Archive for May, 2014



May 30th, 2014

Week’s Top Stories: May 24 — 30, 2014

Posted at 8:00 AM ET

2014 Reinsurance Renewals: As we approach the June 2014 reinsurance renewals, we review the reinsurance renewals Guy Carpenter has reported on so far this year.

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Trends in Convergent Capital in the Reinsurance Sector: Here we review GC Capital Ideas entries highlighting trends in convergent capital in the reinsurance sector.

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Chart: Global Property Catastrophe ROL Index: The Guy Carpenter Global Property Catastrophe Rate on Line index is presented for 1990 through 2014. The index fell by 11 percent at January 1, 2014.

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Europe Embraces Annuity Settlements for Bodily Injury: Here we review GC Capital Ideas entries highlighting Europe’s embrace of periodic payment orders over traditional lump sum payments for the settlement of bodily injury claims.

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Guy Carpenter Asia-Pacific Climate Impact Centre Publishes New Annual Report: The Guy Carpenter Asia-Pacific Climate Impact Centre (GCACIC), a joint initiative of the City University of Hong Kong and Guy Carpenter, released its fifth annual report presenting the highlights of the GCACIC’s research activities from the past year. The report details the findings of 16 projects conducted by the GCACIC, which focus on climate problems in the Asia-Pacific region as well as on a global scale.

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And, You May Have Missed…

Review of the Asia Pacific Market: Here we review recent GC Capital Ideas stories related to the Asia Pacific region.

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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/NFA/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. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade, Canary Wharf, London E14 5HS. 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.

May 29th, 2014

Guy Carpenter Strategic Advisory Appoints Two Prominent Rating Agency Executives

Posted at 5:00 AM ET

Guy Carpenter today announced the appointments of Eric Simpson as Managing Director and Mark Murray as Senior Vice President. Mr. Murray reports to Mr. Simpson, who reports directly to Jack Snyder, Managing Director, Head of the Rating Agency Practice, Guy Carpenter Strategic Advisory. Both are based in the Philadelphia office. Mr. Simpson joined Guy Carpenter on April 28 and Mr. Murray on April 21.

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May 29th, 2014

Europe Embraces Annuity Settlements for Bodily Injury

Posted at 1:00 AM ET

Here we review GC Capital Ideas entries highlighting Europe’s embrace of periodic payment orders over traditional lump sum payments for the settlement of bodily injury claims.

Time Off for Certain Behavior: The Courts Act of 2003 fundamentally changed the way that catastrophic injury claims are settled by insurers. It gave the courts the power to enforce a periodic payment order (PPO) as compensation instead of an upfront lump sum payment. A PPO is an annuity payment from the insurer to the claimant, and is designed to cover ongoing care costs, loss of earnings and other expenses associated with the injuries sustained for the rest of the claimant’s lifetime.

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Chart: Prevalence of Annuity Settlements in Europe: For bodily injury claim settlements in Europe, the trend is shifting away from lump sums and towards annuity-type settlements, which come with risks related to longevity, inflation and hedging.

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May 28th, 2014

2014 Reinsurance Renewals

Posted at 1:00 AM ET

As we approach the June 2014 reinsurance renewals, we review the reinsurance renewals Guy Carpenter has reported on so far this year.

April Renewals Bring Price Reductions & Focus on Tailored Coverage: Guy Carpenter reports that the April 1, 2014 renewal was marked by price reductions and more tailored reinsurance coverage. Strong balance sheets, an abundance of capacity and a consolidation of buying led to lower reinsurance pricing across most territories and business segments at the renewal.

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January 1, 2014 Renewals Bring Downward Pressure on Pricing: Guy Carpenter & Company reports that reinsurance rates-on-line fell at the January 1, 2014 renewal in nearly all classes and regions. According to Guy Carpenter’s 2014 global renewal report, strong balance sheets, relatively low loss experiences and an unprecedented influx of convergence capital spurred competition and innovation at renewal. These factors led in turn to surplus capacity across most business segments as competition spilled beyond property catastrophe lines.

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May 27th, 2014

Trends in Convergent Capital in the Reinsurance Sector

Posted at 1:00 AM ET

Here we review GC Capital Ideas entries highlighting trends in convergent capital in the reinsurance sector. 

Chart: Evolution of Dedicated Reinsurance Capital, 2012 - YE 2013: The evolution of dedicated sector capital is presented in this chart. Guy Carpenter estimates this rose marginally in 2013 to USD322 billion at year-end as underwriting profits from low catastrophe claims and convergence capital inflows offset unrealized losses, sustained share buybacks and dividend payments.

