Insurance Agenda, Oct 08

Welcome to the first issue of Insurance Agenda. Each month we will be looking at key insurance, reinsurance and risk management issues, bringing insight, fresh perspectives and analysis on topical matters.

This month has been a rollercoaster ride for the financial services sector, as the sub-prime crisis took a further twist, bringing down investment bank Lehman Brothers and taking insurance giant AIG to the brink of collapse.

Insurers appear to have emerged relatively unscathed from Lehman’s demise. Had AIG gone bust, the view from analysts is that it would have been a credit event on a similar scale to Lehman.

Yet AIG’s troubles could be other insurers’ gain. AIG’s new chief executive is in the process of drawing up a list of business units to sell, which could provide some prize assets for rival insurance groups to snap up – if they can raise the money to bid for them (page 2).

The root of the problems at AIG and the wider financial crisis were complex financial instruments such as credit default swaps. With the spotlight turning on such products, will investors become wary of cat bonds? Global Re editor David Sandham says not (page 3).

Meanwhile, the worsening economic climate coupled with the financial turmoil will lead risk managers to review their buying strategies. Insurers will need up their game or risk losing business (page 6).

michael.faulkner@instimes.co.uk