Maurice "Hank" Greenberg, one-time CEO of American International Group and one of the insurer's largest shareholders, is reuniting with some of his former colleagues for a new insurance venture.
Greenberg's firm, C.V. Starr & Company, has launched Iron-Starr Agency Limited, a joint venture with Ironshore Inc. Iron-Starr Excess will act as a specialty lines insurance and reinsurance managing general agency, domiciled in Bermuda, according to an announcement from C.V. Starr.
Initially, Iron-Starr Excess will focus on the production of excess financial and commercial lines insurance and reinsurance products through U.S. insurers, Bermuda or other offshore carriers, including catastrophic excess casualty insurance for Fortune 2000 and other clients. It will issue policy limits up to $75 million.
"There are significant opportunities in this market, and C.V. Starr together with Ironshore has the team to get the job done," Greenberg said in a statement.
Kevin Kelley, Ironshore's CEO who used to work under Greenberg at AIG's Lexington Insurance subsidiary, said in a prepared statement that the partnership allows his company to enter the excess casualty market "with additional backing and support to offer larger limits, consistent with the needs of these clients."
"We look forward to developing a long-standing relationship with C. V. Starr and are excited about this new venture," he said. "This arrangement will assure customers that during these challenging times, they have a syndicated alternative that understands their needs and has the experience to be a long-term solution on Finance."
Ironshore also features six former AIG employees as its executives.
Greenberg has been a frequent critic of the $150 billion federal bailout of AIG, the company he left in 2005 amid money mismanagement claims by former New York Attorney General Eliot Spitzer.
In November, Greenberg told IFAwebnews.com that while the impact of the relief funding will take years to realize, he believes AIG will be minimized to a worldwide property-casualty company with "some modest life remaining assets, but it is hard to tell."
Greenberg has also been skeptical of the government's 79.9% ownership role in the insurer, as it could hurt raising capital in the future.
C.V. Starr is an independently owned holding company with insurance agencies and a portfolio of global investments. Through its insurance operations, C.V. Starr writes specialty lines covering aviation, marine, energy, excess casualty and property, accident and health, including risks with international exposures.
Ex-AIG CEO Hank Greenberg launches new insurer
Madoff torts likely to plump up some insurance prices
Frenzy of litigation could strain liability lines already stretched thin by subprime mess; ‘lot of links in the chain’
Madoff’s alleged $50 billion fraud is likely to produce substantial insured losses and put additional pressure on the industry’s already battered professional liability lines, observers say.
Aon Benfield estimates the direct insured losses resulting from the investment fraud at $760 million to $3.8 billion, with a best estimate of $1.8 billion, according to a preliminary analysis released recently by the Chicago-based reinsurance brokerage.
Suits against money management firms that sent investors to Bernard L. Madoff Investments Securities have mounted since last month, when federal prosecutors charged the Wall Street fund manager with running a massive Ponzi scheme.
Claims are being directed at financial institutions, investment funds and money managers who dealt with Mr. Madoff; some lawsuits extend to include parent companies, accounting firms and auditors tied to the investments, said Kevin LaCroix, a partner with executive liability intermediary OakBridge Insurance Services in Beachwood, Ohio.
For example, a suit against investment adviser Ascot Partners—which invested nearly $1.8 billion in assets with Mr. Madoff—also named Ascot’s auditor, BDO Seidman.
“Basically, anyone who stood in between the investor and Madoff” could be targeted, Mr. LaCroix said. “There are a lot of links in the chain” and “burned investors will be examining all the relationships as they try to recover their losses.”
The size and scope of this scheme “will add up to a lot of liability somewhere” said Greg Flood, the New York-based president of IronPro, a professional liability division of Bermuda-based Ironshore Insurance. “Industry-wide claims costs between $1 billion and $2 billion would be very easy to imagine,” he said. Mr. Flood said he was not aware of any Madoff-related exposure at Ironshore.
Lawsuits are likely to focus on the due diligence performed by the institutions that invested clients’ money with Mr. Madoff. Other allegations could include negligence, mismanagement and breach of fiduciary duty, legal experts say.
New York-based Fairfield Greenwich Group, a large institutional investor in Madoff funds, faces a $7.5 billion suit by investors. In the suit, plaintiffs argued the hedge fund managers collected millions of dollars in fees while failing to carry out due diligence that would have uncovered the fraud.
Claimants primarily will call upon firms’ errors and omissions and directors and officers liability policies, but other types of coverage also may be sought to pay for the losses, including crime insurance and fidelity bonds, observers say.
Subprime loan-related claims already have generated an estimated $3.5 billion worth of D&O claims for financial institutions and pushed up prices for liability coverage for financial institutions by as much as 100%, according to market experts.
D&O rates for financial institutions have risen for the past five quarters year over year and, given the Madoff impact, “we expect that trend may continue,” said Michael O’Connell, New York-based managing director of the financial institutions practice for Aon Risk Services, a unit of Aon Corp.
“It’s certainly something the E&O and D&O lines are bracing for,” said Michael White, senior vice president and financial institutions industry leader for the executive risks practice for Willis HRH in New York. He noted that recent renewal negotiations for financial institution coverage have featured a heightened interest by underwriters in clients’ potential exposure to Mr. Madoff. Industry observers also say they would not be surprised to see insurers writing Madoff exclusions into policies.
Among the leading providers of financial institution insurance generally are American International Group, Chubb Corp., ACE Ltd. and XL Capital are likely to face the highest claims, observers say. AIG and ACE declined to comment, while Chubb and XL did not respond to requests for comment.
The final cost to insurers may depend on the amount of coverage the institutions bought, but losses could be restricted because money management firms typically cannot purchase high limits, observers say.
