January 2008/2

Shares in Bermudian (re)insurer Aspen Insurance Holdings ltd have jumped by more than 10 percent in early trading after the group’s record full year net income rose by nearly a third on the same 2006 period.

Aon Corp is set to unveil a major restructuring which will see the formation of a new global retail business led by Steve McGill, the current head of the firm’s Americas division, The Insurance Insider can reveal.

Shares in Lloyd’s (re)insurer Omega Insurance Holdings have soared by nearly 10 percent after the firm announced it was in talks over its potential sale.

Despite reporting strong earnings, broker Willis Group disappointed analysts with its lack of organic growth for the fourth quarter.

The deregulated Brazilian (re)insurance industry is set to welcome its latest admitted carrier, German giant Munich Re which is setting up a subsidiary in São Paulo.

Bermudian XL Capital has reported fourth quarter earnings in line with last month’s sub-prime loss fuelled profits warning, but analysts continue to focus on uncertainty surrounding the troubled (re)insurer.

Amlin’s well-regarded head of underwriting has taken a leave of absence from the Lloyd’s insurer because of ill-health.

Aon Corp has hired the former Max Re chief executive Bob Cooney as managing director of its Capital Markets division, the unit which provides structured finance and capital markets products to the (re)insurance industry.

Bermudian reinsurer Everest Re reported a 21-point deterioration in its combined ratio, to 108.4 percent for the final quarter of 2007, owing largely to the $311.2mn asbestos charge announced in January.

The arrival of Brian Duperreault at the helm of Marsh & McLennan Cos (MMC) has reduced the likelihood of an imminent takeover bid by Willis Group Holdings, reflected in the rising share price at the smaller broker following the news.

Brian Duperreault, the former ACE Ltd chief, has been appointed president and CEO of Marsh & McLennan Cos (MMC) with immediate effect, in a bid to boost the fortunes of the ailing financial services group.

US insurer Allstate Corp has cut its reinsurance programme as it scales back its property book in hurricane-exposed states.

AJ Gallagher is likely to receive plaudits from analysts tomorrow – and perhaps even a fillip to its share price - after confirming this evening that it is divesting its reinsurance unit.

German giant Munich Re said this morning (30 January) it expects to book record 2007 profits of EUR3.9bn – up from EUR3.5bn in the prior year - as it revealed minimum exposure to sub-prime related losses in the fourth quarter.

Bear Stearns analyst David Small has praised AJ Gallagher management’s decision to sell its reinsurance division and was “encouraged” by plans to reduce its back office workforce by 400 positions.

Lloyd's has remained upbeat despite the market missing the 100 percent 2007 target for take-up on usage of electronic claims files (ECF) as it ended the year at 88 percent.

AXIS Capital has launched a property and casualty (P&C) insurer to write on an admitted basis in the US.

Guy Hengesbaugh, the former chief operating officer of the defunct catastrophe reinsurer PXRE, is to head up Towers Perrin’s Bermudian reinsurance broker.

Troubled XL Capital was downgraded by both AM Best and Fitch Ratings late last week, with analysts warning the rating action could limit the (re)insurer’s competitive position, particularly in US casualty business.

Lloyd’s has confirmed underwriting capacity at 1 January 2008 of £15.95bn, only fractionally down on the £16.1bn the market began 2007 with.

Bear Stearns analysts have trebled estimates for insured management and professional lines losses relating to the sub-prime crisis from $3bn to $8-9bn as notifications and class action lawsuits continue to mount.

The biggest fraud in investment banking history, at French bank Société Générale, is unlikely to translate into a large insured loss because it did not buy unauthorised trading cover, according to senior market sources.

Brit Insurance Ltd, Beazley Group plc, and Novae Group plc are the Lloyd’s insurers most vulnerable to exposure from sub-prime related liability claims, according to an industry analyst as he cut his target price on the companies.

Security Capital Assurance Ltd (SCA) and its financial guaranty insurance subsidiaries have had their insurer financial strength ratings slashed from AAA to A by Fitch Ratings after investors – including XL Capital – effectively decided against bailing ou

Specialist UK broker THB Group plc has completed its £8.5mn acquisition of PWS Holdings plc’s Lloyd's business and overseas interests, it confirmed this afternoon (24 January).

