Zurich launches new Global Protected Profits Fund

Building on the success of its existing Protected Profits Funds range, Zurich has launched a new Global Protected Profits fund aimed at cautious and moderately cautious investors investing for the medium to long term.

The Global Protected Profits fund is available through Sterling’s Individual Savings Account and the Sterling Investment Account.  It is aimed at those investors who want exposure to assets which provide the potential to benefit from a recovery in global stock markets, but who also want a high level of protection.  The new fund, like our current Protected Profits funds, is designed to ensure that the ‘protected’ price will not fall below 80% of the highest ever fund price.  Each time the fund price increases to a new high, the protected price also increases.  If the fund price then falls, the protected price remains unchanged.

The fund operates an ‘investment portfolio’ which is linked to a selection of equity, bond and commodity indices, such as the FTSE 100 and S&P 500.  Alongside the investment portfolio is a ‘cash element’, which is linked to overnight Sterling money market interest rates.  The fund will allow up to 100% exposure to the Investment Portfolio, thus allowing investors the potential to benefit from any market recovery.

The allocation within the fund between the investment portfolio and ‘cash element’ is reviewed on a daily basis.  When the markets are performing well, more of the fund is invested in the investment portfolio and, conversely, when markets are not performing very well, more of the fund is switched into the cash element.

Paul Wright, Zurich’s Investment Management Director comments: “In these turbulent economic times, people are looking for investments which will provide a higher level of protection.  This fund not only offers a high level of protection, but it also allows investors the potential to benefit from any market recovery across a diverse spread of asset classes.

The Global Protected Profits Fund, offers exposure to the UK, Europe, US, Japan, commodities and Emerging Markets.  Whilst the geographical exposure is wide, 30% of the investment portfolio is invested in global government bonds.  This means that the portfolio is not only diversified across geographical regions but also across asset classes, reducing the overall risk.”

Wright continues: “We are committed to providing customers with investment solutions in these challenging economic times.  Because of our group strategy and our financial and operational discipline, Zurich is in a strong and stable position and well placed in today’s economic climate – so consumers can feel confident about investing with Zurich.”

Notes :

Sterling’s mutual fund range (SIML) comprises of a Sterling Investment Savings Account and Sterling Investment Account

The geographical split of assets effectively available through the ‘investment portfolio’ are:

• 20% UK Equity
• 10% US Equity
• 10% Europe ex-UK equity
• 10% Japan equity
• 10% emerging market equity
• 10% commodities
• 10% gilts
• 10% German government debt
• 5% US treasuries
• 5% Japanese government debt

The TER of this fund will be 1.98% per annum

The  cash element  does not invest directly in cash.  Instead it invests in financial derivatives that are linked to the overnight sterling money market interest rates.  It will deliver a return equal to the Sterling Overnight Index Average (SONIA), which is a measure calculated by the wholesale Markets Brokers’ Association.

Zurich co-sponsor of PGA Seniors Open in Bad Ragaz

Zurich Financial Services Group (Zurich) is pleased to be supporting the PGA Seniors Open in Bad Ragaz for the fifth time as one of the co-sponsors. The tournament, which brings together the world’s elite professional golfers, is to take place at the Golf Club in Bad Ragaz, Switzerland, from August 7 to 9, 2009.

Supporting golf sport is an integral part of Zurich’s sponsorship strategy and provides Zurich with a welcome opportunity to reach customers and thus to communicate Zurich’s brand values in a symbolic and emotional way.

In Switzerland, Zurich also supports the Omega European Masters in Crans-Montana, the ZURICHOPEN in Schönenberg and the DB Ladies’ Swiss Open in Losone, bringing the excitement and skill of Europe’s best golfers to the Zurich region. In the US, Zurich is title sponsor of the Zurich Classic of New Orleans, an annual PGA tournament that has become a major element of the region’s economic recovery and raises significant amounts for local charities.

Zurich’s Global Associate Program – jump-starting leadership

Zurich Financial Services Group congratulates the 69 successful graduates of its Global Associate Program (GAP) 2008/2009. At a graduation ceremony in Zurich, the 29 female and 40 male graduates, representing 17 nationalities, together with senior managers from Zurich, looked back on their 44-weeks deep dive into the world of insurance.

Zurich’s GAP focuses on providing in-depth on-the-job-experience, both at home and abroad, as well as on intensive classroom training. Every associate signs up for a core business area from a variety of disciplines such as Underwriting, Claims, Finance, Marketing and Distribution or IT where they want to play an important role right from the beginning. Besides the extensive technical training in their chosen discipline, the program includes an assignment to a different business area as well as an international rotation to further develop and deepen their knowledge.

Peter Goerke, Global Head of Human Resources, said: “Helping our people grow and develop has never been more important than in challenging times like these. People management therefore remains one of our four strategic cornerstones. The Global Associate Program is a powerful building block in our efforts to equip our employees with the right skills at the right time so that they can help Zurich to capitalize on the opportunities this market environment provides.”

Inga Beale, Global Chief Underwriting Officer and Head of Organizational Transformation, said: “The best way of learning is to prove oneself in a real business environment, and this is exactly what GAP is all about. But the program is not just beneficial for the graduates, but also for Zurich. Having worked with Global Associates in the last couple of months, I especially appreciate their dedication and the fresh ideas they bring to the organization.”

Urs Basler, Group Head Learning & Development, added: “Introduced three years ago, already more than 200 young talents from across the globe have attended our Global Associate Program. But what is probably more remarkable is the fact that more than 90% are still with Zurich. Unlike common graduates programs, Zurich’s GAP is unique in that the global associates have to deliver from the very first day in a real business environment including taking part in an international rotation.”

To learn more about Zurich’s GAP program click here

MCE Insurance confirmed as title sponsor of British Superbikes for 2009 – 2012

MotorSport Vision, the commercial rights holder of the British Superbike Championship (BSB), is delighted to announce MCE Insurance, the UK’s most dynamic bike insurer, as the new BSB title sponsor.

The contract announced today (Wednesday) is for the remainder of 2009 and for a further three years, making it the longest title sponsorship deal in BSB history.

MCE Director Julian Edwards believes the new relationship with Jonathan Palmer‘s MotorSport Vision group will provide a powerful partnership for future success. He commented:

“At MCE we are totally committed to becoming the UK‘s best motorcycle insurer and it has become clear that BSB offers an excellent opportunity for us to really understand bikers need. These are exciting times for MCE and we are absolutely thrilled about being involved with the world’s best domestic Superbike series. To celebrate our partnership with BSB, we have also launched Club MCE, giving existing and new customers money can’t buy BSB opportunities, such as grid walks, pillion laps and walk the track tutorials with leading riders.”

MCE has just been named as Broker of the Year at the prestigious British Insurance Awards.

“I am delighted that MCE Insurance will be the new title sponsor of British Superbikes. MCE share our commitment to providing our respective customers with outstanding quality and value in the UK and I admire their determination and customer-focussed approach. With MCE‘s long term commitment to BSB we are really looking forward to working together and developing our new partnership.” said Jonathan Palmer, the Chief Executive of MotorSport Vision.

The inaugural MCE Insurance British Superbike Championship event takes place at Brands Hatch circuit on 7/8/9 August featuring the first ever BSB “triple-header” and a live track appearance by the legendary former Grand Prix rider Giacomo Agostini.

For more information about the MCE Insurance British Superbikes click here

For more information about The British Insurance Awards you can visit here

Cooper Gay signs up Japanese reinsurance specialist

Cooper Gay, the independent wholesale, reinsurance and specialist retail insurance broker, has announced a formal consultancy arrangement with Japanese reinsurance specialist Megumi Ugai.

Mr Ugai’s remit is to assist Cooper Gay & Co Ltd and other companies within the Cooper Gay Group with the development of reinsurance business opportunities in the Japanese market.

