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French insurer AXA is performing well, despite being placed on negative watch by rating agency Standard & Poor’s in February, according to AXA chief executive Henri de Castries. Speaking at the company’s annual press seminar in the south of France, Mr de Castries said that “our solvency is strong, we are profitable, we have positive cash flows and the earnings are improving the solvency day after day” However, he expressed concern at companies that had been rescued by their states and in which the state now held a shareholding. “The risk is to see them use the state money just to continue with their bad habits” he said. Mr de Castries felt that any company in which the state held a stake should be barred from making acquisitions until the state ceased to be a stakeholder. In reply to a question about AXA’s job cuts in the UK, which has more relaxed labour laws than in France, Mr de Castries said that AXA was “perpetually restructuring its businesses”. He noted also that the number of AXA staff globally was increasing overall. New jobs consist mainly of sales positions, he said.
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Last Updated ( Tuesday, 25 August 2009 )
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Bermuda-based commercial insurer Ironshore has announced plans to raise up to $300m in fresh equity “to support the expansion of Ironshore’s specialty insurance business”. Ironshore has signed a deal with private equity operation GTCR Golden Rauner (GTCR) under which GTCR will buy $200m in fresh stock. A further $100m in equity is expected to be sold to existing shareholders. Ironshore CEO Kevin Kelley said that “we see significant dislocations in selected segments of the market which will enable us to quickly and profitably deploy the capital”. Merrill Lynch and Aon Benfield acted as placement agents.
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Last Updated ( Tuesday, 25 August 2009 )
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Former AIG boss Maurice “Hank” Greenberg testified on Monday that the company and former affiliate Starr International Co (SICO) had mutually agreed in May 2005 to end a deferred compensation plan for AIG executives. In a fifth day of testimony in federal court in New York, Mr Greenberg said that it was “common knowledge” that AIG wanted to end the compensation programme in the event that the company didn’t account for the programme as an expense. SICO shareholders had previously indicated that they wanted to halt the programme if it wasn’t accounted for as an expense for AIG, he said. “I believe there was an agreement” to end the compensation plan, he testified. “This had been brewing since before I left the company in March [2005]. There were discussions before I left the company”. Mr Greenberg’s recollection of events was sternly challenged by AIG lawyer Ted Wells, who went through a series of documents demonstrating that SICO did not reach the agreement through talks with AIG. Mr Greenberg admitted that his memory of the fate of the programme was not based on any conversation or correspondence with then-AIG chief executive Martin Sullivan or then-chairman Frank Zarb. He said that Robert Sandler, an AIG executive at the time and a SICO voting shareholder, had told him that the company wanted to end the plan. The case will decide whether SICO improperly converted AIG shares after Mr Greenberg’s dismissal, and whether SICO breached its fiduciary duty.
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Last Updated ( Tuesday, 25 August 2009 )
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Bermudian insurer/reinsurer Validus Holdings has revised certain terms of its takeover offer for locally based reinsurer IPC Holdings, but has left the economic fundamentals of its $1.72bn offer in place. Validus said that it made a number of concessions to address concerns expressed by the IPC board, including permitting IPC directors to perform a limited market check after the signing an agreement with Validus, eliminating the book-value termination right so that closing would not be affected by catastrophe risk, and enhancing severance terms for IPC employees. However, Validus said that none of IPC’s previous objections “would justify changing the economic terms of our offer”, adding that IPC shareholders, in rejecting a rival offer from Max Capital Group, “sent a strong message to the IPC board that they want the attractive economics of the Validus offer”.
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Last Updated ( Tuesday, 25 August 2009 )
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About 5.2m English properties are at risk of flooding, claims the UK Environment Agency in a report Investing for the Future. Flood and coastal risk management in England, published on Friday. Its long-term investment strategy claims that a steady increase in investment to just over £1bn ($1.62bn) a year by 2035 is needed, without including inflation. This also excludes managing the risk of surface and groundwater flooding. The Agency said that 2.4m properties were at risk from river and coastal flooding, while 3.8m were at risk from surface water flooding. There are 1m properties at risk of both. The report said that, of the 2.4m properties at risk from river or coastal flooding, 500,000 had a more than one in 75 chance of flooding in any one given year. The Agency warned that “if investment is kept at current levels (in ‘cash terms’), there will be 350,000 more properties of which 280,000 will be residential with a significant chance of flooding by 2035”. The Agency tested five scenarios and found scenario four, as detailed above, to be the most cost-effective. It said that this strategy would save England £180bn over the next 100 years.
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Last Updated ( Tuesday, 25 August 2009 )
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