id-01 thursday september 01 lowres - welcome to · pdf fileidar kreutzer, chief executive of...
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THURSDAY 1 SEPTEMBER 2011 ISSUE 3,426
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Industry faces hugepopulation challenge
PREDICTIONS of a surge in glo-bal population growth presentthe insurance industry with ahost of unique challenges, whichhave to be addressed now if theyare not to produce insurmount-ableproblems in the future.
Insurers canplay a central rolein helping the world adapt to thechanges that rocketing popula-tion numbers will bring, but facea challenge to identify and takeownershipof that role.
A study bringing togethersome of the largest companies inthe world predicted the Earth’spopulation will increase toaround9.2billionpeopleby2050,withmore than 70%of these peo-ple living incities.
India is expected to be theplanet’s most populous countryin 2050, with 1.6 billion people,although China will be the coun-try with the most cities contain-ingmorethanonemillionpeople.
According to the report, Chinawill have 231 cities holding morethanonemillionpeople,meaningmore than 10 such metropoliseswill need to be created each yearfor thenext15years.
Idar Kreutzer, chief executiveof Storebrand, said these issueswill not just affect society, butbusinesses as well: “The questionfor us as the business communityis what role will we play. Weshouldtakeanactivepart in form-ing the future by implementingthe challenges we face into thecore strategiesof ourbusiness.”
The Vision 2050 study – whichinvolved 29 companies, such asProcter & Gamble, Sony, Rio
Tinto, E.ON, Toyota and Philips,as well as insurers Allianz andStorebrand – found this hugeincrease in population size willhavean impactonclimate.
“[Climate change] will have animpact... on what we take intoaccount when developing ourstrategies,” Kreutzer said, whilecontinuing as if nothing is hap-peningcannolongerbeanoption.
And he insisted companies takean active approach to thesechanges, otherwise they will suffer
in the future: “Either that change[inattitude]canbegradual andcanbeadevelopmentweare leading,orthechangewillbeabruptand itwillbe revolutionary in nature and itwill have dire consequences forpopulationandcompanies.”
In the next 20 years, some$22trn needs to be invested inwater to ensure there are ade-quate resources, but with gov-ernments struggling to findmoney, Kreutzer said the likeli-hood is theywill turn tooneof the
largest pools of investment fundsin the world – pension funds andlife insurers.
TheNorwegianandSwedishlifeinsurance companies alone havetotal assets of $545bn, and just 5%of this, equal to almost $30bn,couldhelpsolvethisproblem.
To try to offset some of theimpact of climate change, Kreut-zer suggested insurers can investin energy-neutral technologiesand infrastructureaswell.
These industries have found itharder to raise capital in recentyears, owing to the poor eco-nomic climate, but with some ofthemore traditional investmentsperforming poorly, Kreutzer saidinsurers could direct some oftheir funds towards green tech-nologies and helping to counter-act some of the impact of thispopulationgrowth.
An increase in wider resourceefficiency is also needed if theplanet is to come to terms withpopulationgrowth.These changeswillaffectallsectorsinthebusinessworld, with massive innovationrequired in addition to new busi-ness models and technology, par-ticularly in the next 10 to 15 years.Insurers, as some have alreadystartedtodo,willhelpbyprovidingcoveragetothistechnology.
Insurers will likely see signifi-cant increases in the cost of capi-tal, Kreutzer explained, as well asfundamental changes in cus-tomerbehaviour.
Insurers will also have to con-sider how the risks they areexposed to have changed, espe-cially as climate change has beenput forward as one of the reasonsfor an increase in natural catas-tropheactivity.
Insurers urged to act nowas studypredicts 9.2 billion inhabitants onEarth by2050
A POOL mechanism allowing insurers to group their resources tocover new and emerging risks has beenmooted as an ideal way of get-tingagripandcomingtotermswiththeuncertaintysurroundingcov-ering suchperils.
Thatwas justoneof thesuggestionsput forwardastohowtheinsur-ance industry could cope with emerging threats during a breakoutsession at theNordicRisk& InsuranceSummit (Noris) inOslo hostedbyRetoSchneider,SwissRe’sheadof emergingriskmanagement.
Once insurershad their heads around the risks involved, the cover-agewouldmoveacross fromthepool andon tocarriers’ books.
But the problemwith such a pool is it would contravene EuropeanUnionanti-trust laws,oneattendeeexplained, especially as if itwere tohold more than 25% of that particular market’s share, it would nolongerbeable tooperate as anongoingconcern.
According to Schneider, one area where there is high demand fornew products is in the non-damage business interruption (BI) lineof business.
Recent events such as the Icelandic volcano in 2010 (pictured) andthe Japanese earthquake earlier this year have highlighted how easilysupply chains can break down, bringing losses to companies notdirectly impactby incidentsor events.
As a result, therehasbeenacall formore insurers tooffer coveragessuchasphysical damageandconsequentialBI.
However, the insurance industry has not responded as many cus-tomerswouldhave liked.
Schneider said: “Not all companies are offering [these productsand] it’s something thatneeds tobeprovided.”
And he called on the market to adapt more easily to the changingrisk landscape, asking: “Can we be proactive as an industry, or are wecondemned to respond [to losses]?”
Pools mulled foremerging risks
Christopher Munro, Oslo
Christopher Munro,Oslo
Business needs to explain value to improve poor public imageTHE insurance industry still hassomeway to go before it will haveconvinced the general public notto hold it partly responsible forthe economic problems thathave enveloped much of theglobe over the past three years,writesChristopherMunroinOslo.
Insurance is a very valuablebusiness, Thomas Hess, chiefeconomist and head of economicresearch and consulting at SwissRe, insisted.
Butmuchof the general public
has not looked kindly upon theindustry, owing to the perceivedpart itplayedinthefinancialcrisis.
“I think insurance is a very val-uable business, for certain. It’s ofvery high value. Where we areverybad is inexplainingourselvesand explaining the value of insur-ance,”Hess said.
“We have to do much betterexplainingaboutwhatwedo–andthat’s a lesson learned in this cri-sis. They’ve put us in the samebasket as banks. Banks are impor-
tant, but the banking systemneedsa lotof change,”headded.
Of those insurers that didcome close to failing at the onsetof the financial crisis, it was theirbanking-style operations thatwere at the heart of many of theirproblems rather than the insur-ance sideof thebusiness.
Hess said the press and widermedia also play a part in the poorportrayal of the insurance indus-
India is expectedtobe theplanet’smostpopulouscountry in2050,with1.6billionpeople
Thepressandwidermediaalsoplayapart inthepoorportrayal of the insurance industry
Continuedonp3
THURSDAY 1 SEPTEMBER 2011
INSIGHT
2 INSURANCE DAY
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Cloud computing can giveinsurers greater IT controlTHE popularity of comprehen-sive “cloud-based” portals, whichallow the entire risk-placementprocess, from rate checkingthrough to the issuing of the pol-icy, to be conducted online, hasbeenpredicted to soar.
It will potentially bring an endto insurers continuing to belocked into the multi-year ITinvestments that have often hin-dered many carriers’ moves intonewbusiness lines.
