Property Damage & Disaster Restoration Blog: Long Island & New York City

New York Gov. Cuomo Announces Storm Aid for Long Island

Posted on Wed, May 02, 2012 @ 09:59 AM

insurance journal,insurance,long island,new york,storm damage,storm aid,long island insurance,propwerty damage,advanced restoration,risk

New York Gov. Andrew Cuomo said the state is providing $8.5 million to Nassau and Suffolk counties on Long Island. The money will be used to pay expenses from damage done last year by Hurricane Irene and Tropical Storm Lee.

The storms caused widespread destruction across the state. Cleanup costs statewide are expected to exceed $1.6 billion.

The Federal Emergency Management Agency usually covers 75 percent of eligible disaster response and recovery costs.

Earlier this month, Cuomo announced the state would pay $61 million to 25 counties to cover costs for emergency shelter, road, water system and infrastructure repairs and other clean-up projects. Cuomo added $8.5 million for Nassau and Suffolk counties last week. 

Article Taken from the Insurance Journal

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Tags: insurance journal, storm aid, long island, property damage, insurance, new york, storm damage, long island insurance

Best Revises Chartis, Lexington & Members Outlooks to Stable

Posted on Mon, Jan 30, 2012 @ 08:54 AM

 

insurance,insurance journal, insurance news,insurance long island,insurance new york,chartis insurance,lexington insurance,advanced restoration,

 

In connection with its revision of its outlook on AIG, A.M. Best Co. has affirmed the financial strength ratings of ‘A’ (Excellent) and issuer credit ratings (ICR) of “a” of Chartis US Insurance Group and its members and the Lexington Insurance Pool and its members, headquartered in Boston, Mass. The outlook for these ratings has also been revised to stable from negative.

Best also affirmed the FSR of ‘A’ (Excellent) and ICR of “a” of AIU Insurance Company (AIU); however, its outlook on these ratings remains negative.

In addition Best has affirmed the FSR of’ ‘B+’ (Good) and ICR of “bbb-” of American General Property Insurance Company (AGPIC) (headquartered in Houston, Texas). The outlook for these ratings has been revised to stable from negative.

In a related action Best withdrew the FSRs of ‘A’ (Excellent) and ICRs of “a” of Chartis Select Insurance Company and Landmark Insurance Company, due to the merger of these companies with and into their immediate parents, Lexington Insurance Company and National Union Insurance Company of Pittsburgh, Pa., respectively.

All of these companies are subsidiaries of American International Group, and are headquartered in New York, NY, unless otherwise noted.

The ratings of Chartis US reflect its “supportive level of risk-adjusted capitalization, the group’s leadership position in the global property/casualty market, the successful implementation of Chartis’ rebranding, the effect of new leadership on management’s approach to the business, and its favorable earnings prospects in light of the financial, cultural and operational initiatives put in place since 2010,” Best explained.

As an offsetting factor Best cited the “effect of soft market conditions on underwriting results, adding that it expects the “continued emergence of adverse development of prior years’ loss reserves and the group’s exposure to natural and man-made catastrophe events which, although diminished by recent underwriting actions, remains a significant contributor to underwriting variability.”

Best explained that the stable outlook “reflects Chartis US’ market position; its ability to lead, attract and retain clients by leveraging its significant global capacity, extensive product offerings and innovation; and greater emphasis on technical pricing and predictive modeling. While reserve development remains a concern, the stable outlook suggests that any future reserve development will be within a level,” which Best said was “acceptable.”

Best also noted that it “expects that the group will continue to maintain a supportive level of risk-adjusted capitalization through favorable net earnings while providing shareholder dividends to its parent in accordance with historical norms.

“The change in outlook to stable from negative also considers the continued improvements at AIG including the January 2011 implementation of the company’s recapitalization plan, AIG’s recent issuance of debt and equity in the public capital markets, enhanced holding company liquidity and the orderly wind down of its financial products division.”

