K63 Insurance and Superannuation Funds

No evidence retirees are wasting super

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Original article by Jacob Greber
The Australian Financial Review – Page: 3 : 7-Jul-15

A Productivity Commission report estimates that retirees’ superannuation balance would be bolstered by at least 10 per cent if they were not able to access their super until the age of 65. The report also refutes the widely-held view that members of the Baby Boom generation are reorganising their finances or spending their super payout on expensive holidays in order to qualify for the age pension.

CORPORATES
AUSTRALIA. PRODUCTIVITY COMMISSION, AUSTRALIAN LABOR PARTY, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET

Medibank flexes muscles, axes Calvary

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Original article by Tim Binsted
The Australian Financial Review – Page: 23 : 2-Jul-15

Negotiations between Australian-listed Medibank Private and Calvary Health Care have failed, prompting Medibank to end its contract with the private hospital group. Medibank and ahm members who use Calvary’s hospitals from 1 September 2015 may incur out-of-pocket expenses as a result, although Medibank will continue to pay some of its customers’ costs. Calvary has indicated that it is keen to resume discussions with Medibank.

CORPORATES
MEDIBANK PRIVATE LIMITED – ASX MPL, AHM HEALTH INSURANCE, CALVARY HEALTH CARE LIMITED, MORGAN STANLEY AUSTRALIA LIMITED

nib leaks customers’ private details

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Original article by Tim Binsted, Paul Smith
The Australian Financial Review – Page: 19 : 23-Jun-15

Listed health insurer nib has apologised to customers after their personal details were inadvertently made available to other customers via its web portal. The insurer has stressed that credit card details were not disclosed, although customers have said that they were able to view information such as the past claims of other customers. Data privacy agencies are expected to investigate the breach of confidentiality.

CORPORATES
NIB HOLDINGS LIMITED – ASX NHF, PRIVATE HEALTH INSURANCE OMBUDSMAN, AUSTRALIA. OFFICE OF THE AUSTRALIAN INFORMATION COMMISSIONER, PRIVATE HEALTH INSURANCE ADMINISTRATION COUNCIL, MEDIBANK PRIVATE LIMITED – ASX MPL, INTELLIGENT BUSINESS RESEARCH SERVICES PTY LTD

Former QBE executive faces fraud charges

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Original article by Ruth Liew
The Australian Financial Review – Page: 15 & 21 : 19-Jun-15

US prosecutors will allege that James Shea and Eugene Fallon embezzled Australian-listed QBE Insurance Group of some $US2.6m ($A3.37m). Shea was a vice-president of QBE at the time of the alleged fraud, while Fallon was an external consultant. Shea has been accused of falsifying invoices and forging the signature of the insurer’s CFO. The Commonwealth Bank has also been embroiled in a fraud case.

CORPORATES
QBE INSURANCE GROUP LIMITED – ASX QBE, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, DISTRICT COURT OF NEW YORK, COMPUTER SCIENCES CORPORATION, SERVICMESH CSC, ACE FOUNDATION

Buffett to play on the ASX

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Original article by James Eyers
The Australian Financial Review – Page: 1 & 13 : 17-Jun-15

Insurance Australia Group (IAG) shares rallied on 16 June 2015 in response to a deal for US investment guru Warren Buffett to acquire a 3.7 per cent stake in the general insurer for $A500m. As part of the deal, Buffett’s Berkshire Hathaway will be paid 20 per cent of IAG’s annual revenue for the next decade, which will be reinvested in a number of large Australian-listed companies. Buffett has indicated that bank stocks may be included in the portfolio.