Global insurers’ annual spendon ITwill hit $140bnnext year – a5% increase year on year. Yet themajority of this spend will betaken up by carriers maintainingthe status quo and combatingexisting problems posed by leg-acy systems.
The ability for carriers to exertgreater control over their ITexpenditureis justoneofthemany“compelling aspects” of cloudcomputing, which will ultimatelyensure it becomes “an essentialingredient” for insurersseekingtocompete on a global scale infuture, according to insurance ITsolutionsproviderNorthdoor.
“Cloud computing is one of themost exciting developments tocome out of the IT industry for awhilenow,”directorofconsultancy,RobStavrou,toldInsuranceDay.
“It gives you easy access tocomputing power via the inter-net.Nomatterwhere youare, youcan plug into ‘the cloud’ to accessyour data, your stored files orapplications from any computeror mobile device, 24 hours a day,sevendaysaweek.”
But, in addition to this flexibil-
ity, the potential eradication ofinsurersbeinglockedintoamulti-year hardware investments, eventhough they have no way ofknowing whether they will needto scale up, or down, this infra-structure tomeet the demands ofthe business during that time,represents another considerablebenefit, Stavrouadded.
“As a result, many insurershave often been wary of startingnew lines of business, as theupfront costs can be very high –and therefore something of agamble,”heexplained.
“Just think of the provision ofIT alone to enable the criticalbusiness processes: the hasslesetting up the infrastructure, theheadaches of installation andimplementation and the ongoingsupport andmaintenance.
“Whathappens to these invest-ments if the new business doesn’tmaterialise?Surely theremust bea way to reduce risks when itcomes to establishing your owninfrastructureand IT?
“Likewise, some insurers havebeen reluctant to launch newproducts and services due to thecapital and diligence required forSolvencyIIandotherregulations.
“With cloud computing, how-ever, you can be certain yourinvestments in the internal oper-ationcanbecarefullymanaged.”
Other benefits insurers couldderive from cloud computingincludedgreatercontroloverdatadue to the centralisation of coreprocesses and the opportunity toconsolidate legacy systems,allowing carriers to benefit fromthenewest,most flexible technol-ogyavailable,Stavrousaid.
“For example, a premium cal-culation and administrationapplication can now be uploadedon to an iPad or other mobiledevice easily, so employees work-ing in the field can access thisinformation from anywhere, atany time, via thecloud,”he said.
He also noted at the recentMicrosoft World Wide PartnersConference in Los Angeles, it had
been made clear during discus-sions the insurance industry wascurrently facing a number of keychallenges, including the need tomanage and maintain cumber-some legacy systems in the face oftightbudgetconstraintsandadif-ficultmarket.
Microsoft isalreadymakingsig-nificant investments in its cloudinfrastructure and offerings as itseeks to help insurers “modernisetheir core systems, improve theirbusiness intelligence and stream-line their customer relationshipmanagementcapabilities”.
Stavrou saidNorthdoor had itsownplansunderwaytocertifyanddeploy its N-DEX Suite, a func-tionally-rich insurance adminis-tration system, based on theMicrosoftAzurecloudplatform.
“It’s inevitable that many tra-ditional IT systems will bereplaced by internet-based appli-cations, which means the popu-larity of cloud-based systems willcontinue to soar,”heconcluded.
“For insurers willing toembrace this change, the benefitsof cloud computing are not onlycompelling, but will actually bean essential ingredient for com-petingonaglobal scale.”• The future of cloud computingis one of the issues on the agendaat this year’s Insurance Technol-ogy Congress, which will takeplaceoverOctober11and12.
For more information on thistwo-day event, which is hosted byInsurance Day and ACORD, visitwww.ITC2011.com.
Alternatively, call +44 (0)2070177622.
Solutionsproviderclaimsconceptoffers freedomandflexibility,GREGDOBIE reports
Cloudcomputing: nomatterwhereyouare, youcanplug into ‘thecloud’toaccessyourdata, your stored files
orapplications, fromanydevice
‘For insurerswilling toembrace this change,thebenefits of cloudcomputingarenot onlycompelling, butwillactuallybeanessentialingredient for competingonaglobal scale’
RobStavrouNorthdoor
THURSDAY 1 SEPTEMBER 2011 INSURANCE DAY 3
NEWS
Omega financials, first half 2011 ($m)Sixmonthsended
Jun30, 2011Sixmonthsended
Jun30, 2010YearendedDec31, 2010
Grosswrittenpremiums 206.5 244.1 356.1
Net earnedpremiums 136.6 105.6 247.4
Groupcombined ratio 133.2% 128.3% 114.4%
Investment return 0.73% 1.44% 1.94%
Lossbefore tax (49.1) (34.2) (42.9)
Return onequity (12.4%) (6.9%) (9.5%)
Dividendper share – 6¢ 6¢
Net tangible assets 332.2 401.7 374.8
Net tangible assets per share $1.36 $1.65 $0.98
Source:Omega financial results
R&Qmoves into yachtsector with URSL deal
Omega future still uncertain asquestions remain about price
Electric vehicles offer product guarantee business
OMEGA is starting to win somerecognition for itsmanagement’sefforts to reduce volatility, but asit closes in on a takeover deal,further questions are being askedabout how much a potentialacquirer shouldpay.
Omega,whichisheadquarteredin Bermuda, reported a pre-taxloss for the first half of $49.1m,a deterioration on a loss one yearagoof$34.2m.
Driving this deterioration wasa catastrophe claims bill of$51.3m and, while that had a dis-appointing impact on the bottomline, Omega’s work on reducingits catastrophe exposure andimproving its own reinsuranceprotection ensured its tangiblebook value (TBV) suffered only tothe tune of 10%,which comparedfavourablywith itsLloyd’speers.
Still, amid further speculationformer Flagstone chairmanMarkByrne ismullingover a bid for thegroupandOmega’sacknowledge-ment it “remains in discussionswith third parties regardingpotential corporate activity, withthe aim to conclude the process
shortly”, Joy Ferneyhough,EspíritoSanto InvestmentBank’sinsuranceanalyst,posedtheques-tion: “What do you pay for a busi-ness that ismakingnomoney?”
She said Omega’s TBV standsat around 85p ($1.39) and,excluding catastrophes and one-off losses, the underlying returnonequitywas around0.8%.Fern-eyhough suggested a comparisonwith ongoing and recently com-pletedtransactions forbusinesseswith much stronger returns
on equity (RoE) that clusteredaround theone timesTBVmark.
The increasingly bitter Trans-atlantic takeover saga is beingfought over a price equivalent toeven less than that, she said.
“At 0.7 times TBV, the pricereflects the poor underlying per-formance andone could argue fora greater discount on a stan-dalonebasis,”Ferneyhoughsaid.
“Withotherassetshavingbeensold or in the process of sellingat more conservative multiples
versus RoE, we struggle to seehowabidpriceof close toTBVcanbe justified.”
By mid-afternoon yesterday,Omega’s share price had risennearly 10% to 67p – largely theresult of renewed talk of a Byrneapproach–orcloser to0.8ofTBV.
