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Lloyd's of London's EU plan; EIOPA publishes stress test results

S&P Global Market Intelligence offers our top picks of insurance news stories and more published throughout the week.


* European insurers could see as much as €160 billion wiped off their balance sheets under an adverse stress test scenario that envisages prolonged low interest rates and a negative market shock to asset prices, according to the results of the European Insurance and Occupational Pensions Authority's 2016 EU-wide stress test.

* Swiss Re Ltd. said total economic losses from disaster events in 2016 amount to at least $158 billion, compared to $94 billion a year earlier. The reinsurer's preliminary sigma estimates also indicate that insured losses have risen to approximately $49 billion in 2016 from $37 billion a year earlier.

* A.M. Best maintained its negative outlook on the global reinsurance sector as compressed investment yields and underwriting margins continue to put a strain on profitability.

* Lloyd's of London warned that insurers operating on its marketplace are slated to lose money on their 2016 underwriting activities and advised them to keep their plans under continued review in 2017 because of tough market conditions. Lloyd's will continue to push the U.K. government to maintain existing trading rights with the EU, but is also working on alternative trading options.

* British firms with a greater risk appetite than their more cautious peers might have to pay higher contributions to the U.K.'s Financial Services Compensation Scheme under new proposals unveiled by the Financial Conduct Authority. They include introducing risk-based levies.

Deal Talk

* Allianz SE is in talks with Generali to bid for the Italian insurer's French operations, according to Bloomberg News. Allianz reportedly has €2.5 billion left in its acquisition budget to spend until the end of 2016. Otherwise, the company will have to return the funds to shareholders through a repurchase transaction.

* South Africa-based Rand Merchant Investment Holdings Ltd. will acquire a 29.9% stake in U.K.-based Hastings Group Holdings Plc. Rand Merchant Investment will pay the British insurer between 248 pence and 255 pence per share for the stake, representing an aggregate cash consideration of £487.3 million to £499.5 million.

* Phoenix Group Holdings said it received approval from the U.K. Financial Conduct Authority for its proposed acquisition of Deutsche Bank AG's Abbey Life U.K. insurance business. The transaction is expected to complete Dec. 30.

* Australia's Cover-More Group Ltd. agreed to a A$741 million takeover offer from Zurich Insurance Group Ltd. unit Zurich Insurance Co. Ltd. The company said it entered into a scheme implementation agreement with Zurich Insurance, under which Cover-More shareholders will be entitled to receive A$1.95 per share.

Game plans

* Lloyd's of London intends to establish an EU-based subsidiary in 2017, becoming one of the first major businesses in the City of London to have a concrete timetable on relocation plans in preparation for the U.K.'s departure from the EU, according to the Financial Times. The insurance market will use the European subsidiary to continue doing business in the EU through the so-called passporting system.

* Allianz Group will become HypoVereinsbank's new insurance partner, effective Jan. 1, 2018. The collaboration will replace the previous deal between HypoVereinsbank, which trades as UniCredit Bank AG, and Munich Re unit ERGO Group AG.

Management moves

* Gábor Kepecs, member of AEGON NV's management board and CEO of AEGON Central & Eastern Europe, will retire in 2017. The company appointed management board member and AEGON Nederland NV CEO Marco Keim to supervise the group's activities in continental Europe, effective Jan. 1, 2017. Maarten Edixhoven will succeed Keim as CEO of AEGON Nederland.

* Generali named Tim Ryan chief investment officer, effective Jan. 9, 2017. The company also named Marco Sesana country manager for Italy, noting that he will retain his role as CEO of Generali Italia SpA. Both will join Generali's group management committee in January 2017.

* Standard Life Plc unit Standard Life Investments appointed Archie Struthers head of investments, effective Jan. 9, 2017, succeeding Bill Lambert, who will reportedly retire in March 2017.

In other news

* Old Mutual Plc said that unit OM Asset Management plc's underwritten public offering of 13 million ordinary shares was priced at $14.25 per share. The shares are being offered through Old Mutual's wholly owned subsidiary, OM Group (UK) Ltd.

* Italian President Sergio Mattarella chose Paolo Gentiloni, the country's foreign minister, to replace Matteo Renzi as prime minister. Renzi resigned after losing a Dec. 4 referendum on reforming Italy's constitution.

Featured during the week on S&P Global Market Intelligence

Dutch central bank seen to back Delta Lloyd/NN deal: De Nederlandsche Bank's call for insurers to do more to adapt to changing market conditions is a sign of implicit support for the potential merger between Delta Lloyd and NN Group.