1. Wide Range of Outcomes Seen in June 1, 2011, Florida Reinsurance Renewals: The June 1, 2011, renewals took place against the backdrop of record first-half catastrophe losses and uncertainty surrounding the release of version 11 of Risk Management Solutions’ U.S. hurricane model. The heavy international natural catastrophe-related losses that occurred during the first quarter of 2011 - combined with the multi-billion dollar losses from tornadoes in the United States in April and May - have added to significant loss activity over the past 16 months, culminating in insured losses of close to USD100 billion.
2. A.M. Best Updates Its Comments on Catastrophe Models: During a recent webinar, a panel convened by A.M. Best reviewed catastrophe models and addressed questions that arose as a result of the new RMS and AIR model versions that have been released. The discussion was focused on how A.M. Best wants companies to demonstrate a solid understanding of their catastrophe risk exposure and where it fits within their risk tolerances. The panel outlined the need for rated companies to engage in ongoing discussions with their A.M Best analysts regarding the efficacy of model output, specifically, the companies’ confidence in the model output and the reasoning behind this view.
3. Summary of 2011 Hurricane Season Forecasts: With the start of the Atlantic hurricane season just a few days away, Guy Carpenter has summarized the various forecasters’ predictions for the 2011 season. AccuWeather, the Colorado State University (CSU), the National Oceanic and Atmospheric Administration (NOAA) and Weather Services International (WSI) have released forecasts for the forthcoming season and there seems to be a general consensus that 2011 will see above-average activity with an increased risk of hurricane landfalls in the United States.
4. Oliver Wyman Report: Time for a check-up: Capital Model Validation in P&C (Re)insurance: Capital models used in P&C insurance and reinsurance have become increasingly mission-critical to risk and business management. In recent years, regulators and rating agencies have heightened standards for these models dramatically, with an urgency magnified by turmoil in the financial markets. Today, however, insurers with effective models are able to capture competitive advantage with greater capital flexibility, lower cost of capital, and ultimately, stronger and more stable earnings.
5. 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.
6. Succeeding Under Solvency II: Entire White Paper Series: Guy Carpenter recently published a series of three white papers on Solvency II covering key issues of relevance to (re)insurers. We bring the entire series together here.
7. Jonathan Stephenson Named CEO of Guy Carpenter’s Pacific Region: Guy Carpenter & Company announced that Jonathan Stephenson has been appointed Managing Director of Guy Carpenter’s Australia operations and CEO of the firm’s Pacific region, effective July 1, 2011.
8. Earthquake in New Zealand: Another strong earthquake hit New Zealand’s South Island at 02:20 UTC on June 13, destroying buildings already weakened by two previous earthquakes that hit the region in September 2010 and February 2011. The latest event, measuring 6.0 Mw, was located 13 kilometers (8 miles) west of Christchurch and centered a shallow 9 kilometers (5.6 miles) underground, according to the U.S. Geological Survey (USGS). The New Zealand Institute of Geological and Nuclear Sciences (GNS Science) recorded a magnitude of 6.3 for the event. According to the USGS, more than 430,000 people live in areas impacted by a Modified Mercalli Intensity (MMI) of V or higher. Christchurch, New Zealand’s second largest city with a population of around 364,000, experienced intensity VII on the MMI scale, equivalent to severe shaking with the potential to cause heavy damage to vulnerable structures and moderate/heavy damage to more resistant structures.
9. Global Reinsurance Outlook: Points of Inflection, Positioning for Change in a Challenging Market: Executive Summary: Early predictions that January 1, 2011 reinsurance renewal rates were likely to fall have been proven correct. The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) Index lost 7.5 percent - the second consecutive annual decline. Contributing to this move has been a combination of factors, including moderate loss activity and abundant levels of industry surplus.
10. Floods in the United States: Heavy rainfall has triggered severe floods across central and southern regions of the United States since April as the Mississippi River overflowed and flooded thousands of homes and businesses. High levels of precipitation, combined with springtime snowmelt, caused the Mississippi River and many of its tributaries to rise to record levels. Nine states have been affected by major flooding, with Missouri, Kentucky, Tennessee, Arkansas, Mississippi and Louisiana particularly badly hit. President Barack Obama declared the western counties of Kentucky, Tennessee and Mississippi federal disaster areas.