September 10th, 2011

Guy Carpenter Addresses Insurer Strategies for Profitable Growth At Monte Carlo Rendez-Vous 2011

Posted at 11:55 AM ET

GC Editor

mc2011_allspeakersIn its fourth annual press briefing held at the Reinsurance Rendez-Vous 2011 in Monte Carlo, Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist, identified and explored insurers’ opportunities for growth in today’s uncertain (re)insurance market.

Alex Moczarski, President and CEO of Guy Carpenter, led a briefing on Opportunity amid Uncertainty. Joining him were Guy Carpenter’s Chris Klein, Head of Sales Operations for the United Kingdom and Europe, Middle East, Africa (EMEA) regions and Market Relationships; Nick Frankland, CEO of EMEA Operations, and Bill Kennedy, CEO of Global Analytics and Advisory.

Mr. Moczarski opened the discussion with an overview of the factors driving uncertainty in the (re)insurance market, covering global risks, fiscal crises and macro industry issues, and set the stage for examining growth opportunities in an adrift market.

Mr. Moczarski said, “Every CEO in this industry is asking the same question: How do we achieve growth in this directionless market? The current climate is uncertain at best, but we believe that growth opportunities do exist - or can be created - by those cool minds with access to the right insight, right tools and right transactional capabilities.”

He added, “As insurance professionals, we must remember that a market such as this can actually work to our advantage. Uncertainty equals risk, which, for us - unlike virtually any other industry - equals opportunity. New and old risks can be securitized. Non-traditional approaches can be used to counter the squeeze on reserves. New and emerging markets can be developed and capitalized, while changing demographics in mature markets offer new opportunities. New tools and strategies, such as predictive modeling based on real data rather than fixed assumptions, can be employed to more effectively manage and monetize old - or evolving - risks.”

Mr. Klein followed with a detailed report on the state of the global reinsurance market, providing insights and observations on industry financial results for the first half of 2011 and their implications, the recent historically high catastrophe losses, the tightening reserving cycle and outlook for the global industry.

He observed, “This year’s earthquakes have given particular pause for thought. The Christchurch and Tohoku earthquakes tested and in some cases defeated accepted parameters. How confident can we be about earthquake loss assumptions for California, New Madrid or Tokyo?”

Mr. Frankland presented an overview of the European market, explaining the factors that could influence renewal pricing as well as those that are likely to subdue upward price movement at the January 1, 2012 renewals. “Despite all the challenges and variables that have set the current market adrift, we believe that there is adequate capacity if it is approached sensibly and carefully. We believe that, barring late-year catastrophes or sustained upward revisions of early-2011 loss estimates, these factors will keep aggregate risk-adjusted rates in Europe flat to slightly down at the 2012 renewal,” he said.

Mr. Kennedy addressed emerging issues in analytics, examining catastrophe models as both a source of industry disruption and uncertainty as well as opportunity, capital convergence, and innovation at Guy Carpenter. He mentioned that “We believe these [catastrophe] models are very useful in assessing risk exposure, and it is no surprise they have become essential tools for any insurer underwriting catastrophe loss coverage. However, these models reflect highly imperfect science and carry levels of uncertainty far greater than their influence would suggest. Guy Carpenter has begun to encourage clients to take a multi-model approach when assessing total portfolio risks.”

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Introduction by Alex Moczarski, President and CEO, Guy Carpenter

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Chris Klein, Head of Sales Operations for the United Kingdom and EMEA Regions and Market Relationships, Guy Carpenter

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Nick Frankland, CEO of EMEA Operations, Guy Carpenter

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Bill Kennedy, CEO of Global Analytics and Advisory, Guy Carpenter

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Concluding Remarks by Alex Moczarski, President and CEO, Guy Carpenter

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