In addition Best pointed out that “Chartis US’ risk-adjusted capital position remained stable in 2011 and is well-supportive of the ratings at its current level. A decline in affiliated investments in recent years has served to improve both the level and quality of risk-adjusted capital, as have actions to reduce the group’s exposure to natural catastrophes. Surplus declined in 2011, primarily due to underwriting losses driven by catastrophes and by payment by the group members of shareholder dividends in line with historical levels.”

Best said it “anticipates that future dividends will be taken in accordance with AIG’s strategy of maintaining more capital at the holding company level, which affords a greater level of flexibility to deploy resources throughout the enterprise.” At the same time Best expects that “capital will be maintained at a sufficient level to support the ratings at the operating entities. AIG has issued Capital Maintenance Agreements to its key operating subsidiaries as part of its capital management plan in support of this expectation.”

An apparently major factor in Best’s actions is Chartis improved underwriting performance through the first nine months of 2011, compared with 2010, but, Best added, it “is expected to be slightly worse than the industry average for the year. Chartis US’ 2011 results for that period were impacted by the unusually high level of global catastrophe activity in the year, which added approximately nine points to the combined ratio. Results as of September 30, 2011 also were modestly impacted by adverse development of prior years’ loss reserves.”

Best explained that the “favorable comparison of 2011 results to 2010 is substantially affected by the impact of increases in reserves for prior years’ losses in 2010, which totaled $5.2 billion and added over 26 points to the reported statutory combined ratio in that year. The reserve increase in 2010 was, as indicated previously, within Best’s estimate of the group’s reserve deficiency and, as such, did not drive a change in the group’s ratings. Favorable rate changes accelerated through 2011 and Chartis US expects to continue achieving rate increases through 2012.”

The future development of loss reserves “will be favorably impacted by the 2011 loss portfolio transfer of Chartis US’ asbestos reserves to National Indemnity Company, a subsidiary of Berkshire Hathaway Inc.,” Best said. However offsetting this favorable effect is Best’s expectation that “the group’s reserves—even after consideration of the benefit of this agreement—remain deficient, although at a lower level than prior to these actions.”

Best’s assessment of the group’s risk-adjusted level “reflects this expectation,” as well as Best’s expectation that “Chartis US’ reported underwriting results will continue to reflect increases in prior years’ loss reserves in the near to midterm.

“The group continues to enjoy its position as a leading provider of commercial insurance in the U.S. market and benefits from Chartis’ global leadership position. The group’s ability to provide global insurance services to multinational companies, as well as to meet the needs of local markets, remains a key differentiator of its business profile.”

As far as the ratings on Lexington are concerned, Best explained that they “reflect its supportive level of risk-adjusted capitalization, historically favorable development of prior years’ loss reserves, consistent generation of favorable pre-tax operating and net income and its position as the leader in the U.S. excess and surplus lines market.”

As partial offsetting factors Best cited the “effects of soft market conditions on the group’s underwriting results; its exposure to natural catastrophes, which drives variability in underwriting performance; and the long-tailed nature of its excess casualty writings.”

Best said the stable outlook reflects its expectation that the group will maintain a supportive level of risk-adjusted capital driven by continued favorable net earnings. The change in outlook to stable from negative also reflects Best’s perspective on the reduced risk to Lexington from negative events at its ultimate parent, AIG.”

However, Best noted that “Lexington’s underwriting and operating results deteriorated through the first three quarters of 2011 from their 2010 level, driven by the significant level of catastrophe and weather-related events in the year.”

The adverse effect of these events, however, “was partially offset by favorable development of the pool’s reserves for prior years’ losses. Despite the decline in underwriting performance driven by a near-historic level of global catastrophe activity, the group’s underwriting losses through September 30, 2011 were relatively modest in the context of its surplus and asset bases. Underwriting results continue to benefit from a better than average expense ratio,” but, as Best also observed, “Lexington’s expense ratio has grown closer to its peer group average in recent years, driven in part by lower levels of net written premium (particularly in 2009).

“Following the sharp decline in net written premium in 2009, Lexington’s premiums rebounded in 2010 and 2011. The decline reflected both reduced demand for traditional excess and surplus (E&S) coverages (as admitted carriers sought to boost business by writing coverages traditionally offered on an E&S basis on their admitted paper) and the effects of AIG’s 2008 crisis.

