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LONDON -- Mittal Steel Co. NV, Rotterdam, will make its $25.3-billion offer to Arcelor SA shareholders in two weeks, Lakshmi N. Mittal, chairman and chief executive officer of world's largest [...]

The article reports on corporate scandals and regulatory probes that are increasing the amount of litigation against insurers, adding to the workload of their in-house legal teams. It all started in October last year, when Eliot Spitzer, New York's attorney general, sued Marsh & McLennan Cos. Inc. (MMC) over questionable use of contingent commissions at Marsh, its broking subsidiary. MMC settled the case in January this year by paying $850m into a fund to compensate clients whose business Marsh had earned contingent commissions from. INSET: Cutting costs, not quality.

This article presents a discussion involving four notable buyers Ace, Hiscox, Talbot Underwriting and Kiln, two brokers and a consultant, to find out whether reinsurers fears and buyers hopes were founded. Cheap prices were the priority for cedants during the January 1 2005 renewals. Reports from brokers suggest that opportunistic buying, rather than relationships with reinsurers was more important in the latest round of renewals. Cedants are also retaining more risk to keep their reinsurance costs down. To a question on the reinsurance prices expert Warren Neale said they expected some softening, but they thought the hurricanes and typhoons would restrain the market somewhat. Expert Nick Hall said the prices paid for property risks at the renewals this year have been commensurate to loss experience. INSETS: The battle to recover claims;Getting the cold shoulder;Models of reinsurance buying.

The article informs that despite being assailed by catastrophes, investigations and other difficulties in 2004, the insurance industry has proven that it can be profitable. However, talk about softening rates is prompting investors to choose their insurance stocks more carefully, as they try to select those firms that will provide the best long-term returns. The article tries to find out which insurance stocks will find favor with investors in 2005, and which will be treated with caution. Analysts are advising investors in insurance stocks to be selective in 2005. INSETS: Unjustifiably undervalued;Pick of the bunch.

The article informs that although the December 26, 2004 tsunamis were devastating, global insured losses will be relatively small. But domestic insurers and reinsurers in affected countries could face a hefty bill, which in turn may force big changes in these markets. In the early hours of the morning on December 26, 2004, a powerful earthquake, registering magnitude 9 on the Richter scale, happened just off the northern coast of Indonesia. The full effects of the tsunamis will probably only be realized years after the event. The United Nations predicts that economic recovery in the disaster-hit areas will take up to 10 years. INSET: What's in a wave.

This article focuses on insurance business. Asia is seen by many insurers and reinsurers as the growth market of the future, with countries like China and India slowly opening up to foreign companies. India and China, deemed to be the fastest growing emerging insurance markets, together represent only 2.2% of global insurance premiums. According to Katsuo Matsushita, general manager of the international department at The General Insurance Association of Japan, premium growth in property business, especially motor insurance, which makes up more than 50% of the country's insurance market, has been lacklustre over the past three years because of increasing competition.

This article presents an interview with Denis Kessler, chief executive and chairman of Scor SA. Denis Kessler's hair looks slightly dishevelled as he meets Reactions for an interview at the company's head office in Paris. As well as Kessler's attempts to reassure clients, Scor responded with a 751m euro rights issue, its second in less than 12 months. Kessler has not yet restored the company to its former glory, but it is still writing business, despite the numerous problems that threatened its survival. The key to this survival seems to have been Kessler's positive attitude. INSETS: Moving forward;Kessler's economy drive.

This article focuses on the French insurance market. Despite its maturity, the French insurance market is not dominated by a handful of big players. France is one of the 10 biggest insurance markets in the world, according to a report by Swiss Re's Sigma. France is home to some of the largest insurers and reinsurers in the world. One of the main concerns of insurers in France, both listed and mutual insurance companies is reinsurance. Peugeot believes another big concern for French insurers, which could also cause their reinsurers problems, is the increase in litigation in France and elsewhere in Europe. And floods that hit the south of France at the start of 2003 cost the French insurers yet more money. Banks are increasingly moving into the insurance business and the competition is making life difficult for insurers.

