November 6th, 2017

GC Capital Ideas Top Stories: October, 2017

Posted at 4:00 AM ET

1. Reinsurance Market Poised to Remain Vibrant Following Recent Catastrophe Events: The recent series of catastrophic events - earthquakes in Mexico, Hurricanes Harvey, Irma and Maria - is reminding cedents that reinsurance is one of the most effective ways to protect corporate capital bases; Harvey on its own is likely to be an earnings event that will probably not require an increase of industry capital; the addition of the cumulative effect of the earthquakes in Mexico and Hurricanes Irma and Maria, however, could create a capital event;  and the earthquakes and hurricanes provide an opportunity to define the viability and effectiveness of the 144A product. We expect that these instruments will demonstrate their effectiveness and serve their intended purpose.

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2. Flood Insurance: The 2018 Market Opportunity: The U.S. insurance industry is actively seeking new opportunities for growth in a challenging market by identifying untapped customer needs. The potential flood market is over five times the size of the most often mentioned new market, cyber insurance; greater access to flood data and loss results and more reliable exposure modeling are enhancing the flood (re)insurance marketplace; and several developments are helping carriers understand and monitor aggregation.

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3. Industry Must Act to Avoid a “Kodak Moment”: In his first speech as Lloyd’s new chairman, Bruce Carnegie-Brown said the insurance industry must do more to change and innovate or run the risk of being disrupted by external players.

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4. Guy Carpenter Reports US Insurance Market at a Crossroads but Opportunity Exists: Guy Carpenter released a study outlining a dynamic insurance industry facing a changing economy and pressure in once-stable lines, but with opportunity for those with management skill and understanding of risk.

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5. California Wildfires - October 8-17, 2017: Wildfire activity has rendered especially severe impacts to certain areas of California since October 8, including areas of Napa, Sonoma and Solano Counties. Wildfire activity has also rendered impacts to areas of Orange County east of the Los Angeles Metro area. Rates of extreme fire spread were enabled by especially dry conditions together with offshore gusty winds to burn a total of at least 217,566 acres since October 8. Media reports indicate at least 41 fatalities, making this the deadliest series of fires in California history. At least 5,700 structures have been destroyed and thousands more remain under threat. Containment efforts have made significant progress in the last week, thanks to efforts of at least 10,000 firefighters and reduced winds.

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6. Baden-Baden Reinsurance Symposium Addresses Industry-wide Impact of Disruption: Guy Carpenter & Company hosted the Reinsurance Symposium in Baden-Baden on October 22. The ninth year that Guy Carpenter has hosted the event, the theme of the Symposium was “Profiting from Disruption.”

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7. Chart: Combined Ratio for Guy Carpenter Reinsurance Composite, First Half, 2017: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2006 through first half, 2017.

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8. Just Say “Know” to Insurtech: As insurtech offerings proliferate, to gain the advantages promised, companies need to know the opportunities afforded; know their own strengths and capabilities for engagement; and know their clients’ needs and expectations; insurtech is the evolutionary next step for insurance through the combination of data, analytics and technology in new and innovative ways; and capturing information in real time through sensors or mobile devices is the newest process for the collection of data for analytics.

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9. Understanding Systemic Cyber Risk; Insights Through Pandemic Behavior: Today, through air travel, a carrier of MERS or Ebola can cross the ocean in less than a day, board a crowded subway train and potentially infect hundreds of people. Containment of a pandemic outbreak begins upon discovery, similar to the way in which forensics and network restoration efforts can begin once a cyber breach is identified. According to Platt, the longer the lag until discovery, the more difficult containment and treatment will be, whether it is a biological or cyber event.

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10. Guy Carpenter Appoints Claude Yoder to Lead Global Innovation and Product Development: Guy Carpenter & Company is pleased to announce the appointment of Claude Yoder as Managing Director and Global Chief Innovation and Product Development Officer.

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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. (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 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.

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