But Ferneyhough did strikeone positive note, saying: “It isnot all doomandgloom;manage-ment hasmade definite strides toreduce volatility and cat expo-sure, as evidenced by an ‘in the
pack’ number of losses versuspeers in the firsthalf.
“Expenses also appear to beimproving as managementfocuses on improving efficienciesof IT, modelling and back office.However the underlying deterio-ration inperformance is concern-ingand,givencapital constraints,we continue to see merger andacquisitionasthemost likelyend-gamehere.”
Omega’s strategy to reduce itsvolatility has seen it cut back itsgross premiums written acrosstwoof its platforms.
Its syndicate exited marineenergy and retrocessional busi-ness, contributing to a $12.9mreduction in grosswritten premi-ums fromtheLloyd’soperation.
Bermuda-based Omega Spe-cialty third-party premium vol-ume was also down dramaticallyto$28.9mfromlastyear’s$56.5m,again reflecting the impact ofpreviously announced exits fromthe retrocessional account andthe significant reduction of mid-year catastropherenewals.
And Omega revealed it doesnot plan significant further writ-ings in Bermuda this year, whichit saidwould“allowmoreefficientuseof capital”.
Richard Banks
THE NEXT phase of the expan-sion of Randall & Quilter (R&Q)into live underwriting hasbecome clear as the group final-ises its takeover of the yachtand marine trade portfolio ofTalbot Underwriting-ownedMGAUnderwriting Risk Services Ltd(URSL),writesRichardBanks.
URSLmanagingdirector,NickHales, has already resigned hispost to become chief executive ofR&Q MGA Ltd. Hales will bejoined by Paul Miller, who willunderwrite a yacht and marine
trades account through a dedi-cated managing general agent(MGA),R&QMarineServicesLtd.
A further team of specialistmarine personnel is expected tojoin induecourse.
All other lines of business willremain with URSL and Talbot’ssyndicate1183 is expected to con-tinue to support the yacht andmarine trade business throughbindingauthority agreements.
R&Q has been expanding itsportfolio of operations outside itstraditional run-off specialism
recently, in particular targetingthe turnkey and binding author-ity arenas.
It is providing the manage-ment services for the Skuldturnkey Lloyd’s syndicate and inNovember last year, launched twoMGAs: R&Q Commercial RiskServices Ltd, backed by a Euro-pean insurer; and R&Q RiskServices Canada Ltd, supportedby threeLloyd’s syndicates.
It also operates R&Q JustUnderwriting Group Ltd, whichtradesasJustMotorsportandpro-
vides a range of insurance cover-age to themotor sports sector.
Robin McCoy, chief executive
of R&Q’s underwriting manage-ment division, described thislatest move as “an exciting devel-
opment of our live operations anda significant extension of R&Q’sMGAbusiness”.
THE GROWING popularity ofelectric vehicles has presentedinsurers with an opportunity totake the initiative and providemanufacturerswithperformance-related guarantees, a move thatwill alsohelp facilitate thegrowthof thisgreen industry.
Product guarantee covers areincreasingly growing in promi-nence in the renewable energy
insurance industry, an area inwhich Munich Re continues toplaya leadingrole.
The battery in an electricvehicle can oftenmake up half itsvalue and, as a result, is expensiveto replace. But there is littleknowledge about the lifespan andreliability ofmanyof thesebatter-iesas, inthevastmajorityofcases,theyare less than five yearsold.
Jan-Olaf Willums, chairmanof InSpire Invest, explained hiscompany had been workingalongside the French govern-ment to establish the lifecycles
of various electric vehicle batter-ies while taking into accountvariouselements, suchas thetypeand frequency of use, weatherconditions in which it is kept andhowit ismade.
And Willums said it waspossible the insurance industrycould offer guarantees to batterymanufacturers or owners in asimilar way to those provided tosolarphotovoltaicmanufacturersandoperators.
But creating such coverageswould not be without difficulties,as Egil Mollestad, also of InSpire
Invest, explained: “To establishmodels and really predict batterylife, we need to study and knowhow it’s used, what sort of condi-tions it’s kept in [and] what’sinside it. There are a lot of para-meters involved.”
It is not only in this area of bat-tery guarantees where insurerscould play a role, however. JamieBisker, global non-life insurancesegment manager for IBM’s glo-bal insurance team, suggested anew business will be created inthe coming years that will helpto extend the range of electric
vehicles considerably beyondtheir current capabilities – andthe insurance industry can playits part in this too.
Bisker predicted the electricvehicle industry will soon have arescue service, whereby driversunable to complete their journeybecause they have run out ofpowerwillbeabletocallanumberand a replacement or chargerwillbe delivered to assist them. Thiswould present risk-managementcompanieswithanopportunity toanalyse the reliability of electricvehiclebatteries,he said.
try. “Whenever we read some-thing about insurance, it’s alwaysnegative,”hecommented.
Tocorrectthis image,Hesssaidthe industry must open itself toregulation,aswellas tothepublic.
“We have to be more open[and] more transparent aboutwhat we are doing and how theproducts work. Also, we have tomake sure we are acting ethicallyand really listening to our cus-tomers. It’s not just a money-making machine – we have aresponsibility toourcustomers.”
Ole Hesselager, chief riskofficer within Tryg’s group riskand investment department, saidthe industryhas to stick towhat itknows and be completely openwith its clients.
According to Hesselager, theway the insurance industry canregain the trust of its customers isbydoingthebestpossiblejobitcan.
“Wehavebeendoingthis intheNordic region this summer,” heexplained, adding: “Because ofthecloudbursts, a lotof thepublichas become aware [of insuranceand insurers]. It’s important weare doing the right things. Not inthemarketingdepartment,not inthe lobbying to the politicians –justdoingour job.”
Hess urgesindustry tocourt publicContinued fromp1
Christopher Munro,Oslo
NissanLeaf: electric vehiclespresent freshopportunities
THURSDAY 1 SEPTEMBER 2011
NEWS
4 INSURANCE DAY
LEGAL NOTICE
French life sector continues to contractwith July figures showing 16% reduction
Guaranteed rateof interest nownot sustainable
LIFE insurers have been warnedthey must stop offering productswith guarantees if they are toavoid suffering a slow and painfuldeath, with companies urged tolookat the fundamentalaspectsoftheir coverage instead.
Reduced interest rates andfalling investment returns haveleft many life insurers with con-siderably lower levels of incomethan expected, yet at the samepaying out on policies that guar-antee holders a certain level ofpayment. As such, insurers arefacing increasingly large deficitsas interest rates and investmentreturns remain low.
Ann Sommer, chief executiveof insurer Länsförsäkringar (LF),said: “We have to concentrate onthe core of the business – the realdeal of insurance. Traditional lifeproducts are dead. Life compa-nieswithguaranteeswill go intoaslowdeath.”
Consequently, insurers mustinnovate and come up with newcovers or start offering productsthat do not contain these guaran-tees, Sommer said, otherwisethere is an increasing likelihoodcompanieswill fail.
