All articles by LII editorial
LII editorial
AEGON increases an already ambitious 2010 growth target
AEGON increases an already ambitious 2010 growth target When Netherlands insurer AEGON set itself a target of increasing the value of new business (VNB) by 2010 to 1.1 billion ($1.6 billion), double the 550 million achieved in 2005, it appeared ambitious, even by AEGONs own admission
FSA calls for risk management rethink
Turmoil in global investment markets has created a need for life insurance companies to reassess their risk management, the UKs Financial Services Authoritys (FSA) director and insurance sector leader, Sarah Wilson stressed in a speech delivered at a conference convened in London by the Institute of Economic Affairs in May She continued that downside risks have increased and this has had the effect of making the financial sector as a whole more vulnerable to future shocks, a situation that demands that insurers review their assumptions and, in particular, their stress and scenario tests.
Setback for Swiss Life’s growth plans
Swiss Lifes ambitious profit growth strategy calling for earnings per share to grow at a 12 percent CAGR between 2008 and 2012 has been dealt a major blow The target, warns Switzerlands largest life insurer, will neither be met in 2008 nor in 2009. The warning came in its half-year report to 30 June reflecting a net profit of CHF1.637 billion ($1.49 billion) and earnings per share of CHF49.71, up 158 percent and 170 percent, respectively, compared with the first half of 2007
Great-West Lifeco assists Standard Life to hive off a major portion of its longevity risk
Acting to significantly reduce shareholder exposure to longevity risk, UK insurer Standard Life (Standard) has accepted a bid from Canadian insurer Great-West Lifecos reinsurance unit, Canada Life International Re, to reinsure £6.7 billion ($13.2 billion) of its UK immediate annuity liabilities This transaction is believed to be the largest of its kind in the UK, and follows a full analysis of the strategic options for our annuity book and a competitive tender process, said Standards group chief executive, Sandy Crombie. The block of business reinsured more than half of Standards annuity liabilities relates to individual life immediate annuities residing in its Heritage With Profits Fund (HWPF) written prior to its demutualisation in July 2006 Following demutualisation, shareholders bear the longevity risk on pre-demutualisation business; investment risk is borne by the HWPF
Fair value accounting under siege
The mark-to-market rule, a key part of financial services industry accounting reform implemented just a few years ago, is under attack for its role in the failure of giants such as AIG and Washington Mutual A battle royal is raging between proponents of fair value accounting (FVA) standards and those that believe FVA has played a seriously negative role in exacerbating the global financial crisis.
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An industry at a crucial crossroad
Though if taken at face value the UKs life insurance industry has enjoyed several years of outstanding growth, in reality this masks significant challenges The UK life insurance industry has enjoyed robust growth following the tough period between 2000 and 2003, during which time data from reinsurer Swiss Re reflects a 17 percent fall in total premium income to £98.65 billion ($196 billion)
CEA lobbies for block exempti
European life and reinsurance industry body the Comit Europen des Assurances (CEA) has strongly urged the European Commission (EC) to renew the Insurance Block Exemption Regulation (IBER) beyond its current March 2010 expiry date First introduced in 1992 and amended in March 2003 the IBER grants an exemption to the application of competition rules to certain types of agreements in the insurance sector
ING and Piraeus Bank extend alliance in Greece
ING and Piraeus Bank extend alliance in Greece Netherlands bancassurer ING Group and Greeces fourth-largest bank, Piraeus Bank, have extended an exclusive five-year distribution partnership first entered into in 2002 for another ten years
Zurich’s aggressive growth drive
Shrugging off international economic uncertainty, Swiss composite insurer Zurich Financial Services Group (Zurich) has announced ambitious new growth targets spearheaded by its Global Life unit Speaking at an analyst presentation in late-May, CEO of the unit Mario Greco announced that the new 2010 business value target has been set at $1.2 billion, an increase of 41 percent compared with the previous target of $850 million and an increase of 65 percent compared with the $729 million achieved in 2007. Outlining Global Lifes strategy Greco explained that it would involve a refinement of our strategic direction. This would include a shift from the current position in which operations in different countries function autonomously to one in which control would rest in regional hubs and the development of new products centralised in Dublin, Ireland.
Rating agencies face new attack
Already reeling under harsh criticism for their role in the US residential mortgage-backed securities fiasco, rating agencies are facing a new attack, this time for under-rating US municipal bonds The attack comes in the form of a law suit initiated by Connecticut attorney general Richard Blumenthal Blumenthals lawsuit names rating agencies Moodys Corporation and Fitch Incorporated and The McGraw-Hill Companies, parent company of rating agency Standard & Poors.