Coface H1 profit rises 23% despite tough conditions

Combined ratio increases by 1.3 points to 81.6% as claims rise

French credit insurer Coface made a profit after tax of €68m in the first half of 2012, up 22.5% on the €55m it made in last year’s first half.

A big driver of the increase was the lack of restructuring costs, which reduced the first half 2011 profit by €8m. Excluding the restructuring costs, the first half 2012 profit was up 7%.

The higher profit came on the back of a 5.8% increase in overall turnover to €808m (H1 2011: €764m). Turnover in Coface’s core insurance business grew 7.2% to €766m (H1 2011: €715m). However, this was partly offset by a 14.3% drop in factoring turnover to €43m (H1 2011: €50m).

Coface chief executive Jean-Marc Pillu said: “In a deteriorated economic context, Coface has been able both to pursue its growth and support its clients through refined management of risk. Our performance in the first half of 2012 confirms the relevancy of our strategy to refocus on credit insurance.” 

Despite the increase in net profit, underwriting profitability deteriorates lightly. Coface’s combined ratio increased by 1.3 percentage points to 81.6% (H1 2011 80.3%).

Coface described the the combined ratio as “under control” and said it had been able to hold it relatively steady despite a higher claims rate. The company attributed this to its “refined management of risk”.

Willis Networks signs 12 new members

Sign-ups take Willis Networks’ 2012 new members to 22

Willis has announced that 12 new members have joined its Willis N2 network and Willis Commercial Network.

Willis N2 signed up H S Coleman (Insurance Services), Evans and Lewis, Abaco Insurance Brokers, Bestford & Company, Penn Insure, Stonehouse Financial Services and Financial Management (UK), trading as Commercial Direct.

Willis Commercial has expanded to include Chesham Insurance Brokers, Cumbria Insurance Brokers, Brownhill Insurance Group, Houghton Insurance Bureau and Grove Insurance Services.

Willis Networks managing director Sara Fardon said: “Twenty-two new members have joined Willis N² and Willis Commercial Network this year, demonstrating how relevant our networks are to forward-thinking brokers of all sizes across the UK.”

Russian Insurance Community Works on Implementing ACORD Standards

Global standards development organization ACORD announced that a coalition of major Russian insurers, including subsidiaries of Allianz and Zurich, have agreed to work together to implement its standards. “When completed, this will become the first documented ACORD implementation in the Eastern European region and a historic milestone for ACORD,” said the bulletin.

Representatives from ACORD and top Russian companies met in Moscow on August 23, 2012 to sign a memorandum of agreement to work together on this implementation initiative.

“We’re very excited to introduce ACORD Standards to the Russian marketplace,” stated Lloyd Chumbley, ACORD Vice President of Standards. “We look forward to helping these organizations realize the many efficiencies that standards can bring to their businesses.”

The bulletin explained that the Russian insurance industry “became aware of ACORD through a project entitled ‘Technologies for the Insurance Market,’ which brought top managers from leading insurers to a roundtable on ways to improve the Russian market’s internal business processes. The discussions led the group to ACORD Standards, in particular back office and front office functions for accounting, settlement and claims, and the ACORD Framework, the enterprise architecture for the global insurance industry.”

Igor Khromov, Deputy General Director of Ingosstrakh Insurance Company, observed: “We see enormous value in bringing the internationally recognized ACORD Standards to Russia. The development of our insurance market demands that we take this important step towards greater efficiency and faster exchange of data, which will benefit both our companies and our customers.”

ACORD noted that the following Russian insurance organizations are working on the ACORD implementation initiative:
• Rosgosstrakh
• SOGAZ
• Ingosstrakh
• RESO-Garantiya
• Alfa Strakhovaniye
• Allianz
• MSK
• Renaissance Strakhovaniye
• VSK
• Consent
• Insurance Technologies (Russia)
• Zurich

House Lawmakers Reach Deal on Russia Trade Pact, Rights Bill

The top Republican and Democrat on the House of Representatives Ways and Means Committee said on Thursday they had reached a deal to move forward on Russian trade legislation, including human rights provisions opposed by Moscow.