Based in Tokyo, Mr Ugai has more than thirty years of (re)insurance experience. Prior to setting up his own reinsurance consultancy Clifton Consulting Inc in 2008, he was Managing Director of Hannover Re Services Japan from 1999 to 2008 where he significantly improved market penetration and growth. From 1974 to 1997 he held a variety of roles at Sompo Japan (formerly Yasuda), spending the last four years of his time there as General Manager, Reinsurance Department where he was responsible for the placement of Yen 60 billion in reinsurance premiums both in the domestic and the international markets.

Andrew Hitchings, Managing Director of Reinsurance at Cooper Gay & Co Ltd, commented: “We are fortunate to be able to secure the expertise of Megumi Ugai. His vast experience of the Japanese reinsurance market and extensive contacts will be of huge benefit to us as we look to continue to build our reinsurance presence in Japan and the Asia Pacific area.”

Willis Group Reports great second quarter 2009 Results

Willis Group Holdings Limited, the global insurance broker, today reported results for the quarter and six months ended June 30, 2009.

Highlights of the quarter include:

• Reported (and adjusted) earnings per diluted share from continuing operations of $0.52

• 20 percent reported growth in commissions and fees

• 1 percent organic growth in commissions and fees; Global and International segments with 7 percent and 5 percent growth, respectively

• Reported operating margin of 21.0 percent; adjusted operating margin of 21.2 percent

• North America segment operating margin expansion of 660 basis points over a year ago, to 22.3 percent

• Interim bridge facility fully paid at June 30, 2009

“Willis’ strength lies in its business diversity. We continue to see excellent results from our International and Global segments, and this is bolstering our overall performance in the face of difficult economic conditions, particularly in the US, UK and Ireland,” said Joe Plumeri, Chairman and Chief Executive Officer, Willis Group Holdings. “The HRH integration continues to go better than expected, with synergies tracking ahead of schedule. We continue to run our company with discipline and foresight, implementing strict cost controls, right sizing for the current environment, and investing in areas that will drive current and future growth.”

Willis made a quarterly net income of $87m ($0.52 per diluted share). A massive increase compare to the $39m reported for the same period last year.

This could be due to the acquisition of Hilb Rogal & Hobbs Company (HRH), which totalled a cost of $62m. However, the net income was much lower than that achieved in Q1, when the firm made a net income of $192m.

Homeowners : Protect you home against burglars during holiday

With more homes unoccupied during the holiday season, don’t forget to better protect their homes against burglars. Despite latest Government figures showing falls in many crimes, certain crimes such as domestic burglary, can increase during an economic downturn. In the first quarter of 2009, the cost of burglary insurance claims topped £100 million, making it the most expensive quarter for five years.

The Association of British Insurers (ABI) has joined forces with the Home Office to produce guidance to help people make their homes safer against burglary. Insurance Advice on Home Security sets out:

• Basic security measures to take, which include fitting appropriate locks, property marking and security lighting.

• How to protect the outside of the home, including with intruder alarms.

• Steps to take when the home is unoccupied, such as using light timers.

Nick Starling, the ABI’s Director of General Insurance and Health, said:

“Crime tends to increase during an economic downturn. Insurers are tackling the challenges of the recession, including increases in insurance fraud and arson, to protect honest customers. Yet policyholders can do much to protect themselves – in over a third of cases, burglars gain access through an unlocked door or window. And householders are ten times more likely to become a burglary victim if they don’t have basic security measures in place.

“Low-income households are particularly vulnerable, and least likely to be insured. This is why we are working with the Government and social landlords to promote low-cost tenants insurance. This can provide peace of mind for as little as £1 a week.”

Home Office Minister Alan Campbell said:

“Burglary has fallen nationally by 54% since 1997, but there are always changing patterns in crime. We know that during economic downturns certain crimes face upward pressure, but we are already taking action to tackle this issue head on.

“We have just handed out £5 million of grants from our Safer Homes Fund to help improve security at 45,000 homes across the country, and providing more money and resources to 35 areas to tackle burglary and robbery by cracking down on known offenders. We are also supplying free information packs for the public with money off vouchers on home security devices.”

Lancashire to appoint of Neil McConachie as President of the Group

Lancashire Holdings Limited (“Lancashire”) today announces the appointment of Neil McConachie to the position of President of the Group.

Neil will continue in his role as Group Chief Financial Officer.

Richard Brindle, the Group Chief Executive Officer, commented: “Neil has been with Lancashire since its founding in 2005 and this promotion is a very well-deserved reflection of Neil’s dedication and growing leadership since then. In addition to continuing as Chief Financial Officer, Neil will also co-ordinate the executive team. This will strengthen the Group’s executive in Bermuda.

Reassignment to Neil of some of my responsibilities is a natural step in the Group’s progression and allows key members of management to focus on delivering to their strengths with renewed vigour.”

UK drivers face French roadside drug tests

UK drivers could face a roadside saliva drug test if they are caught not wearing a seat belt or speeding in France. The one in 20 of Brits who used cannabis recently could be on a collision course with France’s policy of zero tolerance towards any trace of illegal narcotics.

As part of their campaign to reduce the country’s heavy road casualty toll, French authorities have adopted a more aggressive stance against driving while under the influence of illegal drugs. However, the Home Office’s latest British Crime Survey shows that 4.6 per cent of 16 to 59 year olds have used cannabis in the last month.

Official guidance shows that French police will routinely test for drugs after a fatal accident. They will also test after an injury accident where the police suspect the driver has taken drugs. A drugs test may also be carried out following: any road accident, a road offence that could lead to a driving ban, a speeding offence, the failure to wear a seat belt or helmet.

Penalties

Penalties in France are severe and offenders risk going to prison for two years and a fine of €4,500 (£3,893). A driver found also to have 50 or more milligrams of alcohol per 100 millilitres of blood (UK limit is 80) could be imprisoned for three years and face a fine of €9,000 (£7,786).

Comment

“UK drivers who take drugs days or even weeks before driving though France and other parts of Europe are taking a high-stakes gamble. Unlike the UK, where drivers have to be impaired, the French approach is to prosecute simply for having traces of illegal drugs in the body. In fact, the official French wording suggests a driver could be tested at the discretion of a gendarme anytime after a road safety offence,” says Andrew Howard, the AA’s head of road safety.

“The AA and other road safety organisations will be watching the procedures, results and impact of the French roadside drug testing regime carefully as the UK considers what sort of controls it may enforce in the future. Certainly, a survey among 8,800 AA members found zero tolerance of impaired drug-drivers.”

Official French guidance on drug-driving enforcement

German experience

In Germany a zero tolerance for drugs in drivers was introduced in 1998. In 2000, some 7,000 drivers were arrested for drug driving and this had risen to 35,000 by 2008. This reflected more screening and more testing. However, it was questioned whether these people were impaired to drive, or solely had traces of drugs in their bodies. They had been stopped for bad driving, interviewed and given a ‘little’ impairment test. What happened then depended on situation, but there was no automatic random test of drug presence.

What is life insurance ?

Life insurance offers a way to replace the loss of income that occurs when someone dies (usually the person who produces the majority of income in a family situation).

It is a contract between you as the insured person and the company or “carrier” that is providing the insurance. If you die while the contract is in force, the insurance company pays a specified sum of money free of income tax “cash benefits” to the person or persons you name as beneficiaries.

A good life insurance program does more than just replace the loss of income that occurs if you die. It should also provide money to cover the new costs that arise after your death funeral expenses, taxes, probate costs, the need for housekeepers and child care, and so on. And these cash benefits should provide for your family’s future needs as well, including college education for your children and part or all of your spouse’s retirement needs. In almost all cases, your beneficiary can use the cash benefits in the way he or she sees fit, without restriction.

Some types of life insurance : permanent life insurance policies have a cash value that you can obtain by cashing out the policy or by borrowing against it. Though it can seem attractive, most financial experts agree that this feature should be seen as a secondary purpose of life insurance. Another type of insurance is term life insurance policies are available as well.

