Archive for the ‘Month in Review’ Category



December 1st, 2014

GC Capital Ideas Top Stories: November, 2014

Posted at 1:00 AM ET

1. Cyber-attacks and Terrorism Revealed as Top Emerging Risks for 2015, According to Annual Guy Carpenter Survey: Cyber-attacks and terrorism are ranked among the top emerging risks concerning the (re)insurance industry in the year ahead, according to a survey released by Guy Carpenter. According to the findings, new products, expansion into new geographic markets and access to new distribution channels will be the primary drivers of profitable growth in 2015.

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2. Chart: Global Property Catastrophe ROL Index: The Guy Carpenter Global Property Catastrophe Rate on Line index is presented for 1990 through 2014.  The index fell by 11 percent at January 1, 2014.

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3. Demand for Asia Pacific Catastrophe Reinsurance Remains High in 2014: Guy Carpenter published a new report highlighting the continued increase in 2014 of total Asia Pacific catastrophe limit purchased. However, a confluence of factors, including the weakening of some key zone currencies has meant that reinsurance premium spend in the region has declined significantly.

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4. Cyber Coverage: Directors & Officers (D&O) Liability: Cyber coverage is also having an effect on directors and officers (D&O) liability in the United States. Oversight and increased requirements for disclosure on cybersecurity are making D&O coverage more important than ever. With the rise of data breaches and other cyber-attacks, directors and officers are responsible for making sure that they are taking sufficient steps to protect their company’s digital assets. In the case of a data breach, directors can be hit with shareholder suits and shareholder derivative actions claiming that the directors breached their fiduciary duty to the company for failing to put adequate cyber security measures in place.

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5. Terror Developments: Overview of TRIPRA: Some may question why terrorism risk has a place in a document dedicated to emerging risk. Terrorism as a form of violence to promote cause or promote change is one of the original human conflicts. The wind blows and the earth shakes much the same way now as it has for hundreds, thousands of years. However, terrorism as a risk and a peril has evolved over the years and is a current concern in all parts of the world. Given the growing population, regional conflicts producing a broad list of potential instigators, the expansive reach of social media for extremists spreading their messages and recruiting and the diversity of possible attack modes to cause human and economic loss, terrorism does qualify as an emerging risk.

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6. Guy Carpenter and Oliver Wyman Publish Annual Insurance Risk Benchmarks Research: Guy Carpenter and Oliver Wyman, both wholly owned subsidiaries of Marsh & McLennan Companies, released the 2014 Insurance Risk Benchmarks Research: Annual Statistical Review, the first in a two-part series detailing research executed in collaboration with Columbia University. This, the fourth annual report, provides detailed analysis and insight on the property/casualty industry to help insurers strategically evaluate and benchmark inputs to economic capital models.

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7. Regional Variations in Cyber Cover: Here we examine the variations in the regulation of data protection and privacy between the United States and Europe.

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8. Modeling Terrorism: Modeling methodologies for terrorism have been continually refined and updated since the three major modeling companies - AIR Worldwide (AIR), EQECAT and Risk Management Solutions (RMS) - released their first terrorism models in 2002. Quantifying the economic, insured and human losses from a terrorist attack continues to pose major challenges for (re)insurers and alternative capacity providers. There are three main techniques to model terrorism risk.

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9. Emerging Risk: Periodic Payment Orders: For a number of reasons the United Kingdom represents an extreme example of the impact of annuity compensation structures. For severe bodily injury cases it is now highly likely that the claimant will opt for an annuity structure (known as a periodic payment order, or PPO) rather than a lump-sum. These are often indexed accordingly to the Annual Survey of Hours and Earnings (ASHE). As a consequence, the uncertainties that had previously been transferred to the claimant are now retained by the insurer (and to a certain extent, its reinsurers). Unlike an individual claimant, the insurer needs to articulate these risks in its capital modeling.

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10. Chart: Combined Ratio for Guy Carpenter Composite, H1 2014: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2004 through first half, 2014.

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November 3rd, 2014

GC Capital Ideas Top Stories: October, 2014

Posted at 1:00 AM ET

1. Chart: Global Property Catastrophe ROL Index: The Guy Carpenter Global Property Catastrophe Rate on Line index is presented for 1990 through 2014.  The index fell by 11 percent at January 1, 2014.

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2. Guy Carpenter Announces New Cyber Product Launch: Guy Carpenter today announced the launch of a new cyber privacy and network protection solution designed to meet the unique cyber challenges faced by small- and medium-sized companies.

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3. Guy Carpenter and Oliver Wyman Publish Annual Insurance Risk Benchmarks Research: Guy Carpenter and Oliver Wyman, both wholly owned subsidiaries of Marsh & McLennan Companies, released the 2014 Insurance Risk Benchmarks Research: Annual Statistical Review, the first in a two-part series detailing research executed in collaboration with Columbia University. This, the fourth annual report, provides detailed analysis and insight on the property/casualty industry to help insurers strategically evaluate and benchmark inputs to economic capital models.

