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DOL deals a blow to indexed annuities; economic losses from March weather may hit $3.5B

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DOL deals a blow to indexed annuities; economic losses from March weather may hit $3.5B

In thenews

Sales of indexed annuities could take a hit from the U.S.Department of Labor's unexpected move of addingthe products to the Best Interest Contract provision of the new fiduciary standardrule along with variable annuities. Industry players earlier thought that the increasedoversight on variable annuities would not apply to fixed-index annuities becausethe products were initially covered by an exemption that allowed agents to get relieffrom compensation restrictions, but the final rule released by the department willsubject both variable and indexed annuities to greater oversight.

InvestmentNews reported that carriers earlier pinned their hopes on indexedannuities to counter the rule's negative impact on variable annuities, but yesterday'sannouncement could now send carriers looking for an alternativeplan. The Wall Street Journal reportedthat Mercer Bullard, a securities-law professor at the University of Mississippi,laudedthe change, saying that the greater oversight on the products was necessary becausethey do not fall under securities regulations and are "extremely complex, costlyand often unsuitable."

The Journal reportedseparately that some industry players were happythat the administration listened to the industry's concerns and removed some ofthe "onerous" requirements.


sustained toproperty, infrastructure and agriculture from the convective storm and flood damageacross the U.S. during the month of March were anticipated to approach $3.5 billion,according to the latest monthly Global Catastrophe Recap report from Aon Benfield'sImpact Forecasting.


American InternationalGroup Inc. plans to cutits workforce in the U.K. by as much as 5% as the insurer looks to transferjobs to lower-cost locations, Bloomberg News reported, citing "people familiarwith the plan."


Insurers and reinsurers issued about $2 billion in in the first quarter,an increase of 35% compared to the year-ago period, Property Claim Services saidin its quarterly catastrophe bond report, citing data from the Artemis Deal Directory.


Demand for transactionalrisk insurance continued to climb in 2015 across all regions, according to 'sMarsh. In 2015, there were 450 transactional risk policies placed by Marsh's M&Aprofessionals globally, up 32% from 2014. Limits placed increased year-over-yearby 45% to $11.2 billion, primarily due to larger deal sizes and more insurance limitsbeing purchased per transaction.


Willis TowersWatson Plc agreed to pay$120 million to settle litigation involving the Stanford Financial Group and allegationsarising from matters about 10 years ago.


The Missouri House voted113-38 to advance a bill that would require transportation network companies toconduct background checks on drivers and ensure that vehicles are insured, the Insurance Journal reported.

In Mississippi, Gov. Phil Bryant signed into law H.B. 1381,a bill that gives the state insurance department authority over ridesharing services,the publication reported.

The Insurance Journalalso reportedthat the California Assembly Insurance Committee approved A.B. 2591, a bill thatwould allow policyholders to choose electronic delivery of insurance policy documents.


MetLife Inc.was not trying to "weaken" the Financial Stability Oversight Council infiling its legal challenge to shed its nonbank systemically important financialinstitution designation, MetLife General Counsel Ricardo Anzaldua wrote in a letterto the editor of The New York Times.Anzaldua's letter was a response to the publication's editorialarticle saying that the insurer's court win was "a setback to regulationintended to protect the economy from the inherent risks of an undersupervised financialsystem." Anzaldua said that in appealing the SIFI tag, the insurer only usedan avenue provided by the Dodd-Frank for any entity that wants to challenge thecouncil's determination.


Federal Reserve policymakers debated the merits of an during April,according to the minutes of the Federal Open Market Committee's March meeting, whichconcluded to keep the target range of its key federal funds rate between 25 and50 basis points.

In otherparts of the world

The premium income of Japan's three largest general insurersincreased by 3.4% year over year to ¥7.6 trillion in fiscal 2015, the largest suchincrease since 2009, The Nikkei reported.

Fitch Ratings saida series of weather events in the fourth quarter of 2015 impacted the profitabilityof U.K. nonlife insurers, but flood losses were within the annual budget for weather-relatedlosses for most insurers due to benign weather during the rest of the year. Theagency expects competition in the segment to continue to be strong.

The dayahead

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

In Asia, the Hang Seng rose 0.29% to 20,266.05, while theNikkei 225 was up 0.22% to 15,749.84.

In Europe, as of midday, the FTSE 100 was down 0.09% to6,156.10, and the Euronext 100 fell 0.13% to 844.11.

On themacro front

The jobless claims report, the EIA natural gas report,the consumer credit report, the Treasury STRIPS report, the Fed balance sheet andthe money supply report are due out today.