Archive for July, 2009



July 31st, 2009

Top 10 Stories: July 2009

Posted at 5:00 PM ET

1. Prop-Cat Reinsurance Rate Increases Steady at July 1 Renewal: Property-catastrophe reinsurance rate increases were steady at the July 1, 2009 renewal. In the United States and Latin America, capacity was sufficient to meet demand. U.S. property-catastrophe reinsurance rates increased 15 percent year-over-year, in line with the trend from January to June. In Latin America, preliminary data varied by country, but upward pressure on pricing was offset by supply and local market competition to keep reinsurance rate increases contained.

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2. Cat Bond Second Quarter 2009*: The catastrophe bond market continues to advance, though issuances are down from 2008. The activity represents a positive rally from the hiatus during the second half of 2008. For the first half of 2009, nine bonds have been issued, with aggregate risk capital of USD1.38 billion. The continuing stabilization of financial markets and a decrease in catastrophe bond spreads, however, could result in more issuance activity in the second half of the year, particularly for sponsors which had considered issuances in the first and second quarters but deferred their plans because catastrophe bond spreads were considered to be too wide (i.e., catastrophe bond protection was considered to be too expensive).

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3. Get the Most Out of Cat Models, Part I: Manage the Unknown: Insurer and reinsurer reliance on catastrophe models has become part of the fabric of risk management. Though they provide guidance rather than clear courses of action, these tools help quantify risk and deploy their capital as effectively as possible. But, they aren’t perfect. Every catastrophe model has specific strengths and weaknesses, which is why risk-bearers tend to use several models to evaluate exposures, with the final decisions on whether to cover a particular risk shaped by loss history, company objectives and risk manager judgment. As a result, models are crucial to (re)insurer success … as long as they are used properly.

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July 31st, 2009

Severe Weather in Central and Eastern Europe

Posted at 1:00 AM ET

small-european-storm-mapSevere weather hit central and eastern Europe on July, 23, 2009 and July 24, 2009, as powerful winds ripped roofs off buildings and large hail caused severe damage. Reports said the storms left a trail of destruction in Poland, Austria, Switzerland, Czech Republic, Slovakia, and Germany. Wind gusts reached 130 kmph (80 mph) in some areas, downing trees and power lines, according to officials. The strong winds, combined with heavy rain and large hail, cut power to at least 150,000 households and killed eleven people (eight in Poland, two in the Czech Republic, and one in Germany). According to Poland’s IMiGW state weather service, the storms were caused when hot air masses from North Africa clashed with cooler air systems from western Europe.

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July 31st, 2009

Week’s Top Stories: July 25 - 31, 2009

Posted at 1:00 AM ET

Cat Bond Second Quarter 2009*: The catastrophe bond market continues to advance, though issuances are down from 2008. The activity represents a positive rally from the hiatus during the second half of 2008. For the first half of 2009, nine bonds have been issued, with aggregate risk capital of USD1.38 billion. The continuing stabilization of financial markets and a decrease in catastrophe bond spreads, however, could result in more issuance activity in the second half of the year, particularly for sponsors which had considered issuances in the first and second quarters but deferred their plans because catastrophe bond spreads were considered to be too wide (i.e., catastrophe bond protection was considered to be too expensive).

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GC Podcast 01 — July 1 Renewals (Chris Klein): Guy Carpenter Global Head of Business Intelligence Christopher Klein discusses the July 1, 2009 reinsurance renewal in this new GC Capital Ideas podcast. Click the audio player below to listen to the interview, or download the interview in a file that will work with your iPod.

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GC LiveCat Turns Last-Minute Decisions into a Competitive Advantages: A hurricane is headed toward a coastal urban center, bringing with it the likelihood of outsized insured losses. The storm is heading into Galveston, Texas. The risk manager, tracking the situation, is concerned that the storm could strike a heavily exposed region. At this point, one of three situations could occur: (1) the storm does not make landfall, (2) the storm does make landfall, causing much more damage than expected, or (3) the storm makes landfall, but the risk manager has laid off some of the risk using livecat cover. 