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4. Understanding Emerging Risks: Executive Summary: (Re)insurers today face a degree of change and uncertainty that appears to be evolving at an ever quickening pace. Guy Carpenter has published a report, Ahead of the Curve: Understanding Emerging Risks, highlighting emerging risks facing the (re)insurance sector, including cyber-attacks, terrorism and new compensation structures for long-term bodily injuries. The report seeks to identify and categorize these risks that are now confronting the sector, as well as analyze their implications on businesses and (re)insurers.

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5. Chart: Catastrophe Bonds Versus Various Other Capital Market Assets Classes: Chart shows the cumulative return profile of 144A catastrophe bonds (as a proxy for all capital markets-based risk transfer capacity) versus various other capital market asset classes through mid-year 2014.

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6. Centralization of Reinsurance Buying: It should come as no surprise that there is a general trend among larger cedents to centralize reinsurance buying decisions and retentions and to bundle homogeneous products. This has become possible with the improvement of available portfolio data. This practice has some obvious advantages for buyers, such as reduced spend, reduced administration, improved control over counter-party credit risks and, possibly, retention of additional profits that would otherwise be ceded to reinsurers.

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7. Historical Development of Cyber (Re)Insurance: Companies are uncertain of how much coverage to acquire and whether their current policies provide them with protection. One of the roots of the uncertainty stems from the difficulty in quantifying potential losses because of the dearth of historical data for actuaries and underwriters to model cyber-related losses. Furthermore, traditional general liability policies do not always cover cyber risk. In the United States, ISO’s revisions to its general liability policy form consist primarily of a mandatory exclusion of coverage for personal and advertising injury claims arising from the access or disclosure of confidential information.

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8. A.M. Best’s New Analytics Will Broaden and Improve P&C Industry Capital Modeling and Benchmarking of Tolerances: A.M. Best’s rating analytics continue to evolve and the pace of change is accelerating as the industry embraces more analytical tools, emerging best practices, and peer benchmarking.

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9. Chart: Private Catastrophe Bonds Mid-Year 2014: Chart shows the evolution of private catastrophe bonds through mid-year 2014 based on deal count and total aggregate limit placed.

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10. Baden-Baden Reinsurance Symposium Assesses Future Impact of Current Market Conditions: Guy Carpenter hosted “The Reinsurance Industry of the Future,” the Reinsurance Symposium held in Baden-Baden, Germany on October 19. A distinguished line-up of industry luminaries expressed their views on whether the current changes impacting the reinsurance sector are permanent and structural in nature, are a tactical response to short-term conditions, or are part of the normal evolutionary process.

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Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., 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 Corp., 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.

October 1st, 2014

GC Capital Ideas Top Stories: September, 2014

Posted at 1:00 AM ET

1. Cyber, Terrorism and New Compensation Structures Highlighted as Critical Emerging Risks: Guy Carpenter published a new report highlighting emerging risks facing the (re)insurance sector, including cyber-attacks, terrorism and new compensation structures for long-term bodily injuries. The report seeks to identify and categorize these risks that are now confronting the sector, as well as analyze their implications on businesses and (re)insurers.

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2. Influx of New Capital Continues to Reshape the Reinsurance Market: Guy Carpenter published a new report focusing on the growth in the insurance-linked securities (ILS) market during the past year and some of the recent developments in catastrophe bond structure and risk transfer.

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3. July 1 Renewals Reveal Continued Double Digit Price Decreases Across Many Lines and Geographies: Guy Carpenter reports that market pressures at July 1 renewals continued to drive price decreases across virtually all geographies and lines of business, many in the double digit range. As loss activity remained minimal, reinsurers added to surplus capacity and additional capital continued to come into the market via alternative sources.

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4. Chart: Global Property Catastrophe ROL Index: The Guy Carpenter Global Property Catastrophe Rate on Line index is presented for 1990 through 2014.  The index fell by 11 percent at January 1, 2014.

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5. Capital Optimization: Using Internal Reinsurance for Group Capital Management: Increased capital efficiency remains at the forefront of (re)insurers’ strategies - owing largely to the pending introduction of the Solvency II regime, rating agency capital requirements and the continued pressure around shareholder expectations.

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6. Guy Carpenter Explores Wider Impact of Market Conditions: The growing presence of the capital markets, over capacity in most lines and territories, and the ongoing rationalization of buying strategies are not only influencing market dynamics, but also the continuing evolution of the broker into a capital and risk advisor. This is according to the panel of speakers at the seventh annual press briefing held at the Reinsurance Rendez-Vous 2014 in Monte Carlo by Guy Carpenter & Company, the leading global risk and reinsurance specialist.