“I am pleased that we were able to gain bipartisan support for this important legislation that supports U.S. jobs and exports, and I look forward to marking it up next week,” Committee Chairman Dave Camp, a Republican, said in a statement with Democratic Representative Sander Levin.

Business groups, such as the U.S. Chamber of Commerce, want Congress to pass the trade legislation before its August recess to make sure U.S. companies share in the benefits of Russia’s upcoming entry in the World Trade Organization.

Russia is the largest economy still outside the WTO and its entry is expected to help double U.S. exports to that country to about $19 billion annually over the next five years.

Representatives Kevin Brady and Jim McDermott, the top Republican and Democrat on the Ways and Means trade subcommittee, said they were joining Camp and Levin on the bill to grant “permanent normal trade relations,” or PNTR, with Russia.

U.S. Trade Representative Ron Kirk said more exports to Russia would mean more American jobs.

“We look forward to working with Congress to put a final bill on the president’s desk as soon as possible,” Kirk said in a statement.

SENATE BILL

The bill is similar to one approved unanimously on Wednesday by the Senate Finance Committee and which contains a number of provisions to put pressure on the U.S. Trade Representative’s Office to ensure Russia honors its WTO commitments, they said.

“The bill we are introducing today includes important additional measures relating to the enforcement of key provisions, ranging from the protection of intellectual property rights, to barriers to U.S. exports, and Russia’s compliance with its WTO commitments,” Levin said.

It would exclude certain human rights provisions in the Finance Committee package because that is outside the jurisdiction of the Ways and Means Committee.

But the four lawmakers said they would push for the “Magnitsky bill” to be added by House leaders to the PNTR package before it goes to the floor for a vote.

“As a long-time supporter of the Magnitsky legislation, I am advocating that it be paired with PNTR before a House vote,” Camp said.

Russia is expected to join the World Trade Organization in August, 18 years after it first asked for membership, putting pressure on Congress to lift a Cold War-provision known as the Jackson-Vanik amendment, which is inconsistent with WTO rules.

If Congress does not act to terminate the provision and grant PNTR, Russia could deny U.S. exporters some of the market-opening concessions it made to join the WTO, and the United States would not be able to challenge those actions through the WTO’s dispute settlement system.

Concern about Russia’s commitment to human rights, democracy and the rule of law is propelling the Magnitsky bill, named after a Russian anti-corruption lawyer who died in 2009 after a year in Russian jails.

It would bar Russian officials guilty of human rights violations from traveling to the United States and freeze assets they hold in U.S. banks.

The White House had pushed for a bill free of human rights provisions to terminate Jackson-Vanik and establish “permanent normal trade relations” with Moscow.

But it appears resigned to the bill passed by the Senate Finance Committee, which included the Magnitsky provisions.

“Passage of this bill through the House and full Senate will enable the president to extend Permanent Normal Trade Relations to Russia and allow American businesses, ranchers, farmers, and workers receive the full benefit of Russia’s WTO commitment,” White House spokeswoman Caitlin Hayden said in a statement.

Federal insurance regulation needed, U.S. panel told

Noting that the Obama administration is expected to unveil its plan to enhance government oversight of financial markets on Wednesday, “it also appears likely that we will soon consider reforms aimed at mitigating systemic risk,” Rep. Paul E. Kanjorski, D-Pa., chairman of the House Financial Services Committee’s Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, said at the hearing.

He added that while the specifics of a plan regarding insurance remain unknown, “we have spent enough time debating those issues to come to some conclusions. For example, I believe that only ostriches can now deny the need for establishing a federal insurance resource center and a basic federal regulatory structure.”

“We can no longer sweep insurance regulation under the rug and cross our fingers that nothing will go wrong,” Rep. Kanjorski said at the hearing of the subcommittee he chairs. “We tried it before and learned that such an action may hide the mess for the short term, but pose greater problems in the long term.”

Rep. Kanjorski said the federal government should “actively regulate” lines of insurance that present systemic risk or have national significance, citing bond issuers, mortgage insurers and reinsurers. “I also believe that we should examine how we can promote greater uniformity in the industry, with or without the establishment of a federal charter” for insurers.

A member of the European Parliament told Tuesday’s hearing that the lack of a single regulatory voice for U.S. insurers could work to their detriment.

