Business Blog Posts

BEIJING (Reuters) � China has made "very, very little" progress on letting the exchange rate of the yuan reflect market forces, Treasury Secretary Timothy Geithner said in remarks published in the Wall Street Journal on Monday.

In an interview conducted on Friday, Geithner was asked if he was satisfied with China's progress on the yuan. He replied: "Of course not."

"China took the very important step in June of signaling that they're going to let the exchange rate start to reflect market forces. But they've done very, very little, they've let it move very, very little in the interim. It's very important to us, and I think it's important to China, I think they recognize this, that you need to let it move up over a sustained period of time."

Geithner is due to testify before the House of Representatives Ways and Means Committee on Thursday to present the Obama administration's latest view of what the United States should do to press China to reform its exchange rate practices.

In the transcript of his comments posted online by the Wall Street Journal, he did not address that issue. The transcript is available at http://ping.fm/N0JqZ .

Geithner's Treasury Department, in three semi-annual reports since President Barack Obama took office, has declined to formally name China a currency manipulator.

Commenting on the state of the U.S. economy, he said it was "healing" but overall growth and job growth were not as fast as the administration would like.

The yuan has risen 0.84 percent since June 19, when the PBOC announced the abolition of a two-year peg to the dollar.

(Editing by Ken Wills)

MONACO (Reuters) � Reinsurers on either side of the Atlantic are divided over what business strategy is best following the financial crisis, as sector valuations plumb long-term depths.

European reinsurers are overhauling their business models, while counterparts in the United States and Bermuda are maintaining their pre-crisis course, said consultancy PWC in a report based on interviews with 18 reinsurance chief executives and presidents.

The difference may reflect the business mix on each side of the Atlantic and looming regulatory changes in Europe, as new rules governing risk and capital management known as Solvency II which come into effect from 2013, PWC said.

The consultancy released its report to coincide with the annual powwow of global property and casualty (P&C) reinsurers, that brings together Europe's Munich Re (MUVGn.DE), Swiss Re (RUKN.VX), Hannover Re (HNRGn.DE) and Scor (SCOR.PA), along with Berkshire Hathaway (BRKa.N), Bermuda's Partner Re (PRE.N), Everest Re (RE.N) and XL Capital (XL.N).

The majority of European reinsurers have started making big changes to their strategy, PWC said.

"There is a focus on strong operating cashflow production, combining growth and profitability across P&C and life," PWC quoted one of the CEOs as saying.

Shareholders were also pushing for tighter controls on underwriting and asset management, with reinsurers sharpening their focus on asset diversification, the consultancy said.

Even marginal business is being more keenly reviewed to ensure it earns adequate return on equity, PWC quoted one executive as saying.

Reinsurers act as a financial backstop to insurance companies, helping to pay for big claims in return for part of insurers' premiums. The sector and the insurance industry in as a whole came through the financial crisis well, compared with banking cousins.

But declining reinsurance prices, low investment returns, nagging fears about the sector's exposure to sovereign debt and hurricane damage, on top of tighter capital rules, have conspired to keep reinsurers out of favor with investors.

The property and casualty sector is trading at a price-to-book ratio below 0.9, more than two standard deviations below its 20-year average, estimates specialist reinsurance broker Guy Carpenter, part of Marsh and McLennan (MMC.N).

(Reporting by Jonathan Gould; Editing by David Holmes)

BASEL, Switzerland (Reuters) � Central bank governors and heads of supervision have reached an agreement on Basel III, a sweeping reform that will force banks to hold more capital to withstand shocks, a source close to the process said on Sunday.

"There is a deal," the source said.

The deal was reached by a group of central bank governors and top supervisors, chaired by European Central Bank President Jean-Claude Trichet.

A formal announcement is expected after 1600 GMT (12:00 p.m. ET). (Reporting by Alexander Huebner; Writing by Huw Jones; Editing by Hugh Lawson)