Inreon Going Out Of Business

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By Lisa S. Howard, International Editor

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NU Online News Service, May 7, 12:17 p.m. EST,London?The online reinsurance platform, inreon, hasannounced that it is ceasing to trade as a result of insufficientbusiness volume.

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The London-based company said that it was taking the actiondespite the fact that, "since the launch of the platform, thevolume of risks processed via the platform has shown consistentgrowth."

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"However, the total number of risks transacted remained lowcompared with the total market volumes and fell significantly shortof targets initially set by inreon," the company added.

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Set up in December 2000, inreon was designed to provide variouskinds of facultative and treaty risks via the online platform.

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The platform will remain in operation in the short term tosupport pending placement processes and client documentation anddata needs, according to inreon.

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Market rumors over the past several weeks suggested that SwissRe and Munich Re, two of inreon's biggest shareholders, had grownimpatient at the slow growth of the platform and wanted to see itsold or discontinued.

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Swiss Re and Munich Re each own around one-third of inreon'sshares, while the remaining shares are split between Accenture,Internet Capital Group, and management and staff.

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The London-based reinsurance hub, ri3k, confirmed today that ithad been in negotiations with inreon and representatives of SwissRe and Munich Re for a possible acquisition of the inreonplatform.

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"We had some very productive discussions, but ultimately bothparties couldn't come to any kind of agreement," said Alex Letts,chief executive of ri3k. "We couldn't find a basis where it madeeconomic sense for both parties." (The shareholder backing ri3k isBrit Insurance Holdings in London.)

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Mr. Letts said the tragedy for inreon is that the wholee-commerce sector is starting to rebound.

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"As an example, China and Hong Kong are reporting record wavesof e-commerce due to SARS," he said, referring to the Severe AcuteRespiratory Syndrome epidemic.

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"It's just tragic that this has happened to inreon at this time,just as everything is beginning to take off in the area ofe-commerce and just as the insurance and reinsurance industry isbeginning to commit itself to online transactions," Mr. Lettssaid.

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One market source, who didn't want to be identified, said inreonfailed because it was product-led, as opposed to market-led. "Theyoffered what they thought was the right product without muchconsultation with customers. In the end, execution has let themdown." (See related stories, NU, Dec. 16, 2002, and Jan.27, 2003, for a two- part series on online platforms.)

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