• The insurance operations of U.S. conglomerate General Electric made a loss of $2.7 billion in the fourth quarter of 2005. This comprised a $2.9 billion loss at GE Insurance Solutions, its main insurance and reinsurance unit, and a $200 million profit at Genworth, the life and mortgage business it spun off in 2004. For the full year, the insurance operations made a $1.9bn loss, compared with a profit of $500 million in 2004.
These losses put a big dent in GE’s fourth-quarter earnings. The company posted a net profit of $3.1bn for the fourth quarter of 2005, down from $5.6 billion the previous year. For the full year, GE made a profit of $16.4 billion, down from $16.8 billion in 2004.
GE agreed to sell GE Insurance Solutions to Swiss Re for $6.8 billion in November last year. Under the terms of the deal, GE has put an additional $3.4 billion before tax into GE Insurance Solutions’ reserves. The unit, formerly known as Employers Reinsurance Corporation, has a history of reserving problems, and has had to boost reserves several times in recent years.
• Last year’s unprecedented catastrophe losses had an uneven effect on pricing and capacity at the 2006 reinsurance renewals, according to a report published by reinsurance broker Benfield. The broker said hurricanes caused sharp increases in U.S. reinsurance rates. But elsewhere they had a stabilising influence, reversing the downward price trend.
Loss-affected treaties in the U.S. saw price increases of more than 100% in some cases, the broker reports. Prices on loss-free U.S. business increased by between 10% and 20%, compared with falls of up to 20% in the January 1 2005 renewals. But in Latin America and the Caribbean, western Europe, Australia, and central and eastern Europe rates were either flat or showed low double-digit growth.
• Benfield’s primary broking subsidiary Benfield Corporate Risk has opened an office in Calgary, Canada. The broker’s new operation will be licensed to carry out broking and advisory services. It will focus on marine, energy, power and mining business.
Richard Cutfield will manage the operation. Cutfield was formerly managing partner at broker Jones Brown.
• Rating agency Moody’s has assigned an Aa3 financial strength rating to Transamerica International Re. The company is part of Dutch insurer Aegon‘s U.S. operations. Moody’s said the rating was based on TIRe’s close integration with Aegon’s U.S. organization, whose member companies are also rated Aa3.
• AssuranceAmerica Corporation has acquired Tampa No-Fault Insurance Agency for an undisclosed sum. Tampa specialises in non-standard and motor insurance products.
• Rating agency AM Best has cut the financial strength rating of Louisiana Farm Bureau Mutual Insurance Company to B+ from A-. The downgrade was prompted by a deterioration in the company’s capital position because of losses from hurricanes Katrina and Rita.
• Risk modelling firm AIR Worldwide has opened an office in Munich, Germany. AIR has appointed Yörn Tatge to head the new operation. Tatge joins from reinsurer Converium.
• Zurich Financial Services and affiliates of private equity investment firm Hellman & Friedman have agreed not to proceed with the sale of Zurich subsidiary Universal Underwriters to an investor group led by Hellman & Friedman.
The proposed sale was announced last April but both parties were unable to agree on terms. Zurich will keep Universal Underwriters, a specialised motor insurer, as part of its North American commercial business division. Thomas Bradley, CFO of the division and interim head of Universal Underwriters, has been appointed president of Universal Underwriters.
Zurich has also announced that Zurich Insurance Ireland has opened branches in France, Sweden and Finland. This is part of its plan to expand the network of the subsidiary, which serves corporate business in the EU. It opened a U.K.office in May last year.