Archive for January, 2009



January 30th, 2009

Week’s Top Stories: Jan 24 - 30, 2009

Posted at 4:00 PM ET

Book Value Update: Renewals Impact: The impairment of insurance investment assets, as a result of the financial catastrophe, has pushed capital lower. As of year-end 2008, the GC Global Composite of 141 carriers had lost an estimated 15 percent of implied book value.

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Cats and Credit Push Prices Up: Reinsurance rate increases were moderate on average at the January 1, 2009 renewal. The Guy Carpenter World Rate on Line (ROL) Index rose 8 percent, in response to the dual pressures of a financial catastrophe and the second most expensive property catastrophe year on record.

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Ike Update: Revised Shareholders’ Funds Impact: As expected, the trend of upward loss estimate revisions related to Hurricane Ike continues. Validus Holdings Ltd. is the latest to announce a change, raising its estimate of Hurricane Ike-related losses to USD235.1 million.

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Clash Renewal Stable, Interest Renewed: Casualty clash reinsurance rates increased by 1.1 percent on average at the January 1, 2009 renewal. Specific layers renewed at rates of -12.3 percent to 17.5 percent, based on program-specific factors such as loss history and changes to limits and retentions.

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1/1 Increases for U.S. Surety: Based on surety programs having comparable year-over-year structures, cedents realized flat to increasing prices at the January 1, 2009 renewal. Half of layers renewed at rates close to expiring and 39 percent of layers experienced increases. A small percentage of layers achieved nominal decreases, primarily attributed to the reallocation of premium across program layers.

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Most Popular Keyword: World ROL Index

And, you may have missed …

2008 Atlantic Basin Recap: Sixteen tropical storms formed during the 2008 season, compared to the 1950 to 2007 average of 9.7, an increase of 65 percent. The season also witnessed the first tropical cyclone ever to make four landfalls in one state (i.e., Hurricane Fay, impacting Florida).

Read the article >>

January 29th, 2009

Clash Renewal Stable, Interest Renewed

Posted at 1:00 AM ET

Nick Olijslager, Managing Director
Contact

Casualty clash reinsurance rates increased by 1.1 percent on average at the January 1, 2009 renewal. Specific layers renewed at rates of -12.3 percent to 17.5 percent, based on program-specific factors such as loss history and changes to limits and retentions. Casualty clash remains a relatively small market, but many larger carriers are showing a renewed interest in this product, especially those with larger net lines of business.

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January 29th, 2009

Chart: Casualty Clash Annual Rate Change

Posted at 12:59 AM ET
Click chart for larger version

Click chart for larger version

Specific casualty clash layers renewed at rates of -12.3 percent to 17.5 percent, based on program-specific factors, such as loss history and changes to limits and retentions.

To download this chart, right-click on the image, and select “Save Picture As”. If you have any trouble, please e-mail us.

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January 29th, 2009

Chart: Casualty Clash Layer Renewal Trend

Posted at 12:58 AM ET
Click chart for larger version

Click chart for larger version

The vast majority of programs (70 percent) either renewed at expiring terms or were able to secure rate decreases relative to 2008.

To download this chart, right-click on the image, and select “Save Picture As”. If you have any trouble, please e-mail us.

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January 28th, 2009

1/1 Increases for U.S. Surety

Posted at 1:00 AM ET

Scott MacColl, Senior Vice President
Contact

Based on surety programs having comparable year-over-year structures, cedents realized flat to increasing prices at the January 1, 2009 renewal. Half of layers renewed at rates close to expiring and 39 percent of layers experienced increases. A small percentage of layers achieved nominal decreases, primarily attributed to the reallocation of premium across program layers. On average, the cost to transfer risk increased by 4.1 percent. Actual and anticipated changes in exposure, program size and historical results influenced year-over-year price differences for specific programs.

Continue reading…

January 28th, 2009

Chart: U.S. Surety Annual Rate Change

Posted at 12:59 AM ET
Click chart for a larger version

Click chart for a larger version

On average, the cost to transfer surety risk increased by 4.1 percent. Actual and anticipated changes in exposure, program size and historical results influenced year-over-year price differences for specific programs.

