Life insurers at greater credit risk than before financial crisis
The life insurance industry in the US is more exposed to corporate credit risk than it was before the financial crisis. Ratings agency Fitch has published a report on the credit quality of the US life insurance industry's investment grade corporate bond portfolio. It highlights lower credit quality and reduced liquidity characteristics than in the 2007-2009 period. “In the next credit crisis, the US life insurance industry is more susceptible to rating migration due to the increased exposure to corporate bonds,” said Julie Burke, Managing Director, Insurance, Fitch Ratings. Since the financial crisis, US life companies have shifted their bond holdings toward corporate securities and away from structured securities.
Advisors split on Towers Watson, Willis deal
Those who advise shareholders on whether a transaction would be in their best interests are split on whether a deal between Towers Watson and Willis Holdings is a good one. Last week, ISS and Glass Lewis advised that shareholders should reject the deal on the basis that market conditions meant that the premium on the $8.7 billion merger was effectively worth less. This week however Proxy Mosaic and Egan-Jones Ratings Company have recommended that Towers Watson shareholders should vote in favor of the deal.
Proxy Mosaic commented: “Structuring the deal as a merger of equals means forgoing the control premium typically paid to a target’s shareholders in an acquisition, but we have seen no evidence that the board’s processes in evaluating this transaction were anything less than thorough and rigorous.” Egan-Jones said that it “views the proposed transaction to be a desirable approach in maximizing shareholder value.”
Proxy further commented that it believes the combination would create “a fast-tracked brokerage license that will allow [Towers Watson] to further its own growth agenda, namely by leveraging Willis’ global distribution network to extend the reach of its global reach in health insurance.” Towers shareholders will vote next Wednesday (Dec. 18.)
Promotion for insurance man at Canada’s TD Bank
The head of insurance at Toronto-Dominion Bank has been handed a new role amid a reshuffle of the bank’s top executives. Riaz Ahmed is currently group head of insurance but will become the bank’s chief financial officer. He will take up his new position on Jan. 2. 2016.
