Sharp rise in insurance M&A

Insurance industry mergers and acquisitions have picked up dramatically in the first half of this year and dealmaking globally is expected to continue at an elevated pace, according to analysis by specialist law firm Clyde & Co.

The reinsurance sector and especially the Bermudan industry is likely to be a hotbed of activity as companies look to increase their scale and diversification to deal with rising regulatory costs and capital requirements as well as to create more robust balance sheets, according to the lawyers.

These concerns will be high on the agenda for the top reinsurance executives gathering in Monte Carlo for the annual Rendezvous event, which 10 years ago was in full swing when the September 11 terror attacks on the US took place. The destruction of the Twin Towers in New York that day in 2001 led not only to huge losses for the industry, but also to big changes in how it operated that are still evolving today.

Andrew Holderness, partner at Clyde & Co, said that while the number of deals globally had steadily declined through 2009 and 2010, the first half of this year saw a sharp jump to 290 deals globally from less than 250 in the second half of last year. In Europe, the first half of this year saw more deals than in the whole of 2010, he said.

“It is evident that mergers and acquisitions are back on the agenda of underwriting businesses,” he said. “Regulators and customers are looking for strength and stability...we expect to see continued activity across all types of transactions.”

This was particularly prevalent in the reinsurance business, Mr Holderness added, pointing to the development of the Bermudan industry since the wave of start-ups that were created in the aftermath of September 11 2001.

The so-called “class of 2001” was the most significant mass influx of new capital into the reinsurance industry ever seen, according to industry experts. But while $500m of capital was enough to make a company credible then, that figure is now between $3bn and $5bn.

The current three-way battle for Transatlantic Re in Bermuda is seen by bankers as heralding a potential increase in that capital floor and so a new round of consolidation.

However, others believe this will be hampered by poor valuations for reinsurers with many companies’ shares trading below their net asset values.

“Logically, there should be more consolidation, but if you look at valuations that limits what companies can do using their stock as a currency,” says Chris Klein at Guy Carpenter, the reinsurance division of brokers Marsh.

Read more...

Why choose car insurance with Confused.com?

It's simple - people choose car insurance with Confused.com to find the lowest rates in the UK from our panel of providers. Confused.com offers a comparison service that could allow you to save money on your policy.

We aim to always give you a wide range of choices when selecting car insurance. Compare insurance policies with Confused.com and you'll be putting the UK's top providers head-to-head to find the right policy for your needs. With high-profile partners from across the UK car insurance market, you'll find the lowest rates around from the quality providers on the Confused.com panel.

Choose quality car insurance with Confused.com

Confused.com has a long history of helping people save money online, starting with our car insurance service in 2002. As the longest-running UK comparison site, we've helped millions save on insurance policies. Our services don't stop there either, as we can find you cheaper gas and electricity or even help you save on high street shopping with voucher codes.

Once you've saved with Confused.com, you'll want to use our comparison engine to pinch your pennies wherever you can.

Our easy-to-use comparison has drawn the praise of many, including car insurance customer Nigel Caldicott: "I've already used Confused.com for my car insurance, and now I've used it for my Home and contents. Quick, easy and effective. Thanks."

Other reasons to choose Confused.com

Our car insurance comparison is free and easy-to-use, so it's hard to find a reason not to choose Confused.com. By choosing Confused.com, with our partner agreements, we can match offers direct from the provider or you could find an exclusive deal or offer, so you could save money when you choose Confused.com.

Read more...

Small-Business Owners Respond to Obama Plan

President Obama, in his speech Thursday before a joint session of Congress, promised to deploy the power of the federal government to induce small businesses to hire out-of-work Americans. But even some of the small-business owners who watched the speech live in the House chamber at the White House’s invitation said they would not be swayed by the carrots the president proposed to dangle.

David Catalano, who helped found Modea, a digital advertising agency in Blacksburg, Va., and Darlene Miller, who owns Permac Industries, a precision machining company in Burnsville, Minn., both said they planned to hire regardless of what the government does. “We’re going to hire based on our needs,” Ms. Miller said.

In his speech, the president outlined several tax incentives for businesses to prompt investment in general and to reward hiring in particular. The investment incentives, which would take effect in 2012, include cutting the employer payroll tax in half, to 3.1 percent, for the first $5 million in wages. The president would also allow companies to continue taking a full deduction for certain kinds of property purchases immediately, rather than having to amortize the expense over many years.

