Profit pressure for life insurers

Life insurers’ net profits have fallen during the third quarter this year compared to the corresponding period last year, according to the Australian Prudential Regulation Authority’s (APRA) quarterly statistics.

This quarter the industry reported net profits of $657 million, compared to $976 million in the 2009 September quarter. No reason for the fall was given in APRA’s report.

AHIP Opposes Rate Review Rule

America's Health Insurance Plans' (AHIP) President and CEO Karen Ignagni today released the following statement on the proposed rate review rule released by the Department of Health and Human Services:

Life Insurers' Growth Challenged by Regulatory and Economic Uncertainty, E&Y Predicts

Despite entering 2011 with a stronger balance sheet, reasonable earnings momentum and slightly rising direct premiums, the U.S. life and annuity insurance industry will be challenged by broad regulatory changes and an uncertain economic environment, according to Ernst & Young's Global Insurance Center 2011 US Outlook for the life insurance industry.

MetLife Mature Market Institute Study Estimates Boomers’ Inheritance at $8.4 Trillion

The Baby Boomers, whose financial portfolios have been the focus of much discussion about poor economic prospects, may be finding a ray of hope in the distinct possibility that they will receive an inheritance, according to “The MetLife Study of Inheritance and Wealth Transfer to Baby Boomers.”

Rain a blessing for some, a curse for others

Large areas of eastern Australia’s wheat belt have escaped the devastating floods which swept through NSW and Victoria last week.

Primacy Underwriting Agency Underwriting Manager Peter Book says some crops will be lost, but the overall situation isn’t as bad as has been made out.

In Insurance News (the magazine) this month

It’s back by popular demand – the Insurance News list of the 20 most influential people in the industry. Publisher Terry McMullan says this year’s list was compiled only because so many readers asked for it.

New York Life Settlement Act Applies Regardless of Investor Residence

Recent articles have incorrectly suggested that the New York Insurance Department’s Office of General Counsel (OGC) opinion, OGC Op. No. 10-10-01, issued Oct. 21, concluded that the New York Life Settlement Act does not apply to investors resident in Canada. In fact, the opinion reached the opposite conclusion.

Swiss Re expert predicts pain before gain

The global insurance industry faces a tough year ahead, but insurers will see stronger returns from 2012, a senior Swiss Re economist says.

“We are seeing the global economy recovering slowly but with that improvement we predict it will lift premiums,” Swiss Re Chief Economist North America Kurt Karl told insuranceNEWS.com.au.

Banks top home and contents tables

The Commonwealth Bank’s CommInsure business provides the best value in home and contents insurance, according to Canstar Cannex in a performance measurement that places Australia’s banks at the top of the charts.

NCOIL Model Requires Notice of Settlement Option

The National Conference of Insurance Legislators (NCOIL) has adopted a controversial model act requiring life insurers to notify policy owners about the life settlement alternative when considering lapsing or surrendering a policy.

Banks top home and contents tables

The Commonwealth Bank’s CommInsure business provides the best value in home and contents insurance, according to Canstar Cannex in a performance measurement that places Australia’s banks at the top of the charts.

Third Quarter Indexed Annuity Sales Set A Record

Forty indexed annuity carriers participated in the 53rd edition of AnnuitySpecs.com’s Indexed Sales & Market Report, representing 99 percent of indexed annuity production. Total third quarter sales were USD 8.7 billion, up 16 percent from the same period last year. As compared to the previous quarter, sales were up nearly 5 percent. “It is going to be another record year for indexed annuity sales!” said Sheryl J. Moore, President and CEO of AnnuitySpecs.com. “Although insurance companies are challenged to offer annuities because of the prevailing low interest rate environment, this environment has also increased the attractiveness of these products beyond anything we’ve ever seen before. With CDs averaging 0.56 percent a year and fixed annuities hovering at 3.14 percent, I think we can count on another record quarter to close-out the year.”

Outside events put pressure on insurers

The home insurance market is expected to return to profitability next year – as long as there are no large weather-related catastrophes.

Finity Consulting MD Estelle Pearson says personal lines insurers have enjoyed a number of profitable years, but this year they became unprofitable due to weather-related claims.

