August 17th, 2012

Week’s Top Stories: August 11 - 17, 2012

Posted at 10:30 AM ET

Lower Storm Activity Expected Through Peak of 2012 Atlantic Hurricane Season: A new Guy Carpenter briefing suggests reduced hurricane activity for the peak of the 2012 Atlantic Hurricane Season. However, storms are more likely to develop in the West Atlantic and Gulf of Mexico with a higher threat to land. Since 1950, 100 percent of years saw the occurrence of a September tropical storm, a hurricane in 98 percent of years and a major hurricane in 74 percent of years. A major landfalling U.S. hurricane cannot be ruled out, despite the quiet period of recent weeks.

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Top GC Capital Ideas Chart Room Entries: 2012:  Here we review the most viewed charts from GC Capital Ideas’ Chart Room 2012 year-to-date.

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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.

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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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Chart: Non-Traditional Market Capacity in the Property Catastrophe Risk Transfer Market: It is worth noting that while the 144A catastrophe bond* market is the most visible component of direct capital markets capacity in the catastrophe risk market, it is not the largest. Other conduits, particularly collateralized reinsurance and sidecar participations are also meaningful as additional sources of risk transfer capacity.

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Most Popular Keyword:  catastrophe bonds

 

And, you may have missed…..

Defining the Value of Risk Management:  How do you put a price on risk management? In the early days of finance theory (1950’s), the value of risk management was questioned-unless, of course, it was costless. The nuances of a more complex business environment have rendered this position untenable, but we still struggle to quantify the benefits of risk management, especially in the (re)insurance industry. Thus, the fundamental activity of risk-bearers has not been measurable, leaving a cloud of ambiguity in the middle of every carrier’s operation.

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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. **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.

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