July 9th, 2010

Week’s Top Stories: July 3 - July 9, 2010

Posted at 11:00 AM ET

Reinsurance Renewal July 1, 2010: Capital Cushion Continues to Impact Pricing: Further erosion of rates was evident at the July 1, 2010 reinsurance renewal. Property rates were down by as much 15 percent despite substantial catastrophe loss activity in the first half of 2010. Heavy losses from the Chilean earthquake were insufficient to turn prices outside the areas immediately affected by the earthquake, despite the announcement of large increases in estimates from the largest European reinsurers. In the energy and casualty sectors, conditions were flat or down, but the Deepwater Horizon rig disaster may exert upwards pressure as more information emerges. Excess capital remains available to absorb losses as evidenced by continuing share buy-backs and the substitution of equity capital with less expensive debt.

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Guy Carpenter Asia-Pacific Climate Impact Centre Publishes New Report on Interannual and Interdecadal Variations of Tropical Cyclone Activity in South China Sea:   The Guy Carpenter Asia-Pacific Climate Impact Centre (GCACIC), a joint initiative of Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist, and the City University of Hong Kong, has published a new paper on tropical cyclone activity variations between 1965 and 2005 in the South China Sea region. The report identifies trends over the years and decades during this period, and the factors that drove these variations.

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The Time Profile of Risk:  From the Desk of Guy Carpenter’s Chief Actuary:   According to the draft European Union Solvency II directives, companies will need to provide an “own risk and solvency assessment” (ORSA). The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) has prepared an issues paper that provides guidance to assist (re)insurers in implementing the ORSA.

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Update: Hurricane Alex:   Hurricane Alex has made landfall near Soto La Marina and La Pesca in Mexico’s Tamaulipas State as a category 2 hurricane, according to the National Hurricane Center (NHC). The storm made landfall around 02:00 UTC on July 1 with sustained winds of around 105 mph (165 kmph). The NHC said Alex was the first category 2 hurricane to develop in June in the Atlantic since Hurricane Alma in 1966.

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Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of Enterprise Risk Management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

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Most Popular Keyword:   Guy Carpenter rol index

And, you may have missed…

2010 Hurricane Season Begins: Knowing, Understanding and Better Managing the Risks, Part I: State of the Florida Marketplace: The 2010 hurricane season kicked-off on June 1 and the meteorological forces wasted no time in getting down to business. Tropical storm Agatha slammed into Central America, killing at least 101 people. The hurricane season kick-off and the storm occurred as backdrops to the wrap up of the June 1, 2010 reinsurance renewals, traditionally centered on the Florida property marketplace.

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GCCapitalIdeas.com has been nominated for membership in the Lexis/Nexis Insurance Law Community (ILC) “Top 50 Insurance Blogs.” When considering blogs for membership, ILC looks for frequent posts, timely topics and quality writing. Guy Carpenter & Company, LLC is proud that GCCapitalIdeas has been nominated.    


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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.

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