Second Quarter Profit Figures on the Rise: April, May and June are usually good months for the insurance industry, and 2005 has been no exception. While AIG led the U.S. contingent with a second quarter net figure of $3.99 billion in profits, European and Bermudan companies got on the bandwagon as well. Even hard-pressed reinsurer Converium posted a $49.2 million profit, bouncing back from a $61.8 million first quarter loss.

Some of the more important numbers included: Germany’s Allianz increased gross revenues by 6.6 percent from 22.2 billion euros ($27.4 billion) to 23.7 billion euros ($29.3 billion). Operating profits increased by 18.8 percent from 2 billion euros ($2.47 billion) to 2.37 billion euros ($2.93 billion) while net income rose by a remarkable 65 percent from 846 million euros ($1.05 billion)-adjusted for goodwill amortization after tax-to 1.39 billion euros ($1.72 billion), compared to the prior year period.

The U.K.’s Aviva plc. reported strong first half results with operating profit up 21 percent to 1.318 billion pounds ($2.38 billion), compared to 1.076 billion pounds ($1.94 billion) in the first half of 2004. Royal&SunAlliance posted first half year net after tax profit of 195 million pounds ($352 million) a 138 percent gain over the 82 million pounds ($148 million) it earned in the same period of 2004. Operating profits were up 79 percent.

Although ING’s second quarter results were skewed due to divestitures it made last year, the Dutch giant’s first-half net profit rose 25 percent to 3.492 billion ($4.33 billion), up from 2.793 billion ($3.46 billion) in the same period last year. Rival Aegon reported a 71 percent rise in second quarter net income of 760 million euros ($943.4 million), compared to last year’s 444 million euros ($551 million).

Munich Re posted an 870 million euro ($1.08 billion) profit for the first six months, down from 2004’s 1.192 billion euros ($1.48 billion), primarily due to reserve strengthening at American Re, which had an impact of 388 million euros ($481.5 million) before tax and 750 million euros ($930 million) after tax. Hannover Re reported solid profits in the second quarter, earning 121.4 million euros ($150.6 million), a 6 percent gain, compared to the 114.6 million euros ($142.2 million) earned in the same period of 2004.

Bermuda-based Allied World Assurance reported net income of $75.3 million for the second quarter 2005, compared to $69.4 million for the second quarter last year, an 8.4 percent increase. Another Bermuda-based insurer, Arch Capital Group Ltd., reported that net income for second quarter was $126 million, compared to $104.3 million for second quarter 2004.

In the old days all that money floating around might have tempted some companies to lower premiums to attract market share. But of course those days are behind us, aren’t they? Besides, after the sunshine comes the rain in the form of all those hurricanes, typhoons, floods, brushfires and tornadoes that seem to occur in the third quarter.

Lord Charman is New Aviva Chairman: The U.K.’s Aviva plc. announced the retirement, effective Dec.31, of Board Chairman Pehr Gyllenhammar, who has served in the position since the 2000 merger between Norwich Union and CGU created Aviva. Lord Colin Sharman of Redlynch, OBE, currently chairman of Aegis Group plc., will succeed him.

Gyllenhammar was first appointed to the board of Commercial Union in 1997, becoming chairman in 1998. He chaired Commercial Union during its merger with General Accident in 1998 to form CGU. Lord Sharman, 62, joined the Aviva board in January 2005. He retired as chairman of the accounting firm KPMG International in 1999 and has wide international experience. In addition to his post at Aegis Lord Sharman is an independent non-executive director of BG Group plc. and Reed Elsevier plc. and a member of the supervisory board of ABN AMRO NV. He is currently deputy chairman of Group 4 Securicor plc. and will retire from this role later this year.

Bermuda Start-up Investors Cashing In: Three of the larger initial investors in two Bermuda companies, set up in the wake of the Sept. 11 attacks, have decided to cash in their chips.

The Texas Pacific Group and Thomas H. Lee Partners have agreed to sell approximately 7.7 million ordinary shares, representing a 13 percent stake, in Endurance Specialty Holdings Ltd. in a block trade to Goldman, Sachs & Co., who will sell them to public investors. The shares are currently trading in the $38 range on the New York Stock Exchange, making the sale worth around $293 million.

A day before that announcement JPMorgan Partners, a private equity affiliate of JP Morgan Chase & Co., and related entities said they would sell approximately 7.8 million shares in AXIS Capital Holdings in a similar block trade to Morgan Stanley & Co. who will also resell them to the public. The sale doesn’t include some 3.8 million shares held by J.P. Morgan Chase. They’re currently trading in the $30 range on the New York Stock Exchange, making the sale worth approximately $233 million.

Endurance was set up by Aon and Zurich, while AXIS was funded by, among others, Marsh’s Trident II investment fund. Both subsequently held initial public offerings and have seen their shares rise in value.

Worries Growing about Network Risks: The latest survey from the Corporate Business Barometer, conducted by the Economist Intelligence Unit and sponsored by ACE European Group, finds that almost 60 percent of chief risk officers and senior risk managers view network risk as a significant and growing threat to their organizations. Network risk and the threats of data and systems crime are also seen as a significant threat to business reputations, which could seriously undermine public confidence in a company’s brand and products.

The majority of the 230 senior risk managers surveyed put concerns about network risk and regulatory risk as the top threats facing business today. Nearly 50 percent of the respondents also cited reputational risk as a significant threat.

Shaun Cooper, ACE’s senior network risk underwriter, observed that too few companies were taking meaningful action to address the problems. He also said too many risk managers don’t really understand the “tech speak” used within the IT community, and urged closer cooperation in order to better understand the issues involved.

Topics Profit Loss Risk Management