Here we review the most viewed charts from GC Capital Ideas’ Chart Room 2012 year-to-date.
1. Chart: Reinsurance Valuations at a Long-Term Low: The challenging macroeconomic environment of subdued growth and low interest rates meant the reinsurance sector ended 2011 trading near 20-year lows. As the chart below illustrates, the average price to book ratio for the sector of 0.893 is just greater than one and a half standard deviations down from the 20-year average of 1.32.
2. Chart: Catastrophe Bond* Risk Capital Issued and Outstanding: During the first six months of 2012, 15 transactions came to market, totaling USD3.4 billion of risk principal. In terms of risk principal, this is a 113 percent increase relative to the first half of 2011. Risk principal outstanding now stands at USD13.5 billion.
4. Chart: U.S. Property Catastrophe Rate on Line Index: Based on early calculations at July 1, overall property catastrophe pricing for 2012 as compared to 2011 was up 6.5 percent.
6. Chart: U.S. Property Catastrophe Rate on Line Index Update: Chart presents historical pricing activity through July 1, 2011.
7. Chart: Catastrophe Bonds Risk Capital Outstanding, 2004-2011YTD: Total risk capital outstanding increased from the second to the third quarter 2011, reaching USD10.70 billion - up from USD10.64 billion, representing a net increase of 0.56 percent (USD60 million). This is the first quarter that risk capital outstanding increased since the fourth quarter 2010.
* 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. **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.