The New York branch of the Federal Reserve pushed through the bailout of troubled insurer AIG in late 2008 without negotiating a better deal with AIG's counterparties on credit default swaps and other derivatives, according to an audit by Neil Barofsky, the special inspector general for the Treasury Department's Troubled Asset Relief Programme (TARP). With the rush, the New York Fed ended up agreeing to pay in full Goldman Sachs, Merrill Lynch, Société Générale and other counterparties that covered credit-market bets through the insurer, the report said. The report, to be released today, acknowledged that the bailout of AIG lacked proper disclosure. Mr Barofsky wrote that the Fed "refused to use its considerable leverage" in dealing with Goldman Sachs and AIG's other trading partners and "made the possibility of obtaining concessions from those counterparties extremely remote". At the time, Swiss bank UBS had offered to take only take 98¢ for every dollar owed by AIG. However, Goldman Sachs and others argued that such discounts could only be agreed through a bankruptcy proceeding. For its part, the New York Fed said in a letter that accompanied the audit that it had "acted appropriately" in its negotiations with Goldman Sachs and other AIG trading partners, saying that the rescue of AIG "was designed to prevent a system-wide collapse and achieved that end".

Illinois-based insurer Allstate could take advantage of a cheaper market and the increase in the number of available takeover targets , CEO Thomas Wilson told Bloomberg Television yesterday that "we are relatively cheap in terms of what we are prepared to pay, but there are more properties on the market". Last year Allstate was one of several candidates to buy the insurance businesses of UK-based Royal Bank of Scotland (RBS) but the units eventually stayed with RBS. Since it received further backing from the UK government earlier this month, RBS has said that it will be putting the insurance operations back on the market.

France-based reinsurer Scor is to appeal against a EUR18.6m ($27.8m) fine imposed by the Spanish Competition regulator, which said that Scor had taken part in a cartel that fixed prices for construction defect insurance in Spain. The other alleged participants were Caja de Seguros Reunidos, ASEFA, Mapfre, Munich Re and Swiss Re. The six companies were said to have set minimum prices from 2002 to 2007. The total fines imposed were EUR120.7m. Caja de Seguros Reunidos also said that it would be appealing against the EUR14.2m fine it had received from the Commission. The other four companies said that they were studying the ruling and considering their position.

Bermuda-domiciled Omega Insurance Holdings has reported gross written premiums of $247m for the first nine months of the year, up 5% from the $236m booked in the same period last year. The company said this morning that there had been a benign claims experience in the year to date. In its core lines — predominantly short-tail property-focused insurance and reinsurance for SMEs — Omega reported a steady rating environment. Significant growth occurred in third-party Bermuda reinsurance (Omega Specialty), up 69% to $66m — mainly US cat-exposed treaty XoL business — and in surplus lines operation Omega US, up 800% to $27m. Omega said that it intended to more than double its 2009 premium by 2011 at Omega US if the rating environment remains steady. Participation in and reinsurance of Lloyd's syndicate 958 was down 21% year on year to $154m. Omega noted that in 2010 and 2011 business derived from syndicate 958 would increase as a result of Omega's increased share following a capacity offer in July and a further purchase of capacity in the November auction. Growth in property-catastrophe reinsurance (+49% to $103m), property per-risk treaty reinsurance (+21% to $17m), and liability insurance and reinsurance (+67% to $25m) was counterbalanced by falls in non-marine property insurance (-28% to $43m), professional indemnity insurance (-30% to $7m), motor insurance & reinsurance (-15% to $11m) and marine insurance & reinsurance (-40% to $27m). Meanwhile, Omega announced that Walter Fiederowicz is to step down as Chairman; a successor is expected to be in place by the beginning of next year. Christopher Clarke is to assume the role of senior independent director.