Allstate Insurance Company Files $2.9 Million Medical Fraud Case Against Fraudulent Medical Corporations

As detailed in a lawsuit filed today, its sixth this year, Allstate Insurance Company seeks to prove that professional service corporations were actually owned and operated by a layperson, rather than by licensed physicians or medical professionals. Allstate is committed to fight insurance fraud in New York and has sought to recover damages totaling $9,899,093.56 during 2010.  Since 2003, Allstate has filed 23 fraud lawsuits in New York, seeking damages totaling $144,258,263.56.

Tennessee Teens Delay Getting Behind the Wheel

Mackenzie Leake put off learning to drive for almost a year longer than most of her friends. It was out of a sense of self-preservation.

"Every day I went out, I saw some sort of accident or scattered car parts in the middle of the road. A friend said, 'Oh, I ran into the car in front of me yesterday.' Everything led me to believe that driving was more dangerous than fun.''

Obama Signals Compromise on Tax Cuts

A chastened President Barack Obama signaled a willingness to compromise with Republicans on tax cuts and energy policy Wednesday, one day after his party lost control of the House and suffered deep Senate losses in midterm elections.

Consumers Paying Greater Attention to Retirement

With persistently high unemployment, a sluggish housing market and a slow-growth economy, the Great Recession has had a negative impact on many people’s finances. One unexpected bright spot has emerged, though, as more Americans say they are now focusing more on saving for retirement.

Ship leaves, legal action begins

A local marine insurer is investigating legal action against a grain ship which last month collided with and sank a fishing trawler in Port Lincoln, SA.

Last week the Liberian-registered Grand Rodosi, which sideswiped and sank the tuna boat Apollo S when it entered Port Lincoln Harbour on October 8, was allowed to leave port.

Snowball keeps his profile up in UK

Suncorp CEO Patrick Snowball has made clear his wish to return to the UK at the completion of his current contract.

He has used a far-reaching feature in UK insurance publication Post to reveal he is actively networking in the UK “every three to four months” with the intention of returning there in 2013.

Calliden gets settlement in purchase dispute

Calliden Group will receive USD 3.4 million in settlement of its dispute with Australian Unity over the sale of the mutual’s general insurance business.

In 2008, Calliden started proceedings in the NSW Supreme Court over the actuarial valuations of Australian Unity General Insurance and Mansions of Australia businesses that were part of the deal.

Insurance left off climate roundtable

The insurance industry has been left off the Federal Government’s new business roundtable to discuss climate change policies.

The roundtable includes organisations such as the Australian Chamber of Commerce and Industry, the Energy Supply Association of Australia, Australian Industry Group, National Farmers Federation and the Business Council of Australia.

Industry needs to sell itself better

The insurance industry needs to ensure its value and social contribution is better understood by government and the community, according to Suncorp CEO Patrick Snowball.

He says the amount paid out in claims by the industry each year is not dissimilar to the Federal Government’s economic stimulus package.

Suncorp sets sights on commercial market growth

Suncorp’s share of the commercial insurance market is primed to grow solidly over the next three years, according to divisional CEO Anthony Day.

The commercial insurance operations of Suncorp increased gross written premium by 4 percent last financial year to $2.45 billion – a trend which should continue through to 2013, Mr Day says in the company’s annual report to shareholders.

Suncorp sets sights on commercial market growth

Suncorp’s share of the commercial insurance market is primed to grow solidly over the next three years, according to divisional CEO Anthony Day.

The commercial insurance operations of Suncorp increased gross written premium by 4% last financial year to $2.45 billion – a trend which should continue through to 2013, Mr Day says in the company’s annual report to shareholders.

Plans for dealing with disasters welcomed

The Federal Government has agreed to spend USD 12.5 million on disaster resilience initiatives in Queensland, SA and WA.

The funding will be spend on projects to reduce communities’ vulnerability to natural hazards, building partnerships between sectors, encouraging a regional approach to mitigation initiatives and considering potential impacts due to climate change.

Bank of Japan Cuts Interest Rates, Yen Weakens

The Bank of Japan cut its interest rates today to virtually zero and announced its asset purchase program. The decision to add stimulus was rather unexpected and the yen dropped against the euro and the Great Britain pound. The dollar weakness allowed the Japanese currency managed to outperform its US counterpart.

Matcham takes over at reinsurance pool

The Australian Reinsurance Pool Corporation (ARPC) has appointed former Lumley chief David Matcham to the role of CEO. Mr Matcham, who takes over from Neil Weeks tomorrow, spent more than 32 years at Lumley – 10 of them as CEO – before he left in June 2009.

