market’s combined ratio up from 93.3% in 2006 to 102.8% in 2008. New Zealand used to have the highest interest rates in the developed world but as a result of the economic recession, the official cash rate has been reduced six times in the last 12 months. Insurers’ investment earnings have therefore been dramatically reduced. However, the domestic household market, which has the most chronic loss problems, has been hardening for the last three years even though rates are widely perceived to be increasing so slowly that only the most agile and best prepared insurers are able to benefit from this trend

Willis buys 100% of Argentina brokers

Online Published Date : 15 October 2009 | Appeared in issue: 872 - 12 October 2009

Willis Group Holdings has completed the purchase of 100% of the share capital of Argentinean businesses Herzfeld Willis S A and Willis S A, a reinsurance operation. The business will be renamed as a single unit: Willis Argentina S.A. Terms of the..

Hartford recruits new CEO

Online Published Date : 15 October 2009 | Appeared in issue: 872 - 12 October 2009

International insurers and reinsurers based in Ireland saw their premium income grow to record levels in 2008, according to DIMA, the association which represents them. Based on a survey of its members, DIMA reports gross premium income of $26.2bn..

Arch Capital Group Ltd

Online Published Date : 15 October 2009 | Appeared in issue: 872 - 12 October 2009

The fact that Arch Capital, unlike many of its peer group, managed to emerge from 2008 with not only a positive net result (albeit greatly diminished compared with the previous year) but also with a positive underwriting result, is largely down to the way in which the group has diversified its business over the last five years in terms of the extent of its involvement in the primary insurance and reinsurance markets of the US and Europe. However, its increased loss experience in 2008 has prompted group to reconfigure its US exposures, on both the primary insurance and reinsurance sides, and to increase its involvement, particularly on the reinsurance side, in Europe and other regions such as the Middle East

Managing energy risks in a volatile environment

Online Published Date : 15 October 2009 | Appeared in issue: 872 - 12 October 2009

The financial crisis has served to elevate enterprise-wide risk management (ERM) to the level of the imperative. According to Dan Glaser, chairman and chief executive of insurance group, Marsh Inc, the financial crisis has pushed companies into an era of strategic capital management which has to be embedded in the culture and practices of the entire organisation, at all levels. Here, in an edited extract from his keynote address to the 44th Annual Marine Insurance Seminar in Houston, Mr. Glaser issued a call to the insurance industry for ingenuity, discipline and vigour to meet the emerging needs of clients in the energy sector. Energy companies, he argued, have to navigate increasingly complex challenges, including fallout from the global economic crisis, energy price volatility, and natural catastrophe risks. The insurance industry has all sorts of tools and data to mitigate operational risks and natural hazards. While this is valuable, there may be insufficient focus on what is becoming more daunting for energy companies: dealing with uncertainty surrounding political, regulatory, and economic trends — and planning for the unexpected

Flood insurance costs rise

Online Published Date : 15 October 2009 | Appeared in issue: 872 - 12 October 2009

The cost of federal flood policies in the US will rise by an average of 8% nationally as part of changes to the National Flood Insurance Programme. Deductibles will also change: homeowners in high flood risk areas with $500 and $1,000 deductibles..

Directors’ and officers’ liability insurance: problems and pitfalls

Online Published Date : 15 October 2009 | Appeared in issue: 872 - 12 October 2009

One of the purposes of incorporation is to absorb and contain liability within the corporate shell: the so-called corporate veil, behind which directors used to feel reasonably safe. However, a director can in certain circumstances be personally liable to the company, its liquidator, its shareholders, third parties and any of its regulators, such as the Financial Services Authority (FSA), Health and Safety Executive, Information Commissioner, Pensions Regulator or Office of Fair Trading. Directors may also incur considerable expense in defending claims, investigations or even extradition and, in addition to the recent potential extension of litigation by derivative action, may face claims arising out of the tougher regulation brought into force as a result of the recession. Even when the director is convinced that the allegations made are completely unfounded, the costs of defending their position can be extremely high, a fact gruesomely appreciated by the departed directors of Equitable Life prior to the abandonment of all claims against them by the incoming board, apparently after £20m in defence costs are rumoured to have been incurred. Here, Jeremy Hill, partner, and Christopher Henley, international counsel, at law firm Debevoise & Plimpton LLP, highlight some of the main areas in which careful judgment should be exercised by a director, or, more usually, the company secretary overseeing cover for the board. It should be remembered that D&O policy wordings are complex and the smallest error could result in a large gap in coverage.

Generali merges Spanish businesses

Online Published Date : 15 October 2009 | Appeared in issue: 872 - 12 October 2009

The Generali Group is to merge its Spanish subsidiaries Estrella Seguros and Vitalicio Seguros to form Generali Espana SA de Seguros y Reaseguros. Operations under the new name are expected to start by the middle of next year. The merged company..

Earthquake strikes Samoa

Online Published Date : 15 October 2009 | Appeared in issue: 872 - 12 October 2009

An earthquake recording a magnitude of 8.0 struck in the Samoa Islands region, just south of Samoa’s capital, Apia. The impact was felt in Samoa itself and American Samoa, a nearby US territory. The earthquake triggered a series of tsunamis..