May 2007/2

Within the run-off industry, you do not have to travel far to hear complaints over poor service provided by brokers on discontinued accounts.

Reinsurers were given cheer – and some guidance – in the UK High Court regarding “follow the settlement” clauses.

European giant Allianz has launched a UK High Court counterclaim against the North Korean state insurer over a controversial EUR45mn reinsurance dispute.

Ever since 14 October 2004 – the date New York attorney general Eliot Spitzer stunned the industry with his complaint against MMC - Willis Corp has attempted to distancing itself from the furore over contingent commissions.

Lockton Companies Inc burst onto the UK shores in November 2006, with the Stone Point Capital-backed acquisition of Alexander Forbes International Risk Services (AFIRS) and immediately claimed the title of largest privately-owned global insurance broker.

US-based brokers Arthur J Gallagher & Co (AJG) and Hilb Rogal & Hobbs (HRH) disappointed analysts with first quarter profits down on expectations last month as the top line suffered from the impact of declining insurance rates.

Munich Re continued the trend for (re)insurers to buy brokers and agents to increase control over distribution with its acquisition of UK intermediary Bell & Clements Group this month.

Benfield Group’s expansion into primary lines is continuing to provoke concerns about the reinsurance broker’s prospects.

Faced with falling rates, insurers are increasingly looking to capture control of their distribution by buying brokers and agencies. But, with competition from other acquisitive brokers and hungry private equity investors, all this is doing is chasing up

US insurers Chubb Corporation, The Hartford and WR Berkley reported profits up and premiums down for the first quarter of 2007, while the longevity of Travelers’ continued growth was also questioned.

First quarter results from the big three brokers met with a mixed response, as Aon and Willis found favour for growing revenues and profits, while Marsh & McLennan Companies, Inc (MMC) traded down on sluggish results.

Warren Buffett has signalled his intention to undertake a large acquisition, saying that Berkshire Hathaway Inc (Berkshire) has more cash than investment opportunities.