Cat Bond Update: 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).*
Modernizing the U.S. Insurance Regulatory Structure, Part I: State of Regulation: Though Benjamin Franklin created the first insurance “company” in the mid-eighteenth century, it took another 100 years for insurance regulation to develop formally. New Hampshire established its state regulator in 1851 … and the U.S. state insurance regulatory system had been born.
Five Ways to Make Cat Models More Effective: Catastrophe models don’t make decisions: they merely inform risk managers. To get more out of catastrophe models, therefore, you need to look at how they are used now — and where there’s room for improvement. Catastrophe model use still has untapped potential, which means you could have a hidden revenue and profit opportunity in your portfolio. Optimize how you work with catastrophe models, and you could make your capital more productive.
The Firm-Value Risk Model: This paper, a sequel to chapter 2.6 of Guy Carpenter’s 2007 book, Enterprise Risk Analysis, illustrates some of the complex interactions between risk, capital strategy, and the optimal usage of risk transfer; and how critical decisions can be based on impact to (re)insurer value using Guy Carpenter’s Firm-Value Risk Model (FVRM) methodology.
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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29 Guy Carpenter Brokers Named to Risk & Insurance Magazine’s Annual “Reinsurance Power Brokers” List: An unprecedented 29 members of Guy Carpenter & Company, LLC’s global broking team have been selected to Risk & Insurance magazine’s 2009 “Reinsurance Power Brokers” list, the highest number among all reinsurance intermediaries. The annual Power Brokers directory, now in its third year, honors individual reinsurance brokers for creativity in solving clients’ risk management issues, depth of practice or line-of-business expertise, and superior client service.
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* Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd., which is authorized and regulated by the Financial Services Authority. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product.