CORPORATES
INSURANCE AUSTRALIA GROUP LIMITED – ASX IAG, BERKSHIRE HATHAWAY INCORPORATED, CREDIT SUISSE (AUSTRALIA) LIMITED, PETERS MACGREGOR CAPITAL MANAGEMENT PTY LTD, WELLS FARGO BANK, BANK OF AMERICA CORPORATION

Crackdown on super inducements

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Original article by James Eyers, Clancy Yeates
The Australian Financial Review – Page: 16 : 15-Jun-15

The Superannuation Industry (Supervision) Act prohibits Australian financial institutions from offering employers incentives to choose them as their superannuation fund provider. Assistant Treasurer Josh Frydenberg has flagged stricter penalties to discourage such behaviour, a move that has been welcomed by Financial Services Council CEO Sally Loane.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, FINANCIAL SERVICES COUNCIL, AUSTRALIA. FAIR WORK COMMISSION, INDUSTRY SUPER AUSTRALIA PTY LTD

Default fund choice aired

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Original article by Sally Rose
The Australian Financial Review – Page: 21 : 4-Jun-15

The financial system inquiry concluded that Australian superannuation fees are too high, costing members about $A20bn a year. Inquiry chairman David Murray has told a conference of the need for increased competition in the sector in order to reduce fees, while Assistant Treasurer Josh Frydenberg has flagged possible changes to the default super fund regime to boost competition. However, industry and retail super fund executives disagree on whether such reforms will result in lower fees.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, COLONIAL FIRST STATE GROUP LIMITED, INDUSTRY FUND SERVICES PTY LTD, RICE WARNER ACTUARIES PTY LTD, GRATTAN INSTITUTE, COMMITTEE FOR SUSTAINABLE RETIREMENT INCOMES, ERNST AND YOUNG, AMP LIMITED – ASX AMP, CHALLENGER LIMITED – ASX CGF, DIMENSIONAL FUND ADVISORS

Insurer’s premiums cast cloud

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Original article by Tim Binsted
The Australian Financial Review – Page: 18 : 1-Jun-15

Morgan Stanley’s Daniel Toohey values Medibank Private shares at $A1.85, compared with the issue price of $A2 for retail investors in the 2014 IPO. Morgan Stanley forecasts that Medibank’s lapse rate will rise from 10 per cent to 15 per cent, while Toohey says the growth of its budget-priced ahm brand may come at the expense of the main brand’s customer base. Medibank’s earnings are also likely to be affected by customers opting to reduce their health insurance coverage in order to save money.

CORPORATES
MEDIBANK PRIVATE LIMITED – ASX MPL, AHM HEALTH INSURANCE, MORGAN STANLEY AUSTRALIA LIMITED, MACQUARIE SECURITIES PTY LTD, MACQUARIE GROUP LIMITED – ASX MQG, DEUTSCHE BANK AG, GOLDMAN SACHS AND PARTNERS AUSTRALIA PTY LTD

Mercer revives independent director debate

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Original article by Sally Patten
The Australian Financial Review – Page: 19 : 1-Jun-15

A new report from Mercer has called for Australian superannuation funds to have more independent directors. The firm says this trend is gathering pace in many developed countries, which has also been noted by the OECD. The Australian Government is tipped to outline its policy on the issue later in 2015, and Assistant Treasurer Josh Frydenberg is believed to favour a requirement for at least 33 per cent of a super fund’s directors to be independent.

CORPORATES
MERCER INVESTMENTS PTY LTD, ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN COUNCIL OF SUPERANNUATION INVESTORS INCORPORATED, GREAT BRITAIN. FINANCIAL CONDUCT AUTHORITY

Low rates, yields to hit Suncorp, IAG

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Original article by Ruth Liew
The Australian Financial Review – Page: 18 : 26-May-15

The earnings of Australian-listed insurance companies are likely to be affected by low interest rates and bond yields. Investment income accounts for around 40 per cent of QBE Insurance Group’s profits, compared with 25 per cent in the case of Insurance Australia Group (IAG) and Suncorp. IAG CEO Mike Wilkins says most of the company’s insurance book comprises "short tail risk".

CORPORATES
QBE INSURANCE GROUP LIMITED – ASX QBE, INSURANCE AUSTRALIA GROUP LIMITED – ASX IAG, SUNCORP GROUP LIMITED – ASX SUN, CREDIT SUISSE (AUSTRALIA) LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA