A review of the key onlilne stories.
In a week characterised by rumour and speculation (it was of, course, the week of the Biba conference) the lead story brought with it a hard dose of reality.
The announcement that Endsleigh is to close its branch network of 119 offices by the end of this year has grim implications for hundreds of staff who may not be absorbed into the company’s rejigged business model. Given that Endsleigh has revenues in excess of £50m, and posted earnings before interest, tax, and depreciation of over £10m in 2006, the move raises questions about the future of branch networks of brokers across the land.
At the time of going to press, the story had already surpassed the news that Broker Network is set to conclude a takeover deal for rival Westinsure.
The imminent conclusion of the negotiations, as revealed on insurancetimes.co.uk, is the first evidence of consolidation in the network space – and is unlikely to be the last.
Ongoing concerns over the UK’s oppressive corporate tax regime reached new heights with the news that both Brit and Amlin could be set to up sticks, following in the footsteps of Catlin, Talbot and Kiln. And with corporation tax running at 28%, few commentators suggested such a move would not make sense.
Meanwhile, online reports added a number of suitors to the Royal Bank of Scotland Insurance (RBSI) sweepstakes, with Munich Re becoming the latest party to be linked with the £5.2bn GWP insurance group. However, just hours after the news broke, its chief executive Nikolaus von Bomhard ruled his company out of the bidding.
“We have a screen with a couple of targets,” he said. “Smaller, mid-sized and bigger maybe, but RBS is not among them.”
With insurers and broker reporting a mixed bag of first quarter results, AIG stole the limelight after posting its largest ever loss for the second consecutive quarter. The world’s largest insurer blamed the ailing housing, credit and capital markets for its $7.81bn (£4bn) hit, and announced plans to raise $12.5bn to shore up its balance sheet. In a statement chief executive Martin Sullivan conceded: “The severity of the unrealised valuation losses and decline in value of our investments were beyond our expectations.”
Reuters, meanwhile, poured fuel on the credit crunch-related fire by suggesting that a number of banks, including HBOS, were likely to offload some of their insurance assets in the wake of recent write-downs.
Despite being over 10,000 miles away, the rumour-mill also appears to be spinning fast Down Under. As the Australian press continues to scrutinise the significance of QBE’s latest offer deadline extension for struggling personal lines giant IAG, one publication threw other potential buyers, including Zurich, into the frame.
Other key online stories in a varied week included the FSA’s authorisation of the first Shariah law-compliant insurer and AXA’s seminal fraud victory in the courts.
The most read stories this week on insurancetimes.co.uk:
1. Endsleigh to close 119 branches
Broker expecting to make redundancies.
2. Broker Network swoops on Westinsure
Due diligence underway, deal set to conclude within weeks.
3. Insurers fight against consolidator power
Norwich Union leads the charge by declaring that it will lose business before paying sky-high commissions.
4. Brit looks to leave UK
Lloyds insurer blasts business tax regime.
5. AXA bolsters zero-tolerance policy on fraud with 20,000 pound court win
Insurer calls on others to follow in its crackdown on fraudulent claims.