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Lloyd's defends use of reserve releases; AEGON exits Ukraine

S&P Global MarketIntelligence offers our top picks of insurance news stories and more publishedthroughout the week.


* 's director offinance, John Parry, defended the market's use of reserve releases afteranother set of results in which prior-year reserve releases allowed Lloyd's tobook an underwriting profit.Parry denied that Lloyd's insurers sometimes booked reserve releases to make upfor weak underwriting profits in certain quarters, telling journalists that thefigures reflect better-than-expected claims costs in respect of policieswritten in prior years. Earlier, David Rule, executive director of insurancesupervision at the Bank of England's Prudential Regulation Authority,warned insurersagainst using reserve releases to boost profitability.

* Stress tests should cover not only the core banking sectorbut also other parts of the financial system, including insurers, to determineweaknesses that could undermine the sector's stability, a Bank of England paper.The authors of the paper noted that shocks can spread across the industry.

* Sweden is set to push through to tax law that would deprivebanks and nonlife insurers of favorable treatment for subordinated debt,including Additional Tier 1 bonds, International Financing Review reported.

On the deal table

* AEGONNV agreed to sell 100% of its shares in unit to , marking the Dutchinsurer's exit from the Ukrainian market. TAS will merge Aegon Life Ukrainewith its existing life insurer under the brand TAS Life.

* AtradiusNV acquired 55% of the shares in Graydon Holding NV, a business information servicesprovider with offices in the Netherlands, Belgium and the U.K. Having alreadyowned a 45% stake in Graydon, which will continue to operate independently,Atradius will become the sole shareholder of the company following thetransaction.

* Delta LloydNV's general insurance business agreed to a portfolio of insurance policiesas it looks to focus on core markets. Delta Lloyd General Insurance willtransfer to BovemijVerzekeringsgroep NV the risk bearer status of its garagekeeper insurance portfolio, which comprises specialist policies for garage andagricultural mechanization businesses.

* Legal &General Group Plc signed a five-year general insurancedistribution agreement with Skipton Building Society. The companies plan to offerthe general insurance product on aggregator sites under the Skipton brand.

M&A chatter

*  mightsell its U.K. wealthmanagement unit rather than proceed with plans for an IPO, Bloomberg Newsreported. Due to mounting costs from upgrades to the division's investmentplatform, executives at the parent group now favor a sale as well as severalother unspecified options over an IPO. The upgrades, which are now expected tobe completed in 2019 rather than at 2016-end, are likely to cost up to £450million, up from the initial estimate of £160 million in 2013.

* Generali is among the three main for 's ,Reuters reported. The others are Amundi SA and a Poste Italiane SpA-led Italian consortium. Thetransaction could generate €3 billion for UniCredit.

* StandardLife Plc's wholly owned financial planning unit, 1825, andfinancial adviser Almary GreenInvestments Ltd. ended discussions Standard Life's proposedacquisition of the latter. They were unable to reach an agreement.

Game plans

* ZurichInsurance Group Ltd. will merge its corporate and commercial businesses into asingle global business as part of its streamlining process. The combined unitwill be called commercial insurance and will be headed by James Shea, who joinsZurich Insurance from AmericanInternational Group Inc. The Swiss insurer is also establishing anew global specialty lines function within the new unit that will includecredit lines, marine, aviation and energy.

* CofaceSA mapped out a three-year strategic , aiming to achieve a return onaverage tangible equity of more than 9% across the cycle and a combined ratioof about 83%. It also targets cost savings of €30 million in 2018.

* MunichRe will expand its offices in Tokyo, Singapore and Beijing andscale down or close offices in certain other locations in Asia-Pacific as partof changes to its strategic setup in the region.

Management moves

*  CFO CharlesFry will step downfrom the role with effect from Oct. 31 and will leave the company's board withimmediate effect. Chief Risk Officer Reeken Patel will serve as interim CFO,although he will not join the company's board.

* Bupa unit Bupa Global Sheldon Kenton as managingdirector, Reuters reported. Kenton replaces Robert Lang, who was recentlypromoted to the position of managing director of Bupa's international marketsbusiness.

* Legal & General investment arm appointed StephenHalliwell CFO. Halliwell was CFO at 3i Infrastructure plc, a FTSE 250 group that focuses onU.K. and European infrastructure investments.

Featured during the week on S&P GlobalMarket Intelligence

: Esure is preparing a listing ofGoCompare, while the owner of Compare the Market is also set for a flotation,but Admiral is likely to hold on to its own aggregator,

: CEO Xavier Durand said the Frenchexport-credit insurer will move away from "growing for the sake ofgrowing."

: Investors gated into Standard LifeInvestments' £2.9 billion U.K. property fund, which halted trading shortlyafter the Brexit vote, should be able to withdraw their money again in thefourth quarter.