The takeover of PWS Holdings plc's Lloyd's business and overseas interests by specialist broker THB Group plc could be completed as early as today (24 January).

Troubled Bermudian XL Capital said last night it expects to book up to $1.7bn in after tax fourth quarter charges related to the sub-prime fallout when it reports its financials next month.

UK mid-market business is currently a tough sector with typically high service costs and falling commission rates. Occupying that role at Aon is now Robert Brown following the exit of the previous incumbent, John Thornton.

Despite Berkshire Hathaway's Swiss Re stake being a "vote of confidence" in its competitor, one analyst has highlighted the dilutive effect of the "attached" quota share deal on the reinsurance giant's earnings per share (EPS).

Berkshire Hathaway Inc has acquired a 3 percent stake in reinsurance giant, Swiss Re, while also entering into a major quota share reinsurance contract with the Warren Buffett-led group.

Shares in European (re)insurers have bounced back this afternoon after sliding in early trading today.

Shares in European and Lloyd’s (re)insurers have continued to slide this morning as fears of a US recession persist in the financial markets.

The Bermudian insurance group Ironshore Inc has told Heritage Underwriting Agency that it does not intend to make a formal offer for the Lloyd’s insurer.

US giant American International Group (AIG) leads the hull cover on the British Airways jet that crash-landed at London’s Heathrow Airport yesterday (17 January) while carrying more than 150 passengers.

Willis Group is likely to face significant regulatory hurdles if it is to be successful in concluding a possible takeover of its larger rival Marsh & McLennan (MMC).

Crystal ball-gazers of broker M&A activity have long predicted that Joe Plumeri has at least one major deal in him before he steps down at Willis Group and it could prove to be a spectacular one.

Bermudian firms PartnerRe and RenaissanceRe have announced combined writedowns of over $200mn from their stakes in financial guarantee reinsurer Channel Re.

Difficult trading prospects are believed to have forced US broker Arthur J Gallagher & Co to put its reinsurance subsidiary up for sale – just three years after it was set up, The Insurance Insider can reveal.

Florida insurance commissioner Kevin McCarty has suspended Allstate Companies from writing new business in the state after accusing the US insurer of failing to provide subpoenaed documents at a hearing into its Florida activities.

Nigel Roberts has joined Willis after leaving Aon Ltd last year.

Private equity-backed Lloyd’s insurer Canopius Group Ltd is continuing its expansion strategy with a Dublin-based operation that will initially specialise in structured reinsurance.

Specialist broker THB Group plc has pulled out of talks with PWS Holdings plc over the acquisition of PWS’ Lloyd’s business and overseas interests.

David Batchelor, Marsh’s head of Asia Pacific, is to return to the UK as CEO of its operations in Europe, the Middle East and Africa (EMEA) as the broker’s new CEO Dan Glaser continues to reshuffle his team.

Paul Karon - the CEO officer of reinsurance intermediary Benfield’s US division - has sold more than half his stock in the company.

New Marsh CEO Dan Glaser wasted little time in stamping his authority on the broker as the MMC subsidiary made its second management reshuffle in a matter of months as part of an organisational restructure to "improve efficiencies".

Competition has forced reinsurance rate reductions of up to 15 percent at 1 January as the industry shows signs of reverting to its historic pattern of "feast and famine", according to leading market players.

The London market has begun its fight back against "unfounded" findings in the EU competition inquiry into business insurance criticising subscription market practices.

It was former CEO Maurice "Hank" Greenberg's concern over the falling share price of American International Group Inc (AIG) that prompted an allegedly sham finite reinsurance deal with Gen Re, a US court was told earlier this month.

Issuers of natural catastrophe bonds finished 2007 strongly, with four cat bonds brought to market, totalling $781mn and EUR200mn.

The California Earthquake Authority's $500mn Redwood X transaction, launched on 31 December 2007, brought to a close a busy season for cat bond issuance - taking total natural catastrophe bond issuance in 2007 to a record $7.105bn.

A suit against Credit Suisse filed by Florida insurer Bankers Life Insurance over losses on investment-grade bonds backed by sub-prime mortgages sold by the bank is expected to become a "bellwether" for legal action relating to the credit turmoil.