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7. Private Market Involvement In US Terror Risk Market: Prior to September 11, 2001, coverage for terrorism-related losses was generally included in standard catastrophe reinsurance agreements without specific charges. However, the USD20 billion loss that reinsurers paid out following the September 11, 2001 attacks prompted companies to quickly exclude terror coverage in standard agreements for most lines of business. Terrorism exclusions therefore became standard in catastrophe reinsurance programs at the January 1, 2002 renewal, seriously diminishing the availability of terrorism reinsurance capacity. Concerned that the lack of terrorism coverage would hit the American economy, the US Congress passed the Terrorism Risk Insurance Act (TRIA) into law in November 2002.

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8. Guy Carpenter Launches Probabilistic European Hail Model: Guy Carpenter launched its new leading-edge probabilistic hail model for Europe. The G-CAT® Hail Model features a unique approach to producing historic hail tracks using a lightning detection system developed for Guy Carpenter by atmospheric research firm nowcast GmbH.

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9. Guy Carpenter Series Details Impact Of 2004 & 2005 Hurricane Seasons: Guy Carpenter released Part One of a two-part series report detailing a ten-year retrospective on the 2004 and 2005 Atlantic Hurricane Seasons - two landmark years that were not only significant for their weather events, but for their lasting effects on the (re)insurance industry. The report examines the meteorological conditions that contributed to the weather activity characterizing both hurricane seasons, as well as the impact on underwriting and claims adjusting practices, cat modeling, and the Florida Hurricane Catastrophe Fund (FHCF).

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10. Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

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Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., 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 Corp., 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.

September 2nd, 2014

GC Capital Ideas Top Stories: August, 2014

Posted at 1:00 AM ET

1. July 1 Renewals Reveal Continued Double Digit Price Decreases Across Many Lines and Geographies: Guy Carpenter reports that market pressures at July 1 renewals continued to drive price decreases across virtually all geographies and lines of business, many in the double digit range. As loss activity remained minimal, reinsurers added to surplus capacity and additional capital continued to come into the market via alternative sources.

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2. The Terrorism Reinsurance Market: Despite the recent spike in terrorist-related activity, evolving capacity and the absence of a major terrorism loss for reinsurers have resulted in a softening terrorism reinsurance market in areas with less perceived risk. Although localized terrorism and political violence activity has impacted certain facultative programs and affected pricing and capacity at the local level, adequate terrorism capacity continues to be available in the reinsurance treaty marketplace for certain countries and territories.

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3. Chart: Global Property Catastrophe ROL Index: The Guy Carpenter Global Property Catastrophe Rate on Line index is presented for 1990 through 2014.  The index fell by 11 percent at January 1, 2014.

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4. Guy Carpenter Launches MetaRisk® 7.3: Guy Carpenter announced the release of MetaRisk® 7.3, the latest version of the firm’s premier risk and capital management decision-making tool.

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5. GC Videocast - MENA Insights: Fadi AbuNahl, Chief Executive, Trust Re: In our third MENA Insights interview Fadi AbuNahl, chief executive of Trust Re, describes how the MENA re/insurance market has developed in recent years and what has prompted greater risk retention within the underlying market. He thinks there is plenty of reinsurance premium to go around but cautions against competing on price alone.

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6. The Evolving Terrorist Threat: Terrorist activity over the last 18 months has reflected the changing terrorism landscape. Several important developments have occurred since the beginning of 2013, starting with French military intervention in Mali in January 2013 to prevent the country from becoming a failed state and base for jihadist terrorists.

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7. Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

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8. 6.0Mw Earthquake - American Canyon, California: A 6.0-magnitude earthquake was reported by the U.S. Geological Survey (USGS) about 4 miles northwest of American Canyon, California and five miles north-northwest of Napa, California. The quake occurred at 3:20 a.m. local time (10:20 UTC) near the north shore of San Pablo Bay, with a magnitude of 6.0. The quake depth was 7.0 miles (11.3 km).

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9. Chart: Regional Property Catastrophe ROL Index: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

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10. Hawaii Double Threat: Hurricanes Iselle and Julio: Hurricane Iselle is poised to become the first hurricane in 22 years to make a direct landfall in Hawaii. According to the Central Pacific Hurricane Center (CPHC), Iselle is located 305 miles east-southeast of Hilo, Hawaii and 510 miles east-southeast of Honolulu, Hawaii. It has already started raining in Hilo and conditions are expected to deteriorate through the day, with the onset of tropical storm conditions this afternoon and hurricane conditions tonight. Trailing Iselle is Hurricane Julio. Julio is presently 1,235 miles east of Hilo, Hawaii. Julio is expected to impact the area shortly following Iselle, but with some uncertainty concerning the expected track and impacts.