See also in the news-insurance Glossary:

Life assurance

Life insurance

Lancashire reports a strong second quarter 2009 results

Lancashire Holdings Limited (“Lancashire” or “the Company”) today announces its results for the second quarter of 2009 and the six month period ended 30 June 2009. Lancashire grows book value per share 6.9% in Q2 2009, 9.9% year to date combined ratio of 35.4% in Q2 2009, 57.9% year to date.

Financial highlights for the second quarter of 2009:

• Fully converted book value per share of $7.57 at 30 June 2009, compared to $7.08 at 31 March 2009, an increase of 6.9%;

• Gross written premiums of $241.9 million. Net written premiums of $238.7 million;

• Reported loss ratio of 5.8% and a combined ratio of 35.4%. Accident year loss ratio of 30.7%;

• Annualised total investment return of 2.4%;

• Net operating profit of $103.3 million, or $0.55 diluted operating earnings per share; and

• Net profit after tax of $106.4 million, or $0.57 diluted earnings per share.

Financial highlights for the first half of 2009 :

• Fully converted book value per share of $7.57 at 30 June 2009, compared to $6.89 at 31 December 2008, an increase of 9.9%;

• Compound annual Return on Equity since inception of 18.2%;

• Gross written premiums of $384.7 million. Net written premiums of $337.9 million;

• Reported loss ratio of 29.3% and a combined ratio of 57.9%; Accident year loss ratio of 29.8%;

• Annualised total investment return of 3.5%;

• Net operating profit of $139.2 million, or $0.75 diluted operating earnings per share;

• Net profit after tax of $147.1 million, or $0.79 diluted earnings per share ; and

• Interim dividend of 5.0 cents per common share.

Richard Brindle, Group Chief Executive Officer, commented:

“I am pleased to report another good performance by Lancashire. We grew book value per share by 6.9% in the second quarter, delivering a return on equity of 9.9% for the first half of the year.

Our underwriting result was excellent with a combined ratio for the second quarter of 35.4%. Our investments returned 2.4% on an annualised basis; a reasonable result given our conservative philosophy. Since our inception, Lancashire has grown book value per share, including dividends, in thirteen quarters out of fourteen, generating a compound annual return of 18.2%.

We have, however, been somewhat surprised by the reduced demand this year for Gulf of Mexico energy hurricane cover. This significantly reduced the level of business written by Lancashire in that particular class, as compared to our expectations. At the same time, we have made steady progress in building our property catastrophe book in many United States’ critical catastrophe zones and expect to become a significant market participant. Despite reduced premium income in the Gulf of Mexico market, Lancashire has seen strong overall premium growth in the quarter. We are also pleased with the business written in July at rating levels supporting our decision to hold back capacity earlier in the year.

We are proud of the fact that during the quarter Lancashire entered the London Stock Exchange FTSE 250 Index. We are also pleased to declare an interim dividend of 5.0 cents per share.

We look forward with enthusiasm to the opportunities ahead of us for the rest of the year.”

Full report available here

Drivers ignorance biggest barrier to cash-for-crash justice

Unawareness of the threat of cash-for-crash accidents is the main reason more criminals are not brought to justice, as new data reveals 41 percent of drivers have never even heard of this form of gang crime.

This dangerous form of highway-banditry occurs when criminal gangs deliberately cause an accident with an innocent motorist, with the intention of making a false or inflated insurance claim. But despite co-ordinated efforts from insurers and the police that have resulted in an 11 percent reduction in cash-for-crash cases in the last two years, awareness levels have not risen during that period. In fact, two-thirds of motorists would not even know if they were involved in a deliberate or staged accident, while a further 32 percent would not know what to do if they found themselves victim of one of these situations.

Worryingly, the insurer says that unless people become aware of the cash-for-crash scam they may not recognise the signs if it were to happen to them, meaning crimes would go unreported unless the insurance company noticed anomalies during the claims process.

Pete Markey, spokesman for MORE TH>N, commented: “Even though police and insurers are making great headway in eliminating the threat of cash-for-crash accidents, there are still thousands more cases that slip under the radar. The reason for this is that motorists either aren’t aware of this threat, or aren’t able to spot the signs that they have become a victim.

“If more drivers were made aware of the dangers they are facing, it becomes more likely that they will be able to report anything unusual to their insurance company who could then make investigations and cut down on levels of fraud. What’s more, not only does insurance fraud put innocent lives at risk, but it is also responsible for adding about £401 to the average honest policy holder’s premium so its in everyone’s interests that we make it harder for crooks.”

Regionally, drivers from the NorthEast were least aware of the threat, with 52 percent of them not having heard of deliberate accidents compared to only a third in the NorthWest. The Scottish were not too far behind, with 48 percent oblivious to the crime.

If caught and successfully prosecuted, fraudsters not only face a criminal record and, in extreme cases, a jail term, but they would also find it almost impossible to secure insurance cover or indeed any financial products in the future. But despite this, it seems fraud is only too common on UK roads. In fact, 2.6m UK drivers said they would consider or already had hit a parked car but driven off quickly without leaving their details, while a further half million had been involved in a road accident but had sped off to avoid taking the blame.

The bad news for insurers, however, is that almost a million motorists have had repairs made to their vehicles, via insurance, that were not caused during an accident they were claiming for, while half a million claim they have lied about the details of a smash in order to make sure the insurance company paid for their repairs.

To help motorists avoid being involved in a cash-for-crash situation, here is a list of useful tips:

• Take extra care at busy roundabouts or junctions.

• Check you rear view mirror.

• Maintain a safe distance to the car in front at all times.

• Be aware of overly helpful witnesses.

If witnesses appear surprisingly quickly to offer assistance beware as they may be a part of the act. Corrupt doctors and mechanics have also been known to be involved, helping to inflate the value of claims. You should do this anyway, but in these situations the driver in front may brake suddenly and for no reason. They may also have unscrewed their brake lights, making it harder for you to react. Often these gangs operate from several vehicles, with one following from behind who may try to push you into the vehicle in front if you manage to stop safely. Other drivers may also be following who act as ‘witnesses’. Crooks know your attention will be split between what’s ahead and what’s approaching from other angles. You may find the car in front has not proceeded in the way you may have expected it to.

Not only is it important that you can spot the signs of a deliberate accident, but that you know what to do if you think you may have been involved in one. Follow these tips if you suspect you may have been involved in a deliberate accident:

• If you suspect you have been involved in a staged accident, don’t say anything other than ‘it is a matter for our insurance companies’

• If anyone is injured, the police should be called

• If possible take as many pictures of the accident as possible, including the driver, passengers, vehicle and any damage

• The identity of the driver is crucial so take a good description

• Establish how many passengers are in the other car and again, take a good description of them

• Take note of any other cars involved including damage and registration numbers

• Try to find an independent witness for the accident but be wary of any witnesses quick to offer their services as they may be corrupt

• Be wary of any companies who contact you quickly offering to repair your car, unless these are through your insurance company

• If you suspect the accident was intentional, inform your insurance company at the earliest opportunity

• If you know of anyone involved in staging accidents you can confidentially call the IFB Cheatline on 0800 328 2550.

Odyssey Re Net Income in raise for the Second Quarter 2009

Odyssey Re Holdings Corp. today reported net income available to common shareholders of $121.8 million, or $2.03 per diluted share, for the quarter ended June 30, 2009, compared to $65.2 million, or $0.99 per diluted share, for the quarter ended June 30, 2008.

Operating income after tax was $85.9 million, or $1.43  per diluted share, for the second quarter of 2009, compared to $35.5 million, or $0.54 per diluted share, for the second quarter of 2008.  Included in second quarter 2009 net income available to common shareholders were after-tax net realized investment gains of $35.9 million, or $0.60 per diluted share, compared to after-tax net realized investment gains of $29.7 million, or $0.45 per diluted share, for the second quarter of 2008. For the six months ended June 30, 2009, net income available to common shareholders was $122.7 million, or $2.04 per diluted share, compared to $314.2 million, or $4.66 per diluted share, for the comparable period of 2008.