Sub-prime related writedowns have so far wiped more than $170bn from the balance sheets of companies worldwide, according to data compiled by information provider Advisen.

With a falling share price, the Bermudian insurer is under pressure to find a new leader and resolve its SCA dilemma

Lloyd’s insurer Amlin plc has seen its premium income drop 7 percent so far this year reflecting the softer market conditions.

As well as cutting 2008 capacity on Lloyd's syndicates, a number of the market's listed insurers have already begun to hand capital back to shareholders - a pattern likely to continue this year...

Alongside access to international risks, and the Society's A+ Standard & Poor's (S&P) rating, the lower capital requirements of operating at Lloyd's are one of its key attractions to new entrants and acquirers of existing businesses.

Renewable energy insurer GCube has opened for business offering up to $600mn cover per project, for onshore and offshore, with capacity provided by a consortium of Lloyd’s underwriters.

Aon Corp has continued to strengthen its European reinsurance arm as it prepares for the arrival of Geoff Bromley, the former chairman of Guy Carpenter’s European and Asian operations, next month.

Our monthly column keeping a check on recent US and EU legislative and regulatory developments, in association with Sidley Austin LLP

Asbestos liability (re)insurer St George Re in Bermuda launch; Great American accused of bid rigging; Citizens in Bermuda; Ironshore buys Fairfax shell; Tobin steps down from XL...

UK quoted run-off acquisition firm Tawa plc will now pay a reduced cash sum of $54mn to buy defunct US reinsurer PXRE Reinsurance Company following a dividend paid out by the company.

Listed Bermudian-headquartered legacy firm Enstar Group has acquired AMP Ltd's Australian-based closed (re)insurance operations for A$585mn ($518mn).

Run-off (re)insurer Alea Group Holdings has reached agreement to "fully and finally" commute all exposure under an excess-of-loss reinsurance treaty.

R&Q Re (Bermuda) Ltd is set to go live on the island during the first quarter of this year after recently listed UK run-off firm Randall & Quilter Investment Holdings (R&Q) received regulatory approval.

Recently merged New York law firm Dewey & LeBoeuf LLP has opened a full service office in Dubai, with a primary focus on corporate finance.

Global law firm Mayer Brown LLP is to merge with the Asian law firm, Johnson Stokes & Master (JSM).

Insurance specialists Edwards Angell Palmer & Dodge LLP (EAPD) and London-based Kendall Freeman have completed their merger, a deal that was first predicted by The Insurance Insider.

More than $2.7bn of sidecar capacity is available to reinsurers for 2008, despite unfavourable market conditions of falling rates and an excess of traditional capacity, not generally suited to the high returns sought by investors.

With six significant M&A deals in the Lloyd's sector since the takeover of Wellington Underwriting by Catlin Group in December 2006 - including two agreed transactions last month - the theme looks set to continue this year.

US insurer CV Starr & Co Inc has launched a Lloyd's energy syndicate with £30mn 2008 capacity in partnership with private equity firm First Reserve Corporation.

Cherkasky departure linked to activist; break-up pressures grow (again)

Arthur J Gallagher & Co is suing start-up broker Edgewood Partners Insurance Center, as well as 24 named individuals, in California after the defection of senior staff.

The departures from Aon Natural Resources & Construction in London has continued with a number of key staff tendering their resignations recently, including Derek Thrumble.

Ex-Converium boss advised MDU on SCOR deal; FSA appoints Sally Dewar in wholesale role; Marsh in £200mn UK back-office outsourcing deal; Glacier Re to form London platform...

The sub-prime related professional liability (PL) litigation faced by US financial services firm State Street Corp has set alarm bells ringing among errors and omissions (E&O) insurers.

Ex-Liberty Syndicates duo Sean Dalton and Andrew Elliot are poised to launch the latest reinsurance-to-close (RITC) Lloyd's syndicate, with funding to write in excess of £100mn of transactions on open years, The Insurance Insider can reveal.

With Lloyd's global capacity thought to see a moderate fall at the start of 2008, new start-ups have played a significant part in offsetting de-emptions by some of the market’s larger players.