“The USA’s state-based regulatory system makes the dialogue between the E.U. and USA much more complicated,” testified Peter Skinner, a U.K. member of the European Parliament and rapporteur on Solvency II, which will overhaul the regulation of insurers in the European Union. “The significant divergence in regulatory systems also makes it more difficult to resolve problems such as the perennial issue of the discriminatory collateral requirements applied by USA regulators to non-USA reinsurers,” he told the House panel.

“The U.S. is disadvantaged by the lack of a federal entity with constitutional authority to make decisions for the country and to negotiate international insurance agreements,” said Frank Nutter, president of the Washington-based Reinsurance Assn. of America.

But not all witnesses supported federal insurance regulation.

Property/casualty insurance does not pose a systemic risk and therefore should not be subject to any new federal systemic authority, John Hill, chairman-elect of the National Assn. of Mutual Insurance Cos. and president and chief operating officer of New York-based Magna Carta Cos., told the subcommittee.

Premiums of Listed Life Insurance Firms Jan. up 12.7%

Total premiums of listed life insurance companies increased 12.7% in January 2012, according to insurance premium data issued by those companies.

The insurance premium of New China Life Insurance Co., Ltd. (SHSE: 601336; SEHK: 1336) hiked 19.6%; that of China Life Insurance Co., Ltd. (NYSE: LFC, SEHK: 2628, SHSE: 601628) grew 11.8%; that of Taiping Life Insurance Co., Ltd. increased 10.7%; that of China Pacific Life Insurance Company rose 4.3%.

Meanwhile, the China Insurance Regulatory Commission (CIRC) issued each company's scale premium and standard premium data for 2011, which shows that in life insurance industry, the scale premium increased 5.1% year on year, but the standard premium slipped 0.5% in 2011.

In January 2012, the original insurance premium of China Life Insurance accumulated to CNY 49.1 billion, increasing 11.8% year on year; that of China Pacific Life Insurance was CNY 12.2 billion; that of China Pacific Property Insurance Co., Ltd. was CNY 6.8 billion; that of Ping An Life Insurance Company of China was CNY 21.1 billion; that of Ping An Property & Casualty Insurance Company of China, Ltd. was CNY 9.7 billion; that of New China Life Insurance was CNY 13.2 billion.

Even though those life insurance companies' insurance premium increased in January, a reliable result on whether the increasing situation can be kept can not be made until the end of February at the earliest. The result will be made according to the combination of data in January and February, according to a research report of China International Capital Corporation Limited (CICC). 

Reinsurance prices expected to be flat at year-end renewals: Rendez-vous meeting

MONTE CARLO, Monaco — Reinsurance prices largely will be flat at year-end renewals, barring any major catastrophes, according to reinsurers, brokers and other experts meeting in Monte Carlo, Monaco, this week.

While reinsurance capacity remains plentiful, the continued influence of 2011 catastrophe losses on the market and low interest rates dampening investment income likely will stifle attempts by cedents to significantly lower reinsurance rates, experts say.

And demand for reinsurance may increase next year as insurers in Europe prepare for increased capital requirements under the Solvency II regulatory regime, they say.

Reinsurers, brokers and other market participants are meeting in Monte Carlo for the annual Rendez-vous de Septembre reinsurance meeting, which marks the traditional start of year-end renewal negotiations.

Rate hikes moderating

Reinsurance rates for contracts renewing throughout 2011 have seen increases, but rate hikes have been moderating as the year progresses, said Ulrich Wallin, CEO of Hannover Reinsurance Co.

“Provided that there's no significant loss between now and year-end, we expect further moderation,” he said. Rates likely will vary depending on classes of business, but U.S. catastrophe reinsurance “should see increases of around 5%,” Mr. Wallin said.

But some U.S. catastrophe programs could see modest decreases in rates, said David Priebe, vice chairman of Guy Carpenter & Co.

“U.S. property cat rates represent the most attractive pieces of business in the world … the market feels that the margins in that area are attractive,” he said.

Non-catastrophe programs, such as aggregate excess of loss programs, may still see some increases, depending on the individual risks, Mr. Priebe said. “But there is good dialogue between cedents and capital providers on developing program structures and pricing that makes sense.”