Highlights for the second quarter of 2009:

• Shareholders’ equity of $3.14 billion as of June 30, 2009, an increase of $310.6 million, or 11.0%, compared to December 31, 2008, and a 15.7% increase compared to March 31, 2009;

• Book value per common share(2) of $51.90 as of June 30, 2009, an increase of $6.53, or 14.4%, compared to December 31, 2008, and an increase of $8.10, or 18.5%, compared to March 31, 2009;

• Total invested assets and cash of $8.1 billion as of June 30, 2009, an increase of $197.6 million, or 2.5%, compared to December 31, 2008; and

• During the second quarter of 2009, 1.2 million shares of the Company’s common stock were repurchased and retired at an aggregate cost of $47.5 million; 532,000 shares of the Company’s common stock were repurchased and retired from July 1 through July 29, 2009 at an aggregate cost of $21.6 million.

Gross premiums written for the quarter ended June 30, 2009 were $511.4 million, compared to $566.2 million for the quarter ended June 30, 2008. Gross premiums written related to the Company’s worldwide reinsurance business decreased 10.3%, due largely to our non-U.S. dollar denominated business. Gross premiums written related to the Company’s insurance business decreased 8.4% compared to the quarter ended June 30, 2008. Net premiums written for the second quarter of 2009 were $459.8 million, an 8.7% decrease compared to second quarter 2008 net premiums written of $503.5 million.

The combined ratio for the second quarter of 2009 was 96.5%, compared to 98.7% for the second quarter of 2008. Results for the quarter ended June 30, 2009 reflect after-tax net current year catastrophe losses, principally related to our EuroAsia division, of $9.1 million, or $0.15 per diluted share, compared to $23.2 million, or $0.36 per diluted share, for the second quarter of 2008. For the six months ended June 30, 2009 and 2008, the combined ratio was 96.5% and 98.5%, respectively.

Net investment income amounted to $93.0 million for the second quarter of 2009, compared to $64.7 million for the second quarter of 2008. Net pre-tax realized investment gains were $55.2 million for the second quarter of 2009, compared to $45.6 million for the second quarter of 2008. Net pre-tax realized investment gains were reduced by $45.3 million and $0.3 million for the quarters ended June 30, 2009 and 2008, respectively, related to other-than-temporary write-downs of investments. Net unrealized investment gains, after tax, were $346.3 million at June 30, 2009, compared to $75.2 million at December 31, 2008.

For the quarter ended June 30, 2009, cash flow from operations was a negative $1.5 million, compared to positive cash flow from operations of $15.2 million for the quarter ended June 30, 2008.

In the second quarter of 2009, OdysseyRe paid a cash dividend of $0.075 per common share on June 30, 2009 to common shareholders of record as of June 16, 2009

19% of UK businesses unaware of recent welfare reform initiatives

The Government is encouraging businesses to further adjust their work practices to reduce illness and disability in the workplace, yet nearly 20% of businesses are completely unaware that these requests are even being made of them, according to a survey by Aon Consulting, the leading benefits and employee risk firm.

Aon Consulting surveyed over 600 employers, asking them about their attitudes to welfare reform. The research shows that nearly one in five employers (19%) admit to not knowing about recent Welfare Reform announcements.

The Government has undertaken a two-pronged approach to ill-health and disability in the workforce. Firstly, they are encouraging employers to promote and report on health and wellness in the workplace, partly in an effort to stop people leaving employment and going onto benefits in the first place. Secondly, by reforming the eligibility requirements they are trying to ensure only the genuinely long-term ill and disabled qualify for state benefits, and that the majority of such claimants participate in work-related activity.

Employers seem not to be heeding the Government’s calls, however, with 63% of employers saying they have no plans to amend current sickness and absence benefits, for example by actively promoting return-to-work strategies or providing income protection, which would be vital to the success of the government reform effort.

Starting from 2010, more than 2.6 million people currently claiming incapacity benefits will be subjected to new, more stringent work capability assessment criteria, with the intended aim of moving those who are deemed able to work back into the workforce.

Matthew Lawrence, Senior Consultant, of Aon Consulting commented: “The protection of an employee’s health, safety and wellness is becoming an increasingly important socio-political issue, with employers being expected to shoulder more of the responsibility when it comes to keeping ‘sick’ employees in work and out of the benefits system. With employees an employer’s greatest asset it is certainly arguable that it is in their best interests to do so from both a financial and corporate responsibility perspective.

“Long term, businesses will need to adjust to these circumstances, and indeed changing a company’s approach to sickness, illness and absence can provide both short and longer term benefits. For example, having formal absence processes in place, utilising occupational health resource effectively and introducing a wellness programme can very quickly help reduce the number of sick days taken by employees as well as helping reduce the number of long-term injuries sustained at work, such as back injuries, and increase productivity.

“With regard to those currently caught in the cycle of benefits dependency, it does appear that there are currently a limited number of jobs available. However, this group of people should not be written off and employers should view this as part of a wide ranging opportunity. An opportunity to improve the health and wellbeing of their workforce; to decrease the costs of ill-health on their business; to increase productivity; to be recognised as an employer of choice; and, in due course, to tap into a section of the working-age population that for a multitude of reasons that in the past could not or would not participate in work activity.”

Comment on the threat of a two-day strike by immigration officials (5th and 6th August)

Yet more bad luck for holidaymakers looking to jet off this summer with the news the UK Border Agency staff have voted for strike action. If the dispute is not resolved, travellers could face major delays at airports as limited staff members attempt to cope with the influx of holidaymakers looking to travel.

It is worth noting exactly what your travel insurance policy covers you for in the event the strike takes place. In the event of delays to your journey, the majority of providers will only cover you if the departure time of the outward journey or return journey takes place more than 12 hours after the departure time appearing on your ticket.

After this point, compensation is normally paid, for example Insurewithease will pay out £20 per hour delayed for the first 12 hours, and £10 for each additional 12 hour period after this, up to a maximum of £200 in total. I would advise all holidaymakers to clarify this with their providers before making a trip.

“With the outbreak of swine flu still at the forefront of everyone’s minds, the pandemic has caused some confusion and anxiety for travellers regarding plans for their holidays. I advise any worried holidaymakers to contact their tour operator, airline and travel insurance provider to clarify exactly where they stand and identify who is liable to pay out in the event a claim needs to be made, whether it be as a result of swine flu or the potential strike.

“It is unsurprising holidaymakers are concerned about whether their travel insurance will cover them if they contract the swine flu virus since it could result in refused entry to board their plane, or being unable to travel at all. Although restrictions for travelling to Mexico have been lifted, it is still worth checking where you stand with your insurer if you are booked to holiday in Mexico and have any uncertainty about travelling there.

If you contract swine flu before heading off on your trip, providing you have already purchased your insurance and your doctor has deemed you medically unfit to travel, your insurance should cover you if you want to claim back the cost of the holiday you have missed. Similarly, if you contract the virus whilst holidaying abroad, any medical costs incurred will be covered through your policy. For those using their EHIC card while travelling in Europe, full cover would also still apply under the normal terms of the card.”

Top tips for travel insurance :

• Ensure you are covered for the entire duration of your trip; its often wise to start a policy before you depart so you are covered for any cancellation

• Check the policy covers belongings such as an ipod, mobile phone and any other items of value

• Shop around for the best policy with the right level of cover to suit the nature of the trip, you may find an annual policy is cheaper if you take more than two holidays a year especially if one of those holidays is long haul, whereas a single trip policy could prove a bargain if you make one short trip to Europe

• If travelling in Europe ensure that you have a valid European Health Inaurance Card (EHIC). These cards do expire so ensure you have a card that is in date in your possession when you travel.

• Make sure the levels of cover are adequate, where possible we advise they match our recommended levels of cover (below)

• Speak with your insurer to check you are adequately covered for scheduled airline failure or any delays to your flight

• Check your destination is covered by your policy – the small print will list the destinations

• Some activities will not be covered by a insurance policy – if you intend to do something specific, i.e. water jet skiing, check whether its covered and if not speak to your insurer to see if it can be added

• Also, travel insurance policies probably won’t cover competitive or professional sports / activities; a specialist policy may be necessary

• If you are taking specialist equipment on holiday it is also worth checking the small print, and then calling your insurer if you need to add it.

