November 2nd, 2018

Week’s Top Stories: October 27 - November 2, 2018

Posted at 10:00 AM ET

Escalating Threat of Cyber Terrorism: The WannaCry and NotPetya cyber-attacks illustrated the magnitude of the damage that cyber-attacks can cause. These two attacks affected organizations in more than 150 countries, prompted business interruption and other losses estimated at well over USD 300 million by some companies, brought reputational damage and resulted in loss of customer data.

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Facultative or Treaty and Why the Need for Hybrid Solutions - GC@PCI Commentary: Insurers face challenges in managing underwriting, capital protection, risk and risk profiling as they navigate underwriting guidelines based on their gross and net risk underwriting appetite. Against these challenges, companies utilize various forms of reinsurance, traditionally facultative or treaty, to buy risk protection, shore up capital and satisfy rating agencies, according to Jeff Fleming, Managing Director, Guy Carpenter.

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Life: Emerging Competition and the Need to Remake the Reinsurance Relationship - GC@PCI Commentary: The life reinsurance sector has been shrinking for several years, but reinsurers possess the capabilities to remain relevant and vital if they take a strategic approach. They may then be able to better meet their cedents’ principal needs and solidify or increase their value to life insurers, according to David Rains, Managing Director, Guy Carpenter.

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Mortgage Credit Risk Transfer Market – Expanding Growth Opportunities - GC@PCI Commentary: Fannie Mae and Freddie Mac – government-sponsored entities (GSEs) in the United States – purchase hundreds of thousands of mortgage loans and assume the risk of mortgage credit default, interest rate volatility and prepayment. The GSEs began transferring mortgage credit default risk only in the last few years. The organizations are now programmatically using (re) insurance to transfer that credit risk and plan to continue to do so. (Re)insurers seeking growth may look to this market as a diversifying risk with several different options available –market changes and safeguards in place make it even more viable, according to John Tedeschi, Executive Vice President, Guy Carpenter.

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The Transformation of Australian and New Zealand life insurance - GC@SIRC Commentary: The life insurance industry in Australia is facing unprecedented challenges from forces within and from the effects of an increasingly globalized economy. As life industry profitability has declined in Australia in recent years, the underlying manufacturing business model is rapidly changing, according to Matthew Rose, Managing Director, Guy Carpenter.

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And, you may have missed..

Solutions for Improving Profitability in the Commercial Auto Liability Line - GC@PCI Commentary: One of the major factors affecting property/casualty industry profitability in the United States in recent years has been the poor performance of the commercial auto liability (CAL) line. On both a Calendar and Accident Year basis, industry CAL underwriting results have been deteriorating for the past decade. Accident Year combined ratios have been above 105 percent since 2010, and carriers are feeling the pressure to reverse this trend. Related lines of business such as umbrella, have also felt the adverse effects of challenging loss trends driven by CAL. It is an open question regarding which will arrive first: autonomous cars and trucks or underwriting profits for CAL writers, believes Nick Durant, Managing Director, Guy Carpenter.

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