The article presents an interview of James Schiro, chief executive of Zurich Financial Services AG. When asked about the Zurich's biggest problems when he became chief executive, Schiro said that soon after he took over the CEO responsibilities at Zurich, he spent some time alone to look at the issues. They seemed larger than he, or anyone else, had anticipated. And the deterioration of the economy magnified this. Answering a question on the future plan of the company, Schiro said that people buy and protect their assets and that is the opportunity. People do this in different ways in different countries because laws are different. INSET: Experience counts.

Many Bermudian reinsurers have set up offices in Ireland to serve as their European headquarters. The average yearly temperature is 17 degrees Celsius and the annual rainfall is 62 millimetres. But Ireland is regarded by some as Europe's answer to Bermuda. Max Re opened Max Insurance Europe, in Dublin, Ireland's capital city. Eamon O' Brien, managing director of Aon Insurance Managers, a captive manager in Dublin, calls Ireland's capital city the Bermuda of Europe. Rachel Panagiodis, chief executive of life insurer Hansard Europe in Dublin, says her company set up in Dublin 10 years ago because it expected the city to become a market in its own right. INSET: Save money on tax.

Insurers and reinsurers are spending more money and resources on legal services and advice than before. More companies are being sued or getting embroiled in legal disputes. In 2002, the U.S. civil liability system cost the country $233bn, an increase of $27.4bn over its cost in 2001. According to actuarial consulting firm Tillinghast, tort costs accounted for 2.2% of the nation's gross domestic product of $10.45 trillion in 2002, compared with 1.4% in 1970 and only 0.6% in 1950. Litigiousness is not only increasing in the U.S. It is also on the rise in Europe. INSETS: Other firms mentioned;The top performers;Company profiles.

The South African insurance industry is small. Players have to fight hard for market share, while the economy and wealth of the people grow slowly. The local and foreign insurers plan to grow and maintain pricing discipline amidst various pressures in this compact, competitive environment. The stark contrast between rich and poor is an everyday sight in South Africa. The Central Intelligence Agency estimates that at least 50 percent of the country's total population of 43 million earn less than $1 a day. And the South African Ministry of Labour estimates that in 2002, only 16 million South Africans were economically active—in other words, earning and spending money. INSETS: Close to the market;Spreading their wings.

The Markel Corp. was started more than 70 years ago to cater for the insurance needs of the early transportation industry in the United States. Tony Markel, its chief operating officer and the grandson of its founder, explains the firm's next steps to Bianca Markram. Before long, the public started to demand protection from the bus operators against accidents and some districts started to make insurance compulsory. So, when the owner of a small insurance agency in Norfolk, Virginia, found it impossible to place cover for his customers, a group of such bus operators, he set up a small mutual insurance company for them. INSETS: From broker to underwriter;Profit, profit, profit.

Axa Re's new chief executive, Hans-Peter Gerhardt, says the reinsurer has never been more focused. It may be surprising to learn that the journal "Reactions," succeeded in interviewing Axa Re's new chief executive officer at the company's Paris headquarters in early August. Although relatively inexperienced in Parisian culture and the French language, Gerhardt is by no means a stranger to the reinsurance business. The three divisions, Axa Re, Axa Corporate Solutions Insurance and run-off unit Axa Liabilities Managers, were merged into Axa Corporate Solutions by its former chief Jean-Marie Nessi. Gerhardt says it is tempting for reinsurers to lower prices in some lines of business in a soft cycle rather than reduce the volume of business, despite the dangers.

The downgrade of insurance company Munich Re to single-A status from triple-A in under a year has shocked the market. Cedants are now questioning the reliability of ratings and Munich Re has hit back with a campaign aimed at proving insurance information company Standard & Poor's wrong. Many cedants are now asking how much they should rely on the ratings of their reinsurers. Analysts estimate that Munich Re could only raise about €500 million in debt without affecting its ratings further. And as well as its ratings from insurance information companies S&P and AM Best, Munich Re has interactive ratings from Moody's and Fitch, which rate the group Aa3 and AA+ respectively, and now that Munich Re is single-A rated, Hannover Re is under no pressure to be double-A rated.

