October 2006/4

In a landmark transaction, Lloyd’s run-off vehicle Equitas has agreed a $7bn reinsurance deal with Berkshire Hathaway which, once completed, will bring finality to the vehicle.

Few of the 34,000 Lloyd’s Names who reinsured themselves into Equitas in 1996 probably thought it would happen, but it is now possible they will receive a premium following today’s transaction with Berkshire Hathaway.

Today's (20 October) $7bn deal between Equitas and Berkshire Hathaway lays a framework for reinsured Names and Lloyd's to achieve finality for pre-1993 liabilities and, if completed, nearly doubles the assets available to the run-off vehicle.

Bermuda-based insurer Catlin Insurance Company Ltd had its A financial strength rating placed under review with negative implications by rating agency AM Best today (19 October).

Bermudian-headquartered Endurance Specialty Holdings is pulling out of the offshore energy market and parting company with Paul Upton, who ran the business out of its London subsidiary, The Insurance Insider can reveal.

The Swiss reinsurer Converium has agreed to sell its US operations to Berkshire Hathaway for $295mn, paving the way for a possible upgrade of the company.

Lloyd’s insurers have geared up balance sheets to cash in on attractive post-Katrina underwriting conditions, according to research by equity house Numis Securities Ltd.

Wellington Underwriting plc is “highly likely” to join its Lloyd’s rivals Amlin plc, Hiscox plc and Omega Underwriting Holdings plc by opening a Bermudian operation by the end of the year, according to Numis Securities’ analyst Nick Johnson.

Benfield Group’s unexpected profits warning today (16 October) is likely to focus attention on the firm’s new Corporate Risk division which has found the going tougher than expected.

The risk gap is widening for insurers who are taking less premium for more risk, leading to significant concern about sustaining their profitability levels, according to Aon’s ‘2006 European Property, Liability and D&O Report’.

US reinsurers enjoyed a strong first half of the year, as rate rises in key property & casualty lines together with mild catastrophe losses contributed to favourable underwriting conditions, according to broker Benfield in its latest report on the sector.

Berkshire Hathaway chairman Warren Buffett has warned his senior managers against using “accounting gimmicks” to manipulate stock options in a memo.