Archive for September, 2012



September 28th, 2012

Week’s Top Stories: September 22 - 28, 2012

Posted at 9:45 AM ET

Navigating the Risks: Executive Summary: Guy Carpenter is pleased to present our mid-year report on the global insurance and reinsurance sector, Overcoming Key Risks on the Road to Profitable Growth. In this report we outline three key risks to the sector: economic uncertainty and emerging interest rate sensitivity, the shifting nature of catastrophe losses and reserving 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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Capital Development at Lloyds: The chain of security at Lloyd’s describes the three layers of capital that Lloyd’s uses to pay claims.

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“Cold Spot” Catastrophe Losses Reveal Potential Emerging Market Risks, According to Guy Carpenter Report: Guy Carpenter published a new report that offers insight into catastrophe risks in developing economies and how they are likely to affect the (re)insurance sector as companies target growth opportunities in these new markets, including emerging Asia and Latin America. According to Cold Spots Heating Up: The Impact of Insured Catastrophe Losses in New Growth Markets, growth opportunities in emerging economies pose a unique set of challenges to (re)insurers.

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Guy Carpenter Explores Opportunities in a Challenging Market At Monte Carlo Rendez-Vous 2012: In its fifth annual press briefing held at the Reinsurance Rendez-Vous 2012 in Monte Carlo, Guy Carpenter addressed the challenging market conditions currently facing the (re)insurance industry and highlighted opportunities for growth.

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Most Popular Keyword: catastrophe bonds

 

And, you may have missed…..

Catastrophe Bonds* at July 1, 2012: Catastrophe bonds continue to play an increasingly important role in the property catastrophe risk transfer market with particularly robust issuance levels. 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, within striking distance of the high water mark of USD14 billion established in 2007 after the post-Katrina-Rita-Wilma issuance surge.

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

September 27th, 2012

Growing Interest Rate Sensitivity

Posted at 1:00 AM ET

David Flandro, Global Head of Business Intelligence, Julian Alovisi, Assistant Vice President and Lucy Dalimonte, Senior Vice President

Contact

Although (re)insurers’ investments in higher-grade fixed income securities have calmed nerves for now, it is only logical to expect an increase in interest rate sensitivity for portfolios with lower yields to maturity. This creates the potential for negative balance sheet impacts should interest rates rise suddenly. Continue reading…

September 26th, 2012

Eurozone Debt Crisis and the “Flight to Quality”

Posted at 1:00 AM ET

David Flandro, Global Head of Business Intelligence, Julian Alovisi, Assistant Vice President and Lucy Dalimonte, Senior Vice President
Contact

A prominent effect of the global slowdown has been pressure on countries’ tax revenues and difficulty in financing national budgets. The southern European periphery and Ireland have been particularly susceptible to heightened risk premia. While Greece obtained a funding package from the European Union and the International Monetary Fund (IMF) in March, it has been speculated that the likes of Spain and Italy are simply “too big to save” given current central bank and IMF resources in a similar event (1).

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September 25th, 2012

(Re)insurance: The Global Slowdown and Implications for the Sector

Posted at 1:00 AM ET

David Flandro, Global Head of Business Intelligence, Julian Alovisi, Assistant Vice President and Lucy Dalimonte, Senior Vice President
Contact

The Global Slowdown

As 2012 progresses, the global economy is in a worse state than previously thought, with growth expectations revised lower in many advanced and developing countries. In the United States, gross domestic product (GDP) growth estimates for 2012 have been revised downward from approximately 3 percent at the end of last year to 2 percent at present (1). This has contributed to stubbornly high U.S. unemployment, adding to fears of a “fiscal cliff” with tax increases and spending cuts set to kick in early next year.

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September 24th, 2012

Navigating the Risks: Executive Summary

Posted at 1:00 AM ET

Guy Carpenter is pleased to present our mid-year report on the global insurance and reinsurance sector, Overcoming Key Risks on the Road to Profitable Growth. In this report we outline three key risks to the sector: economic uncertainty and emerging interest rate sensitivity, the shifting nature of catastrophe losses and reserving risk. Guy Carpenter has dedicated extensive resources to understanding these risks and it is our objective to assist clients in overcoming the current challenges by deploying best-in-class risk management tools, reinsurance placement and strategic advisory services.

Continue reading…

September 21st, 2012

Week’s Top Stories: September 15 - 21, 2012

Posted at 10:30 AM ET

Capital Development at Lloyds: The chain of security at Lloyd’s describes the three layers of capital that Lloyd’s uses to pay claims.

