Swiss Re reveals $32mn satellite loss as P&C soars - Inside Fac Report

BREAKING NEWS ALERT
Swiss Re reveals $32mn satellite loss as P&C soars
Swiss Re has indicated in a presentation to analysts following its 2012 results that it is expecting a $32mn loss from the launch failure of the Russian Zenit-3SL rocket on 1 February.

The rocket was carrying an Intelsat-27 satellite which is understood to have been insured on an Aon-placed programme, widely placed through the space (re)insurance market, with a significant line also understood to have been taken by Munich Re.

Swiss Re's 2012 results, released yesterday, indicated a significant increase in underwriting profitability for ITS P&C reinsurance business, with a combined ratio of 80.7 percent compared with 104 percent a year ago.

The improvement was driven by lower catastrophe losses, which added only 1.3 percentage points to the combined ratio, compared to an annual budget of 9.3 percentage points. This contrasted with the cat-heavy 2011 when the total cat loss was 24 percentage points above budget.

The reinsurer's previous estimate of a $900mn loss in the fourth quarter of 2012 for Hurricane Sandy remained unchanged.

The reduction in cat losses helped to offset a slight decline in the positive contribution of prior-year reserves, which improved the combined ratio by 8.1 percentage points in 2012 compared to 11 percentage points a year earlier.

The unit contributed $3bn of net income - almost treble the $1.1bn it reported in the catastrophe-heavy 2011. The standalone P&C 2012 return on equity was equivalent to 26.7 percent.

The result was driven by a 21.6 percent increase in net earned premiums to $12.3bn, improved margins, realised gains and prior year reserve releases, the reinsurer said.

Swiss Re's appetite for growing its P&C reinsurance premium base was again demonstrated by growth at the 1 January renewals, with treaty premium up 11 percent to $9.3bn.

This was driven by solvency relief-style transactions in Europe and the Americas, although the company said it had also deployed more catastrophe and casualty capacity.

The group said prices had increased 2 percent across its portfolio after accounting for claims inflation, rate and exposure changes. However, after accounting for the impact of the weaker investment yields available, the portfolio renewed flat on an economic basis.

Swiss Re's net premium income from P&C operations will also be significantly boosted in 2013 by the lapse of its five-year 20 percent quota share with Berkshire Hathaway, which expired in December.

At a group level the P&C combined ratio, which includes reinsurance and corporate solutions, was 83.1 percent compared to 104.7 a year earlier. This was better than the 94 percent that was forecasted.

Stripping out the effect of catastrophes and reserve releases, the underlying group combined ratio was 91.1 percent.

Net investment income was $4.5bn across all of its divisions, which included net realised gains of $1.5bn.


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Ascot lead on Brinks diamond theft coverage - Inside Fac Report

Ascot lead on Brinks diamond theft coverage
The London specie market is also expected to be in receipt of a claim following the diamond heist at Brussels Airport on the 18th February - from security firm Brink's.

Ascot is said to be the lead insurer on the Brink's programme which is understood to have been brokered by Willis, according to a report by Bloomberg.

As Inside FAC revealed earlier this week, the theft from a Helvetic Airways aircraft is likely to hit the aviation market via Helvetic parent Lufthansa's aviation cargo policy.

It is understood that the Lufthansa programme is placed by the airline's in-house broker Albatross, is led by Allianz and is reinsured into the London market by Willis and JLT.

Caroline De Wolf, of the Antwerp World Diamond Centre, said the haul was estimated to be worth some $50mn.

A Brink's spokesman told Bloomberg that the company has repaid all of its customers for their losses and confirmed that Brink's has coverage for the loss via the Lloyd's of London market.

The robbery took place in the evening from the hold of a Helvetic Airways plane.

A spokesman for Brussels Airport said the thieves made a hole in the perimeter fence and drove right up to the plane, which was ready to take off.

The robbers left their car, brandishing weapons, and took the loot from the hold of the aeroplane, before driving off through the same hole in the fence.

The diamonds had been loaded from a Brinks security van onto the plane, which was bound for Switzerland.

Allianz was unavailable for comment.


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Bruno Richie to head Argo - Inside Fac Report

London market veteran Peter Matson is to step down as director of underwriting at Argo Group's Lloyd's operation next month, as sister publication The Insurance Insider revealed yesterday.

Argo Group confirmed today that Matson's role at Argo International would be filled with immediate effect by aviation specialist Bruno Ritchie, subject to regulatory approval.

Matson, who joined the firm in October 2011, is remaining with the Bermudian-listed firm in order to focus on developing new business opportunities for Syndicate 1200 and Argo Group.

