Archive for July, 2013



July 31st, 2013

Chart: MGA Market Size

Posted at 1:00 AM ET

Results of Guy Carpenter’s annual survey of the PA/MGA market continue to reflect it as large.

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July 31st, 2013

Chart: MGA Market Profitability

Posted at 1:00 AM ET

Results of Guy Carpenter’s annual survey of the PA/MGA market show that, while the program marketplace is expected to remain profitable, the perception of the extent of the profitability has changed.

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July 30th, 2013

Specialty Insurance Program Issuing Carrier Survey from Guy Carpenter

Posted at 1:00 AM ET

The PA/MGA market continues to thrive. Over the course of the last eight years, through our annual survey, Guy Carpenter has tracked the market from the carriers’ perspective. The 2012 results reflect change, flexibility, growth opportunities and an exciting outlook for 2013. As the entrepreneurial spirit of the PAs and MGAs pushes them to look for ways to profitably expand and grow their business, their carrier partners appear poised to work with them in order to find solutions to assist in that growth. The PA/MGA space remains an underwriting arena and as such it will be driven by underwriting profit. Hopefully, the results of this year’s survey have provided some insight into what program carriers are looking to do in order to achieve mutual growth and profitability with their partners in this vibrant insurance market segment.

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July 29th, 2013

PA/MGA Survey: Growth Through Acquisitions, Part II

Posted at 1:00 AM ET

The majority of the respondents plan to use company funds or company stock (if applicable) to make acquisitions (47 percent this year versus 53 percent last year). Even though bank financing, private equity and venture capital are options, it appears insurance companies have ample capital and would use their own resources rather than go to outside sources.

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July 26th, 2013

Week’s Top Stories: July 20 -26, 2013

Posted at 8:00 AM ET

PA/MGA Survey: Reinsurance Purchasing: Reinsurance continues to play an important role for program issuing carriers. Seventy-six percent of respondents to the survey this year (66 percent last year) indicated the use of both direct reinsurers and intermediaries, while 18 percent indicated their use of intermediaries exclusively.

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July 1 Renewals Indicate Downward Pressure on Reinsurance Rates Likely to Continue through 2013: Guy Carpenter reports that reinsurance market rates on line (ROLs) continued to be driven by an influx of capital from third-party investors at the July 1 renewals, in spite of catastrophe losses reaching approximately USD20 billion during the first six months of 2013 (above the ten-year average for the period). In a briefing released today, Guy Carpenter comments that robust catastrophe bond, sidecar and collateralized reinsurance activity throughout the year has for the first time pushed pricing in the capital markets to “decouple” or breakaway from levels set by the traditional market. This has in turn prompted downward pressure on overall traditional market pricing.

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Chart: Alternative Capacity as a Percentage of Global Property Catastrophe Reinsurance Limit: The increasing influence of alternative capacity is demonstrated by the chart below, which shows the growth of convergence capacity as a percentage of global property catastrophe limit from 2008 to 2013 (projected).

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Chart: Combined Ratio, Guy Carpenter Reinsurance Composite, Q1 2013: Presents combined ratio for the Global, European and Bermuda Guy Carpenter Global Reinsurance Composites.

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Chart: Guy Carpenter Global Rate on Line Index, January 2013: The Guy Carpenter Global Property Catastrophe Reinsurance Rate on Line (ROL) index fell marginally at the January 1, 2013, renewal. This is the seventh consecutive annual renewal in which changes to the index have equaled 10 percent or less, indicating a global market with capacity appropriate to meet demand.

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Most Popular Keyword:  quarterly catastrophe bond issuance

 

And, you may have missed…..

Influx of Convergence Capital Triggers Downward Pressure on Pricing at June 1 Renewals: Guy Carpenter reports that the reinsurance sector has witnessed dynamic capital growth in 2012 and 2013, spurred by an influx of capital from alternative sources. In its June 2013 renewal briefing, Guy Carpenter finds that this surge in alternative or “convergence” capital has changed the nature of the sector’s capital structure, as investors grow increasingly comfortable with supplying capacity through a convergence of both traditional and alternative vehicles. This market dynamic has also begun to impact significantly reinsurance pricing for peak property catastrophe risks in the United States, with surplus capacity and lower target returns driving downward pressure on pricing for June 1 renewals and likely through the remainder of 2013.

Read the article >>

 

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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, Inc. 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.

July 25th, 2013

PA/MGA Survey: Growth Through Acquisitions, Part I

Posted at 1:00 AM ET

Program carriers continue to be interested in making acquisitions, although their level of interest appears to continue to wane. This year, 44 percent of respondents indicated an interest in growing through acquisitions (down from 56 percent, last year). When queried on the types of acquisitions they are seeking, most respondents’ interests appear to be acquiring either MGA/PA firms (38 percent) or teams of people (35 percent). Both types each represented 43 percent of respondents, last year. It also appears that carriers are continuing to look at buying other insurance carriers, although interest has waned somewhat. Twenty percent of the respondents indicated they are interested in this growth area.