“The pool maintained its E&S leadership position, however, and as the aftermath of AIG’s issues faded, customer and premium retentions have returned to near-normal levels. As with Chartis US, Lexington expects the positive rate actions that began in 2011 to continue through 2012.”

Best said its ratings on AIU “reflect its supportive level of risk-adjusted capitalization, the historically favorable performance of its core book of Japanese A&H and auto insurance and its restored focus on that business.”

As offsetting factors, Best cited “the variability in surplus and results in recent years (related in part to the quota share reinsurance it provided to an affiliate in 2008 and 2009), the effects of the Tohoku earthquake and tsunami on 2011 results and the potential for continued changes in the company’s legal entity structure as the previously announced restructuring of Chartis’ business continues. The negative outlook on the ratings is reflective of these offsetting factors.”

 Best’s ratings on AGPIC “reflect the company’s sufficient level of risk adjusted capital to run off its remaining liabilities and the orderly progress of that run-off, offset by its limited business profile,” the report said. The stable outlook reflects Best’s expectation that “the company will continue to maintain sufficient capital to facilitate the wind down of its business, and that there will be no negative impact on the company resulting from issues related to AIG.”

In conclusion Best indicated that it doesn’t “expect positive movement on any of these ratings in the near to midterm. Potential drivers of downward movement in the ratings include deterioration in risk-adjusted capitalization below the level required to support the ratings; underwriting or operating performance that is not in line with Best’s expectations; recognition of adverse development of prior years’ loss reserves in excess of Best’s expectations; recognition of a failure of management to disclose information that is relevant to the rating process; reduction in or withdrawal of lines of credit available to AIG or Chartis Inc.; and deterioration in the financial condition of AIG, whether driven by its insurance or non-insurance operations.”

Best summarized the companies affected by the ratings announcements as follows:

The FSR of ‘A’ (Excellent) and the ICR of “a” have been affirmed and the outlook revised to stable from negative for Chartis US Insurance Group and its following members:
       National Union Fire Insurance Company of Pittsburgh, Pa.
       American Home Assurance Company
       Commerce and Industry Insurance Company
       Chartis Property and Casualty Company
       The Insurance Company of the State of Pennsylvania
       New Hampshire Insurance Company
       Chartis Insurance Company – Puerto Rico
       Chartis Insurance Company of Canada
       Chartis Casualty Company
       Granite State Insurance Company
       Illinois National Insurance Company

The FSR of ‘A’ (Excellent) and the ICR of “a” have been affirmed and the outlook revised to stable from negative for Lexington Insurance Pool and its following members:
       Lexington Insurance Company
       Chartis Specialty Insurance Company
       Chartis Excess Limited

Source: A.M. Best

Article First Published in The Insurance Journal

 

Tags: insurance journal, chartis insurance, a.m. best, long island, insurance, new york

The Next Big Thing In Insurance Coverage Is Here

Posted on Tue, Dec 13, 2011 @ 10:16 AM

By Amy O' Connor | December 13, 2011

First Published in the Insurance Journal

insurance journal,advanced restoration,insurance,restoration,long island,new york,new york city

 

Some in the insurance industry are staking their futures on the reputations of others. That is, they are looking to insure reputational risk.

With the boom in social media, interest in reputational risk has itself boomed. The term refers to a company’s risk of having its reputation damaged because of certain events or incidents and the fallout that takes place because of these incidents. In some cases, the effects can be severe enough to put a company out of business.

In recent months, Aon (along with Zurich) Willis and Chartis have also come out with policies that address the exposures of reputational risk and offer risk management services to help corporations keep their reputations intact.

The Reputation Institute in London, England, deals with issues of reputation management and the strategic importance of reputation, its assets and effects on a company’s balance sheet. The Institute also studies how a company will be able to perform, or survive, if a crisis were to occur.

Seamus Gillen, senior adviser at Reputation Institute, says these new insurance policies are just the tip of the iceberg and there are whispers that insurers see this as the next big class of business.