To download this chart, right-click on the image, and select “Save Picture As”. If you have any trouble, please e-mail us.

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January 28th, 2009

Chart: Surety Layer Renewal Trend

Posted at 12:58 AM ET
Click chart for a larger version

Click chart for a larger version

Rates moved up for layers with increases in exposure (either actual or anticipated) or where there was loss activity over the past few years. Larger programs requiring substantial limits were impacted negatively due to reductions in market capacity and reinsurers concerns with aggregations of exposure across surety clients.

To download this chart, right-click on the image, and select “Save Picture As”. If you have any trouble, please e-mail us.

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January 27th, 2009

Book Value Update: Renewals Impact

Posted at 1:00 AM ET

David Flandro, Senior Vice President
Contact

The impairment of insurance investment assets, as a result of the financial catastrophe, has pushed capital lower. As of year-end 2008, the GC Global Composite of 141 carriers had lost an estimated 15 percent of implied book value. The banking sector fared worse, with the S&P Banks Supercomposite Index losing 27 percent. The average increase in property-catastrophe reinsurance rates, as measured by the Guy Carpenter World Rate on Line (ROL) Index suggests the loss of capital, though certainly uncomfortable, is hardly catastrophic, particularly in comparison with the banking sector.

Continue reading…

January 26th, 2009

Ike Update: Revised Shareholders’ Funds Impact

Posted at 1:00 AM ET

David Flandro, Senior Vice President
Contact

As expected, the trend of upward loss estimate revisions related to Hurricane Ike continues. Validus Holdings Ltd. is the latest to announce a change, raising its estimate of Hurricane Ike-related losses to USD235.1 million. This represents an increase of USD70.1 million. The reinsurer’s estimate for Hurricane Gustav remains unchanged at USD20.8 million. Validus Chairman and CEO Ed Noonan says that a disproportionate percentage of increases has been borne by reinsurers, as ceding companies increasingly attach excess reinsurance layers, which trigger reinsurance recoveries.

Continue reading…

January 23rd, 2009

Week’s Top Stories: Jan 17, 2008 - Jan 23, 2009

Posted at 4:00 PM ET

Cats and Credit Push Prices Up: Reinsurance rate increases were moderate on average at the January 1, 2009 renewal. The Guy Carpenter World Rate on Line (ROL) Index rose 8 percent, in response to the dual pressures of a financial catastrophe and the second most expensive property catastrophe year on record.

Read the article >>

2008 Catastrophe Update: A record-setting Atlantic hurricane season and above-average manmade catastrophe losses put 2008 among the costliest years on record. While the economic downturn dominated the headlines throughout the year, lurking in the shadows was one of the most active hurricane seasons on record.

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Lloyd’s - Relative Strength: Lloyd’s was tested in 2008, like the rest of the (re)insurance industry. Underwriting discipline instilled by the Franchise Board, coupled with a relatively conservative investment strategy, has left the market well-positioned to capitalize on opportunities that may arise in 2009.

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Ike Update: Revised Shareholders’ Funds Impact: Ahead of the fourth quarter and full-year financial reporting season, a handful of companies have announced substantial upward loss estimate revisions related to Hurricane Ike.

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2008 North Atlantic Tropical Cyclone Review: Sixteen tropical storms formed during the 2008 season, compared to the 1950 to 2007 average of 9.7, an increase of 65 percent. The season also witnessed the first tropical cyclone ever to make four landfalls in one state (i.e., Hurricane Fay, impacting Florida).

Read the article >>

Most Popular Keyword: World ROL Index

And, you may have missed …

Atlantic Basin Tropical Cyclone Forecasts for 2009: On December 10, 2008, Philip J. Klotzbach and William M. Gray at Colorado State University released their forecast for the 2009 season, making predictions for somewhat above-average activity in the North Atlantic basin (based on the average 1950 to 2000 season).

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