Check at least the following level of cover:

• £2 million for medical expenses

• £1 million personal liability

• £3,000 cancellation – or enough to cover the cost of your holiday

• £1,500 for baggage

• £250 for cash

Source : moneysupermarket.com

FSA has imposed a public censure on Cheshire Life & Pensions

The Financial Services Authority (FSA) has today imposed a public censure on a Derbyshire financial advice firm for failing to ensure its advice on pension income drawdown products was suitable.

The problems at Cheshire Life & Pensions Consultants (Cheshire) were picked up last year by an FSA team conducting a visit focused on treating customers fairly as part of the FSA’s enhanced supervisory strategy for small firms.

Lesley Titcomb, FSA director for small firms, said:

“This is the first enforcement case arising from our small firm assessment programme on the fair treatment of customers.  This public censure puts advisory firms on clear notice that they must have the right arrangements in place to ensure that suitable advice is given and recorded for investment products such as income drawdown.  We will continue to identify firms who fail to treat their customers fairly through our small firms assessment programme and other work and we will take action where necessary.  This can and will include enforcement action and sanctions where appropriate.”

The FSA investigation found that Cheshire had breached Principle 9 for businesses by failing to:

• Gather or record adequate information about customers’ personal and financial circumstances to support its assessment of suitability

• Adequately explain the reasons for the recommendation made in the suitability reports

• Include adequate risk warnings in suitability reports about the recommended product

• Undertake sufficient research to ensure the suitability of recommendations;

• Undertake adequate monitoring to ensure suitability of advice and compliance with regulatory requirements.

The FSA has also required Cheshire to write to all its income drawdown customers, undertake a past business review and use an external compliance specialist to provide on-going advice and oversight.

Interview with Dr. Gerd-Uwe Baden, member of Euler Hermes Group Management Board

“The financial crisis is hitting companies with great ferocity”. Interview with Dr. Gerd-Uwe Baden, CEO of Euler Hermes Kreditverischerungs AG (Germany), member of Euler Hermes Group Management Board, supervisor of Euler Hermes Group Risk Activities.

Dr. Baden, the latest survey of insolvency administrators which Euler Hermes conducted again this year indicates that we face the prospect of a record number of insolvencies in 2010 at the latest. What are the reasons for this?

Dr. Baden: The main reason is doubtless the serious financial and economic crisis. Quite simply, companies’ order intake has slumped drastically. This is exacerbated by knock-on effects caused by insolvencies on the part of customers or suppliers. Companies which are owned by private-equity investors are particularly at risk. And restrictive bank lending practices are also making themselves felt, of course.

How many insolvencies can we expect in Germany?

Dr. Baden: We currently project around 39,000 insolvencies in 2010, which is roughly on a par with the previous record measured in 2003. The insolvency administrators whom we questioned, who are currently handling around 21,000 cases, estimate that 34 percent of the insolvency applications are due to the present crisis. The financial crisis is hitting companies with great ferocity, with small mid-size enterprises languishing in particular.

Are there any other factors in addition to the economic crisis resulting in corporate insolvencies?

Dr. Baden: Management errors continue to be a frequent trigger of insolvency. In times of crisis, strategic mistakes in particular may have dire consequences for a company. Examples include insufficient reserves, a lack of flexibility and the rigid retention of antiquated business models. In a recession, mistakes such as these tend to take their toll more quickly than in good times. So the economic crisis amplifies these effects.

Märklin, Rosenthal, Schiesser, Woolworth and now also Arcandor – there is no shortage of prominent examples. What mistakes did these companies make?

Dr. Baden: Frequently, a whole series of factors leads to insolvencies. Each individual case has its own unique characteristics and its own momentum. That’s why we as a credit insurer must examine each risk on a case-by-case basis and avoid making decisions based solely on individual criteria such as the sector involved. Even in currently critical sectors, there are solid companies which are weathering the crisis effectively.

What role are credit insurers playing at the moment? Recently, credit insurers’ practices have been facing considerable criticism – also in connection with Arcandor, for which you again increased the deductibles shortly before the insolvency application was lodged.

Dr. Baden: First of all, I want to make it quite clear that the change in deductibles from an average of 25 to 40 percent shortly before this company went into insolvency only related to deliveries on or after the date of change – none of the existing contracts were affected. Such precautions are taken to address a further drastic deterioration in the risk situation. Arcandor is a very good example of the fact that credit insurers do not leave their customers to their own devices when the going gets tough despite the frequent claims to the contrary. We remained committed to Arcandor right up to insolvency. Accordingly, our customers and, thus, several hundred companies from a whole range of different sectors, were able to rest assured that they would not lose outstanding amounts upon Arcandor going into insolvency.

How high is the loss which your company has sustained as a result of the Arcandor insolvency?

Dr. Baden: The potential loss stood at between EUR 30 and 40 million as of the date of insolvency. The actual amount ultimately depends on the outcome of the insolvency proceedings.

Arcandor is not the only major claim which you have had to digest in the past few months. Your claims expense has surged in the wake of the crisis; as a result, claims expense exceeded premium income in the first quarter. How long can you withstand this?

Dr. Baden: Like all other insurers, we are required by law to set aside fluctuation reserves to provide for difficult times. And this is precisely what we have done. To this extent, we are well equipped to face the crisis and have sufficient capital.

What is your view on government aid for credit insurers? There has been discussion on this matter for months in Germany and the German government is under pressure to take action. When will the aid eventuate and what form will it take?

Dr. Baden: Talks between the ministries and the industry association are still ongoing, so no results have merged yet. It is important to realize that the current difficulties in obtaining insurance cover for commercial credit are being experienced by the debtors and not by the credit insurers. The private-sector credit insurers have sufficient capital and liquidity and therefore do not require any government assistance. However, if the government takes the view that it must support businesses during the crisis by providing them with credit insurance which they would not receive in the private sector, then this is a political decision. Needless to say, we would respect this decision and assist the government in implementing it. On the one hand, we would be able to help our customers and the German economy in this way and, on the other, the credit insurers are the only entities able to handle such tasks on account of their risk analysis skills.

Euler Hermes’ results net fall because of the recession

Economic conditions continued to deteriorate throughout the second quarter of 2009. Many companies’ sales contracted and their cash positions worsened, resulting in a significant increase in the number of corporate failures since the beginning of the year. The current crisis has also impacted Euler Hermes, with earned premiums eroded by the drop in insured sales linked directly to the very difficult economic conditions and a rise in claims, which weighed on group profitability”, said Wilfried Verstraete, Chairman of the Euler Hermes Group Management Board, adding that “despite this difficult environment, Euler Hermes posted a positive operating income for the first half of 2009.

• Turnover up by 1.1% (at constant scope and exchange rates)

• Technical result: -€59.5 million

• Operating income: €35.4 million

• Net income at breakeven.

The Group Management Board submitted the results for the first half of 2009 to the Euler Hermes Supervisory Board on 28 July 2009. The results have been reviewed by the auditors and the Audit Committee.

Key figures – First-half 2009

The first half of 2009 saw a continuation of the marked slowdown in the world economy. Euler Hermes expects the number of corporate failures to increase by a further 35% in 2009, following a 27% rise in 2008.

In this challenging environment, Euler Hermes recorded net income of €0.7 million in the first half of 2009, compared with €122.3 million in the first half of 2008.

Turnover

For the six months to 30 June 2009 the group’s turnover totalled €1,084.5 million, corresponding to a 1.1% increase over the first half of 2008 at constant scope and exchange rates

Although turnover continued to rise in new markets, historical markets in Europe and North America saw a sharp contraction in clients’ sales that weighed on earned premium volumes and was reflected in a 1% decline in turnover to end-June 2009.

In most countries, the downturn in clients’ sales, which was of exceptional magnitude in the second quarter of 2009, could not be offset by increases in premium rates or by higher group production levels.

