International Newsbriefs

Roundup of Katrina Loss Estimates:
As the scope of the devastation wrought by Hurricane Katrina became increasingly evident, European and Bermuda-based insurers and reinsurers continued to calculate their potential exposures. Most, if not all, of the estimates are based on a percentage of the projected total insurance industry loss amount, which varies between $35 and $50 billion. The majority of the estimates used $40 billion as a basis. The carriers duly noted that they are thus subject to modification as more hard data emerges. The following is a rundown of the latest reports.

Following a review by all of its 44 managing agents, who operate its 62 active syndicates, Lloyd’s calculates potential overall losses at approximately 1.4 billion pounds ($2.54 billion). Swiss Re revised its earlier loss estimates upward by $700 million from $500 million to $1.2 billion. ACE Limited said the entire ACE Group of Companies expected losses of approximately $450 to $550 million after-tax. XL Capital indicated its losses would be approximately 1.75 percent of industry losses, which works out to approximately $700 million. Property specialist RenaissanceRe said its losses would be approximately 1 percent of the aggregate industry losses, putting them in the $400 million range. White Mountains Insurance Group expects total net losses on its insurance and reinsurance operations to be in a range of $150 to $300 million pretax, or $100 to $200 million after tax. PXRE Group updated its estimates to between $235 to $300 million net after tax, reinsurance recoveries, etc. AXA RE, the reinsurance division of France’s AXA Group, expects net losses of approximately $200 million before tax.

Platinum Underwriters based its estimate on 0.5 to 0.6 percent of the total industry losses, which indicates losses of between $200 and $270 million. Arch Capital Group said its third quarter operating earnings would be negatively impacted in the range of $110 to $160 million, after tax. Odyssey Re Holdings Corp., the reinsurance unit of Canada’s Fairfax, indicated that its net pre-tax losses would be $80 to $100 million with an after-tax net loss of $52 to $65 million. Aspen Insurance Holdings said its initial loss assessment is approximately $150 million. Max Re Capital estimated a $60 to $90 million impact on the company’s third quarter 2005 earnings. Kiln plc, a leading Lloyd’s insurer, put its losses at 80 to 100 million pounds ($147 to $184 million). It said, however that the equivalent loss to its shareholders would be considerably less–between 30 and 35 million pounds ($55 and $64 million). Endurance Specialty said net losses, after calculating reinsurance payments, reinstatement premiums, and tax benefits would be between $375 and $450 million. Everest Re calculated its exposure at approximately 1 percent of the total industry losses, putting the figure in the $400 million range. Transatlantic Holdings, in which AIG holds a 59.3 percent stake, said its preliminary estimate of the pre-tax cost, net of reinsurance would be around $270 million, or $176 million on an after-tax basis. Montpelier Re estimated that its hurricane and flood losses would be in the $450 to $675 million range. Canada’s Kingsway Financial Services said it expected around U.S. $2 million related to Katrina. Finally, Bermuda’s AXIS Capital gave no figures for its estimated net losses but indicated they are expected to be within its current expectations for 2005–“assuming no other large loss events during the year.” A sentiment all of the others would surely agree with.

Allianz Buying Out RAS Shareholders:
Germany’s Allianz AG announced an offer to shareholders of Riunione Adriatica di Sicurta (RAS) S.p.A for the approximately 45 percent of the shares it doesn’t already own. At 19 euros ($23.35) per share that makes the offer worth around 5.7 billion euros ($7 billion). Allianz said it plans to merge RAS into Allianz and restructure both entities as a “European Company,” or “SE–Societas Europaea.” The move is part of its plan to reposition itself and further strengthen its position “as a leading financial services provider in its European home market.” The decision caused a stir in France, where Allianz holds a majority stake in Assurances Generales de France (AGF). Allianz has said it has no immediate plans to make a similar offer to AGF shareholders. However, most analysts feel that it’s only a question of time (and money) before the insurer’s French holdings are also included in the new ES. Eventually it could also include the company’s Austrian, Swiss and Spanish operations, and perhaps even Allianz Cornhill in the U.K. Fireman’s Fund, however, would assumedly remain an American company.

Clinton Launches Global Initiative:
Former President Bill Clinton closed a very successful initial conference in New York for his Global Initiative with commitments of $1.25 billion. The three-day event, organized by the ex-President to coincide with the current United Nations Anniversary summit meetings, focused on finding ways to reduce poverty, on using religion as a force for reconciliation and conflict resolution; implementing new business strategies and technologies to combat climate change, and strengthening governance. Swiss Re CEO John Coomber was among the featured speakers on the final day. He could well prove invaluable for one of the Initiative’s more adventuresome projects–setting up a terrorism insurance program in the Gaza Strip.

Davies and Saville Resign from Kinnect:
Lloyd’s confirmed that Toby Davies, the CEO of its Kinnect IT platform, and Iain Saville, the project’s Executive Chairman, both stepped down, effective Sept. 14. Saville has played an important role in driving forward Lloyd’s business process reform agenda–most importantly the adoption of standardized LMP [London Market Principles] slips and in developing the Kinnect platform. Lloyd’s said Saville, 57, had decided “to scale down his commitments.”
Lloyd’s also indicated that Davies, who has played a key role in developing Kinnect, had decided it was time to move on, as the project enters a new phase. Many London commentators saw the resignations as yet another setback for Lloyd’s troubled initiative to bring online processing to its brokers and underwriters. Michael Dawson, currently underwriter at Chaucer’s nuclear syndicate 1176, has been named interim chairman of Kinnect, replacing Saville. Lloyd’s CEO Nick Prettejohn will also join the Board as a non-executive director, while Steven Haasz, currently head of change management at Lloyd’s, will be giving additional support to the Kinnect team.

Guy Carpenter Releases Report:
Guy Carpenter & Co., the global risk and reinsurance specialist of the Marsh & McLennan Cos., has released its annual, comprehensive study of the property catastrophe reinsurance market, “The World Catastrophe Reinsurance Market: 2005.” The report went to print before Hurricane Katrina and covers more than 90 percent of the worldwide market for catastrophe reinsurance.