June 14th, 2012

June 1 Renewal: Industry Loss Warranty Market

Posted at 1:00 AM ET

mowery_lara_1415flandro_david5David Flandro, Global Head of Business Intelligence and Lara Mowery, Head of Global Property Specialty

Inactivity in the traditional ultimate net loss market during December 2011, led many buyers to look early to the industry loss warranty (ILW) arena. Their objective was to secure reinsurance/retrocession protection in advance of January 1. Some large deals were bound supported by limits from the usual carriers as the anticipated influx of capacity from new entrants failed to materialize. ILW pricing was up significantly year on year in all territories and for all perils, other than in Europe, but down slightly from the high levels seen in mid-2011. As normality returned to the traditional market, the usual take up of ILWs in the early weeks of the new year was less apparent with no shortfalls to fill or program gaps to plug. Activity increased during the last weeks of the first quarter as cedents secured significant limits, predominantly for Japan earthquake cover, ahead of the April 1 inwards renewal. Another period of relative inactivity was followed in recent weeks by a further uptick in activity. Selected buyers secured significant U.S. wind protection in the ILW market. During all these peaks and troughs there has been ample capacity to meet buyer demand.

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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 U.S. 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 an offer to buy any security, financial instrument, reinsurance or insurance product. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act.

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