June 2007/2

Insurance giant Allianz SE and its core operating companies have been upgraded from AA- to AA by Standard & Poor's (S&P) as a result of "major and sustained" improvements in its operating performance.

Lloyd’s CEO Richard Ward has warned the London market that the “pace of change” on business processes remains too slow and reiterated his willingness to mandate action if necessary.

In a pioneering transaction, the US insurer Farmers Insurance Exchange has acquired the right to issue $500mn of regulatory capital if it suffers a severe US natural catastrophe loss in the next five years.

Lloyd’s insurer Kiln plc has revealed its intention to drop the capacity of its four syndicates by 14 percent to £847mn next year in the face of the cycle downturn.

Rates continue to fall at the 1 July reinsurance renewal season, as insurers add to the pain of increased competition by electing to retain more, according to Wills Re’s reinsurance renewal review published today.

Lloyd’s insurer Ascot Underwriting has established a renewable energy operation, Renewco Underwriting, it announced today.

Gerling at Lloyd’s has been sold by its German parent to Caribbean financial services group Sagicor.

Karel Van Hulle, head of insurance and pensions unit at the European Commission and responsible for the preparation of the Solvency II regulation has said that the deadline for implementation of the regulation will be pushed back by two years to 2012.

The Association of British Insurers (ABI) has said the cost of the recent UK floods is expected to reach £1bn, double the £500mn estimated by modeller Risk Management Services yesterday.

The devastating floods that have hit large parts of England this week will inflict insured losses in excess of £500mn, according to Risk Management Solutions (RMS) estimates.

Jacques Aigrain, CEO of reinsurance giant Swiss Re described insurance linked securitisations (ILS) as a “major revolution in how we perform in the market”, and predicted that the ILS market could reach $1trn by 2016.

Paris Re has priced its forthcoming initial public offering (IPO) with a range of EUR19.35 to EUR22 a share, which could raise up to EUR311.9mn at the mid-point price.

Guy Carpenter has swooped for Chris Klein, the head of rival Benfield Group's counterparty risk unit.

Swiss Re, an increasingly dominant force in insurance linked securities, is the counterparty in the first transaction to reference an existing cat bond as a trigger with the launch of $140mn Fusion 2007 Ltd.

Hiscox plc has acquired the Illinois based livestock insurer American Live Stock in a deal that will provide the group with further US growth opportunities.

UK insurer Brit Insurance Holdings plc has launched a pioneering $200mn cat bond structure that will pay out fixed amounts in the event of four to nine qualifying natural catastrophes over the next three years.

The Act of Parliament that governs Lloyd’s is to be changed to enable the Society to reform its structure and processes, it was announced today.

The alleged poaching dispute between Gen Re and Arch took a new turn yesterday, when the temporary restraining order granted against Arch Capital and four former Gen Re executives in May was lifted and replaced by an agreed-upon order between the parties.

Bermudian firm Montpelier Re has announced the formation of a new £47mn Lloyd’s syndicate which will write non-marine property and engineering business, as predicted by The Insurance Insider in May.

Reinsurance broker Guy Carpenter has said it will mandate the use of Electronic Claims File (ECF) for all in-scope claims from the Lloyd’s markets as of 1 January 2008.

Standard & Poor’s (S&P) has raised its counterparty credit and insurer financial strength ratings on Zurich Financial Services (ZFS) from A+ to AA- citing the group’s “major and sustained improvements” in its operating performance.

Lancashire Holdings Ltd has entered into a contingent equity arrangement which gives the Bermudian-headquartered insurer the right to raise a minimum of $49mn any time throughout this year’s hurricane season.

Standard & Poor’s (S&P) has upgraded the insurer financial strength rating of AXA’s core subsidiaries to AA from AA- citing the company’s successful integration of Winterthur.

Swiss reinsurer Glacier Re has become the latest carrier to go to the capital markets sponsoring $75mn in notes under a shelf programme providing it with retrocession cover from windstorm and earthquakes.

Ken Randall, the founding head of run-off acquisition firm Randall & Quilter Investment Holdings Ltd, described 2006 as a "watershed" year after his firm’s net assets leapt from £13mn in 2005 to £50.8mn.

Restraining order issued against Arch and its new fac team

Last month, Aon confirmed finance chief David Bolger would step down, but it was the continuing suggestions of private equity interest which hogged most of the attention.

The latest from the legacy market

A series of reinsurance contracts were at the heart of efforts by Independent Insurance senior management to misrepresent the company's financial health, a court has been told.

RenaissanceRe confirmed the launch of its second Florida-dedicated sidecar in another sign that the impact of the state's hurricane catastrophe fund expansion earlier this year may be less severe than first feared.

Bermudian (re)insurer Validus Holdings Ltd has increased the size of its pending initial public offering (IPO) to $350mn following its $382.2mn acquisition of Lloyd’s based Talbot Underwriting Holdings.

Increased capacity and low losses are combining to soften the energy market, according to a report published by Willis Group Holdings.

The North Atlantic hurricane season, which officially began on 1 June, will present US insurers with a number of legal and meteorological challenges, according to a report by Fitch Ratings.

Converium Holdings CEO Inga Beale will receive a lump sum payment of SFr4.2mn when she leaves the company on completion of the takeover by SCOR.

Despite a recognition that Florida’s impact will be far less brutal than first feared for reinsurance brokers’ 2007 earnings, analysts Keefe Bruyette & Woods Ltd (KBW) retain a bearish stance...

Mergers and acquisitions (M&A) activity has recently become the resurgent trend in the insurance industry, with most action evident in the UK regional broking sector.

Expansion questioned as leading figures propose higher entry fees and capacity caps

In what is developing into another defining year for the insurance linked securities (ILS) market, a number of significant transactions were concluded in recent weeks highlighting the broadening scope of alternative capital markets...

Gen Re's action is the latest in a series of legal scraps over fac reinsurance teams reflecting a recent increased interest in the area from brokers and underwriters looking for new growth opportunities in a softening market.

Towergate has very effectively managed its tight-knit relationship with a small panel of insurers, including Royal & Sun Alliance, AXA and Norwich Union, and its control over a vast amount of SME business...

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

Ironshore builds US presence; Paris Re confirms IPO plans; RIMS calls for mandatory disclosure; Swiss Re to sell UK life operation; Greenlight raises $258mn in IPO; QBE states intent with $2bn US deals...

Reinsurance broker RK Carvill is close to unveiling a $120mn Bermudian Class 3 reinsurer to issue indemnity-based policies linked to hurricane options and futures traded on the Chicago Mercantile Exchange (CME), The Insurance Insider can reveal.

RK Carvill's acrimonious "commissions" dispute with XL Capital has been settled after a US court ruled that the Bermudian insurer should pay $5mn in damages to the reinsurance broker.

Resurgent French reinsurer SCOR is facing the threat of a sizable hit from the recent $2bn settlement between (re)insurers and the World Trade Center (WTC) developer Larry Silverstein.

Ex-Wellington underwriters to head Mitsui aviation; Novae launches into the UK property market; Heritage to add international treaty team; Lloyd’s to raise up to £500mn in debt issue; FSA bans King...

David Spiller, the chief executive of MMC's reinsurance arm Guy Carpenter & Co, is close to relocating back to London, The Insurance Insider understands.

Insurance outsourcing firm Axiom Consulting has parted company with CEO Vince Wooding, after a strategic review decided a more commercial approach was needed to drive the business forward.

Munich Re led the innovative $110mn reinsurance programme for the World Bank-sponsored Caribbean Catastrophe Risk Insurance Facility (CCRIF), which went on risk for 16 countries in the region on 1 June.