Wednesday newspaper round-up: Insurers fret on new rules

2nd Sep 2009 06:13

UK insurers fear they will be forced to tap investors for more than £50bn in fresh equity as a result of proposed new European rules that they warn would lead to a dramatic increase in premium rates.In a startling letter to Alistair Darling, UK chancellor, the leading UK industry trade body warned the 'extreme' proposals could destabilise the industry across Europe. The Association of British Insurers urged Darling and the European Commission to intervene over a threat 'to the industry, to its customers and even to financial stability,' the FT reports.Lending to business fell by a record £8.4bn in July as banks continued to hoard credit for fear of rising bad debts, jeopardising hopes of a swift economic recovery. According to Bank of England data published on Tuesday, loans to "private non-financial corporations" fell 1.7% in July - the single biggest monthly fall since records began in 1997. Lending was down 2.9% year on year, the Telegraph reports.Marks and Spencer is close to appointing a headhunter to start the search for a new chief executive to replace Sir Stuart Rose next year. Jan Hall, a former Spencer Stuart headhunter who has worked for M&S in the past and now heads her own practice, JCA, is expected to be among the leading candidates to carry out the search, people familiar with the situation said, the FT reports.The race to buy Opel stepped up as Belgian investment group RHJ International raised its bid for the European wing of General Motors. RHJ said it had sent a letter to GM offering it €300m (£265m) for a 50.1% stake in the car group - some €25m more than it originally offered in its first bid last month. It added that it would also reduce the amount it required in state aid from the German government by €600m to €3.2bn, with repayment due a year earlier in 2013, the Telegraph reports.EBay has sold a 65% stake in Skype to a private investment group in a deal that values the internet telephony business at $2.75bn (£1.7bn). The online auction company bought Skype in 2005 for a price that exceeded $3.1bn. The company will get $1.9bn in cash from investors led by Silver Lake, the Silicon Valley private equity firm, and will retain a 35% holding, the Times reports. Britain's leading defence companies made a pre-emptive attack against possible government budget cuts yesterday as they sought to highlight the industry's value to the economy. The chief executives of BAE Systems, Thales UK and QinetiQ, the chairmen of Babcock and Finmeccanica UK and the managing director of Rolls-Royce's defence unit launched the report at a briefing in London to highlight the industry's impact on the economy and call for adequate funding of the defence sector ahead of widely expected cuts to government budgets next year, the Times reports.Bank of America is considering paying off a $20bn (£12.4bn) chunk of the $45bn that it took from the US Government's Troubled Asset Relief Programme (Tarp), raising the possibility that the bank will shake off the attentions of the Obama Administration's new pay czar. The biggest American bank is also discussing with the US Treasury a fee of as much as $500m to cancel a government guarantee on $118bn of the bank's assets,the Times reports.DSG International, the electricals retailer, is expected to win the backing of some of its biggest shareholders for a salary sacrifice scheme, even though the controversial arrangement has come under attack from an investor advisory group. Standard Life, DSG's biggest shareholder with a 12 per cent stake, is expected to back the scheme, which is likely to see John Browett, DSG chief executive, sacrifice 25% of his salary in return for share options, the FT reports.SkyEurope Airlines, the Slovakian discount carrier, lost its battle against bankruptcy yesterday, leaving travellers stranded in airports from Manchester to Bratislava. A raft of budget rivals, including easyJet and Ryanair, rushed to offer cheap "rescue" tickets to passengers stranded abroad after the company grounded its planes, the Independent reports.