International Newsbriefs

EU Leaders Fiddle While Europe Burns:
The crisis in the European Union, provoked when French and Dutch voters rejected the EU Constitution, is being largely ignored by Europe’s leaders. Instead of a bit of soul-searching and reassessment, they’ve chosen to pursue business as usual. France is busy beating the Brits over the head about budget rebates, while Tony Blair has retaliated by seeking a revision of EU farm subsidies, of which France receives the most. About the only ones making any progress are private companies and business groups, led by banks and insurers, who continue to pursue economic integration through mergers–UniCredit/HVB; Aegon/Nationwide Poland–and regulatory harmony–the German Initiative Finanzstandort Deutsch-land as a model for EU payment systems.

Meanwhile the Constitution remains on life support. Proposals to revise it seem fruitless. It consists of 448 Articles, most of them in dense legalese, and needs to be radically restructured and explained to EU voters if it’s ever to pass. If the leaders paid a bit more attention to what EU citizens are thinking, they might learn something. Among other concerns–unemployment, immigration, globalization, etc.–Europeans are reacting to the frequent dictates of the non-elected European Commission in Brussels, the introduction of the euro and the expansion of the EU from 15 to 25 countries with more waiting. Many of them have said “enough,” but their leaders refuse to listen. People in France, Germany, the Netherlands and other EU countries have lost faith in them, as they have become too isolated for the people to trust. Unless and until new leadership emerges, who can rebuild that trust, and who will try to implement what the EU’s citizens want, rather than telling them what they’re going to get, there will be no progress. The EU will remain essentially gridlocked, and weaker, both economically and politically, because of it, to the detriment of the rest of the world.

Finite Re Probe Hits Bermuda Insurers:
A veritable hurricane of subpoenas has descended on Bermuda’s insurance community as the U.S. Attorney for the Southern District of New York widens the probe by the Securities and Exchange Commission into the use of suspect finite reinsurance products. ACE Limited, PartnerRe, Renaissance Re, Platinum Underwriters and Everest Re all recently acknowledged receipt of the subpoenas. Each of them in turn made similar statements, pointing out that “other insurance industry participants have received similar subpoenas,” and that they intend to “cooperate in responding to these requests.”

Canada Says No to Health Care Restrictions:
Canada’s Supreme Court announced a potentially precedent setting decision on June 9 when it ruled that a patient awaiting a hip replacement operation in Quebec was entitled to obtain private health insurance to help defray the cost.

The current regulations largely bar doctors from attending to private patients in public hospitals and private insurance has been barred from paying for services covered by the publicly funded system. Initially the decision applies only to the Province of Quebec, but it could eventually be applied in other Provinces, and would open the way for private carriers to increase their participation in Canada’s health care market.

Although proponents of expanding public health care in the U.S. have frequently praised Canada’s public system, many doctors and their patients complain of long delays, and have been campaigning for the introduction of a private health care option in Canada.

U.K. Flash Floods:
Flash floods hit the North Yorkshire region of Britain on June 18. While no loss of life was reported, many houses were destroyed, a number of roads and bridges were heavily damaged and power cuts hit some 38,000 homes. The Association of British Insurers (ABI) noted that the events were localized, and that insurers had been able “to make contact with affected policyholders to get claims moving as quickly as possible.”

No firm estimates have yet been made on the extent of the losses, but the ABI indicated that “insured damage will run into millions of pounds.” It also noted that this is “exactly the type of unforeseen (a month’s rainfall–70mm [4.5 inches]–fell on the top of the nearby North York Moors in under three hours) event insurance is designed to protect against financially.

“While flash floods of this type are common in other parts of the world–notably the Western U.S.–they are rare in rainy Britain. However a report from the BBC indicates that according to the U.K.’s Environment Agency they are “likely to occur more frequently as climate change tightens its grip.”

WTM Cuts Ties to Olympus Re Chairman:
Bermuda-based White Mountains Insurance Group Ltd. (WTM) announced that Joseph Steinberg, the chairman of Olympus Re, has resigned from the company’s board of directors. Steinberg is also president of Leucadia National Corp, which has a 19 percent share in Olympus Re. WTM, Leucadia and other investors established the reinsurer after the Sept. 11 attacks. Its business is exclusively with WTM. The ongoing investigations by New York Attorney General Eliot Spitzer and the Securities and Exchange Commission have raised questions about the propriety of such interlocking relationships. In May Olympus announced that it was in the process of reevaluating its ties with WTM in light of those investigations.

AIG to Receive Vietnam P/C License:
What a difference 30 years makes. American International Underwriters Insurance Company, a subsidiary of AIG–arguably a symbolic capitalist icon–is set to obtain a license to sell general (P/C) insurance in Vietnam. The license would permit AIUI to operate throughout the country under the name AIG General Insurance (Vietnam) Company Limited. It will begin marketing personal and commercial P/C products from its headquarters in Hanoi as soon as all regulatory approvals are in place. AIG President and CEO Martin Sullivan commented: “We are pleased that the government of Vietnam will grant AIUI a general insurance license, the first U.S.-based insurer to receive such a license in Vietnam.” Not that AIG doesn’t know the territory. Its founder C.V. Starr did business in Vietnam in the ’20s, and AIG has had a representative office there–mainly for life products–since 1993.

Corvus Shelves R&SA Offer:
Corvus Capital, the investment group operated by British financier Andrew Regan, has decided not to pursue an offer for Royal & Sun Alliance, the U.K.’s second largest general insurer. R&SA shares had risen sharply since rumors first surfaced on June 10 that Regan had obtained pledges of financial support for the bid, but the insurer remained distinctly unenthusiastic to the takeover, leading to its being dropped–at least for the moment.

Topics Carriers USA Legislation Europe Property Casualty Canada AIG Uk