Prudential shares fall on $4.2B acquisition

Shares of Prudential Financial Inc. fell Thursday after the company said it agreed to pay USD 4.2 billion in cash for two Japanese life insurance units owned by AIG.

THE SPARK: American International Group Inc. is selling the units as part of its broader plan to repay government bailout money. The deal between AIG and Prudential includes USD 600,000 in third-party debt, bringing its total value to approximately USD 4.8 billion.

Tripp to run The Hartford's marketing

Karen C. Tripp has joined Hartford Financial Services Group Inc. as executive vice president for marketing and communications.

Tripp, who reported for work Monday, oversees brand management and advertising, Karen C. Tripp, executive vice president, The Hartfordexecutive and employee communications, media relations and philanthropic activities. She reports to Chairman and CEO Liam E. McGee

Billionaires give 91 percent of funds for Rove-tied group

New FEC filings show that American Crossroads, the Karl Rove-backed group that is pouring money into attack ads targeting Democrats around the country, continues to be funded virtually entirely by billionaires.

older models remain most popular with Ohio car thieves

For the second straight year, an insurance industry group names the 2000 Dodge Caravan minivan as the vehicle most reported stolen in Ohio.

The Ohio Insurance Institute says the automobile second most popular with the state's car thieves is the 1995 Oldsmobile Cutlass, together with similar models Ciera and Cutlass Supreme. The 2000 Honda Civic ranks third, followed by the 1995 Buick Century and then the 1999 Ford Taurus.

AIG plans to list AIA on Oct

American International Group Inc   plans to list its Asian life insurance unit, AIA Group Ltd, on October 29, aiming to raise about USD 15 billion in Hong Kong, sources familiar with the deal said on Monday.

AIG, which is nearly 80 percent owned by the U.S. government, is disposing of assets to repay taxpayers who committed USD 182.3 billion to prop up the insurer during the financial crisis.

Insurance Companies Shamelessly Profit From The Death of Servicemembers

Who should be allowed to profit from the death of Soldiers, Sailors, Airmen, and Marines? The question is almost so appalling as to be absurd. And yet, those are the accusations made by family members, that insurance companies are taking advantage of the death of military personnel to make substantial profits on their life insurance proceeds.

NZ insurers move fast after quake disaster

The New Zealand insurance industry is braced for costs in the hundreds of millions of dollars following Saturday’s devastating Christchurch earthquake.

Measuring 7.1 on the Richter scale, the quake has caused at least $NZ2 billion of damage to property and infrastructure.

Insurers have a better half-year

Australian general insurance industry has recorded strong results in the year to June, with net profit after tax rising to USD 4.6 billion, up from USD 2.6 billion in the corresponding period previous year.

Insurers accounted for USD 4.1 billion or 88.2 percent of industry profit.

AIG wants end of Taiwan deal

US Insurance giant American International Group signalled it wants to end the sale of its Taiwan unit to a Hong Kong consortium after the deal failed to get the Taiwanese government's approval.

Taiwan's Investment Commission late last month rejected the application for the acquisition of Nan Shan Life Insurance Co by Hong Kong-listed China Strategic Holdings and its partner Primus Financial Holdings.

Financial Woes Affecting Life Insurance

A new survey found that millions of Americans are having a difficult time doing what they can to protect their family, as more than 35million households are without life insurance.

Robert Kerzner, president of the insurance industry-funded research firm LIMRA said that’s nearly a third of all households. And the survey found that individual life insurance is at a 50-year low.

hurricane risk for insurers

Earl could cause insured losses of less than USD 100 million, catastrophe-modeling firm Eqecat estimated. If the hurricane churns closer to the U.S. mainland in coming days, insured losses could approach USD 500 million, Eqecat said.

The storm may already have caused insured losses of USD 50 million to USD 150 million in the Virgin Islands and Puerto Rico, as well as St. Maarten and St. Martin, according to estimates released Wednesday by catastrophe-modeling firm AIR Worldwide.

Data loss risks licence loss

Australian insurers losing client data come under scrutiny from both the prudential and corporate regulators, and risk losing their licences, insuranceNEWS.com.au has found.