“Most of the firms would not have adequate limits of coverage to indemnify the people who would sue,” said Marshall Gilinksy, a shareholder in the New York office of Anderson Kill & Olick. He noted that typical E&O policy limits for financial advisory firms might be about $15 million to $20 million and available up to $30 million. Limits for financial institutions are more difficult to generalize, he said.
“It would not be unusual for a money management firm to have limits of $10 million” for E&O liability, Mr. LaCroix said.
Defense costs, which are expected to be “significant,” are likely to erode policy limits because liability coverage typically includes defense costs inside limits, legal experts say.
Insurers also may be looking closely to see whether the allegations raised trigger coverage exclusions, particularly those around conduct resulting in personal profit or gain, said Mr. LaCroix.
But Willis’ Mr. White said he thinks “it’s going to be difficult (for the carriers) to try to deny coverage” broadly due to the nature of the investors’ claims.
Cheap Car Insurance Policy Options in 42 States
Phoenix Arizona, January 21, 2009 Serenity Insurance Group announced today that they have been appointed with Safeco Insurance to provide Homeowner’s Insurance, Renter’s Insurance, Umbrella Policies, ATV Insurance and RV Insurance in 42 States. Serenity Group has the ability to provide car insurance coverage in 47 states from several different companies and they currently provide auto insurance quotes for high risk requiring a Form SR22 and for preferred drivers requiring cheap car insurance and motorcycle insurance.
Serenity’s agents are bilingual and Serenity has a large customer service staff to assist customers . Serenity has provided insurance for tens of thousands of customers throughout the Unites States. Cheap car insurance has become one of Serenity’s specialties and their agents are becoming known throughout the industry as the experts in finding the companies who can provide the least expensive rates.
Innovation is also one of Serenity’s attributes. Serenity can quote and complete a purchase for auto insurance in less than 7 minutes. All transactions can be completed via the internet, with the help of agents to secure the least expensive and best insurance scenario for the customer. For over fifteen years Serenity Insurance has provided cheap auto insurance, SR-22 insurance and high risk auto insurance in 47 states.
Rather than going from company to company and getting a quote from each of them, Serenity’s experienced agents rate customers with all of the companies they represent to find the best rate and situation for that person. Serenity has extensive experience finding cheap car insurance rates for all customers and SR22 insurance is not their only business. Serenity can offer complete insurance packages for the homeowner, renter, motorcycle or ATV rider, Recreational vehicle owner,or an umbrella policy.
About Serenity Insurance Group
Serenity Insurance began as a unique insurance agency primarily focused on serving the specialized insurance needs for drivers with alcohol related offenses. Mr. Thomas A. Black, the founder and CEO of Serenity Insurance has over 30 years experience in the insurance business. Mr. Black believes that when people make a serious mistake and get an alcohol related offense they need an insurance agency that understands what is involved from society’s point of view as well as from the offenders point of view. Serenity Insurance helps people get back on their feet by acting as a resource for answers related to SR-22 insurance and providing affordable insurance. Serenity now serves 47 states and is committed to treating all people with dignity and respect while maintaining complete confidentiality.
Serenity works very closely with Alcohol Treatment Centers supporting their efforts to get offenders back on their feet as contributing members of society as quickly as possible. Serenity stands firmly committed to providing caring confidential service combined with affordable insurance for people requiring an SR22 filing.
Former AIG Execs Creates U.S. P/C Operation
Ironshore Inc. has appointed Steven England as executive vice president responsible for running its newly created U.S. Property/ Casualty underwriting operations based in St. Louis, Missouri.
The new unit, Ironshore National Branch, will act as a U.S. underwriting office for certain of Ironshore's property/ casualty operations. Ironshore National Branch will build out a national distribution platform for Ironshore products utilizing primarily a wholesale brokerage distribution strategy.
Jordan Gantz and Jim Dowdy have also joined the group and both report to Steve England.
England was most recently president of AIG Landmark, where he managed the start up of an agribusiness practice. Prior to heading up AIG Landmark, he was regional vice president for AIG's Commercial Insurance Group in Houston, Texas. he will report to Shaun Kelly, CEO of Ironshore's U.S Operations.
Gantz has been in the insurance industry for 23 years. Prior to joining Ironshore, he was most recently senior vice president for AIG Landmark where he managed the casualty start-up of the agribusiness practice. Before joining AIG Landmark, he was the chief underwriting officer in Bermuda for Allied World Assurance Co.
Dowdy has 27 years' experience in the insurance industry. Most recently, he was senior vice president for AIG Landmark where he managed the property start-up of the agribusiness practice. Prior to AIG Landmark, Dowdy was zonal property manager for Lexington Insurance Co.'s Northeast Zone.
Siemens upbeat on bribery insurance payout -report
FRANKFURT - Siemens (SIEGn.DE) is optimistic it will get a payout from 250 million euros ($331.4 million) of insurance cover it took out for damages caused by senior company officials, a German newspaper reported on Sunday.
The Sueddeutsche Zeitung cited company sources at the German engineering group as saying an insurance consortium led by Allianz (ALVG.DE) was prepared to pay, though not the full amount, and that talks were under way to determine the exact sum.
Siemens and Allianz declined comment on the report.
Siemens years ago took out the policy covering actions by top executives and supervisory board members.
It now wants it to cover some of the nearly 2 billion euros in costs it incurred from a bribery scandal that cost the jobs of former Chief Executive Klaus Kleinfeld and ex-CEO and former supervisory board Chairman Heinrich von Pierer.
Von Pierer and Kleinfeld, who resigned from their posts in 2007, have not been accused of crimes and both have denied any wrongdoing.
Siemens last month agreed to pay more than $1.3 billion to settle corruption probes in the United States and Germany, ending two years of uproar that rocked the company. Siemens is also seeking compensation from former officials in the case.
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