Thomas Hess, Swiss Re’s chiefeconomist and head of economicresearch and consulting at thecompany, said such failures havebeen seen before, with consider-ably lower levels of interest thanthe guarantees they had offeredpolicyholders.
“We saw it in Japan and a few
important companies went out ofthe market,” Hess said, althoughhe believes the situation is not asbleak inEurope, with the interestrate drop not as severe as it was intheLandof theRisingSun.
The reason European insurerswill not encounter such difficul-ties is because the majority ofcontinental insurers were offer-ing guarantees of around 2%,while their counterparts in Japanwereofferingguaranteescloser to7%or8%.
“Whenyouguaranteeareturn,of course you have to meet thatreturn…You canmeet that guar-anteewhenyouhaveassetswhichhave the same duration as yourpromise [and] when the interestrate is higher than the one youguarantee,”Hess explained.
However, problemsarisewheninsurers guarantee a high inter-est rate (as has happened in thepast) and there is a sharp drop ininterest rates, which can becaused by low inflation or a pooreconomic environment, both ofwhichcanbe seen today.
ButwhileHess doesnot expectinflation to rise over the next twoyears, it will once again start toimprove after this period. How-ever, he said life insurers offeringguarantees can expect to sufferproblems in the short term.
The introduction of SolvencyII will also have an impact, withcompanies incentivised to moveaway from what are consideredthemore risky investments, suchas equities and corporate bonds –and into the more conservativegovernment bonds, meaningreturns are even further removedfromtheguaranteesoffered.
FRANCE’S life insurance marketaccelerateditscontractioninJuly,posting its eighth consecutivemonthofdecline.
Gross inflows were down 16%year on year for July, following an8%decrease in June,bringing the
year-to-date decline to 12%, witha total of €80.6bn ($116.35bn) ininflowsover sevenmonths.
The contraction is mainly theresult of a decrease in inflows toguaranteed euro-linked policies,down 13% this year to €68bn.Inflows into riskier unit-linkedproducts fell only1%to€12.6bn.
Insurers have attributed thecontinued contraction to various
factors, including uncertaintiesregarding the future of life insur-ance’s favourable tax regime.
However, life policies weresparedintheFrenchgovernment’sdeficit-reductionplanannouncedlastweek.While theplan includesa sharp increase in the taxationof health insurance contracts(Insuranceday.com, Aug 26), itcontains no specific measure
aimedat life and savingspolicies.Life policyholders will see a
small increase in social securitycontributionsleviedontheirgains,but this will apply to all savingsand investmentproducts.
In June, the French Federa-tion of Insurance Companies saidit had revised down its life inflowsestimate for the full year to a 2%to6%decline.
Fabien Buliard, Paris
Christopher Munro,Oslo
Sommer: ‘Life companieswithguaranteeswill go intoaslowdeath’
THURSDAY 1 SEPTEMBER 2011 INSURANCE DAY 5
Global Marketsincorporating Alternative Insurance Capital, The ReReport and World Insurance Report
Insurance Day
Battle adds pace to slowyear in reinsurance sectorWHATEVER the outcome, the battle forTransatlantic Re has injected somepace into what has been a slow year sofar for reinsurance mergers andacquisitions. To follow is a list of themostimportant developments during Augustfor the international insurance and re-insurancemarket.
Mergers, acquisitions,disposalsandbids
Acumen has acquired Great AllianceInsuranceLtd (GAIL), aBermudian cap-tive insurer writing non-life businessbefore it enteredrun-off in2002.Acumenwas set up as a run-off and outsourcingcompany inBermuda in2006.
AIG has raised $2.16bn from the saleof Taiwanese insurer Nan Shan Life toRuen Chen Investment Holding andapplied the proceeds to reduce to $9.3bnthe remaining liquidation preference ofpreferred interests the USDepartment ofTreasuryholds inAIAAurora.RuenChenisowned80%byRuentexGroupand20%byPouChenCorp.
Argo has agreed to take an investmentin SureTec Financial, parent company ofa firmprovidingcontractandcommercialsurety bonds. SureTec Insurance Co,foundedin1998, isthe20th-largestwriterof surety business in the US. Argo saidSureTec’s focus on contractor perform-ance bonds and low-limit commercialsuretybusinesswasa logical complementto itsownUSsuretyoperation.
Catalina Holdings, a Bermudian run-off group, has agreed to acquireResiden-tial Loss Control Holdings (RLCH),ownerof tworisk-retentioncompanies inrun-off. National Home Insurance Co,based in Colorado, and ResidentialInsurance Co, based in Hawaii, wrotehome warranty business until theyentered run-off inAugust last year.RLCHis currently majority-owned by BreraCapital Partners. The company had totalassets of $168.4m, gross technicalreserves of $113.7m and net assets of$19.4mat June 30 this year. Catalina saidthe purchase price was at a discount tonet asset value. The transaction isexpected toclose in the fourthquarter.
Cinven, a European buyout company,has agreed to acquireUKgroupGuardianFinancial Services from Dutch parentcompany Aegon for £275m ($447.9) incash. Guardian’s three trading compa-nies, managing 300,000 life insurancepolicies intheUK,havebeeninrun-off forthe past 10 years. Aegon Asset Manage-menthas entered into a long-term agree-ment with Cinven and will continue tomanage Guardian’s assets of £7.4bn. Thetransaction is expected to close in thefourthquarter.
Aegon’s chief financial officer, JanNooitgedagt, said the group remainedcommitted to the UKmarket in the formof workplace savings and retirementproducts. This will be Cinven’s entry intotheclosed lifemarketand it said it aims tobea leadingclosed life consolidator.
Hannover Re has bought a majoritystake in Integra Insurance Solutions, amanaging general agency subsidiary ofUK church insurer Congregational &General Insurance (CGI). The agencywill continue tobemanaged and servicedby CGI. Integra started trading in Maylast year and has a plan to gain £100mfrom the UK intermediary home marketin thenext five years.
INGhasagreed toa€2.68bn ($3.86bn)sale of its Latin American pensions, lifeinsurance and investment managementoperations to Colombian financial com-pany Grupo de Inversiones Surameri-cana. The sale will be the first major stepin the divestment of ING’s insurance andinvestmentmanagementactivities.
Included in the sale are themandatoryand voluntary savings business in Chile,Colombia, Mexico, Uruguay and ING’s80% stake in AFP Integra in Peru; andthe life insurancebusinesses inChile andPeru, including ING’s 33.7% stake inInVita Seguros de Vida in Peru. Thetransaction includes the local invest-mentmanagementcapabilities inthe fivecountries. Last year, the businesses pro-duced net profit of €192m from revenuesof about€670monan IFRSbasis.
ING expects to take a net gain of about€1bnon the sale. Not included in the dealare ING’s 36% interest in Brazilianinsurer Sul America SA, which INGintends to sell separately, and the com-mercial banking activities in Mexico,Brazil andArgentina.
