Archive for May, 2010



May 31st, 2010

Continental European Legislative and Judicial Trends: Dutch Insolvency Law and Directors & Officers Liability

Posted at 2:00 AM ET

2010_legislative_thumb-22David Lewin, Managing Director
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The worldwide economic downturn has had a huge effect on the Dutch economy. Many companies in the Netherlands face the risk of bankruptcy. In 2009 almost 11,000 enterprises were declared bankrupt, an increase of more than 51 percent compared with 2008. A similar number of companies are expected to enter bankruptcy in 2010. An even greater number of companies will be affected as they become entwined with the insolvencies of their contractual counterparties.

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May 28th, 2010

Week’s Top Stories: May 22 - 28, 2010

Posted at 10:00 AM ET

Solvency II - Non-Life Underwriting Risk in Light of QIS 5:   On April 15th, 2010, the European Commission (EC) published its draft technical specifications for the next Quantitative Impact Study (QIS) 5, which will be implemented from August to November of 2010. Based on empirical evidence, the general calibration of the standard formula solvency capital requirement (SCR) may fall between the calibration of QIS 4 and the calibration seen in the rigid proposals of the various consultation papers (CP) submitted during 2009. This article takes a deeper look at the calibration of non-life underwriting risk as part of the overall SCR calculation.

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Floods in Central and Eastern Europe:   Heavy rain has triggered severe floods in parts of central and Eastern Europe over the last week, killing at least nine people, inundating homes and businesses and causing widespread damage and disruption. Parts of Poland, Hungary, the Czech Republic and Slovak Republic have been flooded after days of heavy rain burst river banks and inundated low-lying areas. The heavy rain was accompanied by strong winds, causing power outages and transportation disruption. Reports said southern Poland was worst-affected after the Vistula River burst its banks. Poland’s Prime Minister, Donald Tusk, said the damage caused by the flooding could cost more than EUR2 billion (USD2.5 billion).

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GC Videocast - Risk Management Creates Value:  Guy Carpenter’s Global Chief Economist Joan Lamm-Tennant offers a view of how risk management creates value.

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GC Videocast - Enterprise Risk and Risk Capital: A Perspective on the Future:   Guy Carpenter’s Global Chief Economist Joan Lamm-Tennant reviews emerging themes, post financial crisis, around enterprise risk and risk capital.

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GC Securities, a Division of MMC Securities Corp., Announces Completion of 144A Catastrophe Bond - EOS Wind Limited*:  This catastrophe bond transaction provides per-occurrence PCS Index Protection for U.S. hurricane and per-occurrence Paradex Protection for European windstorms.

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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.

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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.

May 28th, 2010

GC Videocast - Risk Tolerance Influences Economic Capital (Joan Lamm-Tennant)

Posted at 1:00 AM ET

lammtennant3Guy Carpenter’s Global Chief Economist Joan Lamm-Tennant describes how economic capital is a function of the risk profile that comes from simulation based models, but it also requires knowing the company’s risk tolerance. She reviews how hedging frees up the need for economic capital and reduces volatility.

Click here to view all Guy Carpenter videocasts »  Continue reading…

May 27th, 2010

GC Videocast - Risk Management Contributes to Transparency and Leads to Value Creation (Joan Lamm-Tennant)

Posted at 1:00 AM ET

lammtennant2Guy Carpenter’s Global Chief Economist Joan Lamm-Tennant speaks about how earnings releases provide information to investors on the company’s earnings persistency. Risk management removes the noise, making the releases stronger predictors of future earnings. The market values persistency in earnings. The company may be rewarded with higher price to book.

Click here to view all Guy Carpenter videocasts »

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May 26th, 2010

Update: Floods in Central and Eastern Europe

Posted at 9:24 PM ET

middle-europe-flooding-small1Heavy rain has triggered severe floods in parts of central and eastern Europe since mid-May, killing at least 18 people, inundating homes and businesses and causing widespread damage and disruption. Parts of Poland, Hungary, the Czech Republic and the Slovak Republic have been flooded after days of heavy rain burst river defenses and inundated low-lying areas. The heavy rain was accompanied by strong winds, causing power outages and transportation disruption. Reports said southern Poland was the worst-affected area after the Vistula River burst its banks. Poland’s Prime Minister Donald Tusk said the damage caused by the flooding could cost around EUR2.6 billion (USD3.2 billion).

