Saxon East rounds up the best of the news from the festive break


31 December Former Biba chairman and CII president Simon Bolam is awarded an MBE in the New Year honours list.

Bolam said that he was “very surprised is not often that the insurance industry gets recognised at any level, especially in the current financial circumstances, so I am delighted.”

From 1971 Bolam ran broker E H Ranson in Edinburgh, recently passing on the day-to-day management to his daughter, Valerie McIntee.

Standard Life’s chief executive Sandy Crombie was knighted in a list that featured few figures from the financial services sector after a year of turmoil and banking collapses.


2 January Regional airline Flybe offers free AIG-backed insurance to its customers, allowing them to claim a full refund on their travel costs if they lose their jobs after working for the same employer for two years.

The “peace-of-mind” guarantee means that if one member of a party on the same booking is made redundant, any or all of the remaining members of that party can receive a refund if they want one, said Mike Rutter, chief commercial officer at Flybe.

“We know that holidays and breaks are important to our passengers and that’s why we’re introducing what we believe is a totally unmatched offer in the aviation world.

“These are unprecedented times and Flybe wants to do our bit to keep the economy moving,” he said.


18 December The French-based Coface aims to restore confidence in the battered financial system by launching it own credit ratings service.

The company says the move is to fill the gap for a reliable service after other agencies are blamed for not downgrading toxic investments.

It says it will use its expertise in trade credit insurance – where it checks the financial strength of companies before giving cover – to create the new service.

It also wants tougher European regulation over credit agencies. Jérôme Cazes, its chief executive, said: “Only performance control can make it impossible for a financial catastrophe, such as the AAA rating of toxic securitisation vehicles, to be repeated – an AAA rating which announces a one-in-3,000 chance only of defaulting in the year, or an average life expectancy of 3,000 years.”


30 December The International Monetary Fund (IMF) proposes that governments should offer recession insurance to companies.

The IMF believes banks could insist companies buy this insurance before lending to them, in the same way mortgage lenders insist borrowers buy buildings cover.

An IMF report said: “The government could provide insurance against extreme recessions by offering contracts – with payment, for example, contingent on GDP growth falling below some threshold level. Banks could condition loan approvals on firms having purchased such insurance. This is analogous to the flood insurance that mortgage companies often require from borrowers.”


2 January Aviation insurance prices will rise and the insurance market will harden further this year, according to the latest Airline Insurance Insight report from Willis.

It says lead premiums last November increased 16%, while overall programme premiums increased more.

The report claims insurers are achieving rate increases despite low loss levels and over-capacity, both of which normally would lead to reductions.

It says insurers are controlling the deployment of capacity as part of their strategy to manage the market cycle, while capital providers are increasing their demands for better returns. International insurers also are taking a harder attitude than those in the US and are attempting to achieve higher premium increases.

The report notes that the total premium generated in 2008, including known December renewals, was $1,233m (£789m), an increase of 9% over 2007, despite a number of carriers going out of business during the year. Gross premium for 2008 could exceed $2bn, driven by major renewal activity in December, it said. Gross premium for 2007 was $1.8bn.


16 December Robert Ferguson, former General Re chief executive, is sentenced to two years in prison and fined $200,000 for helping AIG inflate its financial statements.

Ferguson was convicted in February with four other executives on charges of conspiracy, securities fraud, mail fraud and false statements to the Securities and Exchange Commission.

Prosecutors said the defandants were behind two sham reinsurance transactions in 2000 and 2001 that allowed AIG to falsely inflate its reserves by more than $500m.

A federal judge in Connecticut found that the fraud cost AIG shareholders between $544m and $597m. AIG restated the transactions in 2005.

“This transaction was designed to cook the books of AIG. He had many opportunities to step in and stop the deal but he did not,” District Judge Christopher Droney said of Ferguson.

The case is not linked to the mortgage-related losses that led to a near collapse of AIG in September and a federal bailout.

General Re is a unit of Warren Buffett’s Berkshire Hathaway.