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Weekly news roundup: February 3-9, 2012

Intact and Aon results; RSA builds commercial & specialty division; XL launches pollution protection for real estate portfolios.

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• Weekly news roundup: May 11 – 17, 2012
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• Weekly news roundup: April 20 – 26, 2012

Growth and acquisitions

Strategic Underwriting Managers (SUM) has established strategic alliances with commercial insurance carriers in Canada, including Lloyd’s, ACE Canada, Economical, and Jevco. These relationships allow SUM to bolster its current product suite by adding an environmental impairment liability (EIL) capacity of $10 million, as well as marine and logistics capabilities, while strengthening its existing commercial general liability, professional liability and umbrella and excess facilities.

Since acquiring GCAN in January 2011, RSA has combined the strength of both organizations to build its large commercial & specialty division, including solutions for large, complex, national and multinational P&C risks, significant capacity and global reach in over 140 countries. The commercial division is set to handle customers with commercial premiums less than $25,000, Canadian operations, mainly local sales and lower hazard exposures. In personal lines, RSA is shifting focus from a generalist only insurer to also writing specialists’ insurance.

XN Financial promoted Anthony Alberico to senior vice president for global benefits. Alberico will continue to work closely with XN Financial’s underwriting partners and service providers in responding to the expatriate healthcare needs of global corporations. His new responsibilities will allow him to apply his international healthcare experience towards strategic planning and development projects around the globe.

Company results

Intact reported net operating income for the fourth quarter 2011 of $152 million, up $72 million from the same quarter last year. Net income was $84 million, or $0.62 per share, compared to $107 million, or $0.95 per share, for the same period last year. The decrease reflects $42 million of integration costs and a $41 million provision for the contingent consideration to be paid for the acquisition of AXA Canada. Direct premiums written increased 49% to reach $1.6 billion, reflecting the contribution of AXA Canada and a rebound in organic growth.

In 2011, total revenue at Aon increased 3% to $3.0 billion with organic revenue growth of 3%. In the fourth quarter 2011, risk solutions revenue increased 3% to $1.8 billion with organic revenue growth of 3%. Also, subsequent to the close of the fourth quarter, Aon announced its intention to change its jurisdiction of incorporation from Delaware to the UK, pending shareholder approval and satisfaction of other conditions.

Market update

A predictive modeling survey by Towers Watson found that while the potential to advance critical areas of P&C pricing and risk assessment through predictive modeling is not as mature in commercial lines as it is in personal lines, commercial lines adoption will continue to accelerate over the next two years. The majority of US personal lines insurers are already committed to predictive modeling, with approximately 85% saying they use or are planning to use it. Also, standard commercial lines carriers are actively adopting the technique, with roughly 70% indicating they either currently use or plan to use it in underwriting, risk selection, rating and/or pricing.

In 2011, the mining insurance market was not only hit by $2.7 billion in natural catastrophe losses, but also over 60 operational losses totaling $835 million. The $3.5 billion total estimate of losses facing mining insurers has prompted a 30% withdrawal in insurance capacity since the start of 2011, according to the latest Mining Market Review released by Willis Group Holdings.

Distracted driving

Manitoba drivers are not putting down their handheld devices, according to a Manitoba Public Insurance (MPI). In an effort to reduce distracted-driving collisions, MPI is providing $120,000 in funding to police agencies to conduct targeted, dedicated enforcement towards distracted drivers during the month of February. To read more on this story, click here. 

New products and programs

XL Group has unveiled enhanced pollution protection for real estate portfolios. This new product offers standard portfolio coverage protections and can be tailored to include blanket non-owned disposal sites, business interruption and extra expenses, contractor’s pollution liability (CPL) coverage for property management activities, and disaster response and recovery.

A new training program that focuses on managing the recovery of an injured person is being launched by the Insurance Institute of Ontario, in collaboration with the Ontario Insurance Adjusters’ Association (OIAA). Understanding Serious Injury: Adjuster Training & Education will be available beginning April 2012 to all levels of adjusters, following a well-received pilot held in November 2011. The comprehensive, eight-day program offers applied technical training and education specifically developed for adjusters and their employers.

Ratings 

A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of “a+” of Industrial Alliance Insurance and Financial Services Inc. (Quebec) and its subsidiary, Industrial Alliance Pacific Insurance and Financial Services Inc. (Vancouver, BC). Additionally, A.M. Best has affirmed the existing debt ratings of IA and Industrial Alliance Capital Trust.