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July 30th, 2009

Wildfires in Southern Europe

Posted at 4:00 PM ET

smallwildfiresHundreds of wildfires have been burning in southern Europe for several days, gutting homes, destroying thousands of acres of woodland and killing eight people, six of them Spanish firefighters. Tens of thousands of hectares of countryside have been devastated in Spain, France, Greece, and Italy, and Agence France Presse reports that the insurance bill may run into hundreds of millions of euros. Thousands of firefighters were deployed to battle the fires that were fuelled by strong winds and temperatures of up to 40 degrees Celsius. Although firefighters made good progress in containing some of the fires over the weekend, conditions in some areas are expected to remain favourable for further outbreaks over the next few days.

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July 30th, 2009

GC LiveCat Turns Last-Minute Decisions into a Competitive Advantage

Posted at 1:01 AM ET

harnick_michelle_141pxMichelle Harnick, Managing Director
Contact

A hurricane is headed toward a coastal urban center, bringing with it the likelihood of outsized insured losses. The storm is heading into Galveston, Texas. The risk manager, tracking the situation, is concerned that the storm could strike a heavily exposed region. At this point, one of three situations could occur: (1) the storm does not make landfall, (2) the storm does make landfall, causing much more damage than expected, or (3) the storm makes landfall, but the risk manager has laid off some of the risk using livecat cover. 

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July 30th, 2009

Global Terror Update: Malaysia

Posted at 1:00 AM ET

global_cover141x141There is no terror pool or government involvement in terror coverage. The Malaysian government has not enacted terror cover legislation, and it appears unlikely to do so, since it is satisfied with the availability of cover on an extension basis. Prior to January 1, 2002, terrorism was covered on an optional basis for both commercial and personal lines. After January 1, 2002, terrorism cover was excluded from all commercial and personal lines policies. Extensions, however, may be granted. 

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July 29th, 2009

GC Securities, a Division of MMC Securities Corp., Announces Completion of 144A Catastrophe Bond – Parkton Re Ltd.

Posted at 11:48 AM ET

First-Ever State Windpool Cat Bond Transaction Provides
Per-Occurrence Ultimate Net Loss Protection for North Carolina Hurricane Peril

Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist, and GC Securities, today announced the completion of a $200 million issuance from a new 144A catastrophe bond program, Parkton Re Ltd., a Cayman Islands exempted company, to benefit the North Carolina Joint Underwriting Association and the North Carolina Insurance Underwriting Association (collectively the NC JUA/IUA). This program is the first-ever 144A catastrophe bond program to be established for the benefit of a state’s residual market pool to manage its hurricane risk.

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July 29th, 2009

Five Ways to Make Your Capital More Productive

Posted at 1:01 AM ET

Susan Witcraft, Managing Director, Financial Intelligence Team
Contact

The financial catastrophe may be almost a year behind us, but we’re still dealing with the effects. Capital remains constrained, and it will be a while before balance sheets return to early 2008 levels. (Re)insurers have had to learn to do more with less — deploying limited capital in a way that maximizes earnings and reaches challenging return on equity (ROE) targets. With MetaRisk®, Guy Carpenter’s economic capital model, you can delve into the scenarios that could mean the difference between capital productivity and missed opportunity.

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July 29th, 2009

Global Terror Update: Korea

Posted at 1:00 AM ET

global_cover141x141Terrorism is excluded from all primary insurance commercial lines, and reinsurance is not available locally. However, it is possible to buy a standalone terrorism cover if the reinsurance is available from the overseas market.

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July 28th, 2009

GC Podcast 01 - July 1 Renewals (Chris Klein)

Posted at 1:01 AM ET

podcast_kleinGuy Carpenter Global Head of Business Intelligence Christopher Klein discusses the July 1, 2009 reinsurance renewal in this new GC Capital Ideas podcast. Click the audio player below to listen to the interview, or download the interview in a file that will work with your iPod.

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Click here to download an iPod-compatible version of the interview >>