ADVFN - Advanced Financial Network.
HOME» NYSE » A » ACE Stock Price » ACE Stock News

Ace Share News

 Ace, Ltd. Stock Price
ACE Stock Price
 Ace, Ltd. Stock Chart
ACE Stock Chart
 Ace, Ltd. Stock News
ACE Stock News
 Ace, Ltd. Company Information
ACE Company Information
 Ace, Ltd. Stock Trades
ACE Stock Trades

Insurers May Face 'Far-Reaching' Claims As Supply Chain Breaks

By Erik Holm and Serena Ng NEW YORK -(Dow Jones)- Insurance companies far from Japan could be on the hook for some of the lost profits at manufacturers whose supply chains were disrupted by the devastating earthquake. The costs insurers will incur from such "business interruption" claims are far from clear, but industry executives, analysts and brokers who arrange the coverage say the effects of Japanese plant closures, transportation delays and power shortages could reach distant corners of the globe. For companies that purchased protection against such disruptions, it may be their insurer that foots the bill. "The third-largest economy in the world seems to be under siege right now," said Rod Fox, chief executive of reinsurance broker TigerRisk. "It's going to have far-reaching effects, and the business interruption claims can mount very quickly." The longer the disruption, the higher the claims could climb. A prolonged nuclear crisis, electricity shortages or temporary shutdowns of manufacturing plants could affect hundreds of businesses in the U.S. and Europe that use Japanese-made auto parts, computer chips or other components in the production of cars, consumer electronics and other goods. Boeing Co. (BA), Texas Instruments Inc. (TXN) and BMW AG (BMW.XE) are among the firms girding for possible disruptions to supply chains. It's unclear if those companies have insurance that would compensate them for lost profits. "A lot of the largest corporations have insurance programs that include coverage for these sorts of things," said Jon Hall, executive vice president of commercial insurer FM Global. "There's going to be a ripple effect felt around the world." Most U.S. manufacturers have some form of business-interruption insurance, which generally covers profit lost following damage to their own property. If a U.S. business has to stop production because a supplier can't deliver needed parts, it can only collect from its insurer if it has bought additional protection, called contingent business interruption. But several issues make a determination of the potential costs difficult. The businesses that have the added protection may not be able to collect, depending on their deductibles and possible exclusions in their policies. Production may have to be shut down for several days before the coverage kicks in. In the case of the Japanese quake, "there is such devastation that the concern is the deductibles will not be strong enough to protect the insurance industry from losses," says Jim Rubel, head of insurance broker Lockton's global property practice. A company can generally collect only if the disaster that caused the shutdown at the supplier's plant is an event covered at their own plant, said Finley Harckham, a shareholder at law firm Anderson Kill & Olick. Companies without earthquake insurance, or flood insurance in the case of tsunami damage, may not be able to put in a valid claim. Not everyone in the industry is convinced the claims for business interruption will be significant. The issue of business-interruption claims "always comes up (after a big catastrophe event) but the losses often are not big" across the insurance industry, says Bryon Ehrhart, chairman of reinsurance broker Aon Benfield's analytics division. Though he said he expects U.S. insurers to see some claims, the use of contingent business-interruption insurance isn't very widespread. "It's not going to be something that moves the needle in the insurance industry." Whatever the total amount of the claims, insurers covering businesses with operations in Japan may pay the most for business interruption. But it seems likely that insurers without international operations--insuring businesses that import parts but only own property domestically--could also be on the hook, several executives and analysts said. "At this point, the market doesn't fully appreciate what the potential cost will be, and it's not just insurance companies in Japan," said Michael Paisan, an insurance analyst with Stifel Nicolaus. "This is a legitimate concern even for companies operating outside of Japan." -By Erik Holm, Dow Jones Newswires; 212-416-2892; erik.holm@dowjones.com

Stock News for Ace (ACE)
DateTimeHeadline
10/22/201409:51:50U.S. Hot Stocks: Hot Stocks to Watch
07/02/201408:56:12ACE in Exclusive Talks to Buy Itau High-Risk Insurance Unit...
01/12/201422:19:24ACE to Acquire Majority of Siam Commercial Bank's Non-Life Insurance...
11/15/201309:18:02OZ Management LP 3Q 13F: Holdings As Of Sep 30 -2-
11/15/201309:18:02OZ Management LP 3Q 13F: Holdings As Of Sep 30
11/15/201309:17:55OZ Management LP 3Q 13F: Largest Sales
11/15/201309:01:37HBK Investments LP 3Q 13F: Largest Eliminations
11/15/201309:01:27HBK Investments LP 3Q 13F: Largest Eliminations -2-
11/15/201309:01:27HBK Investments LP 3Q 13F: Largest Sales
11/15/201309:01:27HBK Investments LP 3Q 13F: Largest Purchases
11/15/201308:12:57Fidelity Management & Research Co. 3Q 13F: Holdings As Of Sep...
11/15/201308:12:57Fidelity Management & Research Co. 3Q 13F: -2-
11/15/201307:59:25Soros Fund Management 3Q 13F: Largest Purchases
11/15/201307:59:24Soros Fund Management 3Q 13F: Holdings As Of Sep -2-
11/15/201307:59:24Soros Fund Management 3Q 13F: Holdings As Of Sep 30
11/15/201307:11:08AQR Capital Management 3Q 13F: Holdings As Of Sep -2-
11/15/201307:11:08AQR Capital Management 3Q 13F: Holdings As Of Sep 30
11/15/201307:07:30Two Sigma Investments 3Q 13F: Largest Eliminations
11/15/201307:07:27Two Sigma Investments 3Q 13F: Largest Eliminations -2-
11/15/201307:07:27Two Sigma Investments 3Q 13F: Largest Purchases

Ace Limited and other New York Stock Exchange stock quotes are delayed by at least 20 minutes.
All other stock price data is delayed by at least 15 minutes unless otherwise stated.
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
Contact Us | Copyright 1999-2007 ADVFN PLC. | Privacy Policy | Investment Warning | Data accreditations | Investor Relations

ADVFNADVFN ItalyADVFN GermanyADVFN FranceADVFN BrazilADVFN JapanADVFN UKADVFN US noad