October 2008/1

Credit derivatives – famously described as “financial weapons of mass destruction” by Warren Buffett – came back to bite his Berkshire Hathaway investment conglomerate as its profits slumped 77 percent in the third quarter.

Fallen insurance giant American International Group has unveiled a staggering $24.47bn third quarter net loss on the day it announced a $150bn revamped bail-out package with the US government it says is a “dramatic step forward for AIG and all of its stak

American International Group (AIG) and the US government are close to an agreement that would see the current $123bn bail-out of the troubled insurer replaced with a new $150bn programme that includes the buying up of toxic assets, according to reports.

Lloyd's (re)insurer Hiscox echoed a number of its peers in signaling a hardening (re)insurance market in its interim management statement; predicting a "greatly improved outlook" for 2009.

Shares in Munich Re traded up this morning after the reinsurer booked a EUR260mn consolidated profit for the third quarter – albeit 77 percent down on the prior-year period – as catastrophe losses and a 66 percent fall in investment income took their toll

Michael Bannon, assistant vice president of AIG's London aviation insurance division, has become the latest in a growing number of senior figures to leave their posts at the troubled insurance giant, The Insurance Insider understands.

Reinsurance broker Guy Carpenter has seen Q3 underlying revenue fall 10 percent year on year as reinsurance premiums continued to fall, while sister company, global broker Marsh, managed to grow underlying earnings 1 percent during the period.

Hannover Re has become the latest (re)insurer to slip to a third quarter net loss under the weight of heavy catastrophe claims and investment write-downs.

Global directors' and officers' liability (D&O) and errors and omissions (E&O) losses resulting from the credit crisis could hit $12.1bn, according to a report released today (5 November).

Swiss Re has become the latest reinsurer to slump to a third quarter deficit, as it booked a SFr304mn net loss for the period, driven by a SFr614mn operating loss in its life and health business.

Flagstone Reinsurance Holdings Limited has revealed a Q3 2008 net loss of $186.5mn, compared to net income of $66.2mn for the same quarter a year earlier as investment and catastrophe losses weighed heavily.

Independent reinsurance broker RK Carvill is separating its underwriting and broking businesses in a corporate restructure that will result in “material” redundancies, The Insurance Insider can reveal.

Ironshire Insurance Ltd president and chief underwriting officer Les Rock has resigned from the Bermudian insurer for “personal reasons”.

Shares in Hartford Financial Services Group have slumped more than 35 percent in early trading today after the US insurer booked a $2.6bn Q3 loss, lowered its full-year forecasts, and failed to reassure analysts over its capital position.

RenaissanceRe slumped to a $231mn net loss for the third quarter as it was hit by the double impact of net realized investment losses and hurricanes Gustav and Ike.

Lloyd’s (re)insurer Advent Capital Holdings plc is on course to end the year in the black after a volatile first three quarters that have seen it just about break even for the year to 30 September 2008.

Newly Swiss-domiciled (re)insurer ACE Ltd has avoided the third quarter net losses posted by a number of its peers, but nevertheless saw its net income decimated by net realised investment losses and catastrophes as it plummeted 92 percent to $54mn.

Zurich Financial Services Group (ZFS) has joined a growing chorus of (re)insurers to reveal preliminary hurricane loss estimates, with expected claims payments from hurricanes Gustav and Ike amounting to $600mn before tax.

Modeling firm Risk Management Solutions (RMS) has almost doubled its initial estimate for industry losses from Hurricane Ike to a range of $13bn to $21bn – making it the third most expensive US hurricane in history.

Willis Group shares were trading down heavily after the broking giant reported third quarter profits below analysts’ expectations and said it was reviewing profit targets for 2009 and 2010 because of the financial turmoil.

Up-for-sale Transatlantic Holdings Inc has become the latest (re)insurer to post a net loss for the third quarter as the combination of financial market turmoil and catastrophe losses weighs heavy on the sector.

Securities law firm Klayman & Toskes has filed a class action against a list of prominent investment banks alleging that they failed to identify “misstatements and omissions” in an American International Group prospectus for a debt issue they were underwr

Lloyd’s insurer Amlin plc has revealed its star head of underwriting Tony Holt will stand down from executive responsibilities at the end of year, taking a non-exec board position.