Insurance Australia Group (IAG)
expects to pay the equivalent of A$100m($106.7m)totakea20%strategic interestin Chinese non-life insurance groupBohai Property, based in Tianjin in thecountry’snorth-east.Bohaiactsmainlyasa motor insurer, selling directly to cus-tomers through provincial and citybranches, as well as a network of agents.The company has built up its accountsince establishment in 2005 and writespremium incomeofmore thanA$200mayear. Its major shareholders are state-ownedenterprises inTianjin.
Under the agreement, IAG will haveboard representation and will take seniormanagement roles in key technical areas.The transaction should close early nextyear. IAG’s managing director and chiefexecutive, Mike Wilkins, said with theBohai investment, the Australian groupwouldhaveafootholdinthetwomostpop-ulous Asian countries, India and China.IAGalreadyhasbusinessesinMalaysiaandChina. By 2016, Asia should represent10%ofIAG’sgrosspremiumincome.
Montpelier has acquired the renewalrightstothepropertycatastrophereinsur-ance book ofTorus for undisclosed terms.Under the agreement between the twoparties,Toruswillprovidesidecarcapacityto Montpelier from January 1 next year.Clive Tobin, chief executive of Torus, saidthegroupplanned furtherexpansion in itsprimary insurance operations – and its“modestambitions fornichereinsurance”were better served through the disposalandsidecararrangement.
National Group Insurance Co of Flor-
idahasbeenordered into receivership forthepurposeof rehabilitation.TheFloridaDepartment of Financial Services is thecourt-appointed receiver of the insurer.National Group, based in Coral Gables,was setup in2004andwrotemainlycom-mercial property andmotor insurance.
Nipponkoa is to acquire 100% controlof Dutch underwriting agency NateusNederland fromexisting ownerEthias inwhat is believed to be the first takeover ofan insurance operation in the Nether-lands by a Japanese company. The dealshould close by the end of September.Nipponkoa already uses Nateus for theagency duties of the Japanese insurer’sDutch branch but following acquisitionNipponkoa Insurance Co (Europe) willstart to underwrite the insurance con-tracts that Nateus handles, marking itsentry into the Dutchmarket. Nateus hada premium income of about €31.7m lastyear, derived mainly from fire, marine,constructionandmachinery insurance.
Thus far, Nipponkoa’s strategy forforeign non-life business has been totarget Japanese companies that operateinternationally, but the groupnowplansto develop its international accountthrough takeovers and has set up a unitto pursue international acquisitions.
Penn Millers Holding has appointedWillis Capital Markets & Advisory toreview strategic alternatives. The USinsurance group said although it has“high-quality franchises,well-establishedagency relationships and state-of-the-artloss control and claim services in agri-
business and other specialty niches, itscost structure has historically been chal-lenged by a relative lack of scale”. Thegroup, active in 34 US states, produced anet loss of $2.5m from net premiums of$29.8mfor the first sixmonthsof theyear.Shareholders’ funds totalled $91.7m atJune30.
Scorhascompletedthetakeoverof lifereinsurance provider Transamerica Refrom previous owner Aegon for a totalcost of $912.5m, including a statutoryequity of $497m for Transamerica’s Irishentity. Aegon has transferred to Scor€1.2bn of assets in cash and securitiesandcorresponding liabilities.
The acquired book produced a grosspremium income last year of $2.2bn,with 87% sourced from the US market,and represents a 50% increase for Scor’slife reinsurance activities. The Trans-america Re operation for the Americashas been combined into a single unit,Scor Global Life Americas, managedby Paul Rutledge, previously presidentof Transamerica Re. Elsewhere, Trans-america Re teams will join their localScorGlobalLife teams.
Aegonhasretainedthevariable-annuityguarantee business and someother Trans-americaReaccounts.
Scottish Re has completed itsmergerwith a new subsidiary of its controllingshareholders SRGL (an affiliate of Cer-berusCapitalManagement) andaffiliatesofMassachusettsMutual Life Insurance
Dutch groups ING and Aegon continuedto restructure their operationswith thedisposalof internationalunits lastmonth.Meanwhile, the tusslegoeson forcontrolof Transatlantic,GRAHAMVILLAGEsays
Continuedonp6
AegonAssetManagementhasagreedwithCinven tomanageGuardianFinancialServices’assets; thegroupsays it remainscommitted to theUKmarket
THURSDAY 1 SEPTEMBER 2011
ID GLOBAL MARKETS
6 INSURANCE DAY
Co. Scottish Re recorded a net loss of$158.9mfor the firsthalf of theyear.
Tokio Marine Holdings has agreed topay $165m in cash to acquire the 50% ofFirst Insurance Co of Hawaii it does notalready own from CNA subsidiary Conti-nental Insurance. Following the acquisi-tion, First Insurance will be a 100%subsidiary of Tokio Marine & NichidoFire Insurance Co. First Insurance is theoldest and second-largest non-lifeinsurer in Hawaii. It has had a businesspartnership with Tokio Marine since1974. Last year, the Hawaiian companyproduced a net profit of $32.4m fromnetpremiumsof$135.4m.
TokioMarineplans to expand its inter-national position through organicgrowth as well as acquisition. It boughtPhiladelphia Insurance in December2008 and in May this year set up TokioMarine North America to manage all itsbusiness entities in theUS.
Transatlantic shareholder DavisSelected Advisers has issued a regulatoryfilingtosayitwillopposetheplannedcom-bination of the reinsurance group withBermuda’sAlliedWorld.Davisholdsabout24% of Transatlantic, although its votingrightsare lowerthanthisproportion.
The investor did not comment on themerit of the rival bid by Validus. Thatcompany has sent copies of its statementopposing the Transatlantic-Allied Worldmerger to all Transatlantic shareholdersofrecord.BerkshireHathawaychairman,Warren Buffett, indicated his group’soffer forTransatlantichadexpired.
ViennaInsuranceGrouphasagreedtotake amajority stake inAlbaniannon-lifeinsurer Intersig, a move it expects willmake it the second-largest insurer in thecountry and the largest motor insurer.Intersig is currently the sixth-largestAlbanian non-life company with a pre-mium income of €5.3m and a marketshare of about 9% last year. About 90%ofIntersig’s distribution is through its ownsales force.
Vienna entered the Albanian marketin 2007 with the acquisition of Sigmaand extended its position last year withthe takeover of Interalbanian. The Inter-sig purchase should increase Vienna’sannual premium income to about €20mand itsmarket share to30%.
WRM America Holdings has reacheddefinitive agreement to acquire theflood insurance business of FidelityNational Inc for $210m, of which about$122.5m will be in cash. FidelityNational Indemnity Insurance Co(FNII) will operate as a wholly-ownedsubsidiaryofWRMAmericaandwill con-tinue to be led by Patty Templeton-JonesandMichael Sloane.
WRM said FNII was the largest pro-vider of federal flood insurance in the USthrough the National Flood InsuranceProgram, taking a 17% share of the“write your own” market. The businessand its 220 employees will remain basedinStPetersburg,Florida.
WRMAmerica is a specialty lines non-life insurance and risk-managementgroup operating through various com-panies including Wright Risk Manage-ment and the New York MunicipalInsurance Reciprocal. Its lead share-holder is Aquiline Capital Partners, ledby JeffGreenberg.
