May 20th, 2011

Week’s Top Stories: May 14 - 20, 2011

Posted at 11:00 AM ET

GC Securities*: Catastrophe Bond Market Surges to Record High for First Quarter Issuance:  The catastrophe bond market posted its most active first quarter on record for new issuance in Q1 2011, according to a new report by GC Securities. Four transactions came to market in the first quarter of 2011, securing USD1.02 billion of new and renewal risk transfer capacity. This represents a significant increase over the USD300 million issued during the same time period in 2010.

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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 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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Tohoku Quake and Tsunami…An Industry Meets the Challenge - Reinsurance Market Short-Term Implications: The recent catastrophe in Japan has implications beyond reinsurance rates and balance sheets. Carriers have already begun to watch for rate changes and anticipate changes to catastrophe models. Both issues, along with the capital implications, will set the tone for the industry in the near term.

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Guy Carpenter Publishes Third Installment of “Succeeding Under Solvency II” Guide for Re/Insurers:  Guy Carpenter announced the publication of Succeeding Under Solvency II - Special Considerations for Reinsurers and Counterparty Risk, the third report in the firm’s series on Solvency II preparedness developed for re/insurers operating in or covering risks in Europe. The new report examines: The potential risks to cedents arising from Solvency II; the positive developments for cedents under Solvency II and strategies for managing counterparty default and credit risks.

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GC Securities* Completes Catastrophe Bond Johnston Re 2011-1 Class A and Class B Notes for State of North Carolina’s Windpool:   GC Securities announced the placement of the Series 2011-1 Class A and B Notes, with notional principal at $201,835,000, through an existing catastrophe bond shelf program, Johnston Re Ltd., to benefit the North Carolina Joint Underwriting Association and the North Carolina Insurance Underwriting Association (collectively, the NC JUA/IUA). This is the third consecutive year that the NC JUA/IUA has utilized the cat bond market to manage its hurricane risk.

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Most Popular Keyword:    pcs catastrophes 2010

And, you may have missed…

Cat Risk in a Solvency II Environment: Many approaches exist for use in assessing catastrophe risks. Under Quantitative Impact Study 4 (QIS 4), the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) provided a list of those that can be used for Solvency II compliance and, in the interim, managing risk and capital effectively. The full stochastic modeling of catastrophe risk using an internal model, such as Guy Carpenter’s G-Cat® tools and MetaRisk®, provides the most information.

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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, Inc. 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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