Continue reading…

May 26th, 2010

GC Videocast - Risk Management Creates Value (Joan Lamm-Tennant)

Posted at 1:00 AM ET

lammtennant1Guy Carpenter’s Global Chief Economist Joan Lamm-Tennant offers a view of how risk management creates value.

Click here to view all Guy Carpenter videocasts »   

Continue reading…

May 25th, 2010

GC Videocast - Enterprise Risk and Risk Capital: A Perspective on the Future (Joan Lamm-Tennant)

Posted at 1:00 AM ET

lammtennantGuy Carpenter’s Global Chief Economist Joan Lamm-Tennant reviews emerging themes, post financial crisis, around enterprise risk and risk capital.

Click here to view all Guy Carpenter videocasts »

Continue reading…

May 24th, 2010

Solvency II – Non-Life Underwriting Risk in Light of QIS 5

Posted at 1:00 AM ET

Frank Achtert, Managing Director, Financial Intelligence Team, and Sebastien Portmann, Vice President, Financial Intelligence Team
Contact

On April 15th, 2010, the European Commission (EC) published its draft technical specifications for the next Quantitative Impact Study (QIS) 5, which will be implemented from August to November of 2010. Based on empirical evidence, the general calibration of the standard formula solvency capital requirement (SCR) may fall between the calibration of QIS 4 and the calibration seen in the rigid proposals of the various consultation papers (CP) submitted during 2009. This article takes a deeper look at the calibration of non-life underwriting risk as part of the overall SCR calculation.

Continue reading…

May 21st, 2010

Week’s Top Stories: May 17 - 21, 2010

Posted at 11:45 AM ET

GC Videocast - US PC (Re)insurers’ Earnings Have Been Supported by Releases of Prior Year Loss Reserves: Can This Be Sustained?   Chris Klein, Guy Carpenter’s Head of Business Intelligence, reviews the relationship between accident year initial loss picks and subsequent calendar year development for that accident year. Good years appear to get better and bad years appear to get worse.

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GC Videocast - Favorable Investment Returns Subsidize Poor Underwriting Results: An Illustration from Guy Carpenter:   Chris Klein, Guy Carpenter’s Head of Business Intelligence, presents an illustration of the impact that higher investment returns can have on (re)insurer return on equity. A company with a 6 percent investment return is able to earn a 10 percent return on equity despite an unfavorable underwriting ratio. The situation is very different if the investment return drops by only 2 percentage points.

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GC Videocast - Per Risk Property Market Renewals:   Guy Carpenter Managing Director Kevin Stokes looks at the April 1 and mid-year 2010 renewal trends for the per risk property market for reinsurance.

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Catastrophe Bond Update: First Quarter 2010: Heavy Smoke, Some Fire: Encouraging Conditions Persist*:   In the first quarter of 2010, two catastrophe bond transactions were completed, and USD300 million of risk capital was issued. In response to strong investor demand, both transactions closed within initial price guidance and were upsized relative to announced placement targets. While this activity furthers the integration of the capital markets into the risk management processes of protection buyers, on balance, issuance volumes for the quarter were perhaps a bit lighter than expected at the close of 2009.

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GC Videocast - Key Issues Around the June 1 Florida Reinsurance Renewals:  Guy Carpenter Managing Director Kevin Stokes reviews key issues and developments around the Florida market for property reinsurance. He offers early predictions of the June 1, 2010 renewal season.

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MGA M&A Appetite Remains:  Program administrators and managing general agents (PAs/MGAs) appear to be interested in making acquisitions. This year, 72 percent of participants in Guy Carpenter’s Fifth Annual Specialty Insurance Program Issuing Carrier Survey indicated an interest in growing through acquisition, up slightly (though not materially) from 70 percent in 2008. A mature segment of the insurance industry, this remains one of the few ways to accelerate top-line growth and capture market share.

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Click here to register for e-mail updates »

*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.

 

May 21st, 2010

Floods in Central and Eastern Europe

Posted at 9:10 AM ET

middle-europe-flooding-smallHeavy rain has triggered severe floods in parts of central and eastern Europe over the last week, killing at least nine people, inundating homes and businesses and causing widespread damage and disruption. Parts of Poland, Hungary, the Czech Republic and Slovak Republic have been flooded after days of heavy rain burst river banks and inundated low-lying areas. The heavy rain was accompanied by strong winds, causing power outages and transportation disruption. Reports said southern Poland was worst-affected after the Vistula River burst its banks. Poland’s Prime Minister, Donald Tusk, said the damage caused by the flooding could cost more than EUR2 billion (USD2.5 billion).

Continue reading…