Also in the news this week ...
Towers Watson: why Solvency II is good for us
Consultancy and brokerage Towers Watson has said that innovations stemming from the forthcoming Solvency II capital adequacy regulation will give insurers a competitive edge, if used properly. Approved internal models will allow insurers to accurately understand and manage risk while taking advantage of scarce resources like capital and actuaries, the company said. Towers Watson managing director, Paul Whitlock, said: “Solvency II means that companies could gain competitive advantage by optimising their capital position, taking into account diversification effects and risk mitigation strategies.” Whitlock added that Solvency II will bring other opportunities: “Product design may change … with a different balance of risks between insurance companies and policyholders.” He added: “Market-based approaches also encourage transparency in pricing.”
Varied capacity for CIFS
Lloyd’s credit insurer Credit Indemnity & Financial Services (CIFS) has added three capacity providers as it seeks to grow by more than 60% over the next four years. The insurer, part of the Novae Group, previously received 100% of its capacity from its parent. However, Novae will cut its participation to 50%, and fellow Lloyd’s groups Sagicor, Catlin and Omega will provide 30%, 10% and 10% of CIFS’s capacity respectively. The shift is designed to maintain the optimum balance of Novae’s credit insurance exposure between primary and reinsurance markets, while supporting expansion.
Hardy reveals partner
Lloyd’s insurer Hardy has revealed that its new third-party capital provider, announced on 26 November, is the newly formed corporate member of Bahrain-based Arab Insurance Group (Arig). Arig will take a 7.5% share of Hardy’s Syndicate 382 in 2011. Arig is supporting the syndicate on a two-year tenancy basis, which guarantees participation in 2011 and 2012, but does not offer rights to any future participation.
P&I falls, but returns rise
International P&I clubs made a collective underwriting loss of $84m (£53.2m) in 2009, according to Lloyd’s broker Tysers, with only three of the 13 clubs managing a technical profit in excess of $10m. However, the underwriting losses were more than offset by investment returns of $616m. The group’s total free reserves rose to just over $3bn.