Download the full report (adobre acrobat reader required)

Aon Reports Second Quarter 2009 Results

Total Revenue was $1.9 billion and EPS from Continuing Operations was $0.51

Second Quarter Highlights

• EPS from continuing operations, excluding certain items, increased 9% to $0.76

• Brokerage revenue was $1.6 billion with flat organic growth

• Brokerage pretax margin was 13.3% and the adjusted pretax margin, excluding certain items, increased 130 basis points to 19.6%

• Consulting revenue was $300 million with a decline in organic revenue of 1%

• Consulting pretax margin was 13.7% and the adjusted pretax margin, excluding certain items, increased 100 basis points to 15.0%

• Repurchased 3.4 million shares of common stock for $125 million

• Completed 500 million Euro offering of 6.25% guaranteed notes due July 1, 2014

The full report is available here.

Mexico City offers insurance to bring back tourists

Mexico City on Tuesday introduced free insurance for tourists in a bid to bring back visitors scared away after the swine flu epidemic broke out in Mexico in April.

The Tourist Assistance Card would be the first free cover for tourists in the world, said Mexico City mayor Marcelo Ebrard as he handed out the first cards to a handful of foreign tourists.

“It aims to place our city where we want to be,” Ebrard said, three months after hotel occupancy sunk to record lows as the city shut down to contain the outbreak.

Tourists who show they are staying at one of the city’s 460 hotels will have access to medical assistance, not only for A(H1N1) symptoms, but also for accidents or other illnesses, ambulance transport, hospitalization and medicines, Ebrard said.

The cover, administered by the Mapfre company, also includes dental care, repatriations, legal assistance after robberies, lost luggage and delayed or canceled flights.

The sprawling Mexican capital hosts some three million international and four million national tourists each year.

Hotel occupancy sunk as low as 10 percent in April and May and is currently at 59 percent, according to industry groups.

Despite a peak in southeast regions, officials say A(H1N1) is now under control in Mexico, which has reported 138 deaths and some 14,800 cases.

Source : AFP

Aon Benfield Securities places €150m Euro wind cat bond amid strong investor appetite for ILS products

Aon Benfield, the world’s premier reinsurance intermediary and capital advisor, announces today that the investment banking group of its affiliate, Aon Benfield Securities, successfully completed the private placement of Eurus II – a €150m European windstorm catastrophe bond. The notes were issued by Eurus II Ltd., an exempted company in the Cayman Islands established for this transaction.

The placement of the principal at-risk variable rate notes provides reinsurer, Hannover Re, with fully collateralized catastrophe protection for Europe windstorm risk across seven EU countries: Germany, France, the United Kingdom, Ireland, the Netherlands, Belgium and Denmark.

The bond was placed with investors in Europe and North America, and Aon Benfield Securities was a joint placement agent for the Rule 144A transaction.

Paul Schultz, President of Aon Benfield Securities, said: “We are pleased to complete our sixth insurance linked securitization since the re-emergence of the cat bond primary issuance market in February 2009.  The capital markets continue to offer our clients additional capacity that complements traditional reinsurance, and large buyers of catastrophe reinsurance worldwide are utilizing this source of capital.”

The transaction was structured with a parametric index trigger, providing recoveries based on wind speed as measured at 233 METAR weather reporting stations located throughout the seven countries in northern Europe.  This was the first issuance under the Eurus II shelf program.

AIR Worldwide Corporation provided the risk modeling and analysis for this transaction.  The notes were priced at EURIBOR plus 6.75 percent with a maturity of 6 April 2012 and rated BB by Standards and Poor’s.

“The deal was oversubscribed, enabling Hannover Re to increase the issuance size and achieve attractive pricing.  The non-US risk and simple parametric index structure proved to be very appealing to investors,” added Schultz.

SCOR records net income of EUR 184 million for the First Half of 2009

SCOR records net income of EUR 184 million for the First Half of 2009; robust July renewals underline the Group’s strong competitive position SCOR’s solid results for the first half of 2009 demonstrate once again the resilience of its business model in a financial environment that continues to be challenging. The higher premium volume confirms the commercial dynamism of the Group, supported by a strong capital base and profit momentum.

Key items of the first half 2009:

• Net income year-to-date stands at EUR 184 million, down 24.0% against 2008, or EUR 1.03 per share (EPS), with an annualized return on equity (ROE) of 10.6%;

• Total gross written premiums reach EUR 3,254 million, up 18.4% against the same period in 2008 (16.2% at constant exchange rates);

• SCOR Global P&C reports a combined ratio of 97.5%, with natural catastrophe claims accounting for 5.6 points, primarily driven by Q1’09 losses related to European climate events, notably the storm Klaus in France and Spain;

• Strong July renewals for SCOR Global P&C with price increases of 5.9% (vs. 3.3% at 1 January renewals) demonstrate SCOR’s capacity to benefit from positive reinsurance market conditions, and to leverage its improved competitive position;

• SCOR Global Life delivers an operating margin of 5.1% (or 5.9% excluding net investment losses);

• SCOR Global Investments pursues its prudent investment strategy. The execution of the inflection program, as presented at the July Investors’ day, results in an improvement of the quarterly recurring investment yield from 2.7% at Q1’09 to 3.3% for Q2’09;

• The application of unchanged accounting rules leads to asset impairments and writedowns of EUR 184 million, primarily occurring in the first quarter of 2009, with a limited impact on book value. In the second quarter of 2009, the recovery of the financial markets limits asset impairments and write-downs to EUR 28 million (pre-tax);

• Shareholders’ equity increases strongly year-to-date by EUR 219 million or 6.4% to EUR 3.6 billion after EUR 143 million in dividend paid during the reporting period; book value per share stands at EUR 20.21;

• SCOR settles its litigation with Highfields that dates from 2001. The settlement, net of insurance recoveries and tax, amounts to EUR 5.6 million.

Denis Kessler, Chairman and Chief Executive Officer of SCOR, comments: “SCOR’s 2009 first half results demonstrate yet again the solidity of our franchise. The strong growth in premium volume and shareholders’ equity support what we said at our Investors’ Day: that the Group is pursuing its strategy of endogenous growth with “gardening” deals of limited size that complement our existing activities. On the asset side, we have continued to take prudent steps to enhance the recurring yield of our portfolio. SCOR is well positioned to seize business opportunities during the forthcoming 2010 renewals,  capitalizing on its strong market position”.

Hannover Re renews cat bond for European windstorm risks

As part of its diversified risk management, Hannover Re has renewed its Eurus catastrophe bond issued in July 2006. The bond with a volume of EUR 150 million was placed with institutional investors in Europe and North America. “We are pleased that we succeeded in structuring an attractive transaction that met with keen interest among investors. We were able to place twice the originally planned amount of EUR 75 million at our preferred conditions”, Chief Executive Officer Ulrich Wallin explained.

Eurus II Ltd. provides cover from 30 July 2009 to 31 March 2012 against severe windstorm events in seven European countries (Belgium, Denmark, Germany, France, United Kingdom, Ireland, Netherlands). The performance of the bonds is linked to a wind speed index.

“This transaction strengthens our risk management and protects our capital against events with a return probability of between 50 and 80 years. We thus continue to be able to provide windstorm protection for our European clients”, Mr. Wallin affirmed.

The Eurus II transaction has received a preliminary rating of “BB” from the rating agency Standard & Poor’s. AIR Worldwide Corporation handled the modelling of the underlying risks.

The transaction was arranged by BNP Paribas and Aon Benfield Securities. Its insurance risk components are clearly and simply structured. Eurus II also benefits from an innovative repurchase agreement, under which BNP Paribas guarantees the minimum return on the portfolio and offsets any fluctuations in value on a daily basis. The investors’ paid-in capital is put into corporate and government bonds.

Michael Jackson’s children could miss out on a $20 million life insurance payout

Michael Jackson’s children may miss out on a US$20 million (HK$156 million) life insurance payout because an aide allowed the policy to lapse.