Bermudian (re)insurer Platinum Underwriters Holdings Ltd reported a Q3 net loss of $45.3mn, compared to $91.3mn for the same point in 2007.

A $115mn settlement in the litigation brought by New Orleans Teachers' Retirement System against four former AIG chief executives and CV Starr & co has been preliminarily approved by Delaware Chancery Court.

Fitch Ratings has put XL Capital on Rating Watch Negative on concerns over the (re)insurer’s capital position following its announcement of heavy investment losses.

Bermudian (re)insurer Platinum Underwriters Holdings Ltd reported a Q3 net loss of $45.3mn, compared to $91.3mn for the same point in 2007.

Former Independent Insurance executive Keith Rutter has left (re)insurance broker Lockton International for US insurer AmTrust.

US (re)insurer Travelers’ net income for the third quarter plummeted to $214mn compared to $1.198bn in the same period last year.

US (re)insurer Travelers’ net income for the third quarter plummeted to $214mn compared to $1,198bn in the same period last year. Overall, underwriting losses were $208mn for the quarter compared to an underwriting profit of $520mn in the previous year.

The New York insurance authorities are considering the innovative approach of putting the liquidation of Midland Insurance Company out to tender in a bid to improve the returns available to policyholders.

Hannover Re has issued a profits warning as it said would be unable to meet its full-year targets as a result of the double impact of financial markets turmoil and heavy catastrophe losses.

Lloyd’s expects its members to face net claims of £1.3bn, or $2.34bn, from hurricanes Gustav and Ike, based on an aggregate $20-25bn industry loss.

Flagstone Reinsurance Holdings Ltd has ended its search for a Lloyd’s platform with an agreement to buy Marlborough Underwriting Agency Ltd from Berkshire Hathaway, as it becomes the eighth Bermudian to establish a Lime Street presence since the start of

AM Best has downgraded Bermuda-based insurer XL Life reinsurance’s financial strength rating from A to A-, citing declining premium and capitalisation pressure as its parent, XL Capital Ltd has been winding down its business profile...

Shares in specialty (re)insurer Catlin Group Limited, were under pressure in London this morning as it unveiled Q3 estimates for mark to market investment declines and losses from Hurricane Ike and Gustav totalling 11 percent of shareholders’ Q2 equity.

American International Group (AIG) has agreed to hand over details of all compensation paid to senior executives to New York attorney general Andrew Cuomo as he looks to recover “illegal expenditures” from the beleaguered insurer.

New York attorney general Andrew Cuomo is to scrutinise executive compensation since the start of 2007 at American International Group (AIG) as he launched a probe into what he called “unwarranted and outrageous” spending by the fallen giant.

After the gains of earlier in the week, European and Asian shares have continued to fall this morning (16 October) amid gloomy economic news both sides of the Atlantic.

Ascot Underwriting founder Martin Reith has stepped down as its CEO just months after agreeing a deal with American International Group (AIG) for the Lloyd’s insurer to become a wholly owned subsidiary of the troubled US giant.

Bermudian (re)insurer Max Capital Group Ltd will cut its allocation to alternative investments after being hit by poor results from the portfolio, while compatriot Allied World Assurance Company Holdings (AWAC) said it expects to take $210mn investment lo

Broking giant Aon Corporation has agreed a $154.7mn deal to sell off its auto unit AIS Management Group to Mercury Insurance Group, California’s third-largest personal automobile insurer.

American International Group's (AIG) rescue deal with the US government will result in its liquidation, according to former chief executive Hank Greenberg.

The directors of nationalised UK bank Northern Rock will not be sued by its new owner over the collapse of the mortgage lender earlier this year.

WR Berkley has confirmed the hire of a financial institutions (FI) team from American International Group, as previously revealed by The Insurance Insider.

Berkshire Hathaway is restructuring its London market operations with a view to selling its Lloyd's insurer Marlborough Underwriting Agency, The Insurance Insider can reveal.

