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London News Digest - June 2004

Arch plumps for London
Bermudian (re)insurer Arch Capital announced it would start to underwrite commercial business in the UK, after finally receiving a licence to do so from the Financial Services Authority (FSA).

Arch's London office will operate in a range of commercial lines, including onshore and offshore energy, executive assurance and constructions risks. Commercial property, marine and casualty lines are also planned.

Momart fire to cost insurers £20-30mn
The Momart warehouse fire could cost fine art insurers more than £20-30mn in claims, it was revealed.

The fire, which ripped through a storage facility on an industrial estate in Leyton, East London, destroyed as many as 100 works owned by Charles Saatchi and other fine art collectors.

Specialist insurer Ascot is believed to have been lead insurer on the cover with Catlin, Amlin, XL, Hiscox and ACE also affected. Heath Lambert said it placed the risk.

700,000 UK businesses in breach of asbestos rules, says law firm
Law firm Davies Arnold Cooper (DAC) said over 717,000, or 58 percent, of UK businesses had failed to carry out an asbestos assessment on their business premises, despite the risks of criminal proceedings.

Syndicate forecasts updated
Selected Lloyd's insurers, including SVB, Catlin and Kiln released their updated forecasts for the 2002 and 2003 years of account.

Chaucer said Motor Syndicate 587's 2003 forecast was ahead of 2002 at the same stage and that the 2003 forecasts for Marine Syndicate 1084 and Non marine Syndicate 1096 were equal to 2002 at the same stage. SVB said Syndicates 1007 and 2147 showed strongly positive development for the 2003 year of account, and both Syndicate forecasts have been improved. For its part, specialist insurer Kiln maintained its strong forecasts for 2002 and said it expected 2003 to continue to develop in line with 2002, a reflection of the current positive trading environment.

Tolle role reaps rewards
Lloyd's revealed the full cost of a first successful year for its Franchise Performance Directorate in its Corporation of Lloyd's Annual Report 2003.

The directorate contributed a total of £3.2mn to the Corporation's operating expenses, with a significant proportion of the costs coming from director Rolf Tolle's remuneration package, which totalled £981,000.

On top of a basic £372,000 came taxable benefits of £25,000, an annual bonus of £250,000, and a further £334,000 that included a £220,000 "golden hello" for accepting office as an executive director, and £114,000 paid into a Funded Unapproved Retirement Benefit Scheme (FURBS).

R&SA results point to partial recovery
UK insurer Royal & Sun Alliance (R&SA) made a positive start to the year with a 30 percent rise in first quarter operating profits to £100mn.

Post-tax quarterly profits came to £66mn against 2003's Q1 loss of £9mn, with strong performance in the Group's Scandinavian operations and better results at its Canadian arm.

However, it said general business net premiums had dropped to £1.2bn from £1.9bn for the same period in 2003 and that its US business remained a challenge.

The company's shares rose around 7 percent on the results announcement.

GoshawK defeats Atletico Madrid appeal
The fronting insurer of Spanish football club Atletico Madrid failed in its attempts to overturn a decision in the UK Courts which allowed London market contingency underwriters to void coverage relating to the side's relegation in 2000.

Lord Justice Thomas in the Court of Appeal handed down his decision confirming that reinsurers led by the GoshawK Syndicate 2021 were entitled to dispute the claim because of material misrepresentation relating to the size of the club's losses.

Invaro goes under
Invaro Ltd, a Liverpool based claims farmer with links to the disgraced investment company Imperial Consolidated Group, became the latest UK personal injury firm to go under.

On the 9 June, Invaro confirmed that it has ceased to trade and has applied for voluntary liquidation.

Although headed by Terry Lindon, Invaro had many connections with Imperial Consolidated, including the fundraiser Bill Godley, a former Imperial Consolidated chief executive.

Wellington buys AXA’s US surplus lines arm
Lloyd’s insurer Wellington Underwriting revealed earlier this month that it is close to buying AXA Corporate Solutions Excess and Surplus Lines Insurance Company.

The company will be renamed Wellington Specialty and expects to write $40mn of premium income by the end of 2005. On the same day, the insurer revealed that it remained upbeat about the trading environment. Terms “remain favourable” while its rating index was down only 2 percent at end May compared with 12 months ago.

Colosso promoted at Heath Lambert
Adrian Colosso has been promoted to Group managing director of the broker Heath Lambert, following a year of flux which witnessed the ousting of chief executive David Margrett, a restructuring of its debt and ownership and the selling-off of a number of divisions including a 60 strong aviation team to Jardine Lloyd Thompson (JLT) and its major international subsidiaries.

JLT have also agreed in principle to acquire Heath’s Latin American arm, while Marsh paid Heath’s $53mn earlier this year for its Australian and New Zealand operations.

Euclidian sued by Names group
Despite an outstanding settlement offer, an action group formed by former Sedgwick Oakwood members' agent Tim Williams has issued proceedings against the Lloyd's insurer Euclidian over the failure of the Integer stop loss policy.

The Stop Loss Recovery Group has campaigned for some time over the Integer failure (See The Insurance Insider January 2003), which saw Lloyd's Names receive only a fraction of the recoveries they expected to get.

Policyholders now have until the 20 June to vote on a scheme of arrangement, but the Stop Loss Recovery Group has issued a complaint before then against Euclidian, the Lloyd's insurer whose subsidiary, Euclidian Insurance Services, brokered the business to the Integer mutual.

The Recovery Group alleges that the policies sold to Lloyd's Names in 1999-2000 were mis-sold because they failed to properly explain the limits of the reinsurance protection provided by Centre Re. "The claimants seek damages for negligence and or negligent mis-statement on the part of first and/or second and/or third defendants relating to their purchase of personal stop-loss policies for the 1999 and/or 2000 underwriting years at Lloyd's," stated the proceedings.

Euclidian, however, deny the allegation and stresses that it is an independent entity from Integer, which had its own board of directors.

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