The King of Pop’s family are planning legal action against the assistant who they reportedly believe kept the cash that had been put aside for insurance.

Dr Steven Hoefflin, the plastic surgeon who became one of Jackson’s closest friends, said that the affair highlighted the “deception and incompetence” of the hangers-on who surrounded the singer in his final days.

“The family have told me that, utterly unbelievably and horrifyingly, one of his aides did not keep up with payments in the last months of his life. They believe he was pocketing the money,” he told The Sun.

“This was hugely important to him – it was money for his children. The family are furious and they are now seeking a lawsuit against the person believed responsible.

“It is incredible, and just stands of further proof of the levels of deception and incompetence of the sharks that surround Michael.”

Because the final payments were missed it is understood that Jackson’s children will now receive around $2.5 million rather than the $22.5 million to which they would have been entitled.

Jackson was around $400 million in debt when he died, having squandered a fortune once estimated at $1 billion.

His children Prince Michael, 12, Paris, 11, and Prince Michael II, 7, commonly known as Blanket, will inherit his $300 million share in The Beatles back catalogue but the rights are mortgaged up to the hilt and the singer is facing a range of legal claims on his estate.

Source : The Sun

PartnerRe Ltd. Reports Second Quarter and Half Year 2009 Results

PartnerRe Ltd. today reported net income of $474.3 million, or $8.10 per share on a fully diluted basis for the second quarter of 2009. This net income includes net after-tax realized and unrealized gains on investments of $279.6 million, or $4.86 per share. Net loss for the second quarter of 2008 was $26.0 million, or $0.64 per share, including net after-tax realized and unrealized losses on investments of $219.1 million, or $4.04 per share. Operating earnings for the second quarter of 2009 were $179.3 million, or $3.12 per share on a fully diluted basis. This compares to operating earnings of $183.8 million, or $3.39 per share, for the second quarter of 2008.

Net income for the first six months of 2009 was $615.8 million, or $10.43 per share. This net income includes net after-tax realized and unrealized gains on investments of $205.1 million, or $3.57 per share, as well as a net after tax gain of $57.0 million or $0.99 per share, from the purchase of approximately 75% of the Company’s outstanding Capital Efficient Notes (CENts) in the first quarter of 2009. Net income for the first six months of 2008 was $103.0 million, or $1.54 per share, including net after-tax realized and unrealized losses on investments of $210.1 million, or $3.77 per share. Operating earnings for the first six months of 2009 were $335.0 million, or $5.84 per share on a fully diluted basis. This compares to operating earnings of $294.0 million, or $5.28 per share, for the first six months of 2008.

Operating earnings exclude net after-tax realized and unrealized investment gains and losses, net after-tax realized gain on the purchase of the CENts and net after-tax interest in results of equity investments, and are calculated after payment of preferred dividends. All references to per share amounts in the text of this press release are on a fully diluted basis.

Commenting on the second quarter and half year 2009 results, PartnerRe President & Chief Executive Officer Patrick Thiele said, “PartnerRe had an excellent second quarter and first half of 2009, with both its reinsurance and capital markets activities performing well. For the first six months of 2009, we achieved an operating return on beginning equity of 18%, and a 15% growth in GAAP book value per share. Our reinsurance results benefited from a low level of large losses while our investment operations participated fully in the improvement shown by the global capital markets.”

Results by Segment

The Non-life segment reported net premiums written of $724 million for the second quarter of 2009, compared to $814 million in the same period in 2008. The combined ratio was 83.5% for the second quarter of 2009 compared to 85.9% for the same period in 2008. The Non-life technical result was $171 million for the second quarter of 2009 compared to $176 million for the prior year period. For the first six months, Non-life net premiums written were $1.9 billion, compared to $2.0 billion for same period of 2008. The six month technical result was $319 million, compared to $292 million for the same period in 2008. The combined ratio for the six month period was 85.3% compared to 89.0% in 2008.

The U.S. business, which represented 29% of total net premiums written for the quarter, reported net premiums written of $249 million for the second quarter of 2009, compared to $246 million in last year’s second quarter. Net premiums earned were $258 million in the second quarter of 2009, compared to $285 million for the same period in 2008. The technical ratio for this sub-segment was 87.9% for the 2009 second quarter, compared to 102.3% in the second quarter of 2008. The technical result for the second quarter of 2009 was a gain of $31 million, compared to a loss of $6 million for the same period in 2008. For the first six months of 2009, net premiums written were $561 million, compared to $578 million in the first six months of 2008. The six-month technical ratio was 90.4%, compared to 95.9% in 2008. The technical result for the half-year was $48 million compared to $22 million in 2008.

The Global (Non-U.S.) P&C business, which represented 14% of total net premiums written for the quarter, reported net premiums written of $118 million for the second quarter of 2009, compared to $132 million for the same period in 2008. Net premiums earned during the quarter were $161 million, compared to $186 million in the second quarter of 2008. The technical ratio for this sub-segment was 75.2% for the second quarter of 2009 compared to 72.3% for the same period in 2008. The technical result for the second quarter of 2009 was $40 million, compared to $51 million for the same period in 2008. For the six months, net premiums written were $417 million, compared to $505 million for the first half of 2008. The six-month technical ratio was 74.5%, compared to 86.3% in 2008. The technical result for the half-year was $81 million compared to $53 million in 2008.

The Global (Non-U.S.) Specialty business, which represented 28% of total net premiums written for the quarter, reported net premiums written of $232 million for the second quarter of 2009, compared to $291 million for the second quarter of 2008. Net premiums earned were $232 million for the quarter, compared to $272 million in the same period in 2008. This sub-segment’s technical ratio was 87.0% for the second quarter of 2009 compared to 80.5% for the second quarter of 2008. The technical result for the second quarter of 2009 was $30 million, compared to $53 million for the same period in 2008. For the six-month period, net premiums written were $563 million, compared to $624 million in the first half of 2008. The six-month technical ratio was 87.5%, compared to 85.8% in 2008. The technical result for the half-year was $60 million in 2009 compared to $70 million in 2008.

The Catastrophe business, which represented 15% of total net premiums written for the quarter, reported net premiums written of $125 million for the second quarter of 2009, compared to $145 million for the prior year period. Net premiums earned were $52 million for the quarter, compared to $65 million in the same period in 2008. This sub-segment’s technical ratio was (35.1)% for the quarter compared to (20.5)% for the second quarter of 2008. The technical result for the second quarter 2009 was $70 million, compared to $78 million for the same period in 2008. For the six-month period, net premiums written were $330 million, compared to $343 million for the prior year period. The six-month technical ratio was 0.3%, compared to (3.3)% in 2008. The technical result for the half-year was $130 million in 2009 compared to $147 million in 2008.

The Life segment, which represented 14% of total net premiums written for the second quarter of 2009, reported net premiums written of $116 million for the quarter, compared to $136 million in the second quarter of 2008. The allocated underwriting result for the quarter was $15 million, compared to $7 million in the same period of 2008. For the six-month period, net premiums written were $277 million, with an allocated underwriting result of $20 million, compared with net premiums written of $307 million and an allocated underwriting result of $11 million in the first half of 2008.

The Company’s capital markets and investment activities are reported under the heading of “Corporate and Other”. Within Corporate and Other, capital markets and investment activities contributed $123 million to pre-tax operating income in the second quarter and $241 million to pre-tax operating income in the first six months of the year (exclusive of Life investment income), as compared to $128 million and $248 million in 2008, respectively. Separately, following the adoption of FAS 159, with changes in the unrealized market values of invested assets recorded in net income, capital markets and investment activities contributed pre-tax non-operating gains of $313 million and $236 million in the second quarter and first half of 2009, respectively, compared to pre-tax non-operating losses of $298 million and $272 million, respectively, in the second quarter and first half of 2008.

More details can be found here

Heavy losses due to severe weather in the first six months of 2009

The natural catastrophe figures for the first six months of 2009 were marked by heavy losses due to severe weather in areas with a high insurance density. Insured losses were US$ 11bn, somewhat above the average for the same period in the past ten years. Economic losses were below average, at US$ 25bn (average for the past ten years: US$ 42bn). The loss figures include a substantial number of weather-related natural catastrophes in Europe and the USA, which explains the relatively high ratio of insured to economic losses.

