REINSURANCE

Converium opts out of the US

National Indemnity, a subsidiary of US financial services group Berkshire Hathaway, has bought the North American business unit of Swiss Life and non-life reinsurer Converium for $295 million. The purchase price comprised $95 million in cash and $200 million in assumption of debt.

Commenting, Converium CEO INGa Beale said: “We can now fully concentrate on building Converium’s future, with our business strategy focused on markets outside the US.”

Converium, which was spun off by Zurich Financial Services in 2001 as a separate company, has experienced considerable problems with its North American business. In 2004 the reinsurer announced that losses related primarily to underwriting between 1997 and 2001 would require a $420 million capital injection to strengthen its reserves.

Rating agencies Standard & Poor’s and AM Best, which downgraded Converium harshly in 2004, have greeted positively the ownership change positively, placing the reinsurer on credit watches with positive outlook implications.

A framework for privatisation of the world’s largest financial institution, Japan Post, has a received a cold reception from the American Council of Life Insurers (ACLI).

Germany’s insurance industry has never achieved the market penetration of many of its counterparts in other countries...

US life insurers eager for passage of a defined benefit (DB) pension overhaul bill remain on tenterhooks as House of Representatives and Senate negotiators debate the thorny issue of a reduced estates tax. This remains a stumbling block after months of negotiations on pension reform.

Late in 2005, ING Group, which has established a powerful online marketing presence in the US, announced it was looking to significantly increase its term life insurance business through more competitive pricing and the introduction of new products. As part of this strategy, the company has launched a new instant-issue term life product to be marketed through banks and credit unions, and has indicated that it will roll out additional term offerings later this year.

US life insurers must improve their domestic operations while looking for other sources of growth at home and abroad if they are to cope with the challenges ahead, stressed Standard & Poor’s ( S&P) Equity Research Services. Challenges include increased competition, modest performance in equity markets, a flat interest rate yield curve and slower economic growth.

Defined benefit pension schemes are placing a huge financial burden on UK companies...

An ongoing restructuring programme by bancassurer Allianz has taken a significant and controversial step forward following the announcement that Allianz will shed about 4 percent of its global workforce. The biggest cuts will be in Germany where headcounts will be reduced by 5,000 at insurance group Allianz Deutschland and by 1,980 at Dresdner Bank. An additional 500 jobs will be shed at other domestic and international banking subsidiaries.

Marketing and research organisation Limra International’s survey of first quarter 2006 US individual life insurance sales reveals sales of $2.7 billion, up 15 percent compared with the corresponding period in 2005.

An international coalition of nine insurance and commerce associations has called on the Japanese government to ensure “fair and open opportunities to compete” during the privatisation of Japan Post, an organisation that includes the world’s largest financial institutions: Kampo (life insurance) and Yucho (savings bank).