Last week the UK Financial Services Authority fined Zurich Insurance UK £2.275 million (US $3.97 million) for losing the personal details of 46,000 general insurance customers [see INTERNATIONAL].

AFA group to examine reforms

The Association of Financial Advisers (AFA) formed a group to look at the implications of the various proposed legislative reforms of the financial services industry.

The Future of Financial Advice Working Group will be jointly run by Aon Advice MD Pierre Kraft and Australian Financial Services MD Peter Daly.

Premium funders seek Treasury exemption

Insurance premiums funders are going to petition Federal Treasury for exemption to new credit licence regulations after the Australian Securities and Investments Commission (ASIC) rejected their submission.

Premiums funders must be registered with the new national consumer credit protection regime. Premium funders, alongside insurance brokers who help clients apply for or secure premium funding, and any other financial body providing credit, must be compliant by the end of the year.

BYD Co stock slides as results fail to meet expectations

BYD Co fell as much as 3.9% in Hong Kong trading on Monday, the lowest level in almost one year, after second-quarter profit was below analysts' expectations.

BYD posted a second-quarter profit of 717 million yuan ($106 million), less than the 962 million-yuan average estimate of four analysts surveyed by Bloomberg. It's the first time BYD, whose F3 car was the best-selling model in China in the first half, reported second-quarter results, and no year-earlier comparison was available.

Industry giants a study in contrasts

Top two insurers Suncorp and IAG are expected to deliver vastly different results when the pair unveil their end-of-year financials this week.

As Suncorp prepares to release a strong rise in net profit – tipped by analysts to be more than double last year’s result – struggling competitor IAG is forecasting a 50 percent reduction in profit once natural catastrophe and UK losses are taken into account.

Brokers flock to Auckland convention

As many as 800 brokers and other industry professionals attended the Insurance Brokers of NZ (IBANZ) annual Propel convention in Auckland last week, setting a new attendance record.

CEO Gary Young says the convention’s emphasis on education, a more flexible registration system and a range of concurrent sessions over two days were the factors that made the convention such a success.

“We had five concurrent streams running on Thursday and Friday, and the result was a terrific turnout,” he told insuranceNEWS.com.au. “The flexi-passes allowed companies to send three or four staff to sessions using the one registration fee.”

QBE revises executive structure

QBE revised its group executive structure, with Vince McLenaghan moving on from COO and Acting CEO Australia to become CEO of a new Australia-Asia-Pacific division. The other operating divisions are Europe and the Americas. Australia will no longer operate as a separate division. The Group COO position has been retired, with each division now responsible for its region’s operational issues.

Mr. McLenaghan will report directly to Group CEO Frank O’Halloran, alongside European operations CEO Steven Burns and the Americas CEO John Rumpler. Current Asia-Pacific CEO Mike Goodwin, who remains in Singapore, retains his role and will continue to report to Mr McLenaghan. The four executives join Global Head of Distribution Terry Ibbotson as part of the new Group Operations Executive.

Berkshire Hathaway posts 40 percent profit slump

Falling stock prices has contributed to a 40 percent slump in second-quarter profit for Warren Buffett’s Berkshire Hathaway as derivative contracts lost value amidst the slump in global stocks.

The firm posted USD 1.41 billion (USD 1.58 billion) in losses on derivatives compared with a profit of USD 1.53 billion (USD 1.71 billion) a year ago.

Net income dropped to USD 1.97 billion (USD 2.2 billion) from USD 3.3 billion (USD 3.69 billion) this time last year but the 79-year-old billionaire chairman had cause to cheer an operating profit increase of 72.7 percent to USD 3.07 billion (USD 3.43 billion).

The February 2010 takeover of railroad operator Burlington Northern Santa Fe was the main contributor, adding USD 603 million (USD 674 million) in the second quarter.

Union attacks Suncorp pay offer

Suncorp hosed down Finance Sector Union (FSU) criticism of the company for imposing a four year pay deal on employees with no guaranteed pay increases.

The union says Suncorp’s proposed pay deal offers no guaranteed across-the-board pay increases over four years, with workers on base pay entitled to a one-off 2 percent increase. Any further increases would come from a discretionary pool tied to measures such as performance.

The FSU and Suncorp are currently negotiating on a collective agreement for the company’s 17,000 strong workforce.