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Chart: Catastrophe Bond Issuance and Capital Outstanding: Issuance reached a record high of USD7.1 billion, surpassing 2007’s total. Risk capital outstanding also reached an all-time high of USD18.6 billion last year.

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Chart: Pension Fund Capital Under Management and Allocations into Reinsurance: As the illustration shows, pension funds alone are worth around USD30 trillion. Based on Guy Carpenter’s analysis of possible capital allocation percentages to the (re)insurance space in consultation with sector experts, a maximum of USD900 billion of this amount could potentially be available for insurance-linked investments.

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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/NFA/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. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade, Canary Wharf, London E14 5HS.  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.

May 26th, 2014

GC Capital Tip: Find Older Articles

Posted at 1:00 AM ET

During busy times of the year, we add articles quickly. So, what you see on the front page of GC Capital Ideas one day may not be there the next. The article has not disappeared; it has just moved to the next page. Articles are listed in the order in which they were published. The newest is at the top of the front page. To see those that are a bit older, go to the bottom of a page and click the “Older Entries” link.

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May 26th, 2014

GC Capital Tip: Chart Room

Posted at 1:00 AM ET

We all know that a picture is worth a thousand words. That’s why GC Capital Ideas has the Chart Room. If you want to get a quick sense of important industry trends, the Chart Room provides snapshots of everything from catastrophe bonds to the Guy Carpenter World Rate on Line Index. We encourage you to use these charts in your presentations, along with the proper attribution.

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May 23rd, 2014

Week’s Top Stories: May 17 — 23, 2014

Posted at 8:00 AM ET

Guy Carpenter Asia-Pacific Climate Impact Centre Publishes New Annual Report: The Guy Carpenter Asia-Pacific Climate Impact Centre (GCACIC), a joint initiative of the City University of Hong Kong and Guy Carpenter, today released its fifth annual report presenting the highlights of the GCACIC’s research activities from the past year. The report details the findings of 16 projects conducted by the GCACIC, which focus on climate problems in the Asia-Pacific region as well as on a global scale.

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Review of Space Risks and Insurance Solutions: A review of recent GC Capital Idea stories on space risk and related insurance solutions.

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Review of the Asia Pacific Market: Here we review recent GC Capital Ideas stories related to the Asia Pacific region.

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Guy Carpenter’s Rate on Line Index: This review of recent GC Capital Ideas Chart Room entries highlights Guy Carpenter’s Rate on Line Index.

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Wildfires in California, United States: In an early start to the season, several wildfires grew this week in Southern California affecting Carlsbad, San Marcos and Camp Pendleton. The fires were enabled by hot, dry and windy conditions placing fire containment efforts at a disadvantage. At least 125,000 evacuation notices were issued. One fatality has been reported, and at least fifteen buildings have been destroyed. Media reports indicate a minimum of USD20 Million in damages.

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And, You May Have Missed…

Asia/Australasia Catastrophe Review, 2013: Asia and Australasia received their share of both natural and man-made catastrophes in 2013. One of the most costly man-made events occurred in China after a major fire hit a large microchip factory in September. The blaze caused significant damage to the SK Hynix-owned facility in the city of Wuxi, with reports saying the cost to the (re)insurance sector is expected to range between USD900 million and USD1 billion. The incident represents the most expensive single-risk loss on record to occur in China.

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May 22nd, 2014

Insurance Gaps in Emerging Economies

Posted at 1:00 AM ET

From our Chart Room, we review the increasing gap between GDP growth and reinsurance in the Asia Pacific region and the small proportion of losses that were insured in both the advanced and emerging economies. 

 

Chart: Increasing Gap Between GDP Growth and Reinsurance Limit in Asia Pacific: The chart shows that growth in reinsurance catastrophe limit in the Asia Pacific region has clearly not kept pace with economic growth since 2006. Stronger rates of economic growth in such emerging markets mean the gap between economic and insured losses has the potential to increase further.

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Chart: Economic and Insured Losses in Advanced and Emerging Economies: The chart shows how small a proportion of losses were insured in both advanced and emerging markets between 2002 and 2011.

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May 20th, 2014

Guy Carpenter Asia-Pacific Climate Impact Centre Publishes New Annual Report

Posted at 2:00 PM ET

The Guy Carpenter Asia-Pacific Climate Impact Centre (GCACIC), a joint initiative of the City University of Hong Kong and Guy Carpenter, today released its fifth annual report presenting the highlights of the GCACIC’s research activities from the past year. The report details the findings of 16 projects conducted by the GCACIC, which focus on climate problems in the Asia-Pacific region as well as on a global scale.

Continue reading…