Almost every region in the world is susceptible to natural catastrophes of some kind. But in some areas the threat is so large that governments and international institutions have to create special methods of absorbing the financial impact. In October last year, following the floods that swept across Europe, Swiss Re Corp. released a report suggesting how the insurance industry could cover flood risks more effectively. In August 2002 parts of Europe saw unusually heavy rainfall. The floods caused high economic losses for several European countries. INSET: How Japan protects itself.

This article that insurers and reinsurers are investing more in legal services and advice because of an increase in litigiousness. When insurers and reinsurers choose a law firm then they basically look for expertise and responsiveness of the firm. Liability insurance rates are increasing, reflecting what insurance companies pay out for policyholders' legal defence and judgements against them. The increasing litigiousness of society is also pushing insurers out of some lines such as medical malpractice which is no longer viewed as an attractive line of business in the United States. In-house counsels for insurance and reinsurance companies worldwide say this increase in litigiousness is affecting their companies. INSETS: Laying down the law;Other firms mentioned;The cream of the crop;Company profiles

Risk managers understand the need for the insurance industry to return to profitability. They are worried about the solvency of their insurers. General Electric Co. (GE) announced in March 2003 that its directors' and officers' liability insurance (D&O) is four times more expensive than it was a year ago. However, GE is not the only corporation facing such steep increases in D&O insurance prices. Many insurers are reporting large losses for 2002 as the stock markets continue on their downward slide. A report by rating agency AM Best says that inadequate reserving by U.S. insurers, caused by years of underpricing many lines of business, was responsible for 38 U.S. property/casualty insurance bankruptcies in 2002, compared with 30 in 2001. They add that they are also concerned about the solvency of their insurers. Bad underwriting in the past, slumping equity markets and worldwide economic problems on top of September 11 losses have forced some insurers to exit the market. INSET: Voicing concerns.

Reports on the dominance of small brokers over some larger rivals in the reinsurance broking industry. Reason behind the failure of large players; Importance of business volume for reinsurers in a soft market; Advantages of smaller brokers.

Examines the effect of satellite technical failures on the space insurance industry in the U.S. Assessment on the ability of insurers on coping with space insurance claims; Resistance of clients on increasing insurance rates; Importance of legislation on managing space insurance claims. INSET: Rewriting the law..

Examines the effect of the WorldCom company scandal on the insurance industry. Impact of scandal on the intent of reinsurers and brokers of going public; Benefit of going public on insurers; Importance of pricing on attracting investors. INSETS: How to attract investors.;Better people, better prospects.;Why you need a good banker..

Reports on the increase of threat for biological terrorism in the U.S. Plan of the government on the possible bioterrorism; Effect of bioterrorism on the business; Risk of bioterrorism to the properties. INSET: Caught in the middle..

Reports the unpredictable terrorists attacks in the U.S. Role of the insurance companies on the issue; Importance of communication on the event; Assessment of insurance companies on terrorism risk.

The article analyzes whether brokers always act in their clients' best interests when choosing where to place business. In 2004, the Heath Lambert Group PLC had to pay damages and expenses of $2.54m to Comcover, the self-managed insurance company for Australian government departments and agencies, for breach of contract. The broker received premium commission for placing Comcover's reinsurance, even though its contract with Comcover precluded it from doing so. There is no indication that Heath Lambert deliberately steered Comcover's business to London, England, to earn commission. INSET: More woes for Health Lambert.

The article informs that international insurers and reinsurers must comply with a different set of regulations in almost every country where they operate. It writes life insurance and reinsurance business and offers pensions and investment products. It means the company must comply with more than 18 different insurance regulators globally, not including the U.S., where its subsidiary John Hancock has to comply with the regulations of each state it writes business in. In October, Victor Apps, senior executive vice-president and general manager of Manulife Financial Asia, spoke at the annual conference of the International Association of Insurance Supervisors (IAIS) in Jordan to an assembly of regulators from across the world.

Insurance prices are stabilising in most lines of business and even falling in some. But that does not necessarily mean risk managers will start buying more traditional insurance again. Many could be reluctant to let go of the alternatives they were forced to use at the peak of the hard market. On March 8, 2004, the United States Risk and Insurance Management Society published the results of a survey of risk managers that could severely disappoint the insurance industry. The results suggest that the present hard market could have changed the future behaviour of risk managers by forcing them to rely more on alternatives. INSET: Telling it like it is.