ExpansionsandnewunitsAlMadinaInsurance, based inOman,hasreceived regulatory approval to operateas a takaful company, believed to be thefirst company to gain this status. Thelocal Capital Market Authority has alsogranted the company’s request to trans-form itself into a public limited company
and raise additional capital through aninitial public offering. Al Madina intendsto set up a sharia board to supervise taka-ful activities.
Alterra Europe, based in Dublin, hassetupanewfacility towriteexcess liabilityinsurance from its recently-licensedbranch in London. The group hasrecruited Paul Bland as vice-president ofcasualty insurance operations at thebranch, charged with writing a highexcess, diversified general liability portfo-lioofUSandinternationalbusiness.BlandwaspreviouslywithCatlinatLloyd’s.
Argo Surety has established a pres-ence in the Chicago area, recruiting DanCarlson as vice-president for the northcentral and western US regions. Carlsonwas most recently with Zurich Surety.Argo Surety now offers up to $50m inaggregate surety bond capacity for quali-fyingclients.
CatVest Petroleum Services is a newcompany set up to facilitate the securiti-sation of oil spill liability. Managers TimReilly and Jake Walker said institutionalinvestors interested in risk securitisationwould be willing to take much largeramounts of oil spill risk than had previ-ously been seen in insurance-linkedsecurities (ILS) transaction. CatVest saidit has created the first oil spill riskmodel,enabling customers to remove much ofthe uncertainty surrounding their risk.ILS structureswould include parametrictriggers such as spill source, size andtype, location, inventory, vulnerabilityandhazard.
CignahasopenedCignaHayatSigortain Istanbul to offer supplemental health
care and financial protection to custom-ers in Turkey. The products and serviceswill be marketed through affinity part-ners and direct channels, such as theinternet anddirect response television.
Hartford has re-entered the struc-tured settlement annuity market, pro-viding tax-free payments to people whoreceive settlements related to a workers’compensation or personal injury claim.The insurer also offers medical under-writing for structured settlement. Prod-ucts are issued by Hartford LifeInsuranceCo.
Ironshorehas launchedacommercialcrimeunitwithin its financial lines oper-ations at Pembroke syndicate 4000. TheLloyd’s syndicate’s commercial crimepolicy will cover insureds for losses fromboth internal and external threats. Iron-shore has appointed Sarah Markhamdirectorof thenewunit.
Kane Group has set up Kane (Ver-mont) SCC as a segregated cell companyin the state of Vermont. The new spon-sored captive is owned and managed byKane (USA). This isKane’s first cell com-pany in the US, although it already hascell structures in Guernsey, Bermudaand theCaymanIslands.
Mitsui Sumitomo and PT AsuransiJiwa Sinarmas (Sinarmas Life) havereceived regulatory approval from theIndonesian authorities to launch a jointcompany, PT Asuransi Jiwa SinarmasMSAG, as part of the two groups’ strate-gic alliance. The Japanese company hasalready paid ¥67.2bn ($877.2m) to sub-scribe to new shares of Sinarmas Life,becominga50%shareholder.
Sinarmas Life has shown a growthrate of 20% a year, selling endowmentsand other saving products to high-net-worth customers, mainly through banc-assurance channels. Mitsui Sumitomosaid it expected growth would be morethan 30% a year from now on. The busi-ness will sell life insurance to existingnon-life customersofPTAsuransiMSIGIndonesia, Mitsui Sumitomo’s non-lifesubsidiary and the sixth-largest companyin the Indonesianmarket.
Swiss Re has applied for local rein-surer status in Brazil. The group hasserved theBrazilianmarket since1924; itopenedanoffice inSãoPaulo in1996.
Talanx, the German financial servicesgroup, has entered into a strategic part-nership for the Vietnamese market withPVI Holdings, previously known asPetrovietnam Insurance. Under theagreement, Talanx’s subsidiary HDI-Gerling Industrie will acquire a 25%stake of the enlarged share capital of PVIand will become the Vietnamese com-pany’s foreign strategic insurance part-ner. The companies will join forces intheir respective insurance businesses,supported by Hannover Re, anotherTalanx subsidiary.
Talanxwill pay about $93m to take theshareholding, which will enhance PVI’sfinancial strength.
PVI claims to be the largest non-lifeand industrial insurer in Vietnam, with amarket share of 24%. Its gross premiumstotalled $183m last year. The companyhas a staff of 1,370 operating from 25branches in Vietnam. Its parent com-pany,Petrovietnam, is thecountry’s larg-
est company, accounting for 25% ofVietnam’sgrossdomesticproduct.
Universal Insurance Holdings hasreceived regulatory approval to writehomeowners’ business in the state ofFlorida. Universal is based in Florida,where it is one of the largest homeown-ers’ insurers and also has licences tooperate in Hawaii, North Carolina andSouthCarolina.
Othercorporatedevelopments(namechanges, redomestications)Allianz has received regulatory approvalto combine three Russian companies,CJSC Allianz Russia,OJSC IC ProgressGarant and OJSC IC Rosno. The groupsaid the intention was to create a highly-profitable company supported by thecapital of Allianz SE. Russia is a growthmarket for Allianz and provided non-lifegross premiums of €402m for the firsthalf of the year, up from €362m for thesame period of 2010. For life business,Russia brought statutory premiums of€24m and earned premiums of €22m forthe2011period.
Axa Commercial Lines in the UK hasoutlined its strategy up to 2015, aimingto increase revenue to £1.2bn and pro-duceacombined ratioof 95%.Theopera-tion will continue to focus on small andmedium-sized enterprise business, withsimple cover provided electronically andmore complex insurance underwrittenmanually through branches. The opera-tion intends to launch 10 e-commerceproductsby theendofnext year.
Bermuda’s financial regulator said 31insurance companies had gained regis-tration this year, to themiddle of August,compared with 36 for the whole of lastyear. The 2011 total includes 12 specialpurpose insurers, such as EmbarcaderoRe, set up to securitise risk ceded by theCaliforniaEarthquakeAuthority.
Lancashire plans tomove its tax resi-dence from Bermuda to the UK, sayingits decision was influenced by proposalsfor the reform of the UK’s ControlledForeign Companies (CFC) rules. Share-holders have approved a preliminarymeasure that will allow Lancashire toconduct board and shareholder busi-ness in the UK. Lancashire said itexpects to meet the conditions for thetemporary period exemption from theUK’sCFC rules, introduced as part of theFinance Act 2011. The insurance groupisnot required tomove its placeof incor-poration and plans to remain domiciledinBermuda.
Old Republic International warned itmayhave toplace itsmortgageguaranteeinsurance operations into run-off if itfails to gain approval fromregulators andits two major policyholders to set up anewly-capitalised company to write newbusiness. The company’smainmortgageguarantee insurance carrier has beenoperating under waiver of minimumstate regulatory capital requirementssince December 2009. Old Republic’smortgageguaranteeoperationsrecordeda pre-tax loss of $277m from revenue of$259.5mfor the first sixmonthsof2011.
