Archive for February, 2012



February 29th, 2012

Verification of Forecasts of Tropical Cyclone Activity Over the Western North Pacific and Number of Tropical Cyclones in South China and the Korea and Japan Region in 2011

Posted at 1:00 AM ET

Since 2000, City University of Hong Kong has been issuing real-time predictions of the annual number of tropical cyclones (TCs) affecting the western North Pacific. Verifications of the predictions have shown that the predictions are mostly correct within the error bars. The organization also began to predict the number of TCs making landfall in South China and the Korea and Japan region in 2009 and 2010 respectively. These are all statistical predictions with predictors drawn from a large group of indices that represent the atmospheric and oceanographic conditions in the previous year up to the spring of the current year. This report reviews the success of the predictions.

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February 29th, 2012

Insurers See Growth in Program Administrators and Managing General Agents Marketplace in 2012, According to Guy Carpenter Survey

Posted at 1:00 AM ET

Specialty program insurance providers predict that the Program Administrators and Managing General Agents (PA/MGA) market will grow in 2012 as a result of changes taking place in program business, according to a survey conducted by Guy Carpenter. In its annual study of the PA/MGA marketplace, Guy Carpenter surveyed both traditional insurance companies with specialty program operations and specialty insurance carriers about their program business and the direction of the PA/MGA marketplace.

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February 28th, 2012

GC Securities* Completes Catastrophe Bond Queen Street V Re Limited on behalf of Munich Re

Posted at 1:30 PM ET

GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/SIPC, today announced the placement of USD75 million Principal At-Risk Variable Rate Notes (”Notes”) through catastrophe bond issuer Queen Street V Re Limited.

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February 28th, 2012

2011 Catastrophe Losses and Reinsurance Capital: Part IV

Posted at 1:00 AM ET

Capital Levels Remain Resilient

The elevated loss activity and the catastrophe model changes during the past year put some pressure on reinsurance capital in 2011. At the end of the third quarter, the Guy Carpenter Global Reinsurance Composite (1) reported approximately USD20 billion in catastrophe losses for the first nine months of the year. Catastrophe model changes, particularly the impact of RMS v11, also put some strain on capital levels, although the full impact has yet to be realized.

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February 27th, 2012

2011 Catastrophe Losses and Reinsurance Capital: Part III

Posted at 1:00 AM ET

Losses in United States

Significant weather-related losses also occurred in the United States in 2011 after one of the worst tornado seasons on record caused a combined insured loss of around USD20 billion. If considered a single event, the tornado losses in the second quarter would have ranked as the fourth most expensive disaster in US history, according to the Insurance Information Institute.

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February 24th, 2012

Week’s Top Stories: February 18 - 24, 2012

Posted at 10:44 AM ET

2011 Catastrophe Losses and Reinsurance Capital: Part I:  The reinsurance sector faced multiple headwinds in 2011. Significant losses in Australia, New Zealand, Japan, the United States and Thailand resulted in (re)insurers paying out more than USD100 billion in claims. Adding to the pressure on the market has been the impact of major catastrophe model releases, particularly for US wind risks. Nevertheless, reinsurance capital has remained resilient despite these pressures. The sector’s dedicated capital position recovered from most of its losses in 2011 and ended the year at a level close to that at the start of the year.

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Calling All General Insurance Reserving Actuaries: Does the Bootstrap Model “Work”?  Guy Carpenter’s extensive back-testing of reserve distributions created using the popular paid chain ladder bootstrap method has shown that these distributions materially under-estimate reserve risk.

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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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January 2012 Reinsurance Renewal: Credit, Bond & Political Risk:  In the credit and bond primary market, rates are flat, but these are not rate-driven classes. In political risk and especially structured credit, rates are under considerable upwards pressure for obvious reasons. The outlook for 2012 is turbulent, given the prevailing macroeconomic uncertainty and instability around the world. Loss ratios are quite likely to increase.

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Guy Carpenter’s January 2012, Reinsurance Renewal Report: Executive Summary:  The (re)insurance sector experienced historic catastrophe losses in 2011, many in areas not previously considered ‘peak’ risks. Devastating earthquakes in Japan and New Zealand, floods in Thailand and Australia and a record-breaking tornado season in the United States contributed to insured losses in excess of USD100 billion. As carriers continue to penetrate new growth regions, ‘cold spot’ losses are expected to increase.

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Merger and Acquisitions in Uncertain Markets:  The global reinsurance sector is adrift. With little conviction in the market’s next move, the challenges of organic growth by primary (re)insurers have heightened. Economic uncertainty, volatility in global equity markets and sovereign debt concerns are dampening CEOs’ confidence. Rates remain challenged, and cost savings are hard to find in the property and casualty (P&C) space. With stocks plummeting and credit markets getting roiled, the pace of deals for the remainder of 2011 is expected to slow.

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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. Cory Anger and Chi Hum are registered representatives of MMC Securities Corp.

February 24th, 2012

2011 Catastrophe Losses and Reinsurance Capital: Part II

Posted at 1:00 AM ET

Significant Insured Losses in 2011

At least 12 natural catastrophes resulted in insured losses of more than USD1 billion during 2011. Interestingly, the vast majority of the loss activity occurred outside of the United States, with Asia accounting for more than two-thirds of total insured losses (see Figure 1). This broke the historical trend of US-based events dictating price movements across the property catastrophe reinsurance market.

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February 23rd, 2012

2011 Catastrophe Losses and Reinsurance Capital: Part I

Posted at 1:00 AM ET

Reinsurance Capital Resilient Despite Pressures

The reinsurance sector faced multiple headwinds in 2011. Significant losses in Australia, New Zealand, Japan, the United States and Thailand resulted in (re)insurers paying out more than USD100 billion in claims. Adding to the pressure on the market has been the impact of major catastrophe model releases, particularly for US wind risks. Nevertheless, reinsurance capital has remained resilient despite these pressures. The sector’s dedicated capital position recovered from most of its losses in 2011 and ended the year at a level close to that at the start of the year.

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February 22nd, 2012

January 2012 Reinsurance Renewal: Credit, Bond & Political Risk

Posted at 1:00 AM ET

In the credit and bond primary market, rates are flat, but these are not rate-driven classes. In political risk and especially structured credit, rates are under considerable upwards pressure for obvious reasons. The outlook for 2012 is turbulent, given the prevailing macroeconomic uncertainty and instability around the world. Loss ratios are quite likely to increase.

Continue reading…

February 21st, 2012

January 2012 Reinsurance Renewal: Construction & All-Risk Engineering

Posted at 1:00 AM ET

Engineering reinsurance pricing was flat at the January 1, 2012, reinsurance renewal - for general treaty, catastrophe excess of loss and per risk. For loss-affected programs, the losses realized drove pricing changes.

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