Investors have been patient with the insurance industry over the past few years. They were assured that 2003 would be much better, only to be greeted with a string of rights issues, rating downgrades and reserve hikes. Now investors expect their tolerance to be rewarded in 2004. The insurance industry will have to prove that it can make a decent return or suffer the consequences. William Hawkins, insurance analyst at investment bank Kox-Pitt, Kelton says that investors really will be looking for quality earnings and quality returns on equity in 2004. The threat of further reserve hikes for insurance business is dampening in 2004.

The consensus among research teams is that 2003 is going to be an active hurricane season. According to hurricane forecast research teams, it is going to be an active season with an above average probability of hurricanes making landfall. Mark Saunders, who heads the hurricane research team at Tropical Storm Risk, a joint-venture between Benfield Hazard Research Centre and the University College of London, England says that the Atlantic will have at least 12 named storms, of which seven will be hurricanes. The hurricane forecasters also predict that La Niña, El Niño's alter ego, will start in the Pacific by the beginning of the most active part of the hurricane season in mid-August. INSET: What's in a name?.

In April 2001, the European Union (EU) issued a directive that could change reinsurance buyers' behaviour across the globe. The aim of the directive is to protect the interests of direct policyholders. The directive outlines insolvency procedures for insurance companies in EU countries. The deadline for member states to comply with it is April 30, 2003. It will mean a uniform policy across the EU. However, each country will still have its own insolvency and winding-up procedures. The guidelines will create a clear divide between pure companies and those who write both insurance and reinsurance business. The insolvency directive has to be implemented in all EU states through legislation by the end of April. The directive gives payment priority to policyholders of an insolvent insurance company above all other creditors including cedants that are reinsured by that entity. INSET: A new uniformity.

Reports the forecasting on the occurrence of hurricanes in the U.S. Expectation on the increase of cold in Atlantic sea surface; Lists of storms predicted; Speed of the wind. INSET: The influence of El Niño..

The article reports on financial performance of the insurance industry in the first quarter. The capital raising environment was difficult for the insurance industry in the first quarter. Companies will now have to work much harder to tempt investors to buy their stocks and bonds. Regulatory probes into industry practices are affecting the ability of insurers and reinsurers to attract investment. Investors are nervous about putting their money into the industry. The industry raised $26.05bn through bonds in the quarter, compared with $18bn in the same period last year.

The article informs that in 2004, capital raising activity has slowed down from the previous year, signaling the industry is close to filling its capacity. But that does not mean there was a lack of groundbreaking deals during the year. The global insurance industry raised a total of $85.9bn in capital in 2004 to fund growth and operations. This is down on 2003's total of $104.8bn, showing that the industry's capital raising activity is slowing down. This is probably because companies have almost replenished their levels of capital, after losing so much in the extremely hard market conditions that followed September 11 2001.

The article informs that Peter Matson started and floated professional liability insurer (PRI) on the stock market before selling it to Brit. He is now chief executive of Novae Underwriting and chief underwriting officer at SVB. He talks to Bianca Markram. According to him, Andreas Loucaides' [the former chief executive of PRI, now at Catlin] was the original author of PRI idea. Business is now more professional in Lloyd's. The market has moved from this clubby atmosphere to a more professional regulated institution. The danger is that we should not over-regulate.

The article reports that equity investors are keeping insurance and reinsurance stocks at arm's length because of the industry's consistent poor performance. This is making capital raising through equity potentially difficult for companies. On the other hand, it seems investors cannot get enough of insurance debt issues. Industry leaders are becoming increasingly concerned about insurance and reinsurance companies' ability to raise capital. They believe the industry's reputation for bad cycle management repels investors, which in turn makes it difficult for companies to raise the capital they need to sustain their business.