Normally, natural catastrophe losses are lower in the first six months than in the rest of the year, most occurring in the second half of the year, during the North Atlantic Hurricane season. Between January and June 2009, there were 380 natural catastrophes worldwide, which is more or less in line with the average for the past ten years. Although the death toll was regretfully 3,000, the number of fatalities was well below average.

Winter Storm Klaus, which hit northeast Spain and southwest France between 23 and 25 January with winds of up to 195 km/h, ranks as the costliest natural catastrophe so far this year. The storm produced metrehigh waves on the Atlantic coast, and resulted in considerable loss and damage to buildings and vehicles. About a million people suffered power cuts. Although the area affected was relatively small by winter-storm standards, insured losses nevertheless amounted to US$ 2.3bn, with overall direct economic losses standing at around US$ 3.8bn.

The earthquake at L’Aquila in Italy on 6 April, in which well over 10,000 homes were destroyed or damaged, resulted in an economic loss of US$ 2.5bn. The insured loss was comparatively low (US$ 260m) due to the low insurance density. The death toll from the 6.3 earthquake was 295.

Severe weather, tornadoes, hail and a number of other natural catastrophes that hit the USA and Europe caused significant property damage. In the devastating bushfires that struck southeast Australia at the end of January and beginning of February, 173 people died and economic losses amounted to US$ 1.3bn. Prof. Peter Höppe, Head of Munich Re’s Geo Risks Research: “These were Australia’s worst bushfires for decades. And, due to climate change, heatwaves with long periods of drought, and consequently the risk of such fires, will further increase in future.”

Finally, torrential rain in southern Germany, Austria and southeast Europe caused economic losses of approx. US$ 500m in late June when moisture-laden air masses caused by Qinton, a low-pressure system, skirted the eastern edge of the Alps. Some Alpine regions suffered their heaviest precipitation for 50 years. The Czech Republic and Austria were among the countries worst affected as rivers flooded.

Board member Torsten Jeworrek: “Natural catastrophes so far this year have not been excessive. However, events like Winter Storm Klaus, which caused quite substantial losses over a relatively limited area, reinforce our strictly risk-based underwriting policy. Our Geo Risks Research experts keep a close watch on natural catastrophe loss trends, whether driven by increasing values in exposed areas or by changes due to global warming. This enables us to offer our clients customised reinsurance covers and at the same time control our own risks.”

The natural catastrophe statistics for the first six months of 2009 will be presented on 27 July, at 5 p.m. CEST, in an online seminar given by Munich Re America in cooperation with the Insurance Information Institute.

The Insurance Fraud Awards 2009 shortlist announced

Fraud is at the top of the general insurance industry’s agenda in 2009 as economic pressures created by a turbulent economy provide an increase in opportunistic, organised and desperation-driven insurance fraud.

The insurance industry and its partner suppliers and trade bodies have risen to the challenge of combating and preventing insurance fraud in all its guises and these awards will recognise their efforts and encourage the spread of best practice and excellence. The awards follow on from the UK’s major general insurance fraud conference hosted by Post Magazine and held during the day at the same venue.

Fraud Investigation Team of the Year – Insurer

Sponsored by Berrymans Lace Mawer

• Allianz Insurance
• Axa Insurance
• Groupama Insurances
• RSA Group

Investigation Team of the Year – Independent

• Beachcroft
• Cega
• The Cotswold Group
• Cunningham Lindsey
• Robertson & Co

Counter Fraud Initiative of the Year – Commercial Lines

Sponsored by Halliwells

• AIG UK
• Zurich Insurance

Counter Fraud Initiative of the Year – Personal Lines

Sponsored by TCF Corporate

• CPP Group
• RBS/NetReveal
• RBS/Plexus Law

Counter Fraud Initiative of the Year – Public Sector

Sponsored by Detica NetReveal

• Translink
• Travelers Insurance/JLT/London Borough of Hackney

Combating Fraud – Underwriting Initiative of the Year

Sponsored by Ordnance Survey

Winner to be announced on the night

Combating Fraud – Broking Initiative of the Year

Sponsored by Digilog

Winner to be announced on the night

The IFB Special Achievement Award

This special award, nominated by the committee members of the Insurance Fraud Bureau, will be awarded on the night to someone the board believes has made a major contribution to the investigation or prevention of general insurance fraud in the UK.

The winners will be revealed at a special awards ceremony on the 1 October in London

XL Capital Ltd announces second quarter 2009 results

Book value per ordinary share increased by 26% to $18.89 at June 30, 2009

• P&C operations Combined Ratio of 93.0%

• Total Shareholders’ Equity of $7.5 billion, up from $6.1 billion

• Net income available to ordinary shareholders of $79.9 million or $0.23 per ordinary share

• Operating income1 of $162.6 million or $0.47 per ordinary share, or $0.86 per ordinary share, excluding foreign exchange losses

Commenting on the Company’s performance, Chief Executive Officer, Michael S. McGavick, said:

“Finally! We are pleased to report a quarter in which the strength of the XL franchise shines through clearly, despite challenging market conditions in the sector.

“It is also pleasing to be able to prove that investment portfolio accounting marks can go up as well as down. For the quarter, we are reporting a 26% increase in XL’s book value per ordinary share to $18.89 and a 31% increase in tangible book value per ordinary share to $16.41.

“This was another turbulent quarter for foreign exchange markets with the US Dollar reversing some of its strengthening of recent quarters and the overall impact on XL, inclusive of the income

Aviva launches annuity advertising campaign to help consumers

Aviva is tackling one of the nation’s retirement concerns head on with a new series of television and press adverts focusing on annuities.

The campaign, which can be seen on UK TV screens now, shows how by choosing the right annuity, individuals can boost their retirement income by up to 10%. The adverts are designed to inform consumers about the importance of shopping around for the best annuity rate, rather than simply sticking with their current pension provider.

Nearly 450,000 annuities are taken out in the UK each year* but it is estimated that only 37% are taken out using the Open Market Option. Aviva – one of the UK’s leading providers of retirement solutions – estimates that many consumers could get up to 10% more income if they chose this route.

Gary Pepler, marketing, brand and communications director for UK Life, Aviva says: “When devising this campaign we worked extremely closely with people approaching and in retirement to truly understand their wants and needs. We discovered that while most new retirees love the freedom that retirement affords, there are still concerns over managing money.

“For example, nearly half of retirees said they found it difficult to adjust to living on their retirement income in the first year, and more than a quarter said they overspent, seven per cent by a significant amount. Our latest advertisement series is just one of the ways in which we are addressing the concerns of today’s retirees by helping to maximise their retirement income.

“At Aviva we are keen to work with our customers to offer advice and find the right solutions to give them a more comfortable retirement, whatever their circumstances. It is vital that people make best use of the full value of their assets, whether these are pensions, property or savings. By taking control of retirement planning sooner rather than later and by seeking sound financial advice, we can help to alleviate people’s fears and prepare them for the retirement they deserve.”

AIG completes sale of life insurance premium finance portfolio

American International Group, Inc. (AIG) today announced that it has completed the sale of a majority of the U.S. life insurance premium finance business of AIG Credit Corp. and A.I. Credit Consumer Discount Company (A.I. Credit) to First Insurance Funding Corp. (FIFC), a subsidiary of Wintrust Financial Corporation of Lake Forest, Illinois, for approximately $679.5 million in cash. If certain conditions are met, FIFC will purchase certain specified additional life insurance premium finance assets for $61.2 million.

A.I. Credit is a leading provider of insurance premium financing products in North America. A.I. Credit’s lending products enable individuals and businesses to obtain insurance while retaining their capital for other purposes.

The property-casualty premium finance business of A.I. Credit is not included in the transaction.

Blackstone acted as financial advisor to AIG on this transaction.

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