Cat Bond Update: Third Quarter 2009*: The third quarter is traditionally quiet for the catastrophe bond market, and 2009 was no exception. Two transactions were closed, resulting in USD412 million in new risk capital. Nonetheless, risk capital issued was up by a third relative to the same quarter last year, as both catastrophe bonds issued were upsized considerably. The consensus estimate for the entire year remains USD3 billion to USD4 billion, implying a strong fourth quarter for primary issuance.
Turn Solvency II Compliance into a Competitive Advantage: The emerging consensus seems to be that Solvency II will cost a lot and make the (re)insurance business more complicated. If conventional approaches to regulatory compliance are applied, this is likely to be true. After all, compliance tends to be seen as just another expense. This does not have to be the case for Solvency II, however. Choosing the right approach could free capital for investment elsewhere, ultimately resulting in a competitive advantage. “Competitive compliance,” consequently, can create an upside where most would perceive only a cost to be managed.
Solvency II — Did CEIOPS Overdo It?: The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) published its second set of Consultation Papers on Level 2 implementation measures for the Solvency II Directive in July 2009. These papers were open for comment until September 11, 2009. CEIOPS received more than 20,000 comments from 105 stakeholders, demonstrating the importance (and explosiveness) of the ongoing Solvency II discussion.
Guy Carpenter Fifth Annual Specialty Insurance Program Issuing Carrier Survey, Part I: A Steady Marketplace: The Program Administrators and Managing General Agents (PA/MGA) market has remained remarkably consistent from 2008 to 2009, despite the outbreak of the worst financial crisis in more than 70 years. While the number of respondents perceiving market growth has declined since last year, the outlook remains quite upbeat, especially given the year’s tumultuous market conditions.
Earthquake in Southern Sumatra, Indonesia: A powerful earthquake struck off Southern Sumatra in Indonesia at 10:16:09 UTC (17:16:09 local time) on September 30, 2009, destroying hundreds of buildings, killing at least 529 people and seriously injuring 400 more. The earthquake, measuring 7.6Mw, was located around 30 miles (45 kilometers) west-northwest of Padang and 135 miles (220 kilometers) southwest of Pekanbaru, according to the U.S. Geological Survey (USGS). The USGS added that the quake was centered about 50 miles (80 kilometers) underground. Dozens of aftershocks have been recorded following the main earthquake, including a 6.6Mw tremor that occurred around 15 hours after the original quake and was located around 170 miles (275 km) away. There have been no immediate reports of damage from the 6.6Mw aftershock.
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Continental European Legal Update: Conclusion: This latest issue of our legal update continues to expand our coverage of key legislative and judicial developments in Continental Europe. A variety of developments in insurance legislation are charted in this latest issue, from the introduction of mandatory self-insured deductibles in D&O liability insurance in Germany to the introduction of rights of direct access against liability insurers in Switzerland.
* 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.