What’s New: In Brief (June 10, 2008)

Standard & Poor’s (S&P’s) Ratings Services upgraded the financial strength rating on Fairfax Financial Holdings Ltd.’s operating insurance companies to BBB+ from BBB. The rating is based on a good competitive position that is diversified geographically and by sector, as well as reduced debt leverage, S&P’s said in a release.”The upgrade is based on strong earnings in 2007 and 2008 relative to peers,” said Damien Magarelli, S&P’s credit analyst. “Previously restrictive negative ratings factors are still viewed negatively, but no longer limit the rating to the same degree: governance has improved, ERM remains adequate, and reserves and reinsurance recoverables are not as great a concern.”Negative factors are a lack of strong earnings track record in a softening price market, high reinsurance recoverables (though declining), and the historical use of finite reinsurance (though many of these contracts have been commuted), the release adds.

Aon Global UK has launched its Pre-Placement Tool (PPT) and Premium Allocation Tool (PAT) to help organizations operating in multiple jurisdictions maximize compliance with local insurance and tax regulation.The PPT is a database tool used to check all regulatory elements of a global policy before coverage is placed and offers a warning if a policy is ‘non-admitted’ or must be placed by a local insurer, so clients can be advised accordingly, an Aon release says.The PAT allocates the global premiums on a just and reasonable basis according to where the risk is located, rather than countries with more favourable tax rules to determine tax liability in each territory for either the insurer or the insured, the release continues.The tools are updated regularly for changes in worldwide regulatory and tax rules.