Federal Reserve Unveils New Proposed Capital Rules for Large Insurers
Source: Insurance Journal | June 5, 2016
American International Group Inc. and Prudential Financial Inc.’s new capital rules should reflect the insurance business’s differences from Wall Street banking, the Federal Reserve said in a proposal to limit the chance that the companies could threaten the financial system.
The Fed’s plan would subject AIG and Newark, New Jersey-based Prudential to a narrow set of categories by which they would have to measure the riskiness of their assets, the central bank said in a statement. While the proposal approved Friday makes clear that the companies will be treated in a way that’s “appropriate for the longer-term nature of most insurance liabilities,” the Fed didn’t detail how it will determine the minimum capital the firms must maintain against their assets.
Zurich’s Greco Reorganizes in Push to Streamline Operations
Source: Bloomberg | June 10, 2016
Zurich Insurance AG’s new chief executive officer, Mario Greco, is shaking up the largest Swiss insurer after an unexpected jump in claims last year forced it to abandon a takeover and prompted his predecessor’s exit.
Zurich is merging its biggest units, global life and general insurance, and reorganizing along geographical lines. The four regional heads — for Europe, the Middle East and Africa, North America, Latin America and Asia Pacific — will report directly to Greco. The company’s business with its global corporate clients with remain in a separate division.
Apple Raises $1.4 Billion in Taiwan on Larger Insurer Appetite
Source: Bloomberg | June 8, 2016
Apple Inc. sold $1.38 billion of dollar bonds in Taiwan while Canada’s Manulife Financial Corp. also priced $1 billion of securities, as such debt offerings in the jurisdiction jump amid demand from insurers.
The sales bring issuance of such corporate securities to $23 billion for the year, up 53 percent from the same period in 2015, data compiled by Bloomberg show. Domestic life insurers looking for higher yields are driving the trend, said Lawrence Lai, Asia rates strategist at Standard Chartered Plc. Apple’s 30-year note has a 4.15 percent coupon, and Manulife’s bond with the same maturity has a 4.7 percent coupon. Such multi-decade debentures also suit the needs of life insurers which must make longer-term investments, Lai said.
Global Disasters During May to Cost Insurers at Least $7B: Aon Report
Source: Insurance Journal | June 9, 2016
Global disasters led to at least $7 billion in claims during May as insurers aid the recovery process following wildfires, floods, and storms, according to Impact Forecasting, Aon Benfield’s catastrophe model development team.
An historic wildfire caused catastrophic damage in the Canadian city of Fort McMurray throughout the month of May, becoming the costliest natural disaster in the country’s history with insured losses estimated to be in excess of C$4.0 billion (USD3.1 billion), said the latest edition of Impact Forecasting’s monthly Global Catastrophe Recap report.
Puerto Rico Insurers Seek Talks to Avert Next Major Bond Default
Source: Bloomberg | June 7, 2016
Puerto Rico’s bond insurers are urging the commonwealth to negotiate with creditors as speculation increases that the island will default July 1 for the first time on its general-obligation debt.
While commonwealth officials, investors and bond-insurance companies have been negotiating for months on how to reduce Puerto Rico’s $70 billion of debt, specific talks over addressing next month’s general-obligation payment have yet to occur, Nader Tavakoli, president and chief executive officer at Ambac Financial Group Inc., said during a Debtwire conference Tuesday in Manhattan. Such discussions could allow Puerto Rico to avoid lawsuits, put off some of the payment, or restructure debt before next month’s deadline.