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REINSURANCE CREDIT OUTLOOK NEGATIVE

The credit outlook on the reinsurance industry remains negative, Moody?s Investors Service said a recent report. Fundamentals are more likely to weaken than improve in the next 12 to 18 months.

?With premium volumes drifting lower and equity positions holding steady, we believe the industry has too much capacity, which is likely to manifest in increased price competition going forward,? said James Eck, vice president, senior credit officer and the lead author of the report, in a statement.

In 2009, reinsurers? book value increased due to the recovery in the capital markets and low catastrophe losses, Moody?s said. Balance sheets have remained strong despite much higher losses this year related to events such as the Chilean earthquake and the Deepwater Horizon oil rig disaster.

PENSION PLAN FREEZES INCREASING

Some 35.5 percent of Fortune 1000 companies that have defined benefit pension plans have frozen at least one such plan, according to a new analysis. There are 586 employers on this year?s Fortune 1000 list that sponsor defined benefit plans, and 208 have frozen at least one plan, according to New York-based benefit consultant Towers Watson.

That 35.5 percent is up from 2009, when 31.3 percent of 607 Fortune 1000 companies had frozen at least one defined benefit plan.

In 2004, as the corporate drive to freeze defined benefit plans was gathering speed, only 45, or 7.1 percent, of 633 Fortune 1000 companies with defined benefit plans had frozen at least one plan.

In a freeze, a company continues its defined benefit plan, but future accruals for some or all participants stop.

MUNICH RE UNVEILS NEW PROGRAM

Munich Reinsurance Co. has unveiled a liability insurance and reinsurance program that would respond to offshore oil disasters. The program calls for annual aggregate limits of $10 billion to $20 billion for companies engaged in offshore oil exploration and production.

Coverage would be limited to claims relating to cleanup and removal costs, impairment of natural resouces and third-party property damage, as well as loss of earnings for businesses in sectors such as fishing and tourism, as happened in the Gulf of Mexico, Munich Re said in a statement.

Two energy industry mutual insurers, Oil Insurance Ltd. and Oil Casualty Insurance Ltd., already exist in Bermuda and provide some of these coverages above deductibles for their members.

SCOR LAUNCHES CREDIT FACILITY

SCOR has launched a 3-year. ?150 million natural-catastrophe coverage facility in conjunction with UBS. Under the transaction, SCOR will benefit from a contingent equity line, which would be available in two separate tranches. The issuance of the shares will be triggered when SCOR has experienced total aggregated losses from natural catastrophes above certain thresholds.

--Compiled by staff from news and wire reports.

October 15, 2010

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