Former Westpoint manager to stand trial

Former Westpoint Chief Financial Controller Graeme Rundle is to stand trial in the Sydney District Court on criminal charges brought by the Australian Securities and Investments Commission.

Last week he was committed under the NSW Crimes Act with two charges of making a false statement with intent to obtain a financial advantage.

The charges relate to statements by Mr Rundle made in support of a $71 million credit facility to fund a Westpoint building project on York Street in Sydney. Each offence carries a maximum five-year jail term.

Munich Re profit climbs despite catastrophes

Munich Re has reported that net profit of EURO 1.19 billion (USD 1.3 billion) for the first half of this year, up from EURO 1.13 billion (USD 1.23 billion) in the same period last year.

Profits were aided by a 43percent increase in investment results in the first half to EURO 5.1 billion (USD 5.58 billion) from the same period last year, but undermined by major losses, especially in the reinsurance business.

Group operating result for the period was EURO 2.22 billion (USD 2.43 billion), up from EURO 2.11 billion (USD 2.31 billion) in the first half of last year, while gross written premium rose 9.3percent to EURO 22.6 billion (USD 24.7 billion).

Bancinsurance to be sold, taken private

Bancinsurance, specialty insurance company, is being taken private by a group led by John Sokol, the company's top executive and the son of the company's founder.


The company says it has agreed to be acquired for USD 8.50 per share in cash, a 70% improvement over the USD 5 per share that Sokol's group first offered for the company's shares in March.

Bancinsurance shares jumped more than 12% in trading today on news of the deal.

Sokol's group already owns 70% of the company's shares. Buying the remaining shares will cost about USD 13 million.

Competitive Financial Salaries

More than a half of Australian financial services staff received salary increases in the last year, keeping pay rates competitive with the rest of the Asia Pacific region.

But this does not mean firms should relax with regional competition for financial services staff likely to return as markets rebound and growth increases.

Financial recruitment firm Robert Half’s 2010 Asia-Pacific salary survey of 906 industry professionals found 53 percent of financial services staff in Australia received an increase in salary over the past year.

This was on par with 54 percent of employees from Hong Kong and 52 percent of staff in Singapore, and well above the 27 percent of staff who received raises in Japan.

AIG sees loss

The insurance giant AIG yesterday reported a USD538 million loss in the second quarter due to charges related to selling assets to repay the federal government bailout it received during the financial meltdown.

AIG's adjusted results excluding the charges beat Wall Street expectations as its insurance business improved. Its CEO also said discussions are under way regarding a government exit from its huge stake in the company. Its shares rose more than 4 percent in morning trading.

American International Group Inc. said its net loss attributable to common shareholders amounted to USD3.96 per share. It had a profit of USD311million, or USD2.30 per share, a year ago.

The net loss attributable to AIG was a larger USD2.66 billion. That is much bigger than the USD538 million loss attributed to its shareholders, because it includes the portion that the government is shouldering. The government owns 80 percent of AIG.

Removing the charges, AIG earned USD1.99 per share, up from USD1.71 per share last year. That reflected improved performance in its insurance business, despite heavy claims related to the Gulf of Mexico oil rig explosion and subsequent spill, storms and flooding in the U.S. during the quarter and the Icelandic volcano.

Tower Australia premiums

Life insurer Tower Australia has recorded a 10% growth in inforce premium for the June quarter due to strong growth in its group risk portfolio.

Group risk premium raised 21% to USD 465 million during the quarter, while individual life and income protection premium increased 3% to USD 577.4 million.

Tower’s total inforce premium for risk insurance obtained USD 1.04 billion.

TSX takes a fall

Yesterday The Toronto Stock Exchange posted its first decline in three trading days as the country's biggest insurance company delivered a record loss and U.S. jobless claims came in higher than expected.

The S&P/TSX composite index was down 70.28 points, or 0.59 per cent, to 11,774.77, with financials leading the declines.

Manulife Financial Corp. said it lost USD 2.4 billion in the second quarter, its worst loss since becoming a public company in 1999. Manulife stock declined 11.25 per cent to USD 14.20.

"Manulife has had a bit of a problem for quite a while now, and I think they're still trying to deal with it," said Fred Ketchen, director of equity trading with ScotiaMcLeod in Toronto. "But shareholders are impatient people sometimes. They don't like having to wait."