Read the article >>

 

GC Securities* Wins Insurance Day’s ILS Transaction of the Year Award: Guy Carpenter and GC Securities have been named the winner of Insurance Day’s ILS Transaction of the Year, as part of the 2012 World Reinsurance Awards program. This recognition honors the Kibou Ltd. catastrophe bond program for its innovative structure and strategic execution.

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Guy Carpenter Explores Opportunities in a Challenging Market At Monte Carlo Rendez-Vous 2012: In its fifth annual press briefing held at the Reinsurance Rendez-Vous 2012 in Monte Carlo, Guy Carpenter addressed the challenging market conditions currently facing the (re)insurance industry and highlighted opportunities for growth.

Read the article >>

 

Guy Carpenter Details Top Risks for (Re)Insurance Industry in Mid-Year Market Report: Guy Carpenter released its mid-year market report, which addresses the top risks (re)insurers face as they seek profitable growth. The report, Overcoming Key Risks on the Road to Profitable Growth, provides a detailed analysis of three key risks to the sector: economic uncertainty and emerging interest rate sensitivity, the shifting nature of catastrophe losses and reserving risk.

Read the article >>

 

“Cold Spot” Catastrophe Losses Reveal Potential Emerging Market Risks, According to Guy Carpenter Report: Guy Carpenter published a new report that offers insight into catastrophe risks in developing economies and how they are likely to affect the (re)insurance sector as companies target growth opportunities in these new markets, including emerging Asia and Latin America. According to Cold Spots Heating Up: The Impact of Insured Catastrophe Losses in New Growth Markets, growth opportunities in emerging economies pose a unique set of challenges to (re)insurers.

Read the article >>

 

Most Popular Keyword:  catastrophe bonds

 

And, you may have missed…..

The Microfinance Market Today: The groundbreaking efforts by pioneers in the microfinance industry have already begun to yield substantial returns. Today, more than 150 million people worldwide have access to microcredit, the industry’s flagship product - roughly equivalent to half the population of the United States. From the perspective of microfinance institutions (MFIs), this growing market has been successful, as well.

Read the article >>

 

Click here to register to receive e-mail updates >>

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

September 21st, 2012

Lloyd’s: Syndicate Ratings/Assessments

Posted at 1:00 AM ET

Matthew Day, Senior Vice President
Contact

The Market ratings remain the principal measure of financial strength to be applied to operations underwriting at Lloyd’s, but several rating agencies separately provide syndicate-specific analysis. These analyses can support the reinsurance-buying decision-making process, but it is dangerous to rely on them without understanding the varying underlying methodologies. (None of these products are endorsed by Lloyd’s.)

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September 20th, 2012

Lloyd’s: Market Ratings

Posted at 1:00 AM ET

Matthew Day, Senior Vice President
Contact

The financial strength ratings assigned to Lloyd’s by S&P, A.M. Best and Fitch have been relatively stable in the 15 years since the first rating was assigned. During this period, the (re)insurance industry and Lloyd’s itself have undergone dramatic change as they responded to the major challenges of the September 11, 2001, terrorist attacks, devastating US and Gulf of Mexico hurricanes and other natural catastrophes that occurred across the globe. The softening casualty insurance market and the global financial crisis also caused difficulties during this time. The current Lloyd’s ratings assigned by each rating agency are at their original levels - a significant achievement given that most of Lloyd’s peers have failed to recover their pre-2001 ratings.

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September 19th, 2012

Lloyd’s: 2012 Capacity and Future Trends

Posted at 1:00 AM ET

Matthew Day, Senior Vice President
Contact

Lloyd’s capacity is an estimated GBP24.0 billion at the start of 2012, showing continued growth. Lloyd’s capacity grew from GBP15.7 billion to GBP23.3 billion between 2007 and 2011, an increase of 48 percent. GWP in that time increased 43 percent to GBP23.5 billion.

 

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September 18th, 2012

Lloyd’s: Solvency Testing

Posted at 1:00 AM ET

Matthew Day, Senior Vice President
Contact

Lloyd’s has a well-developed risk management framework. A number of committees provide oversight for the Market and detail what is required of members in terms of their own risk management. Lloyd’s is required to conduct an ICA for the Market as a whole, using the normal FSA risk categories to examine risks that are not captured within syndicate ICAs. This process aims to determine the level of capital required to be held centrally that can withstand a 1-in-200 year event over a one-year time frame. The Lloyd’s ICA is an important driver for the Council in determining the optimum level of central assets. Another key driver is the expectation that the costs of mutuality will be less than 1 percent of members’ GWP across the insurance cycle. The central assets target and the level of contributions are regularly reviewed in light of the Market’s current financial position and forecasted needs.

Continue reading…