XL Capital shares have surged after the company reported an estimated third quarter net loss of $1.65bn to $1.67bn that included a $1.4bn charge in relation to its August transaction to close the majority of liabilities to former bond insurer affiliate Se

Fancy buying over $20 for $5? Then perhaps all you need do is instruct your broker to buy XL Capital. The embattled insurer was forced to reassure shareholders on Friday (10 October) that its third quarter book value would be $21-$22.50 after its stock tu

Embattled US insurer American International Group (AIG) has borrowed $70.3bn on loans from the government in the three weeks since its initial $85bn bail-out, up $9bn since last Friday (3 October), according to reports.

A fundamental disagreement over the issue of mandatory commission disclosure lies at the heart of the decision by the London Market Insurance Brokers’ Committee (LMBC) to break away from the British Insurance Brokers’ Association (BIBA) and form a rival t

The global stock market crash has caused Yamato Life insurance, Japan’s nearly century old insurer, to declare bankruptcy overnight.

Concerns that American International Group’s $85bn Federal Reserve loan would not be sufficient were relieved late yesterday when the embattled insurance giant received a further $38bn in cash collateral from the Federal Reserve Bank of New York.

On another bleak day on Wall Street, XL Capital shares more than halved to close at $4.01 as fears returned over the Bermudian (re)insurer's investment portfolio.

Expansive Lloyd’s insurer Hardy Underwriting Bermuda Ltd has hired a five-strong team from HSBC that will bring renewal rights to a portfolio of high net worth property business.

The London Market Insurance Brokers’ Committee (LMBC) is breaking away from its parent body the British Insurance Brokers’ Association, The Insurance Insider can reveal.

Start-up energy insurer Torus Insurance Holdings Ltd has confirmed the appointment of Clive Tobin as the group’s CEO, effective 1 January 2009, as revealed by The Insurance Insider in June.

Shares in several (re)insurers both sides of the Atlantic have continued to slide today, despite coordinated efforts by central banks to provide stability to the banking sector and wider financial markets.

A US congressional committee has criticised former AIG executives during a hearing to examine the regulatory mistakes and financial excesses that led to the $85bn bailout of the insurance giant on 16 September.

Bermudian-headquartered run-off specialist Enstar Group Limited has announced that its wholly-owned subsidiary, Royston Run-Off Ltd, has won the race to buy Unionamerica Holdings Ltd, the discontinued operations of the Travelers companies’ Inc’s UK-based

The financial markets meltdown – which has led to the rescues of American International Group, Fortis and a capital raising at The Hartford – could have “political consequences” for Solvency II, but experts say...

Transatlantic Re, the New York headquartered reinsurer which is majority owned by AIG, is optimistic that its ownership will be resolved later this month to limit uncertainty as the industry gears up for the forthcoming renewal season...

Bermudian reinsurer Harbor Point Ltd is looking to build its London presence after being approved by UK regulator the Financial Services Authority to convert its representative office to a fully licensed branch operation.

Alice Schroeder’s biography of Warren Buffett ‘The Snowball – Warren Buffett and the business of life’ went on sale at the beginning of the month as its subject continues to dominate the headlines.

Specialist environmental inter-dealer broker Evolution Markets has closed its first cat futures trade since launching its new catastrophe derivatives desk in August.

Despite initial estimates of $8.1bn, (re)insurers and investors are continuing to bet that the final loss for Hurricane Ike will eventually climb to over $10bn.

AIG’s fate remains uncertain as financial storms continue to rage...

ICAT Syndicate 4242, the US property catastrophe specialist managed on a turnkey basis by Lloyd’s insurer Chaucer Holdings plc, is seeking new capital providers as it looks to maintain its 2008 capacity at 2007 levels.

Heavy claims in the first half of 2008 have pushed the US property casualty insurance industry to an underwriting loss of $5.6bn for the period, and a combined ratio above 100.

After a miserable year-to-date for industrial and weather-related losses, (re)insurers’ worst fears following US Midwest flooding in June at least appear misplaced.

Offshore energy losses from Hurricane Ike could cost the market over $3bn, it has emerged.

As individual net loss estimates continue to trickle in from (re)insurers for exposures to hurricanes Gustav and Ike it appears that property cat specialists Renaissance Re and Bermudian class of 2001 player Montpelier Re have...

Buffy and his correspondent join us from the Digest of Lloyd’s News, Oliver Carruthers’ splendid journal on Lloyd’s affairs...