Buffett gets the wealthy

Forty wealthy individuals and families have joined Microsoft Corp co founder Bill Gates and billionaire investor Warren Buffett in a pledge to give at least half their wealth to charity.

Six weeks after launching campaign to get other billionaires donate most of their fortunes, the chairman and CEO of Berkshire Hathaway Inc. released the first list Wednesday of people who have signed what he and Gates call the "giving pledge."

Buffett decided in 2006 to give 99 percent of his fortune to charity. Then, he was worth about $44 billion. After five years of investment returns while making annual gifts to five foundations, Buffett's fortune totals nearly $46 billion.

Buffett said he, Bill and Melinda Gates, and a few others have made 70 to 80 calls to some of the nation's wealthiest individuals. The people who agreed to the pledge are from 13 states, with the most participants in California and New York.

Among those who haven't signed the pledge, some prefer to keep their philanthropy anonymous, some were not available to talk, and others were not interested, Buffett said.

Many on the list will be asked to call others, and small dinners will be held across the country in coming months to talk about the campaign.

High-Risk Pool Guidance Viewed As Anti-Abortion Victory

Anti-abortion activists have "scored a victory" after a decision last week by the Obama administration to not allow the new high-risk pools in America to cover most abortions, The Associated Press reports. Groups like the Catholic bishops had issued concerns when "at least one state - New Mexico - initially decided to allow coverage of elective abortion in a newly launched, federally funded program to provide coverage for high-risk uninsured people turned away by private carriers. Abortion foes also raised questions about Pennsylvania's plan, but state officials said the criticism was baseless. Trying to head off more problems, the Health and Human Services Department announced last week the program will not cover abortions except in cases of rape, incest or when the mother's life is in danger - exceptions traditionally allowed under federal law." That's different than in insurance exchanges that begin in 2014, which will allow consumers to have abortion coverage using their own, segregated funds than those from the government. Abortion rights activists say the restrictions in the high-risk pools go too far (Alonso-Zaldivar, 7/19).

The Hill: The decision by the Obama administration has sparked backlash from the American Civil Liberties Union. "In a message to supporters, Washington Legislative Office Director Laura Murphy asks that they pressure the White House to overturn its newly announced restrictions. 'The White House has decided to voluntarily impose the ban for all women in the newly-created high risk insurance pools,' Murphy writes. 'What is disappointing is that there is nothing in the law that requires the Obama administration to impose this broad and highly restrictive abortion ban. It doesn't allow states to choose to cover abortion and it doesn't even give women the option to buy abortion coverage using their own money'" (Pecquet, 7/17).

Tower Australia premiums grows 10%

Life insurer Tower Australia has recorded a 10% increase in inforce premium for the June quarter due to strong growth in its group risk portfolio.

Group risk premium climbed 21% to $465 million during the quarter, while individual life and income protection premium increased 3% to $577.4 million.

Tower’s total inforce premium for risk insurance reached $1.04 billion.

The addition of new income protection benefits for 700,000 members of the Australian Super superannuation fund was reflected in group risk new business results which climbed 207% to $85.7 million.

Life and income protection new business contributed $41.6 million, a 14% improvement over the March quarter.

Insurers profit off payouts

The package arrived at Cindy Lohman’s home in Great Mills, Md., just two weeks after she learned that her son, Ryan, a 24-year-old Army sergeant, had been killed by a bomb in Afghanistan.
It was a thick, 9-by-12-inch envelope from Prudential Financial Inc., which handles life insurance for the Department of Veterans Affairs. Inside was a letter from Prudential about Ryan’s $400,000 policy.
And there was something else, which looked like a checkbook. The letter told Lohman that the full amount of her payout would be placed in a convenient interest-bearing account, allowing her time to decide how to use the benefit.
“You can hold the money in the account for safekeeping for as long as you like,” the letter said.
In tiny print, in a disclaimer that Lohman says she didn’t notice, Prudential disclosed that what it called its Alliance Account was not guaranteed by the Federal Deposit Insurance Corp.
Lohman, 52, left the money untouched for six months after her son’s August 2008 death.
“It was a consolation prize that I didn’t want,” she said.
As time went on, she says, she tried to use one of the “checks” to buy a bed, and the salesman rejected it. That happened again this year, she says, when she went to a Target store to buy a camera on Armed Forces Day, May 15.