This article presents an interview with Peter Gentile, founder of Gerling Global Financial Products Inc. (GGFP). He is now working as a consultant for Tillinghast. He says that "We at Gerling Global Financial Products had a great relationship with the owners of Gerling in Cologne." On being asked on the lessons learned from his experience, he replied " This industry, not only the companies that are in trouble, but also those who are doing well, needs to understand that insurance and reinsurance is a very risky business. And the most valuable tool in this business is excellent intellectual capacity."

Ireland's popularity is rapidly growing as a centre for non-EU insurance companies wanting to write business in the EU. Anne Troy, head of insurance supervision at the Irish Financial Services Regulatory Authority, tell Bianca markram how the regulatory regime has changed to keep up with growth. Before IFSRA, the insurance division in the Department of Enterprise, Trade and Employment regulated the insurance industry. Regulation and supervision of insurance has been developing on a continual basis.

Fewer deals were completed in the second quarter than the first, even though the largest listing and debt issue of the year so far happened in the second quarter. " It is not surprising," says John Keefe, insurance analyst at investment bank Ferris Baker Watts. Genworth, the combined life and mortgage insurance units of General Electric (GE), debuted on the New York Stock Exchange in May. Under its Chapter 11 restructuring, the company was required to cancel its old common stock once the restructuring was done and issue new stock to public debt holders and other unsecured creditors of the company.

After a year of turmoil, which saw its management ousted and its Lloyd's operation put into run off, Goshawk Insurance's business model has changed beyond recognition. At the start of 2002, the company was running the syndicate in London but also setting up the new reinsurance operations on Bermuda. Is it difficult having the holding company and listing in London but the revenue-earning operations on Bermuda? Cavell Management Services will now run the syndicate off on behalf of Lloyd's. The company is seeing whether someone would buy at the right price.

Swiss Re has made a big impact on the London skyline with its new office building. It is also the first time that all of Swiss Re's London staff will occupy the same building. On April 27, Swiss Re officially opened its landmark building in the City of London. The Swiss Re Tower, located at 30 St Mary Axe and known informally as the Gherkin because of its shape, is the sixth-tallest building in London at 180 metres — three times the height of the Niagara Falls. John Fitzpatrick, head of Swiss Re's life and health business group, says it is the first time that all of Swiss Re's London staff will be housed in the same building. INSETS: The two towers;Critical acclaim.

This article presents an interview of David Vick, chief executive officer of Insurance and Pensions Authority in the Isle of Man. The island has been an offshore finance centre for Great Britain captives and life insurance companies since the mid-1980s. According to him, the finance centre started to grow significantly in the mid-1980s. Traditionally Isle of Man was seen as a tourist destination, typically for Britons from the northern parts of Great Britain. Today the island is dependent on the financial services and ancillary services — the legal, accounting and support services.

Many of last year's capital raising efforts were aimed at patching up holes in insurers' and reinsurers' balance sheets. So far this year, however, most companies are seeking fresh funding to fuel growth. The amount of capital raised in the first quarter this year is more than double the amount raised in the same period last year. Companies raised $7.6bn through equity and equity related deals in the first quarter this year, compared with $1.7bn in last year's first quarter. And they raised $18bn from debt issuance in the quarter, compared with $10bn for the same period last year.

Bond issuance dominated insurance capital-raising efforts in the first three quarters of 2003. But in the fourth quarter equity and equity-related deals raised more cash than debt issues. Although equity deals are traditionally more expensive and time-consuming to set up than debt issues, the insurance industry has reached its limit for debt issuance. During the first three quarters of 2003 some of the biggest bond issuers were by German reinsurer Munich Reinsurance Co. of $3.2 billion bond in April and British insurance group Aviva Insurance Co. of $2.6 billion bond in September. But the momentum of big debt issues slowed later because few companies have low enough debt-to-capital ratios to issue more debt.

French reinsurer Scor was downgraded again when it announced another rights issue to fill new reserve holes. But some believe Scor is not alone, and other European reinsurers may need to increase reserves. Poor third-quarter results, a reserve charge and the announcement of a rights issue on November 6, 2003 prompted rating agency Standard & Poor's to downgrade the reinsurer to BBB-from BBB+. Scor now hopes to raise € 600 million through a rights issue, much of which will be used to plug the hole in its reserves. On November 5, 2003 the day before Scor announced its third-quarter results and the rights issue, its share price closed at€ 5.20. INSET: Scor's fighting spirit.