Ritchie, who will relocate to London, is currently Argo's group head of Aerospace, based in Paris, and will continue to lead the Aerospace division in addition to his new role.

Matson's decision to step down was described as "amicable" by one senior source close to the organisation.

The firm said today that Matson had "achieved the goals set out for him", including Syndicate 1200's launch last year of two new classes of business and a number of new products as well as significant improvements in the profitability of its existing classes.

He joined Argo in 2011 from the listed Lloyd's carrier Novae, where he was part of a new management team tasked with improving both the profitability and size of the underwriting portfolio.

The appointments came after a string of heavy losses on US casualty reinsurance from 1998 to 2002 almost brought the (re)insurer to its knees.

Ritchie joined Argo Group two years ago to build the firm's French underwriting platform and is a former Hiscox underwriter with 18 years of experience in aerospace and large account underwriting.

Argo International - which is led by managing director Jeff Radke - has undertaken a recent restructure, which included a transaction with Enstar-backed Shelbourne to cede Argo Syndicate 1200's 2009 and prior year legacy business.

In addition, the (re)insurer took its catastrophe treaty account out of Lloyd's for 2013, and has subsequently added international casualty business.

Radke said: "I would like to thank Peter for his leadership and contribution as underwriting director at a time of considerable change. I am certain Peter will continue to be an invaluable asset in his new role."

"Bruno's appointment...is a logical step in the growth of our business. He will provide excellent leadership and direction to our underwriting teams both in Lloyd's and across the syndicate's expanding European platforms."
Acknowledgement - Inside Fac 21/2/2013

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Can Wind Jet be saved? From: Aviation News Ltd

Can Wind Jet be saved?

Wind Jet managers are meeting with Italian government authorities tomorrow to discuss prospects to rescue the airline.
Antonino Pulvirenti, the owner of Wind Jet, will present Corrado Passera, the Minister for Economic Development- Infrastructure and Transport, will his plans to revive the airline using €3m funding from a consortium of Sicilian businessmen. The revived airline would fly just three of its seven A320s to a reduced network.

From: Aviation News Ltd
 

AM Best upgrades Hannover Re ratings

BREAKING NEWS ALERT

AM Best upgrades Hannover Re ratings AM Best Europe - Rating Services (AM Best) has upgraded the financial strength rating (FSR) and issuer credit rating (ICR) of Hannover Re and its subsidiaries. The rating agency said the outlook for all ratings has been revised to stable from positive. In upgrading Hannover Re's FSR to A+ (Superior) from A (Excellent) and its ICR to "aa-" from "a+" Am Best said the change reflected Hannover Re's "consistently good earnings despite challenging catastrophe losses". AM Best also praised the reinsurer's "excellent risk-adjusted capitalisation and enterprise risk management and an excellent business profile as one of the world's leading composite reinsurers". Hannover Re's interim results in August indicated that a relatively benign first half loss experience helped the reinsurer turn its EUR293mn underwriting loss for the first half of 2011 into a EUR105mn profit in the first six months of 2012. After booking first half (H1) major losses of EUR981mn last year, in the first half of 2012 Hannover Re is expecting some EUR132mn in relation to large claims. The rating agency referenced the lesser impact of cat losses on Hannover Re's prospects, saying that it expects the reinsurer to maintain "excellent risk-adjusted capitalization" in 2012, supported by increased retained earnings from improved current year net income. "Hannover Re's capital and surplus increased by 9.5 percent in 2011 on the back of solid retained earnings, unrealised gains, predominantly on the company's bond portfolio, and currency gains," said AM Best. "The company continues to support risk-adjusted capitalisation through an extensive hybrid debt programme, with leverage and interest cover in line with the rating level." AM Best said it expects Hannover Re to report an increased net income in 2012 of approximately EUR750mn after a benign cat experience at H1 2012. It added that it expects the reinsurer's as-yet-unreported losses on US crop exposures and Hurricane Isaac to be "small on a net basis and comfortably within the group's large loss budget of EUR560mn", of which only EUR132mn had been used at H1 2012. Hannover Re reported second quarter net losses from the May earthquakes in the Italian region of Emilia-Romagna of EUR61mn. The US storms on 2-3 March are also estimated to have cost Hannover Re EUR18.4mn gross of reinsurance and EUR4.9mn net. And the Costa Concordia incident provided the biggest gross claim for H1 2012 at EUR95.3mn. It was reduced to EUR37.3mn after retrocessional arrangements. AM Best went on to say that Hannover Re's net income in 201, after minorities, of EUR606mn (down from EUR749mn in 2010) was "an excellent result considering the technical account was affected by EUR451mn of major losses above budget". The reinsurer's non-life combined ratio increased to 104.3 percent in 2011 from 98.2 percent in 2010, on the back of EUR981mn of major losses. However, the reinsurer's combined ratio improved from 110.3 percent in the first six months of last year to 96.8 percent in the same period of 2012. Despite substantial 2011 cat losses, Hannover Re managed to renew its retrocession programme at competitive rates while providing comprehensive coverage. The firm also has a low direct exposure to peripheral Eurozone debt of just EUR151mn million at H1 2012, according to AM Best. However, said the rating agency, Hannover Re's financial flexibility "remains constrained by its dependence upon its majority shareholder, Talanx". Overall, said AM Best, the reinsurer maintains "an excellent business position in both life and non-life global reinsurance markets". Hannover Re reported at H1 2012 that property casualty gross written premium (GWP) has grown by 15.1 percent to take it just past the EUR4bn mark, while non-life operating profits almost trebled for the half-year. AM Best said life and non-life GWP at H1 2012 increased by 14 percent to EUR6.9bn from EUR6.1bn, year on year. It said the increase was driven by large rate increases on catastrophe-affected lines as well as an increase in motor, aviation and property lines of business. The firm expects Hannover Re's premium income to increase by approximately 7 percent on a constant currency basis at year end to EUR12.9bn, adding that consolidated GWP increased to EUR12.1bn in 2011 from EUR11.4bn in 2010, driven by increased non-life rates after 2011 cats as well as steady life reinsurance growth. However, AM Best said, negative rating actions could occur if the company suffered "a significant fall in risk-adjusted capitalisation, a weakening of its business profile or a sustained reduction in operating earnings".