“It has been understood and acknowledged universally that the crystallization of reputation risk creates or leads to value destruction,” he says. “The financial impact on companies which go through a crisis can be significant. Suddenly people all over the world and within financial media have been putting a term on that.”

The Reputational Institute doesn’t offer crisis management, but Gillen says that it often does end up inside companies that are trying to put out fires.

“We are more proactive – what framework companies need to put into place to manage reputation,” Gillen says.

Recently, the Reputation Institute has been increasingly asked to address reputational risk and give input on reputational insurance products, according to Gillen.

“Reputational risk as a concept is really coming into its own. Previously people talk about reputation and brand and PR and all that – now everyone is talking about reputational risk,” he says. “We are seeing a lot of markets reactions to that with the insurance industry seeking to set up products for clients.”

The Reputation Institute doesn’t offer insurance or work in the industry, but Giillen says it was approached recently by a major London insurer about partnering on an insurance product.

Gillen says his organization has stood on the sidelines when it comes to endorsing any insurance coverages or companies. But that is about to change. The institute will only issue an endorsement when it is sure it is the right fit and a worthwhile product. He said there is a deal being negotiated and an announcement could come soon.

“There is no shortage of crisis management people who want to work with us and we are likely to go into the market,” he says. “People need support to make their business a success. It is about taking philosophies of my reputation and risk management to create a coherent strategy. People are coming to us and saying, ‘how can you help me with this?’”

Robert Yellen, chief underwriting officer for the executive liability division of Chartis in New York, says the company launched its new ReputationGuard product because of what it was hearing from its corporate clients.

“At the board level, the number one non-financial concern [for companies] is reputation,” he says. “It is more and more common for the press to glob onto things that put a company’s reputation at risk. The old adage says, ‘It takes 20 years to build a reputation and five minutes to ruin it.’”

Yellen says he has seen a few other coverages in the marketplace that deal with a crisis and insurance responses to the crisis itself, as well as pieces to the policy that deal with reputation and communication in a limited amount or context, but they use named or limited peril coverage triggers.

ReputationGuard was designed to help insureds cope with reputational threats, providing access to reputation and crisis communications firms Burson-Marsteller and Porter Novelli and coverage for costs associated with avoiding or minimizing the potential impact of negative publicity.

There are two categories of coverage:

  1. For reputation attacks: a public attack upon a company’s reputation. The costs of hiring communications experts from the Chartis panel and communications costs.
  2. For reputation threats: acts or events that the company believes, if made public, would have a material impact on the company’s reputation and would be seen as a breach of trust by the company’s stakeholders.

Chartis is not excluding any business segments but is most interested in those with revenues of $500,000 to $2 billion.

Yellen says the product is targeted to middle-market companies because larger companies are more likely to have in-house teams to deal with these issues. The middle-market and smaller companies may also need more assistance in putting the proper risk management procedures in place.

“Everyone has a reputation at stake, that is a common theme among business,” says Yellen. “People can argue that small businesses, like generic component manufacturers, don’t care, but in the regions we sell to, that’s not a mentality we see. Everyone cares about their reputation.”

Willis is taking a more segment specific route with its new Hotel Reputation Protection 2.0 policy, which responds to incidents that lead to, or are likely to lead to, hotel business losses from adverse publicity through any medium, from traditional to new media.

The policy provides cover for lost revenue based on RevPAR figures, a performance metric in the hotel industry that measures revenue per available room. The coverage also covers the cost of hiring a crisis management consulting firm during the first weeks of an incident.

“This product provides immediate assistance to a client who is suffering an incident which through social media will damage their brand,” says Laurie Fraser, Global Markets Leisure practice leader for Willis Group Holdings in London.

Fraser says the product was predicated on research in reputation, causes of concern to hotels, worldwide figures for incidents and the magnitude. It was designed in consultation with hotels. In the first week the product was launched, there were 32 inquiries, according to Fraser.

“Brand and reputation is an area of increasing importance and concern, especially among our hotel clients,” says Fraser.

Gillen agrees that insurers have a huge opportunity to help companies prevent a crisis with insurance products and access to outside resources.

