May 2012/4

After a bright first quarter filled the sector with optimism, the return of the Eurozone crisis and fears of a disorderly Greek exit from the euro have brought (re)insurance stocks back to a gloomy reality this month.

Data is a key element of the internal model review process but the UK Financial Services Authority (FSA) is still developing how a data audit will be done and by whom, according to former head FSA insurance regulator Simon Kirby.

British Insurance Brokers Association (Biba) CEO Eric Galbraith has criticised the European Commission for considering mandatory remuneration disclosure for brokers and said that one-size-fits-all regulation for the financial and insurance industries is "utterly ridiculous".

Insurers and the Financial Services Authority are under pressure from the reduced time frame to approve internal models, the Association of British Insurers (ABI) warned last week.

Senior claims executives have warned that blanket reservation of rights on claims could not only alienate policyholders but could make the London market an unattractive insurance platform.

New York State regulatory authorities are to broaden their review of insurance lines beyond force-placed programmes once current hearings on homeowners' coverage are over.

Aon has been sued by contractors for the Kleen Energy gas and oil-fired plant over alleged deficiencies in the provision of liability cover for their joint insurance programme.

USAA has successfully gained $40mn annual aggregate cover against multiple US perils at a relatively high-frequency level from the cat bond market as part of its new $200mn Residential Re cat bond.

Global reinsurer Scor has increased the amount of event-driven contingent capital it can draw on following large natural catastrophe losses to EUR150mn, having triggered the first EUR75mn of its 2010 facility last year.

Capital market investors provide about 10-15 percent of the $220bn-$250bn of global catastrophe reinsurance capacity, according to estimates from brokers and bankers.

Long-term investors, including some of the largest hitters in the London market, will be among the biggest losers from Canopius' recommended cash bid valuing the company at £164mn.

(Re)insurers are likely to come under pressure to be more aggressive in their capital management over the next several months - with the usual caveat of the "no major catastrophes" assumption.