January 15th, 2016

Week’s Top Stories: January 9 - 15, 2016

Posted at 8:00 AM ET

Guy Carpenter Reports Stable Capital at January 1, 2016 Renewals: Guy Carpenter & Company reports that overall capital levels dedicated to reinsurance have stabilized, showing no growth for the first time in several years.  In a highly competitive environment, companies assessed broader opportunities and the rate of incoming capital slowed. However, moderate loss experience kept capacity at abundant levels for the January 1, 2016 renewals. The continued scarcity of costly catastrophe losses and more than adequate capacity led to reinsurance pricing reductions, although there are signs the rate of descent is slowing as compared to 2015.

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Developments in Europe: Challenges for European Companies: Apart from still open Solvency II third-country equivalence issues, which will be discussed in detail later, European insurance companies struggle with different interpretations of the European Insurance Occupational Pension Authority (EIOPA) guidelines and rules. For example, while sovereign debt is considered risk-free in the Standard Formula, EIOPA recommended in April 2015 that internal model firms need to consider the spread risk of sovereign debt. However, local supervisors have not interpreted this guidance in the same way - the United Kingdom’s Prudential Regulatory Authority, France’s Autorité de contrôle prudentiel et de résolution and Germany’s Federal Financial Supervisory Authority are asking their internal model firms to fully risk-weight sovereign bonds at the group level.

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Chart: Global Property Catastrophe ROL Index 1990 to 2016: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2016.

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Microinsurance Consortium and Venture Incubator Announces New Name: The Microinsurance Consortium, led by a group of leading companies in the insurance industry, announced a new name for their microinsurance venture incubator (MVI) - Blue Marble Microinsurance. The consortium consists of American International Group, Inc., Aspen Insurance Holdings Limited, Guy Carpenter & Company, LLC together with Marsh & McLennan Companies, Inc., Hamilton Insurance Group, Ltd., Old Mutual plc, Transatlantic Reinsurance Company, XL Catlin, and Zurich Insurance Group.

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Guy Carpenter Establishes EMEA Advisory Council: Guy Carpenter announced the establishment of a new EMEA Advisory Council to support its growth plans in the region.

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And, You May Have Missed…

Businesses and Their Exposures: Small and Medium-Sized Businesses: The picture for small to medium-sized enterprises or SMEs in the United Kingdom is broadly consistent with that for larger firms, but for this segment of companies, (re)insurers see a higher incidence of cyber crime. For example, a small broker was targeted by a phishing scam, where an e-mail containing a link to malicious software was sent to the financial controller within the business. The controller was tricked into installing the software onto his personal computer, and this software was used to steal banking credentials. The cyber criminals were subsequently able to complete electronic wire transfers to the total of GBP100,000 over the following 10 days.

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