Archive for March, 2016



March 31st, 2016

Evolution of Risk Capital

Posted at 1:00 AM ET

The continued flow of new capital into the (re)insurance industry constitutes the largest change to the sector’s capital structure in recent memory. New capital has entered the market through investments in insurance-linked securities (ILS) funds, sidecars, hedge fund-backed reinsurance companies and collateralized reinsurance vehicles. Investors have increasingly been attracted to low correlation returns from catastrophe risk relative to traditional capital markets risks and the attractive yield for the measured (re)insurance risk relative to other investments, particularly in the current low inflation, low yield era.

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March 30th, 2016

Risk Analytic Tools, Part II

Posted at 1:00 AM ET

In addition to internal risk management, models are typically used in risk transfer negotiations. Both traditional and alternative risk markets require extensive analysis of portfolios when considering risk transfer. Sharing a portfolio’s standardized model output is critical to imparting the loss potential of a particular portfolio from which risk-capital can be unlocked to support the risk financing needs of a reinsurance buyer. Using technology is critical when partnering governments with the private sector. Whether partnering with developed or emerging economies, these tools bring together the risk knowledge and historical data of the public sector with risk management techniques of the insurance industry. The result is an enhanced understanding of risk that provides stability and attracts partners.

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March 29th, 2016

Risk Analytic Tools, Part I

Posted at 1:00 AM ET

Public sector-related data can be expansive, containing census data, property risk characteristics, historical loss information, risk rating matrices and natural hazard event scientific tracking. In order to facilitate packaging the sometimes unwieldy data in a way that is useful for risk decision making, utilizing outside resources to improve data transparency can be valuable. Public sector resources devoted to building tools that measure risks that are perceived as “uninsurable” can unlock private sector funding.

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March 28th, 2016

Closing the Protection Gap

Posted at 1:00 AM ET

We have identified seven preconditions essential in the movement towards resiliency and de-risking public sector exposure.

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March 25th, 2016

Week’s Top Stories: March 19 - 25, 2016

Posted at 6:30 AM ET

Public Sector Risk: Terrorism: A number of countries provide for government supported terrorism risk transfer solutions to manage global threats of terrorism. The actual mechanisms employed are a spectrum between loan and direct support, as illustrated in the chart below.

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Guy Carpenter Cites El Niño and North Atlantic Oscillation as Key Climate Drivers in 2015: Guy Carpenter reported that 2015 marked one of the strongest El Niño periods on record, while a positive phase of the North Atlantic Oscillation (NAO) was evident both at the beginning and close of the year.

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Guy Carpenter Launches GC AdvantagePoint® 2.0, The Latest Version Of Its Advanced Risk Management Platform: Guy Carpenter announced the launch of GC AdvantagePoint® 2.0, the latest release of its cutting edge client portfolio and risk management platform.

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Chart: Top Ten Catastrophe Bond Transactions for 2015: The table lists the top ten catastrophe bond transactions that were completed in 2015.

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Reserving and Capital Setting: Sizing the Problem: There are three main questions to be tackled in sequence:

1. Which emerging risks potentially expose my company?

2. What means do I have to quantify those risks?

3. How are these risks likely to crystalize?

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And, You May Have Missed…

Chart: Alternative Capacity as a Percentage of Catastrophe Reinsurance Limit: The chart presents alternative capital capacity as a percentage of global property catastrophe reinsurance limit from 2008 to year-end 2015.

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Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities LLC, 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. (MMCSE L), 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 LLC, 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.

March 24th, 2016

US Flood – The Road Ahead

Posted at 1:00 AM ET

The National Flood Insurance Program (NFIP) is the primary underwriter of flood insurance policies in the United States. The program was established in 1968 through the passage of the National Flood Insurance Act.

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March 23rd, 2016

Guy Carpenter Launches GC AdvantagePoint® 2.0, The Latest Version Of Its Advanced Risk Management Platform

Posted at 4:30 AM ET

Guy Carpenter today announced the launch of GC AdvantagePoint® 2.0, the latest release of its cutting edge client portfolio and risk management platform.

Continue reading…

March 23rd, 2016

UK Flood – An Innovative Market Based Solution

Posted at 1:00 AM ET

For people living at high risk of flooding, finding affordable home insurance is becoming increasingly difficult and the problem is likely to get worse without action. The Association of British Insurers and the UK government formulated a plan following large scale flood events that highlighted the impact of severe flooding on homeowners and communities. The UK government’s preferred approach was the introduction of legislation that would create a flood reinsurance scheme - known as Flood Re - to help support households at highest flood risk with minimal market distortion. The households will be able to access affordable cover through the competitive home insurance market with a managed transition to more risk-reflective pricing over a 25 year period. The scheme provides support in the parts of the home insurance market that need it, which is likely to be around 2 percent of customers living in areas with the greatest risk of flooding. The Flood Re model depends on a statutory levy paid for by the UK insurance industry.

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March 22nd, 2016

Risk Financing for Flood: Emerging Opportunities

Posted at 1:00 AM ET

Flood is the largest contributor to catastrophic loss worldwide. Recent initiatives from Guy Carpenter and Marsh & McLennan Companies, both involving the peril of flood, demonstrate the diversity of approaches that can be brought to bear. In the United Kingdom, we are involved in a project where the insurance industry is working in concert with the government to adjust the industry’s approach to the peril of flood and maintain the private sector’s role as the source of insurance protection without a resultant increase in the public sector’s liability. In the United States, a project is being sponsored by the Federal Emergency Management Agency and the US Congress to determine how the National Flood Insurance Program might be privatized and how it might utilize reinsurance to support its risk management efforts, and thereby move potential loss exposure off the public balance sheet.

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March 21st, 2016

Guy Carpenter Cites El Niño and North Atlantic Oscillation as Key Climate Drivers in 2015

Posted at 11:30 PM ET

Guy Carpenter today reported that 2015 marked one of the strongest El Niño periods on record, while a positive phase of the North Atlantic Oscillation (NAO) was evident both at the beginning and close of the year.

Continue reading…