Chinese insurers at risk from volatile equities
By Steve Randall
The volatility in Chinese stock markets is beginning to affect the credit worthiness of the country’s insurance companies according to Moody’s. The credit rating agency says that it currently rates the industry as “stable outlook” but warns that there are negative headwinds. The Chinese Insurance Regulatory Commission’s figures show a 6 per cent drop in net assets and a 73 per cent drop in profits in the year to August.
Sally Yim of Moody’s says that it expects the Chinese equity markets to continue to be volatile in the next 12-18 months which is expected to have a “negative impact on life insurers, as their financials are highly dependent on stock market performance. Should the recent market correction stabilise at current levels or extend further, insurers will see a reversal in the improving trend in their earnings and capitalisation of the past year.”
California homeowners using specialty insurers for fire risk
By Steve Randall
Wild fires are a big concern of homeowners in California but insuring their properties has become an expensive business. Reuters reports that many homes deemed at particularly high risk are not eligible to be covered by traditional insurance companies and some, such as Allstate, will not insure against wild fires anywhere in California. There is a state plan backed by a consortium of insurers but the report says that many homeowners are opting to arrange coverage through specialty insurers instead. These are the kind of firms that would normally provide commercial coverage for unusual construction projects or kidnapping. Although the cost is often higher than the state plan, the coverage is higher.
Insurer reveals the risk of being a playful kid
By Steve Randall
Inflatables such as bouncy castles rank alongside trampolines as the biggest causes of childhood injuries. British insurer Direct Line has revealed internal data which shows that inflatables and trampolines account for 9 per cent of children’s injuries, slides and water slides are next at 7 per cent while climbing frames and trees account for 6 per cent of injuries. The figures show that 82 per cent of the injuries occurred while an adult was on the premises and that six year olds are most likely to be injured; 20 per cent of claims were for children of that age followed by 5 and 7 year olds at 14 per cent.
Specialist brokerage exploring 1.6Bn sale
By Greg Roumeliotis and Mike Stone
(Reuters) - Confie, a U.S. insurance brokerage focussed primarily on Hispanic consumers, is exploring a sale that could value it at as much as $1.6 billion (1 billion pounds, including debt, people familiar with the matter said on Monday.
ABRY Partners, the private equity firm that owns Confie, has hired investment bank Guggenheim Partners LLC to run an auction for the company, the people said.
Confie is expected to generate $134 million in earnings before interest, taxes, depreciation and amortisation this year, and more than $150 million in 2016, one of the people added.
The sources asked not to be named because the sale process is confidential. Representatives for Confie did not return requests for comment. Representatives for ABRY and Guggenheim declined to comment.
Founded in 2008, Confie is a Huntington Beach, California-based insurance brokerage most known for auto insurance services, although is also expanding into health insurance. ABRY acquired a majority stake in 2012 in the company, formerly known as Confie Seguros, from Genstar Capital for an undisclosed amount.
Confie has been rapidly acquiring smaller brokerages in the hopes of growing beyond its primary markets and establishing a national footprint. It has acquired over 90 businesses since its inception, according to its website.
Private equity-owned insurance brokerages have seen a spate of deals this year. Buyout firm Apax Partners LLP, for example, agreed to acquire AssuredPartners Inc in July from GTCR LLC, while in June Stone Point Capital LLC invested in KKR & Co LP's Alliant Insurance Services.
(Reporting by Greg Roumeliotis and Mike Stone in New York; Editing by Cynthia Osterman)