“Unequivocally, in my view the biggest value piece [of reputational risk insurance] is to help the client understand and help prevent a crisis from happening in the first place,” says Gillen.

Gillen says there is no shortage of reputational risks from social media and the Internet in general, from corporate manslaughter, money laundering, corporate corruption, and terrorism. Consumers also have more awareness of how to affect a company’s fate.

“Companies need to be very careful about where they position themselves in order to get where they want to go because it can be fatal if they don’t take it seriously,” he says.

The combination of all the potential risks, says Gillen, is enough to make reputational risk insurance a hot commodity.

“I think [reputational risk insurance] will take off because there will be enough people out there that want some reassurance and their boards wanting reassurance that the company has the best crisis responses in place,” he says. “This is probably an idea that’s time has come.”

Executive Concern

The concern over reputational risk is reflected in the results of a new survey by Lloyd’s. The 2011 Lloyd’s Risk Index polled 500 C-Suite and board level executives in North America, Europe, Asia and elsewhere to assess corporate risk priorities and attitudes around the world. Business leaders were asked to rank the biggest risks they now face. In 2009 reputational risk was ranked ninth, in 2011 it came in third.

According to Lloyd’s, a 2010 study (Oxford Metrica Reputation Review) of the world’s 1,000 largest companies found 80 percent of companies lose more than 20 percent of their value at least once in a 5-year period because of a major reputational event.

“Business fails to protect itself from reputational damage at its peril,” says the Lloyd’s report, which claims certain business practices can directly increase the likelihood of reputational risk, including operating in new territories without a thorough understanding of local geopolitics, as many international companies operating in Nigeria have discovered.

 

 

 

About Amy O' Connor

O'Connor is associate editor of MyNewMarkets.com.

 

Tags: insurance journal, long island, property damage, risk, insurance, restoration, new york city

Fireman's Fund Expands Green Insurance to Educational Institutions

Posted on Tue, Sep 07, 2010 @ 09:41 AM

insurance journal,green insurance,insurance,fireman's fund,green insurance policy,educational facilities,long island,new york,advanced restoration corporationFireman's Fund Insurance Co. is broadening its commercial green insurance appetite to include public and private schools, colleges and universities, and trade and vocational schools.

With Green-Gard commercial building coverages from Fireman's Fund, schools can replace standard systems and materials with green alternatives after a loss. In the event of a total loss, Fireman's Fund will pay the cost to rebuild as a green certified building. If the property is already green-certified it will benefit from a 5 percent premium discount on its regular insurance coverage. In the case of a loss, Fireman's Fund protects the school's green investment with coverage by allowing it to attain certification at one level above the certified green building level prior to the loss or damage.

"To meet the emerging sustainability needs of schools, Fireman's Fund will now offer comprehensive green insurance coverage. Whether the schools have built green buildings, made green renovations or want to rebuild green in the event of a loss, Fireman's Fund provides the premier insurance solutions for these financial and environmental investments," said Stephen Bushnell, senior director of emerging industries at Fireman's Fund.

As reason for the program expansion, the insurer said public schools spend $6 billion every year on energy, the second highest expense following salaries, while colleges and universities spend approximately $2 billion on utility bills according to data from the U.S. Environmental Protection Agency. The U.S. Green Building Council (USGBC) has found that a green building typically uses 30 percent to 50 percent less energy and 30 percent less water, which can free up critical funds to support schools' core mission. USGBC data also shows that schools that have made green renovations save nearly $100,000 per year.

Going green also means attracting and retaining quality students and faculty for colleges and universities, the company said. The Princeton Review found that 68 percent of high school students are looking for a green campus in their search for their best fit college.

"Colleges and universities have long been on the leading edge of reducing greenhouse gas emissions, energy costs and their overall impact on the environment. A green campus not only conserves energy and makes a statement on climate change, it also reduces utility costs which can make a dramatic impact on a school's bottom line," said Bushnell.

Tags: insurance journal, fireman's fund, green, insurance, green insurancegreen-card, commercial building coverages, educational institutions

Insurance Journal