The Intelligent Quarterly from the publishers of The Insurance Insider

Spring 2017

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Around the world

US
Florida ratings
There was news of a reprieve for a number of Florida insurers considered vulnerable to Demotech's February downgrade threat, with the agency signalling that carriers' ratings would not be lowered below the crucial A range, as originally feared.
Demotech said it would reveal which Florida homeowners' insurers it has affirmed or downgraded no later than 16 March, after reviewing year-end results that included $155mn of aggregate surplus growth for 2016.
The higher surplus, combined with an extra $200mn of loss and loss-adjustment expense reserves on balance sheets compared to year-end 2015, was the culmination of "a remarkable recommitment to Floridians seeking property insurance", Demotech said on 7 March.
The firm said the increase in surplus was the result of capital contributions along with operating profits at some carriers.

UK
Ogden decision
The UK government shocked carriers in February by announcing a far steeper-than-expected cut to the discount rate shaved off lump-sum personal injury compensation.
Justice Secretary Liz Truss cut the so-called Ogden rate from 2.5 percent to minus 0.75 percent, in a move described by the Association of British Insurers as "crazy".
The cut - which will impact the levels of reserves that must be carried on motor business - is much greater than predicted, as most insurers and analysts were anticipating a move to either 1.0 percent or 1.5 percent.
Reinsurers will be hit hardest by the UK government's surprisingly steep reduction in the rate, with Willis Towers Watson estimating that reinsurers collectively will bear the brunt of a one-off reserve charge estimated at £5.8bn ($7.2bn).

MEXICO
Political violence loss
Riots in Mexico in January over the price of petrol are expected to cost the international insurance market between $200mn and $250mn, according to market sources.
Protests against a 20 percent hike in fuel prices led to looting in the Latin American country.
Walmart is submitting a $60mn-$70mn claim to the political risk market following the riots, sources told The Insurance Insider in February.
The US retail leviathan is set to tap its insurers under a wide-ranging global political risk policy. The cover was placed by political risk specialist BPL Global and includes political violence protection against strikes, riots and civil commotion.
The policy is led by QBE, which has a $15mn line on the $7mn primary layer. Other carriers involved include Pembroke and Talbot, both with $11mn lines.

INDIA
Lloyd's approval

Lloyd's has received final "R3" approval from the Indian regulator to establish a branch in the country and plans to begin writing business in time for the April reinsurance renewals.
The office will be based in Mumbai and will offer a variety of specialty reinsurance classes of business.
The launch coincides with the introduction of new regulations in the country stipulating that all ceded reinsurance business is to be offered to local companies ahead of overseas reinsurers.
The Indian government has also granted in-principle approval for five state-owned general carriers -New India Assurance, United India Insurance, Oriental Insurance, National Insurance and GIC Re - to list on the country's stock exchange.

This article was published as part of issue Spring 2017

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