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July 24th, 2013

PA/MGA Survey: Reinsurance Purchasing

Posted at 1:00 AM ET

Reinsurance continues to play an important role for program issuing carriers. Seventy-six percent of respondents to the survey this year (66 percent last year) indicated the use of both direct reinsurers and intermediaries, while 18 percent indicated their use of intermediaries exclusively.

Continue reading…

July 23rd, 2013

PA/MGA Survey: Risk Sharing

Posted at 1:00 AM ET

Program managers may also manage the performance of their programs through the pursuit of risk sharing on behalf of their PA/MGA partners. As we saw in past surveys, not all respondents require risk sharing. This year, somewhat fewer respondents utilize a sliding scale commission structure (76 percent versus 86 percent last year). The number of respondents utilizing some type of captive structure doubled this year from 12 percent to 24 percent. As an alternative, 36 percent of the respondents will still pay flat commissions.

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July 22nd, 2013

PA/MGA Survey: Performance Management

Posted at 1:00 AM ET

A carrier’s need for growth and profitability has to be closely monitored and controlled in the PA/MGA space. Every respondent in this year’s survey indicated that they had audit procedures in place to assure adherence to established risk selection and underwriting guidelines, financial billing, collection, remittance and banking guidelines, claim reporting, adjusting and settlement guidelines. Even though some changes have taken place in the number of audits conducted each year, this year’s results reflect the current and historical importance of the carriers’ PA/MGA management process.

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July 19th, 2013

Week’s Top Stories: July 13 - 19, 2013

Posted at 8:00 AM ET

July 1 Renewals Indicate Downward Pressure on Reinsurance Rates Likely to Continue through 2013:  Guy Carpenter reports that reinsurance market rates on line (ROLs) continued to be driven by an influx of capital from third-party investors at the July 1 renewals, in spite of catastrophe losses reaching approximately USD20 billion during the first six months of 2013 (above the ten-year average for the period). In a briefing released today, Guy Carpenter comments that robust catastrophe bond, sidecar and collateralized reinsurance activity throughout the year has for the first time pushed pricing in the capital markets to “decouple” or breakaway from levels set by the traditional market. This has in turn prompted downward pressure on overall traditional market pricing.

Read the article >>

 

PA/MGA Program Size: The average size of programs targeted by carriers has changed to reflect economic, rate adequacy and expense factors. Carriers remain more flexible with their program minimum premium requirements, their willingness to consider startup programs, their willingness to front and the territorial scope in which they are willing to write business.

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Influx of Convergence Capital Triggers Downward Pressure on Pricing at June 1 Renewals: Guy Carpenter reports that the reinsurance sector has witnessed dynamic capital growth in 2012 and 2013, spurred by an influx of capital from alternative sources. In its June 2013 renewal briefing, Guy Carpenter finds that this surge in alternative or “convergence” capital has changed the nature of the sector’s capital structure, as investors grow increasingly comfortable with supplying capacity through a convergence of both traditional and alternative vehicles. This market dynamic has also begun to impact significantly reinsurance pricing for peak property catastrophe risks in the U.S., with surplus capacity and lower target returns driving downward pressure on pricing for June 1 renewals and likely through the remainder of 2013.

Read the article >>

 

Chart: Alternative Capacity as a Percentage of Global Property Catastrophe Reinsurance Limit: The increasing influence of alternative capacity is demonstrated by the chart below, which shows the growth of convergence capacity as a percentage of global property catastrophe limit from 2008 to 2013 (projected).

Read the article >>

 

Guy Carpenter’s 8th Annual Specialty Insurance Program Issuing Carrier Survey: Guy Carpenter continues to provide the industry with our annual survey analysis of the current program marketplace from the program issuing carriers’ perspective. About This Year’s Respondents:  As in past years, the respondents were a mix of both traditional insurance companies that have specialty program operations (77 percent) and true, specialty insurance carriers (23 percent).

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Most Popular Keyword:  structure of catastrophe bond

 

And, you may have missed…..

GC Securities* Completes Catastrophe Bond Queen Street Re VIII Limited for Munich Re: GC Securities announced the placement of the Principal At-Risk Notes, with notional principal of $75,000,000, through a newly formed catastrophe bond, Queen Street Re VIII Limited, to benefit Munich Re. This is the eighth Queen Street cat bond to benefit Munich Re and the seventh overall cat bond issuance benefitting Munich Re since 2011.

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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, Inc. 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.