Talanx has reorganised responsibili-ties in its German retail division and setup Talanx Deutschland Bancassuranceas an intermediate company to bringtogether the bancassurance activities oftheNeueLeben,TargoandPBinsurers.
Unitrin officially changed its name toKemper on August 25. Unitrin boughtthe Kemper personal lines account in2002 and this segment is currently thegroup’s largest business unit, producingjust under $1bn of earned premiums lastyear. Formarketingpurposes, this unit isnow known as Kemper Preferred. Thegroup’s total earned premiumsamounted to$2.2bn in2010.
Continued fromp5Vienna InsuranceGroup’smajority stake in
Albaniannon-life insurer Intersig is expectedtomake it thesecond-largest insurer in the
countryand the largestmotor insurer
THURSDAY 1 SEPTEMBER 2011 INSURANCE DAY 7
ID GLOBAL MARKETS
World Loss LogPropertyandbusinessinterruptionAug12,explosionTurkey: an explosion closed the Iran-Turkey gas pipeline, according to a state-mentby theTurkishenergyministry.Theexplosion, suspected to have been theresult of sabotage, occurred in the east-ernprovinceofAgri, causinga fire.Kurd-ish separatist group the PKK, whichclaimed responsibility for previousexplosions, was known to have beenactive in the region. Repairs to the linewere expected to take a week. In themeantime, Turkey’s other gas suppliersincreased supply to prevent shortages.Theministry said itmay takeup to aweekbefore the linewas inoperationagain.Aug12, strikeAustralia: stevedores prepared to go onstrike at the Patrick Western Port termi-nal in Victoria. Maritime Union of Aus-tralia (MUA) sources confirmed separatestoppages would begin later in the day.The strikewas part of action by the unionhoping to secure a new deal for steve-dores employed by Patrick. TheMUA saidthe strike was over local shifts andarrangements. The MUA’s negotiatingteamwas tomeetPatrick towards theendof the month. The strike was expectedto affect loading and unloading of IronMonarch, which ferries steel betweenWesternPort andPortKembla.Aug15,pipeline leakUS: a leak in the natural gas liquids pipe-line operated by Enterprise ProductsPartners spilled fuel into the MissouriRiver in Iowa, the company said. The spillwas on the Iowa side of theConwayNorthline inMonona County and the companywas recovering products from the pipe-line,whichwas shutdown.Aug17,unidentifiedspillUS: the Coast Guard, District of Colum-bia Fire Department (DCFD), DistrictDepartment of the Environment andMaryland Department of the Environ-ment worked together to investigatereports of a spill in the Anacostia River. ACoast Guard MH-65 Dolphin helicoptercrew fromCoastGuardAirStationAtlan-tic City and a Coast Guard investigationteamwere dispatched to survey the area.No hazardous material had been sightedso far.TheDCFDnotifiedtheCoastGuardof a sheen in the Anacostia River twodays earlier. The Coast Guard arrived toinvestigate, but could not make anassessment, due to low visibility. Vesseltraffic in the river was reopened. Thesource and nature of the reported spillhadnotbeen identified.
Liability, awardsandsettlementsAug17, sinking, investigationPhilippines: the Phillipine Coast Guard(PCG) let fully-cellular containershipHSPuccini leave Makar Wharf for DavaoPort, despite its ongoing investigationinto the sinking ofBulkCarrier 1when itcame in contact with HS Puccini inSaranganiStraitonAugust9. Initial find-ings suggest human error could havecaused the collision. The PCG also notedit was possible officers did not follow therules of navigating at sea. The PCG said itallowed the HS Puccini to leave MakarWharf after it complied with severalrequirements set by the agency. The PCGsaidnocaseshadyetbeenfiledagainst thevessel and its crew and added since the
Special Board of Marine Inquiry wasbeingheld inDavaoCity, itwouldbemoreconvenient for the board if the vessel wasdetained in Davao Port. The vessel wouldremain in Davao Port during the courseof the investigation and until all mattersrelating to the incidentwere resolved.Aug20, ferryoperator suspendedPhilippines: the authorities suspendedCebu-based ferryoperator IslandExpressShipping after a fatal accident. TheMari-time Industry Authority suspended theoperations of the remaining six vesselsowned by Island Express after a ferry car-rying65passengers caught fire and sank,killing two passengers and one crew. Thecompany was not available for commentabout the incident or the suspension ofits fleetof roll-on/roll-off vessels.
MarineAug12,NorthSeaoil platform,oil spillUK: Royal Dutch Shell struggled to con-tain an ongoing spill at one of its NorthSea oil platforms. The leak was foundnear theGannettAlphaplatform,180kmfromAberdeen. The company reported ithad sent a clean-up vessel to the locationand had an aircraft monitoring the sur-face. The leak was found in a flow lineconnecting an oil well to the platform. Aspokesperson for UK Department ofEnergy andClimate Change (DECC) saidit was aware of the incident and was incontactwithShell. TheHealthandSafetyExecutive also confirmed itwasmonitor-ing the situation. However, two dayslater, an oil slick measuring 50 squaremiles was observed heading for the Brit-ish coastline. It appeared crude oil hadbeenspewing fromthepipeon the seabedat a depth of 300 ft, sparking fears of athreat tomarine life. Early estimates hadsuggested the leak would cause between12and120barrels of oil to escape into thesea, but the DECC, which was set to holdan official inquiry into the incident,stated it estimated several hundredtonnes of oil had escaped, which couldamount to thousands of barrels. The leakwas later estimatedat1,300barrels.Aug15,collision, fire, fatalitiesParaguay: chemical tanker Polaris I(3,128gt, built 1966) and tugCavalierVII(299 gt, built 1972) collided at PuertoVilleta on the Paraguay River. The acci-dentcausedPolaris I,whichcarried2,600litres of fuel, to catch fire. The crew ofCavalier VII jumped off the vessel andswamtoshore.Fourpeoplewerereportedmissing, including two crew of Polaris 1.According to Paraguayan Navy, the bowand the stern of the Polaris Iwere on fire,althoughno fuel leaked into theriver.Aug16, strandedvesselAustralia: livestock transport vessel AlMessilah (38,988gt, built 1980), en routefrom Adelaide to Kuwait with 67,000sheeponboard, experiencedengine trou-ble shortly after it left Adelaide a weekearlier. The vessel returned to Adelaidefor repairs, but the sheep remained onboard, leading the Royal Society for thePrevention of Cruelty to Animals toexpress concern for their wellfare.RSPCA Australia chief executive,Heather Neil, said the incident high-lighted the inherent risks in transportinganimals over such distances by sea. Thefederal Department of AgricultureFisheries and Forestry confirmed thesheep had remained on board since theship’s return to Adelaide, but said thebreakdown had not affected the ventila-
