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Execs bemoan litigious environment; tornado damage estimate; USAA cat bond

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Execs bemoan litigious environment; tornado damage estimate; USAA cat bond

Travelers Cos. Inc. executives cited rising litigiousness as being behind increased levels of general liability and commercial auto losses, which help drive the insurer's third-quarter earnings below expectations. Chairman and CEO Alan Schnitzer said during a conference call that general liability and commercial auto lines were impacted by "a tort environment that has deteriorated beyond our elevated expectation."

The problem posed by social inflation is "finally coming into focus" across the insurance industry, said W. R. Berkley Corp. President and CEO W. Robert Berkley Jr. "People are beginning to realize that it is real and it is here," he said during a third-quarter earnings conference call. Social inflation refers to the increase in losses caused by legislative, judicial and social changes, including higher jury awards.

Travelers shares closed down more than 8% in the wake of its earnings report yesterday, while W. R. Berkley was down more than 4% before reporting earnings post-close.

In the wake of a new law in New York that could lead to a flood of new child sexual abuse claims against public and private organizations, insurers will need to consider adding a regulatory risk premium to combat pricing difficulties, said Chris Williams, senior managing executive officer and co-head of international business at Tokio Marine Holdings Inc.

Anthem Inc.'s third-quarter net income rose to $1.18 billion, or $4.55 per share, from $960 million, or $3.62 per share, from the prior-year period, it said today. Total operating revenue grew to $26.44 billion from $22.98 billion in the third quarter of 2018.

Click here for a recap of yesterday's earnings.

Centene Corp. has received conditional approvals for its pending acquisition of WellCare Health Plans Inc. from every relevant state except Illinois and New Jersey, Chairman and CEO Michael Neidorff said. Centene is confident that it will receive all the necessary approvals to close the transaction by the first half of 2020.

Insurance Council of Texas spokesman Mark Hanna told the Fort Worth (Texas) Star-Telegram that damage from tornadoes that hit Dallas County over the weekend will likely be more than $1.2 billion.

Insured losses from Typhoon Hagibis are expected to range from $8 billion to $16 billion, according to catastrophe risk modeler AIR Worldwide. More than half of those losses will be due to inland flooding. Hagibis made landfall in Japan on Oct. 12, bringing what AIR Worldwide called "unprecedented rainfall."

United Services Automobile Association is sponsoring a $150 million Residential Reinsurance 2019 Ltd. (Series 2019-2) catastrophe bond, Artemis reported. The company is seeking four years of collateralized indemnity reinsurance protection.

After returning to underwriting profit in 2018, Bermuda insurers and reinsurers are expected to see earnings improve for full year 2019, according to Fitch Ratings. The 22 Bermuda-based companies that the rating agency sampled posted a combined ratio of 99% for 2018, down sharply from 108% in 2017.

Canadian regulators are paying particular attention to the continued protection of customer data following the completion of Genworth Financial Inc.'s pending sale of a majority interest in Genworth MI Canada Inc. to Brookfield Business Partners LP, Genworth Financial said.

KPMG has entered into exclusive talks with Exponent Private Equity about a sale of its pensions practice, a spokesperson for the audit company confirmed. Sky News reported that the practice could be valued at over £200 million.

Total new worldwide funding commitments to the insurtech sector in 2019 have already beaten the 2018 total, and during the third quarter exceeded $1.2 billion for the fifth consecutive quarter-year period, according to Willis Towers Watson PLC. A total of 83 deals with a total value of $1.50 billion were announced in the latest quarter, up 6% over the prior three months to reach the third-highest quarter for global insurtech investment to date, the broker added.

South Korea's Kakao Pay Corp. and Samsung Fire & Marine Insurance Co. Ltd. will set up a digital nonlife insurance joint venture by the end of 2019, Yonhap News Agency reported, citing industry sources.

The United States Concealed Carry Association Inc. was fined $100,000 in Washington state for selling unauthorized insurance that illegally covers defense costs for criminal shootings.

Now featured on S&P Global Market Intelligence

'Industry phenomenon' signals more struggles for commercial auto line: Third-quarter results for the top two U.S. commercial auto insurers include negative impacts from higher claims severity in bodily injury coverage.

In other parts of the world

Asia-Pacific: China considers replacing HK chief; India banks face US$50B shortfall says Fitch

Europe: Fast-track Brexit rejected; Swedbank Q3 profit down; Handelsbanken to exit Asia

Middle East & Africa: UAE banks mull real estate lending cap; Commercial Bank's Q3 profit up YOY

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Hang Seng shed 0.82% to 26,566.73, and the Nikkei 225 rose 0.34% to 22,625.38.

In Europe, around midday, the FTSE 100 increased 0.08% to 7,217.66, and the Euronext 100 fell 0.66% to 1,085.66.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

On the macro front

The Federal Housing Finance Agency House Price Index and the U.S. Energy Information Administration Petroleum Status Report are due out today.

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