June 13th, 2014

Week’s Top Stories: June 7 — 13, 2014

Posted at 8:00 AM ET

Review of Rate Change Measures: With Guy Carpenter reporting that reinsurance pricing fell again at June 1, 2014, we review some of the rate change measures released by Guy Carpenter earlier this year.

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Reinsurance Pricing Falls Again at June 1, 2014 as Competition Heightens: Guy Carpenter reports that downward pressure on reinsurance pricing has increased since the June 1, 2013 renewal due to continued competitive pressure from alternative markets, strong reinsurer balance sheets and low loss experiences. In its June 2014 renewal briefing, Guy Carpenter reports that competition increased as markets offered abundant capacity at reduced pricing.  Terms and conditions also came under pressure and multi-year transactions continued to be an area of investigation. Traditional reinsurers sought to protect their market share and alternative providers looked to utilize growing funds.

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Enhancing Catastrophe Modeling In the Middle East and North Africa: The Middle East and North Africa (MENA) region is acknowledged to be a key growth area for (re)insurance. Insurance penetration is rapidly increasing but still has some way to go to reach comparable levels with Europe or the United States. In the period 2003-2012, most countries in the region achieved triple-digit percentage increases in premium volume, with some exceeding 600 percent growth.

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Deployment of Collateralized Property Catastrophe Capacity: The impact the capital markets have had on the property catastrophe reinsurance space is undeniable. Analyzing 2013 market activity, it is also undeniable that much of the movement the market witnessed is as much driven by traditional reinsurers’ changing behaviors. While companies buying catastrophe coverage benefitted, across product type and geography, from collateralized capacity in the market, deployment of this capacity has been targeted.

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Review of Terrorism’s Impact on Insurance and Technology: Here we update our review of some recent GC Capital Ideas stories related to the issue of terrorism, addressing the impact on both the insurance industry and technology.

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And, You May Have Missed…

Chart: Evolution of Dedicated Reinsurance Capital, 2012 - YE 2013: The evolution of dedicated sector capital is presented below. 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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