tion, feed and water systems. The RSPCAsaid leaving the sheep in limbo was com-pletely unacceptable, saying it under-stood the vessel to be one of the oldestvessels in the live export fleet, with ahistory of mechanical problems. Whenthe sheep were offloaded from the ship afewdays later, itwas foundsomehaddied,but three Australian vets who hadattended to the sheep said the ventilationand watering systems on the Kuwaiti-flaggedshipwerestilloperationalandthestandard of welfare for the animals wasextremelyhigh.Aug17, sinking, fatalityUK:aman’sbodywasrecovered followingthe sinking of tug Chieftain in the RiverThames. The body was found near Con-voy’sWharf,Deptford, southLondon, thePort of London Authority (PoLA) said.Two crewwere rescued after the tug sankoff Greenwich Pier five days earlier. A40-year-old crewmanwas reportedmiss-ing after falling into the water. The bodyhad yet to be formally identified. The tugwas towing a barge with a crane on itwhen it sank.Aug18, sinking, fatalitiesBangladesh: cargo vesselWising, boundforDhaka, sank after it came into contactwith product tankerRaidah (612 gt, built1987), proceeding from Chittagong onthe Meghna River. The master of the
sunken vessel reported four crew weremissing.Eightothercrewwere rescued.Aug18,groundingSweden: general cargo vessel with con-tainer capacity Alva (1,037 gt, built1968), enroute fromSczcecin toGothen-burg carrying a cargo of sodium silicate,ran aground north of Landskrona. Thevessel’s 63-year-old Latvian master waslater arrested. The ship failed to changecourse as it passed the island of Hven inthe northbound direction. When theSwedish Coast Guard boarded the ship,they smelt alcohol on the bridge and analcohol test confirmed the master hadbeen drinking. He was brought ashore,whereabloodsamplewas taken.Aug20,marinecasualty rates fallUK: better port state control and newertonnagemight have contributed to a sub-stantial fall inmarinecasualties inthefirsthalf of this year, analysis by InsuranceDay’s sister company Lloyd’s List Intelli-gence Casualty Service said. However,industry and insurance experts ques-tioned the extent to which such a trend,which might imply lower premiums, wasin place. Marine casualties, from minorscrapes tosinkings, fell18%to1,138com-pared with the same period a year previ-ously. That reduction was despite anestimated rise of 25% in global shippingmovementscapturedbyLloyd’sList Intel-
ligence over the period. An increase in thenumberof shipsbeingscrapped,drivenbya rise in scrap prices, contributed to areduction in average vessel age. Almosttwo-thirdsofthedropinmarinecasualtieswas attributable to the easternMediterra-nean, an accident-prone region com-monly viewed as a haven for poor-qualityvessels. Incidents theremore than halvedfrom 318 to 157, despite the region alsoseeinganincrease intraffic.
AviationAug13,birdstrike, emergency landingUS: an MD-83 jet operating as AmericanAirlinesFlight813, en route fromAustin,Texas, to Los Angeles, turned back toBergstrom International Airport shortlyafter take-off after itwashit by a bird. Theflight was about five miles south of theairport when the pilot issued an emer-gency call. The aircraft landed at the air-port’s east runway about three minuteslater. No injuries were reported. The pas-sengers disembarked from the aircraftand made alternate arrangements to getto their destinations. The Federal Avia-tion Administration reported the aircraftsustaineddamage to its left engine.
Continuedonp8
Shell’sGannettAlphaoil platform in theNorthSea: theoil leak froma flow linewas later estimatedat 1,300barrelsPHOTO VIA SHELL
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THURSDAY1SEPTEMBER2011
This information is supplied by
the world’s largest supplier of maritimeelectronic services. Part of Informa UK plc
Aug13,emergency landingPakistan: Pakistan International Airline(PIA) Flight PK386, en route fromMultanto Islamabad with 118 passengers onboard,startedshakinginmid-air,owingtobadweatherabout30minutes fromBena-zir Bhutto International Airport. It wasreportedthepilotmadeanannouncementaskingpassengers to fasten their seatbeltsas he lost control of the aircraft. However,the pilot succeeded in landing the aircraftsafely, after struggling for 15 minutes.Meanwhile, airport authorities declaredan emergency. The airline said at least 10passengers were injured; they were trans-ferred to the airport building and later tonearby hospitals for treatment because oftheircriticalcondition.Aug14, incidentTrinidad and Tobago: the Virgin Atlanticaircraft grounded at ANR RobinsonInternational Airport, following a mis-hap threedays earlier, finallydeparted forLondon. The Boeing 747-400 aircraft leftthe Tobago airport with passengers afterfive of its tyres, which were reportedlyblownoutduringamishap shortlybeforetake-off, were replaced. The aircraft hadbeen cleared by the Trinidad and TobagoCivil Aviation Authority and given clear-ance for take-off. The wheels of the air-craft rolled over several steel barriers,which caused the tyres to burst. The air-craft then got stuck in a section of thetaxiway that was not completely refur-bished. Virgin Atlantic did not release anofficial statement on the incident, but on
August 12, it sent replacement tyres forthe aircraft. There were 452 passengersand 16 crew on board at the time of theincident.No injurieswere reported.Aug14,emergency landingUS: USAirways Flight 749, en route fromMadrid to Charlotte with 192 passengersand nine crew on board, was forced toland at Boston after smoke was detectedin thecabin.However, the smokehaddis-sipated by the time the flight landed andnopassengers complainedof any compli-cations. However, four flight attendantswere taken to the hospital for evaluation.The aircraft was taken out of serviceas engineers tried to determine the causeof the smoke.Thepassengerswereputonanother flight toCharlotte.
SecurityAug13,pirateattackSaudiArabia:bulkcarrierCaravosHorizon(36,015gt,built1985),enroutetoJeddah,saw three skiffs being launched from apirate mothership half a nautical mileaway. The skiffs approached the vessel athigh speed. Caravos Horizon’s mastertook evasive action and contacted theauthorities for assistance. The pirategroup was able to place a ladder on thevessel and climb on board. The masterordered the crew to the citadel. A littlelater, a warship arrived at the scene andmarines boarded and searched the vesselbut found no pirates on board. Mean-while, the crew emerged from the citadeland another search of the vessel was
made with the marines. The engine andnavigational equipment were checkedand found in good order. Subsequently,the crew took command and continuedto Jeddah.Aug15,hijackedvessel recapturedIndia: the Indian Navy captured ahijacked general cargo vessel, Nafis 1(449 gt, built 1986), off theMumbai coastfollowing intelligence information itmightbecarryingarms,ammunitionandcontraband. The vessel was interceptedand all on board detained. Itwas not clearas to how many were pirates and whowere crew. Two AK-47 rifles and a pistolwere found in the empty fuel tank of thevessel. The vessel was located by a navalmaritime reconnaissance aircraft threedaysearlier in thehighseas, afterwhich itwas kept under continuous surveillance.INS Mysore, a guided missile destroyer,was then sent to intercept the hijackedvessel, along with two helicopters and 24marine commandos. The vessel wasintercepted approximately 170 nauticalmiles west of Mumbai. The vessel wastowed to Porbandar, where the people onboardwere tobehandedover to thepoliceofficials. The statements of those onboard revealed the vessel had departedfrom Chah Bahar in Iran and had trav-elled toanundisclosed location inJuly.
Continued fromp7
CaravosHorizon: thebulkcarrierwasattackedbypirate skiffs en route toJeddah
MINISTRY OF DEFENCE