Avinode Summer 2012: Business Aviation Market Trend Report

Summer 2012: Business Aviation Market Trend Report

Posted on September 4, 2012 by Erika Andén

General Market Trends

The first half of 2012 was very similar for the US and European markets, with the former experiencing a 2.8% decrease in business jet traffic while the latter saw traffic decline by 2.7%.

Looking at information from Eurocontrol, we can see that the European market experienced a 1.1% decline in business jet traffic in June 2012, compared with June 2011, despite hosting two major sporting events. July saw the trend continue with a 3.5% decline over the same month last year.

According the data from the FAA summer has not been kind in the U.S. market either. Business jet traffic in the states saw decreases near 5% in both June and July, in comparison to last year. This represents a substantial decline over last summer and may be a result of election year insecurities. We’ll be keeping an eye on the figures to see how business jet traffic in the U.S. fares as the country progresses towards its presidential election in November.

When comparing market trends for the U.S. and Europe it’s interesting to note that the two markets differ substantially in actual traffic patterns. During a normal year actual flight movement in Europe peaks in the months of June, July and August, while U.S. movement patterns remain relatively stable throughout the year.

While the United States doesn’t experience any actual traffic peaks there is a fluctuation of approximately 10% between higher and lower traffic periods. On the European side of the Atlantic, however, the peak month of July accounts for nearly 50% more flight traffic than in the low movement months of January and December.

For those of you that follow our Demand Index throughout the year it may seem a contradiction to say that December represents a low point during the year while July represents a high. This discrepancy is the result of flight pattern differences between the two months. July represents the European peak for actual flight movements and is characterized by a large number of short flights. In contrast December represents a low number of actual movements, but those flights that do take place are generally of the high-ticket, long haul variety.

August: The light at the end of the tunnel?

While August figures have not yet been finalized collected figures from the halfway point show increases in both U.S. and European movement over the same time last year. This looks to be a positive sign for both markets as we head into the fall months.

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Zurich Insurance has applied for licences to expand into Chinese cities

Zurich Insurance has applied for licences to expand into Chinese cities as part of a renewed focus on emerging markets, according to chief executive Martin Senn.

The Swiss firm's Chinese business is one of several areas the company wants to grow on the back of declining premiums in its core European markets, Senn said in an interview with Bloomberg television in Hong Kong.

Zurich Insurance also wants to become "a leading insurer" in Malaysia and is looking to expand in Indonesia, he said.

Mergers and acquisitions may provide another channel for growth, but the firm will not participate in asset bidding wars, Senn added.

"We are seeing a decline in premium income in Europe, and it is fair to say that growth prospects in Europe are limited," said chief financial officer Pierre Wauthier in an interview in June.

"There is less of a need in Latin America than in certain countries in Asia Pacific, because we already have a pretty strong position after the Santander transaction."

The environment in the Eurozone will remain challenging for quite some time, and interest rates may stay low, according to Senn.

Zurich Insurance has adjusted its business model and strategy to meet the greater "tail risk", he added. INSURANCE INSIGHT