All articles by LII editorial
LII editorial
Lincoln National under pressure after downgrade
Having already slumped over 80 percent in the past six months, US life insurer Lincoln National Corporations (LNC) share price came in for renewed punishment during March, a month in which the US equity market recorded solid gains The S&P500 index, for example, gained almost 9 percent in March The first wave of selling of shares in the US 10th-largest life insurer (based on 2007 revenue) followed an announcement by rating agency Moodys that it had downgraded LFCs senior debt rating to Baa1 from A3
Discontent mars Solvency II progress
Solvency II, the proposed regulatory regime for European Union (EU) insurers, took a decisive step forward in late-March with the approval of the text of the proposed Solvency II Framework Directive by the Committee of Permanent Representatives (CPR) The CPR consists of the member states ambassadors to the EU and is responsible for preparing the work of the EU Council, the EUs highest political body Welcoming the development Michaela Koller, director general of the European federation of insurers and reinsurers, the Comit Europen des Assurances (CEA) said in a statement: We are happy that the timetable for implementing the Directive is on track
Survey prompts warning of huge UK protection gap
Half the UKs population would be penniless in less than a month if their income ceased, warns Axa Life, a UK unit of French insurer Axa This is despite the UK having the highest life insurance penetration level in the world: 15.28 percent of GDP in 2007, according to Swiss Re. From a protection perspective, a survey undertaken for Axa Life by research firm Onepoll revealed that 45 percent of the UKs adult population has not purchased any form of protection cover, including life insurance, critical illness or income protection
ACLI calls on Japan to play fair
In yet another appeal to the Japanese government to play by the rules Frank Keating, president and CEO of the American Council of Life Insurers, has pointed to an a situation of unfair competition emerging in Japans life insurance market which holds potentially serious implications for US-Japan relations The focus of Keatings concern is Japan Post Insurance (JPI), Japans postal life insurance entity, which accounts for 35 percent of all life insurance policies sold in Japan Though a 10-year process of privatising JPI began in October 2007, it remains wholly-owned by Japans government
Alleanza deal sees Generali tighten its grip in Italy
A significant change in Italys insurance industry has been set in motion with the announcement by Generali Group that it is to acquire full control of Alleanza, a life insurer in which it already has a 50.4 percent stake In the non-cash deal, Alleanza minority shareholders will receive 0.33 ordinary Generali shares of for each ordinary Alleanza share they own Generali noted that this implies a 6 percent and 13 percent premium on the last three- and six-month average exchange ratio, respectively.
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Product rethink as Singapore new business nosedives
Singapores life insurers are designing schemes to assist financially stressed policyholders, Darren Thomson, president of the Life Insurance Association of Singapore (LIAS) stressed in a statement accompanying release of data showing a dramatic reversal in the life industrys fortunes Thomson said an extended premium holiday for whole life and endowment policyholders with small one-off fees, and low-cost relief schemes offering coverage against death, critical illness and permanent disability are among the solutions the life industry is now offering. The industrys move comes against the background of a slump in premium income growth in the fourth quarter 2008 following what had been a period of significant growth.
EFAMA blasts European retirement annuity bias
Favoured by regulation and tax incentives, annuities have become by far the dominant post-retirement solution in Europe. This bias towards substantial annuitisation of retirement savings early in retirement is, however, not justified, argue Raimond Maurer and Barbara Somova of Goethe University in Germany in a study undertaken for the European Fund and Asset Management Association (EFAMA) In an environment where individuals can expect to live 20 to 30 years in retirement, forcing to buy an annuity at the age of 65 is out of date, said EFAMA director general Peter De Proft at a function in Brussels marking the launch of the report: Rethinking retirement income strategies how can we secure better outcomes for future retirees
CSC walks off with North American outsourcing crown
Based on contracts held, US technology services company Computer Science Corporation (CSC) emerged as the leader in the North American life, pensions and annuities business process outsourcing (BPO) market in a survey by research firm Celent CSC was also named as the leading BPO provider for policy administration in the North American general insurance market. Celents research was based on data collected on 278 BPO contracts representing an estimated $1.4 billion in annual revenue in a market generating annual revenue of about $1.9 billion
Regulatory loophole provides relief
Their balance sheets hammered by investment losses, many big-name insurers in the US market are enjoying much-needed capital and surplus relief thanks to a regulatory loophole that enables state insurance commissioners to permit them to temporarily deviate from standard accounting procedures Not in this state, sums up New York Insurance Department (NYID) commissioner, Eric Dinallos response to special capital and surplus accounting relief being granted to a growing number of insurers by regulators under the National Association of Insurance Commissioners (NAIC) permitted practices rule. Dinallo made it abundantly clear that capital and surplus relief granted to insurers domiciled in other states is not acceptable in New York.
UK regulator gets tough on money laundering
Insurers that fail to implement adequate anti-money laundering (AML) processes and systems leave themselves open to substantial damage, both financial and reputational, warns Jonathan Pell, CEO of UK data quality management specialist Datanomic Pells warning comes against the background of what he views as the UK insurance industrys weak corruption and control standards. Pell continued that the UKs Financial Services Authority (FSA) is starting to show its teeth by imposing hefty fines against companies that fail to implement proper AML screening systems and controls.