World Catastrophe Reinsurance Market: Part III, Catastrophe Model Developments, Impact of Changing Regulations: The increasingly complex nature of the reinsurance industry and the growth in alternative risk transfer instruments such as catastrophe bonds have reinforced the importance of catastrophe models and data management platforms in the risk management process. Such innovations have allowed (re)insurers to improve their understanding of natural perils while accurately estimating potential catastrophe losses to their portfolios and managing their exposures.
World Catastrophe Reinsurance Market: Part I, Introduction, Catastrophe Events: 2010 has been a difficult year for the reinsurance industry after it suffered one of the most costly first halves on record. Spiraling costs from disasters such as the Chilean earthquake and the Deepwater Horizon explosion in the Gulf of Mexico meant (re)insurers’ catastrophe budgets took a severe hit even before the hurricane season had started. Although insured losses reached USD23 billion in the first six months and an active hurricane season has been forecast, reinsurance rates generally declined through the 2010 renewals as surplus capital drove down prices.
Guy Carpenter Examines Excess Capital Strategies At Monte Carlo Reinsurance Rendez-vous: Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist, hosted its third annual press briefing on September 11 at the Reinsurance Rendez-vous 2010 in Monte Carlo. During the briefing Henry Keeling, President and CEO of Guy Carpenter’s International Operations, led a panel discussion on key industry issues, including determining the best use of excess capital in today’s marketplace.
Insurance Companies Undervalued?: Companies in the reinsurance sector are trading at or near long term low valuations. This raises the question: Why are “strong buy” recommendations not more common? The answer may lie in the fact that, generally, analysts and investors are concerned about three important obstacles to returns on equity.
Modeling the Impact of a Casualty Catastrophe: Look no further than today’s headlines to see how a single catastrophic event or lawsuit can have far-reaching effects. Over the past few years, several incidents, seemingly isolated, have ballooned into cross-border, cross-industry and cross-business line catastrophes. Chain reactions of liability — such as the Deepwater Horizon oil spill, the collapse of Lehman Brothers and the Chinese Drywall product recall — have led insurers to ask: How do I assess the impact of a major legal liability catastrophe on my portfolio? And it’s not just the industry waiting for an answer: stockholders, analysts, rating agencies and regulators are listening, too.
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Modeling Loss Reserve Risk: Loss reserves are essentially forecasts of losses that are going to be paid five, 10 and 15 years from now. Since the future cannot be predicted with perfect accuracy, reserves, of course, are difficult to estimate.