Flagstone Reinsurance Holdings Ltd is set to become the latest Bermudian to establish a Lime Street presence with the acquisition of a Lloyd’s platform, The Insurance Insider can reveal.

The legacy sector is eagerly awaiting news on Travelers’ decision over the sale of its UK-based long-tail run-off business, Unionamerica Insurance Company, which attracted a frenzy of potential buying interest over the summer.

The paradox of the legacy industry is the more successful you are; the less you have to do. Indeed, the UK non-life run-off market has now shrunk 30 percent in four years and, at £28.3bn, is the smallest it’s been for at least a decade.

The Lloyd’s sidecar vehicle, Managing Agency Partners (MAP) Syndicate 6103, intends to renew its capacity for 2009.

The total volume of capacity traded in Lloyd’s auctions ahead of the 2009 year was the lowest since the process was introduced in 1995, according to members’ agent Argenta Private Capital.

Beleaguered life securitisation Ballantyne Re has been dealt a further blow as ratings agency Standard & Poor’s (S&P) downgraded three tranches of the bond to junk status, citing mark-to-market losses in the collateral account.

Tawa plc’s share price is now 40 percent lower than its 2007 IPO price as investors responded badly to the firm’s profit slump last month on the back of continuing losses from the bond portfolio of its CX Re subsidiary...

QBE parts company with US chief; Allianz invests $2.5bn in troubled Hartford; PARIS RE buys out founding shareholder; Lehman Re in liquidation; NAIC collateral proposals welcomed; New bill refuels US tax debate

Last month The Insurance Insider predicted PwC partner Dan Schwarzmann’s time was likely to become more scarce following his elevation to head the firm’s Business Recovery Service Practice, just as the Western economies teeter...

Lloyd’s (re)insurer RJ Kiln and Co is to form a new syndicate for the 2009 year of account, The Insurance Insider understands.

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

Newline Syndicate 1218 active underwriter, Stephen Gordon, has left the Lloyd’s insurer to join expansive US-based property casualty insurer AMTrust, according to sources.

The 6 October saw Randall & Quilter (R&Q) affiliate Cavell USA launch its UK offensive against private equity owned Seaton Insurance Co and Stonewall Insurance Co in the English Commercial Court for alleged breach of...

Swiss Re and Catlin are facing the possibility of a $73.4mn and $73.2mn loss each arising out of last October’s California wildfires, The Insurance Insider understands.

Beazley confirms MUM $37.5mn acquisition… and reshuffles following Rowell departure; Kiln appoints new CEO; Swiss Re backs new London equine agency; Amlin buys French coverholder; Ironshore hires Liberty execs; Solicitors’ PI

UK run-off acquisition firm Randall & Quilter Investment Holdings plc (R&Q) is upbeat about prospects despite the growing competition in London Market run-off acquisition.

Engineering specialist TSM Agencies Ltd is approaching potential investors to launch a Lloyd’s syndicate, The Insurance Insider understands.

The annual migration of the US legacy business to the fringes of New York occurs this month with the melt-down in the financial markets and the implications for (re)insurers the inevitable main topics of conversation.

Lloyd’s insurer Hiscox Ltd has come to an agreement with members’ agents over plans to launch a new syndicate backed 100 percent by its own capital to transfer business currently underwritten on its Names-backed Syndicate 33.

Swiss Re has partnered with on-line weather derivatives platform CelsiusPro Ltd to underwrite European weather derivatives.

Ratings agency Standard & Poor’s (S&P) downgraded four cat bonds guaranteed by failed investment bank Lehman Brothers in September, signalling further contagion of the financial sector crisis in the insurance linked securities (ILS) market.

American International Group’s (AIG) enforced metamorphosis from a global financial services firm to what its new chairman and CEO Edward Liddy hopes will be a “smaller but more nimble company that is solidly profitable and has attractive long-term growth

Industry Loss Warranty (ILW) prices spiked during the early part of the US hurricane season on the back of large orders in the market from beleaguered (re)insurer XL Capital Ltd.

Aon Benfield Re’s investment banking arm – an amalgamation of Benfield Advisory and Aon Capital markets – will be led by Rob Bredahl, The Insurance Insider can reveal.

The soon-to-be broking leviathan Aon Benfield Re has continued to flesh out its senior management structure as the two firms look to complete their union by the end of the year.