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.
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.
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.
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.
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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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).