Bermuda-based specialty non-life company Ironshore is to expand the capacity of its specialty casualty unit to up to $25m, targeted to lead umbrella and excess layers. The company said that it would expand its underwriting of commercial risks "across virtually all classes, including energy, transportation, manufacturing and retail sectors". Ironsure Specialty Casualty president Tim McAuliffe said that "dislocation in the casualty insurance market has triggered Ironshore's decision to increase capacity in the marketplace in response to increased demand", noting that the insurer saw "great opportunities to fill these gaps in the marketplace".

Troubled US insurance group AIG has strengthened and shown signs of increased stability, but the federal bailout of the company still carries "significant" risk for US taxpayers, according to a new report by the Government Accountability Office, the investigative arm of Congress. The GAO said that it was still too soon to determine whether AIG will succeed in restructuring and repaying $120bn in federal loans and investments. The report noted that AIG has managed to wind down much of its financial products business, thanks in part to assistance from the Federal Reserve in reducing the size of AIG's portfolio of credit default swaps more quickly than expected. AIG's p/c and life/retirement businesses have maintained adequate capital levels, the report said, noting that the difference between withdrawals and deposits in the life/retirement operation fell to $3bn from $26bn during Q2. For the period, AIG swung to pre-tax operating income of $1.3bn from a year-earlier loss of $8.8bn. The GAO also noted the AIG's improved financial position is largely linked to continued governmental support. "AIG's recovery will depend not only on the long-term health of the company but also on market conditions and other factors", the report said.

Former AIG boss Maurice "Hank" Greenberg has proposed a re-working of the US government's bailout of the troubled insurer, and the House of Representatives Oversight and Government Reform Committee plans to examine the proposal. Upon receipt of the Greenberg proposal,  Representative Edolphus Towns, who chairs the House panel, told his staff to review it. The congressman could soon engage the US Treasury and Department and Federal Reserve in talks over the proposal, Bloomberg has reported. Mr Greenberg, who was ousted from AIG in 2005 amid an accounting scandal, has suggested that the government's stake in AIG be pared back to around 20% from the current 79.9% and that the Treasury and Fed reduce the interest rates that they are charging AIG for around $80bn in loans. Mr Greenberg would also like to see the terms of the loans extended to enable the New York-based insurer to pay down the loans without having to sell off assets hurriedly at low prices. Rep Towns' office said that the lawmaker's "main goal is getting the taxpayers their money back", saying that "if you have to wait a few years, that is fine". An AIG spokesman said that the group welcomes "constructive efforts by Mr Greenberg and others that assist the company in restoring value for shareholders and repaying the taxpayer". With prospects for AIG seeing easier terms on the federal bailout, AIG's shares gained 21% in value to close at $48.40 in Monday's trading.

Laws to be unveiled by the European Commission tomorrow will see the creation of three new pan-European supervisory bodies to draft and help enforce a single rulebook for banks, insurers and the securities market, claims this morning's UK Financial Times. Supervisory bodies in the three financial sectors would work besides the national authorities, and would have greater power than the three existing EU committees. In addition, a "European Systemic Risk Board" would consist of representatives of the 27 central banks and financial regulators in the EU. It would track financial stability matters. The FT said that the full details had not yet been finalized, but that the three supervisory authorities would probably be given the job of creating common rules over a wide range of financial services. Crucially, these authorities would be able to rule in a dispute between member states, although an appeal process would go as high as the European Council, where the final ruling would be by qualified majority voting.