Archive for October, 2008



October 31st, 2008

Week’s Top Stories: Oct 25 - 31, 2008

Posted at 9:03 AM ET

Carrier Capital Softens the Financial Blow: the market is experiencing a fundamental tension of factors right now.

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Cat Risk Comes Out of Hiding: advances in casualty catastrophe modeling may help protect you from “hidden” portfolio exposures.

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Uncover and Mitigate Product Liability Risk: avert a Casualty Catastrophe: few grasp the full extent of product liability insurance exposure.

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ERM: Part of the Answer to Financial Catastrophes: while hurricanes spun through the Gulf of Mexico last month, a larger catastrophe ripped through New York, London, Shanghai, and every other major financial center in the world.

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Models Rise to Flooding Challenge: most models have not been able to address the complexity of this peril, rendering targeted risk management impossible.

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Most Popular Keyword: casualty cat (i.e., casualty catastrophe)

And, you may have missed …

Multi-Year Cover Gaining Steam in LA&H: the use of multi-year cover for accident and health lines of business, though in its infancy, could be the next step in mitigating risk and reducing ambiguity.

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October 30th, 2008

Solution Spotlight: GC LiveCat™ and GC ForeCat™

Posted at 6:12 PM ET

GC LiveCat and GC ForeCat help you assess the impact of Atlantic hurricane activity—and potential losses—on your U.S. risk portfolio. With deeper detail, Guy Carpenter’s clients now have access to improved risk management capabilities, enabling them to manage their reinsurance purchases more effectively. GC ForeCat offers a detailed monthly pre-season hurricane landfall rate forecast from December through April, for four defined regions along the Atlantic Hurricane Basin, prior to the upcoming hurricane season. GC LiveCat delivers a forecast of 10 days—updated every twelve hours—for named storms in the Atlantic Hurricane Basin, along with probabilities of landfall by gate.

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October 30th, 2008

GC Capital Tip: Tagging

Posted at 9:00 AM ET

Every article on GC Capital Ideas is “tagged.” Tags are nothing more than keywords used to label a particular article. Since few stories deal with only one topic, tags give you several ways to find the information you need. To see an article on a specific subject, just click a tag at the end of an article. Examples include reinsurance rates, sidecars, and financial catastrophe. Within each article, key terms are set up as links to tags, as well. Clicking one of these links (see the examples in the previous sentence) is the same as clicking a tag. It shows you all stories related to that keyword.

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October 29th, 2008

Models Rise to Flooding Challenge

Posted at 6:01 PM ET

Rebecca Cheetham, Managing Director
Contact

Flood is among Europe’s primary natural catastrophe risks, but solutions have been in short supply. Most models have not been able to address the complexity of this peril, rendering targeted risk management impossible. Fortunately, the market is advancing. Stochastic flood models are being developed to support carriers’ decision making and improve their use of capital.

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October 29th, 2008

Litigation Financing Makes Plaintiff Pockets Deeper

Posted at 6:00 PM ET

Thomas Herde, Senior Vice President
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The specter of American-style class action litigation looms large over Continental Europe. Many carriers worry that they could face larger claims—and increased legal fees—if this practice is adopted. Litigation financing is particularly daunting, as it provides a way to funnel capital to plaintiffs to support long, intense legal campaigns.

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October 29th, 2008

ERM Finishes What Diversification Starts

Posted at 9:01 AM ET

Donald Mango, Chief Actuary
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The financial catastrophe currently tearing through financial markets has changed the face of risk. Diversification, once the standard for reducing exposure, has been weakened by a convergence of threats on both sides of the balance sheet. (Re)insurer capital is under assault, and a more robust risk management technique is needed. Enterprise Risk Management (ERM) may help the situation, offering an integrated view of portfolio perils and the tools necessary to develop an effective risk transfer strategy.

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October 29th, 2008

Multi-Year Cover Gaining Steam in LA&H

Posted at 9:00 AM ET

David Rains, Managing Director
Contact

Carriers thrive on predictability. Risk management techniques, models, and sometimes intricate programs are devised to anticipate insured losses and take the appropriate risk transfer measures. The use of multi-year cover for accident and health lines of business, though in its infancy, could be the next step in mitigating risk and reducing ambiguity. With a longer-term commitment, (re)insurers trade price advantages that come from sharp turns in the market for the predictability that both crave, particularly when the market becomes volatile.

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October 28th, 2008

Alternatives to Alternative Capital

Posted at 8:01 PM ET

David Piebe, Chairman of Global Client Development
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(Re)insurers have come to expect that alternative sources of capital will always be available. Private equity funds, hedge funds, and other alternative investment vehicles have contributed copious capacity to risk-bearers since the turn of the millennium, and especially following the 2005 storm season. The well, however, may be at risk of running dry.

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October 28th, 2008

Solvency II Compliance Advantage Derives Returns

Posted at 6:00 PM ET

Eddy Vanbeneden, Managing Director
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Compliance may be an expense, but it can still generate a return. The increased cost of operating a European carrier has become a major aspect of Solvency II preparations, preventing many from seeing this regulation as a business opportunity. An enhanced understanding of the specific risks in a portfolio can lead to improved capital management, robust margins, and benefits to shareholders. Instead of pursuing compliance, (re)insurers should look for the competitive advantage that the regulation affords.

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October 28th, 2008

Protect Your Enterprise from Casualty Catastrophes

Posted at 2:00 PM ET

Emil Metropoulos, Senior Vice President
Contact

When mega-catastrophes occur, we tend to think about large-scale property damage. Until recently, hurricanes, earthquakes, and terror dominated the conversation. A new type of catastrophe has emerged, however, with the potential to cause more economic damage and perhaps even higher insured losses. Casualty catastrophes involving product and professional liability can spread quickly, destroy considerable amounts of shareholder wealth, and take years to resolve completely. In the past, carriers were unable to address this form of risk sufficiently, and balance sheets have remained imperiled.

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