To reward hiring, the president proposed a full payroll tax holiday on up to $50 million in increased wages over what a company paid in 2011, regardless of whether the growth comes from new hires or salary hikes. The president also proposed a series of tax credits for companies that hire people who have been looking for work for at least six months: up to $4,000 for most employees, but up to $5,600 for veterans, and up to $9,600 for veterans injured during their service. It is unclear when the hiring incentives would expire. According to a White House spokesperson, the amount of the credit would depend on the employee’s wages and the number of hours worked.

Some economists have questioned whether such incentives really induce hiring and investment or simply reward companies for actions they would have taken anyway. But both business owners said that any extra boost would help. “This just eases the burden, to invest in their education, or do more things for them,” said Mr. Catalano. Added Ms. Miller: “It will definitely help small businesses with cash flow.”

While the proposals would benefit all businesses, not merely small ones, the White House said the payroll tax cut was directed toward “the 98 percent of firms that have payroll below” the $5 million limit. Some economists believe that the bonus depreciation, in particular, offers more help to large firms than small ones.

The president’s speech split advocates for small business along predictable lines. The National Federation of Independent Business, the conservative-leaning small-business lobbying group, panned it as “more of the same” in an e-mailed statement that cited “the threat of higher taxes and the thousands of pending federal regulations.”

“Small businesses need the government out of their way,” said Dan Danner, the group’s president and chief executive, in the statement. “Tax breaks are always a welcome help to small businesses, especially in these tough economic times. But those outlined tonight by the president are temporary, and avoid the question of meaningful business tax reform.”

The National Small Business Association, a more centrist organization, was more generous in its praise of the tax cuts. “Offering a payroll tax holiday can help all small employers — not just the profitable ones who benefit from an income tax cut — with some much-needed cash while at the same time making it a bit more affordable to bring on new employees,” said Todd McCracken, the group’s president and chief executive, in a statement. But the N.S.B.A. joined the N.F.I.B. in calling for a lighter regulatory burden for businesses and demanded a far-reaching overhaul of the whole tax code, not just for corporations.

These concerns resonated even with the president’s invited guests. Mr. Catalano said that he was wary of the president’s pledge to pay for the package by asking the “wealthiest Americans and biggest corporations to pay their fair share.” Mr. Catalano said that because his company was organized as an S Corporation, in which profits are passed through to shareholders, he would then face higher taxes. But, he said, “my partner and I have reinvested 100 percent of the profits that our agency has made over the last five years back into the company. If the government takes a bigger share of that from me, it directly impedes my ability to grow the agency.”

Ms. Miller said the president could have done more to address regulatory burdens. “There’s still a lot of work in that area to be done,” she said. “There are a lot of regulations that really just aren’t necessary.”

She also worried about the president’s call for higher taxes. But she added that even with her company’s profits, “I’m not the wealthiest, so it does not affect me directly.”

Read more...

Corp Bank targets to open 200 branches every year

MUMBAI, SEPT. 10: 

Corporation Bank plans to grow its total business to Rs 5 lakh crore by 2014-15, against Rs 2 lakh crore now, according to Chairman and Managing Director Mr Ramnath Pradeep.

To reach the business target, the public sector bank plans to open 200 branches every year, with each branch growing its business (deposits plus advances) to at least Rs 10 crore within the first couple of years of beginning operations, he said after inaugurating the bank's Thane Zonal Office.

By June-end, the bank had 1,362 branches. As per the business plan, by end-March 2015, it will have around 2,200 branches.

“We have 475 branches in Karnataka. We are considered a predominantly South-based bank. But now we are fast expanding our presence in North and West, where the GDP growth is high,” said Mr Pradeep.

STREAMLINES OPERATIONS

The Corporation Bank chief said the bank has streamlined its operations by opening 12 new zonal offices, including the Thane ZO. The new ZOs have been created to ensure that not more than 50 branches come under the jurisdiction of each zonal manager so that the official has enough time to attend to customer requirements. Altogether, the Mangalore-headquartered bank now has 31 ZOs.

On outlook for credit growth, Mr Pradeep said though there has been a slowdown in credit growth in the financial year so far, it is expected to pick up from October onwards. The bank has set a lower credit growth target of around 22 per cent, against 25 per cent last year.

Corporation Bank is receiving a steady flow of proposals from infrastructure project developers. However, it is avoiding further exposure to the power sector as it had reached the sector exposure limit, he said.

Read more...