Venezuelan investor sues Willis

Venezuelan investor has sued global insurance broker Willis Group Holdings Ltd. over the collapse of the Stanford banking empire, saying he relied on assurances from Willis that Stanford was sound. The lawsuit, filed as a class action in U.S. federal court in Miami Friday by investor Reinaldo Ranni, accused Willis of fraud, negligence, misrepresentation and violations of U.S. and Florida securities laws.

A similar lawsuit was filed against Willis in federal court in Dallas earlier this month by a group of Mexican investors. Willis is located in Bermuda and has large British and U.S. operations. Chicago's Sears Tower, the tallest U.S. skyscraper, was renamed Willis Tower last week. Stanford Financial was put under the control of a receiver in February when the U.S. Securities and Exchange Commission sued for civil fraud. Prosecutors brought criminal charges against founder Allen Stanford and others in June. Stanford enticed investors with promises of higher-than-normal returns on certificates of deposit. Investigators say the bank ran a $7 billion Ponzi scheme in which early investors were paid with money from new investors. Willis played an instrumental role in enabling Allen Stanford and his companies to perpetrate a massive multibillion-dollar fraud against scores of investors, largely Venezuelans and other South Americans, the lawsuit said. Investors relied on phony assurances their CDs were insured and that Stanford's bank could be trusted, it said. Willis supplied the proof for Stanford, the lawsuit said, by issuing safety and soundness letters to Stanford agents on Willis letterhead and signed by a Willis executive that identified the insurance policies underlying operations at Stanford International Bank in Antigua and Barbuda. The letter proclaimed SIB's employees to be first-class business people and claimed that SIB had undergone a stringent risk management review by an outside audit firm, the suit said. None of it was true.

TigerRisk, Karen Clark join to evaluate cat risks

Reinsurance brokerage TigerRisk Partners L.L.C. said it has entered into a partnership with catastrophe modeling and consulting firm Karen Clark & Co. to help insurers assess, price and manage catastrophe risks. The partnership aims to help insurers develop consistent metrics for evaluating catastrophe risk, according to a joint statement Monday.

The program includes an assessment of how companies capture and collect data, and a review of how firms dissect and validate catastrophe model output. Today there is an overreliance on cat models, said Karen Clark, president and chief executive officer of Boston-based Karen Clark & Co. There are ways to assess risk independent of catastrophe models and to apply that knowledge to more effective use of the models, she said. The Karen Clark partnership with Greenwich, Conn.-based TigerRisk will help organizations enhance the profitability of their portfolios without model bias, according to the statement.