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MassMutual selling funds biz; Travelers' Q3 profit up; Prudential sheds SIFI tag

Invesco Ltd. has agreed to acquire Massachusetts Mutual Life Insurance Co.'s asset management affiliate, OppenheimerFunds Inc.. MassMutual and OppenheimerFunds employee shareholders will receive a consideration consisting of 81.9 million shares of Invesco common equity and $4 billion in perpetual, noncumulative preferred shares with a 21-year non-call period and a fixed rate of 5.9%.

The U.S. Treasury's Financial Stability Oversight Council yesterday rescinded Prudential Financial Inc.'s designation as a company whose failure or "material financial distress" could threaten U.S. financial stability, meaning that the company is no longer subject to the increased scrutiny that designation carries.

Travelers Cos. Inc. today reported third-quarter core income of $687 million, or $2.54 per share, compared to $253 million, or 91 cents per share, in the year-ago quarter, as catastrophe losses, net of reinsurance, dropped to $264 million from $700 million.

RLI Corp. yesterday posted third-quarter operating earnings of $20.8 million, or 46 cents per share, up from $1.7 million, or 4 cents per share, in the prior-year period.

Reinsurer Swiss Re AG said today that it estimates its third-quarter preliminary combined claims burden from recent large natural catastrophes at around $1.1 billion, net of retrocession and before tax, dominated by weather-related losses in Japan. Man-made disasters are expected to add a further $300 million in claims, split between reinsurance and corporate solutions. Although the third-quarter losses are large for an individual quarter for Swiss Re, it said cumulative losses for the first nine months are broadly in line with year-to-date expectations.

PCS estimates that overall insured losses from Hurricane Florence will total $2.5 billion, of which 62% will fall on homeowners' insurance, The Insurance Insider reported. Swiss Re estimated market losses from Florence of about $4 billion and from Typhoon Jebi of about $6 billion, with its own shares coming to $120 million and $500 million, respectively.

Earlier, Bermuda-based RenaissanceRe Holdings Ltd. said it expects losses from catastrophe events to have a net negative impact of about $155 million on its third-quarter results. Jebi and Florence will account for about $70 million and $55 million, respectively.

According to Artemis, Markel CATCo Investment Management Ltd.'s stock exchange listed fund is also exposed to potential losses from Michael and Jebi, but it remains hard to estimate the losses at this stage.

The Connecticut Insurance Department approved CVS Health Corp.'s pending $69 billion deal to acquire Aetna Inc. The transaction is expected to close by year-end.

Gallagher, the brand name of broker Arthur J. Gallagher & Co., acquired Southampton, U.K.-based Portmore Insurance Brokers Ltd. and Portmore Insurance Brokers (Wiltshire) Ltd. Financial terms of the deal were not disclosed.

Prudential Financial said it has concluded $3.2 billion of previously undisclosed longevity reinsurance contracts in the U.K., covering about 13,200 retirees.

Interest in purchasing closed-block annuities and long-term care blocks is mounting among private equity firms, according to Athene Holding Ltd. President William Wheeler. He also said the life insurance industry needs to continue to "restructure" problematic assets and predicted there will be more divestitures of beleaguered long-term care businesses.

A.M. Best said in a special report that insurers are increasingly resorting to preferred stock and junior subordinated debt for capital management, as interest rates rise gradually. Several large insurers have recently issued these instruments, and in many cases, the proceeds have been used to retire higher-interest debt.

Austerity plans by Mexico's incoming government, which include cutting insurance premiums for civil servants, could have a dramatic impact on the finances of insurer MetLife México SA, a unit of MetLife Inc., El Economista reported, citing the head of the Condusef financial consumers' defense commission.

Munich Re Co. today recommended that Nikolaus von Bomhard, who was CEO from 2004 to 2017, be appointed to its supervisory board and take over as chairman, with effect from the 2019 AGM.

New York-based Kingstone Cos. Inc. named Dale Thatcher CEO, effective Jan. 1, 2019. Thatcher is succeeding Barry Goldstein, who has been named executive chairman of the board of directors.

Now featured on S&P Global Market Intelligence

Fewer catastrophe losses to lead to better Q3 results for US P&C insurers: All 18 publicly traded U.S. property and casualty insurers are projected to see earnings per share rise year over year, according to estimates compiled by S&P Global Market Intelligence.

Novartis to buy Endocyte for $2.1B; Pfizer to roll out early retirement plan: Novartis will acquire Endocyte for $24 per share, or a total equity value of about $2.1 billion, in cash; and Pfizer has confirmed reports that employees have been offered early retirement options as the pharmaceutical giant seeks growth.

In other parts of the world

Asia-Pacific: South Korea to tighten compliance rules; Dena Bank to get 41B-rupee infusion

Europe: US futures regulator warns on Brexit; Santander caught up in German fraud probe

Middle East & Africa: Qatar Islamic Bank Q3 profit rises YOY; Emirates NBD gets $2B loan

The day ahead

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

In Asia, the Nikkei 225 was down 0.80% 22,658.16, while the Hang Seng fell 0.03% to 25,454.55.

In Europe, as of midday, the FTSE 100 fell 0.10% to 7,047.51, and Euronext 100 rose 0.33% to 1,004.38.

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

On the macro front

The jobless claims report, the Philadelphia Fed Business Outlook survey, the leading indicators report, the Energy Information Administration natural gas report, the Fed balance sheet and the money supply report are due out today.

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