Global brokers Aon, Marsh and Willis Group Holdings have been negotiating with various US state regulations to reinstate collection of contingent commissions; the controversial fees could be at least partially restored by year-end, the Wall Street Journal has reported. The fees were banned in 2005 as a consequence of an investigation by then-New York AG Eliot Spitzer into the rigging of bids for large commercial p/c accounts. In addition to the loss of a significant revenue stream, the big brokers have complained that the ban on contingent fees did not apply to smaller brokers. “We are sensitive to the need for a level playing field, so companies are treated equally”, Connecticut AG Richard Blumenthal told the Journal. However, regulators are also “mindful of the need to protect consumer interests”, he said, adding that a resolution would be reached by the end of the year. Last week, Barclays Capital analyst Jay Gelb wrote in a note to clients that restoration of the commissions could boost Marsh’s annual revenues by $254m, Aon’s by $51m and Willis’s by $40m. Marsh had posted $845m in contingent fees in 2003, the year before Mr Spitzer’s office launched its probe. Illinois-based broker Arthur J Gallagher recently negotiated the lifting of its self-imposed ban in contingent fees and expects the move to raise its revenues by $10m within two years.

Netherlands-domiciled insurer and reinsurer Brit remains committed to UK growth, and this move would either “leave the group looking either very clever in a few years’ time ... or in as much trouble as it was post 9/11”, according to investment bank Keefe, Bruyette & Woods’ (KBW) analysis of Brit CEO Dane Douetil’s presentation at KBW’s Investor Day. Wholesale business still makes up 50% of income, but is a shrinking proportion. Reinsurance is 28% and growing. But it is the UK commercial business that is growing the fastest, up 39% year on year in the first half of the year and now making up 24% of all Brit’s business. Mr Douetil said that Brit was looking for a sustainable business rather than opportunistic Lloyd’s business. He said that the investment in UK commercial would generate substantial gains when the cyclical upturn is in full flow. However, Mr Douetil expressed disappointment that AIG had remained a “competitive disruption” in the UK. On the investment and capital side, Mr Douetil said that the investment portfolio had been de-risked and was sitting in short-term instruments in preparation for when interest rates rise.

Bermuda-domiciled insurer and reinsurer Catlin is reserving its business cautiously and is keeping much of its $290m in capital, raised earlier this year, on one side, according to chief operating officer Paul Jardine. The rights issue that raised $290m had been intended to take advantage of opportunities likely to arise from the disaster at AIG. However, such opportunities have yet to appear. Speaking at this week’s KBW Investor Day, Mr Jardine said that this was the ‘cheating phase’ of the market, where insurers tried to pretend that current business was more profitable than it really is. Eventually pricing would move upwards. Catlin currently sees good pricing in property and catastrophe and in energy, but disappointing trends in most other areas.

...through its QBE Specialty Insurance unit, has acquired Cigna’s special risk, student and sport accident book of business for undisclosed terms. QBE will retain the Cigna operation’s current network of managing general agents and third party administrators.