The article presents an interview of Edward Creasy, who is the chief executive of Lloyd's insurer and reinsurer Kiln, a director of the Lloyd's Franchise Board and deputy chairman of the Lloyd's Market Association. He comments on the rumors of a potential merger with Brit. The importance attached to ratings is bound to change the industry landscape. Financial security is the big issue at the moment, he said on a question on financial strength ratings affecting the industry. Assessment and understanding of the financial security of the business partners is absolutely critical. Own assessment and the rating agencies' assessment operate in parallel. It is part of any management team's job to take ratings into account, but also to look beyond ratings.

Insurers and reinsurers are still raising capital at a steady pace but the activity is dwindling compared with previous quarters. The global insurance industry has raised a total of $78.12bn in the capital markets since the start of the year, of which $56.59bn is debt. Although the activity is slowing, investors remain keen on buying both equity and debt issued by insurance companies. Insurance stocks are more attractive to investors than stocks from many other industries. The third quarter saw 33 debt issues in the U.S., including two issues from Bermuda by Montpelier Re and Oil Insurance. Oil Insurance, a mutual insurance company used by the energy industry, raised $299.4m in subordinated debt.

The article informs that because Munich Re's € 3.8bn rights issue followed so closely on the heels of its Standard & Poor's Corp. (S & P) downgrade, many believe it was a response to pressure from the agency. Munich Re announced on October 17 that it will raise € 3.8bn of capital through a rights issue. Under the issue's terms, Munich Re shareholders are entitled to two new shares for every seven shares they already hold, at a price of at least € 75 a share. Because the rights issue followed S & P's downgrade of Munich Re so closely, many believe it was a response to pressure from the agency. Many in the market expected Munich Re to raise capital through a combination of a smaller rights issue and a hybrid debt issue. There is room for Munich Re to issue debt, but from a pure rating agency point of view it is better to increase capital through equity rather than debt. INSET: The beginning of the end?.

With the acquisition of GE Edison Life Insurance Co. Ltd., General Electric's Japanese life business, the U.S.-based American International Group Inc. (AIG) became the first foreign player to rank in the top ten companies in this market, as of August 1, 2003. But there are rumors of further expansion by the world's largest insurer. The purchase pushes AIG from number 15 in the market into the top ten. It is the first foreign insurer to become one of the ten biggest players in Japan. Japanese life market is consolidating and many expect this to continue.

With so many other threats dominating the headlines, it is often easy for insurers to forget increasing threats, which could be posed by natural catastrophes. But while the risks and potential losses are growing, so are the opportunities. The threat of terrorism, asbestos, the implications of the Sarbanes-Oxley Act, the heightened threat of cyber-crime are few examples of these catastrophes. Natural catastrophes still represent one of the biggest threats to the insurance industry and the potential losses they can inflict are only increasing. Swiss Re Corp. recently held a presentation in London, England, outlining this heightened threat.

Severe acute respiratory syndrome (SARS) has caused much uncertainty for insurers. Some policies may be hit by claims and the disease could dampen life insurance sales in the short term. But there may also be positives for the industry in the long run. The spread of SARS has forced World Health Organization and several countries to take drastic measures to prevent its steps, causing severe damage to parts of global economy. The insurance industry has been attempting to quantify what affect it might have on its business in countries affected by the virus. Claims will hit certain lines of insurance and others will see a drop in sales in the short term. But other lines of business, such as life insurance, may benefit in the long term. INSET: Profile of a killer.

The first quarter of 2003 saw three initial public offerings (IPO) and some large bonds issues by the insurance industry. The year 2003 started with an IPO drought. January became the first IPO-free month since 1974. Investors' confidence has suffered several blows that justify the lack of interest: the string of accounting irregularities in large corporations at the end of 2001, a depressed global economic climate and the war in Iraq. The insurance market raised almost 1.7billion dollar from equities or equity-related deals in the first quarter of 2003. Three IPO were launched. But more than 10 billion dollar was raised from bonds in the quarter.