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August 4th, 2014

GC Capital Ideas Top Stories: July, 2014

Posted at 1:00 AM ET

1. July 1 Renewals Reveal Continued Double Digit Price Decreases Across Many Lines and Geographies: Guy Carpenter reports that market pressures at July 1 renewals continued to drive price decreases across virtually all geographies and lines of business, many in the double digit range. As loss activity remained minimal, reinsurers added to surplus capacity and additional capital continued to come into the market via alternative sources.

Read the article>>

 

2. Chart: Global Property Catastrophe ROL Index: The Guy Carpenter Global Property Catastrophe Rate on Line index is presented for 1990 through 2014. The index fell by 11 percent at January 1, 2014.

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3. Chart: U.S. Landfall To Basin Ratio - Detected Hurricanes (1900-2013): The chart indicates that the proportion of hurricanes counted in the Atlantic Basin and those that made landfall has been very volatile through the years. While there is indeed a weak correlation between hurricane counts in the Atlantic Basin and the number of U.S. landfalls, statistical significance is a subject of some debate in the scientific community (Coughlin et al., 2009; Dailey et al., 2009).

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4. Chart: Combined Ratio for Guy Carpenter Composite, Q1 2014: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2004 through first quarter, 2014.

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5. 2014 Atlantic Hurricane Season: One Never Truly Knows: The 2004 hurricane season was a weak El Niño year, which brought five landfalling U.S. hurricanes, four of which affected Florida. The risk of a landfalling hurricane is a serious threat for any tropical season, regardless of seasonal outlooks for the Atlantic Basin at large. In fact, sea-surface temperatures along the U.S. coast and northern Caribbean are trending above average, and tropical cyclone development in these areas close to the mainland is cause for concern. Such development depends on short-term weather patterns at the time of occurrence, not on how many hurricanes are expected in the Atlantic basin at large.

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6. The Drivers of Agriculture Insurance in Asia: Introduction: Greater demands are being placed on Asia’s agricultural sector as the region’s rapidly changing economies and their increasingly affluent populations seek to boost living standards. This, in turn, will fuel the development of insurance products necessary to underpin the growth in agriculture.

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7. Chart: Rate Movements by Business Segment: Reports rate movements at January 1, 2014.

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8. Chart: Return On Equity For Guy Carpenter Reinsurance Composite, Q1 2014: Chart presents return on equity for the Guy Carpenter Global Reinsurance Composite, 2004 through first quarter, 2014.

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9. Update: Hurricane Arthur: Hurricane Arthur is the first hurricane to make U.S. landfall since 2012, and the earliest to make North Carolina landfall for any hurricane season since 1908. According to the National Hurricane Center (NHC), Arthur made landfall in North Carolina on July 3 at about 11:15 p.m. EDT (0315 UTC), with maximum sustained winds of 100 mph (161 km/hr).  

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10. 2014 Tropical Cyclone Landfall Predictions: A recent study shows it is possible to use a regional climate model to more accurately predict the number of tropical cyclone formations compared to predictions based solely on a global climate model.

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July 1st, 2014

GC Capital Ideas Top Stories: June, 2014

Posted at 1:00 AM ET

1. 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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2. The Total Value of Reinsurance for Long-Tail Business: Can we learn from Solvency II to unlock the hidden value of reinsurance for long-tail business?

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3. Chart: Global Property Catastrophe ROL Index: The Guy Carpenter Global Property Catastrophe Rate on Line index is presented for 1990 through 2014.  The index fell by 11 percent at January 1, 2014.

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4. Alternative Market’s Impact On Traditional Reinsurers: The April 1, 2014 and June 1, 2014 renewals indicate that competition from the capital markets continues to play a major role in the abundance of reinsurance capacity that is placing pressure on pricing. Here we review Guy Carpenter analyses examining the impact of the alternative markets on traditional reinsurers and how reinsurance carriers are expected to face that challenge through the year.

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5. Chart: Rate Movements by Business Segment: Reports rate movements at January 1, 2014.

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6. 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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7. Uncertainty in Catastrophe Models: How Much of it is Reasonable?: It seems reasonable to expect a degree of uncertainty in catastrophe model results. It is not uncommon, however, for models to produce results that differ by several factors. In order to assess how much of this uncertainty is epistemic, due to our incomplete knowledge of the physical phenomena involved, this existing uncertainty needs to be quantified.

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8. 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 (source: Swiss Re Sigma).

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9. 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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10. Guy Carpenter Report Reinforces Need for TRIPRA Renewal: Guy Carpenter released its latest report on global terrorism. The report highlights evolving global terrorism risks and the impact these risks have on the reinsurance market. It also emphasizes the vital role the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) plays in the United States ensuring the availability and affordability of terrorism (re)insurance capacity throughout the country.

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June 2nd, 2014

GC Capital Ideas Top Stories: May, 2014

Posted at 1:00 AM ET

1. Guy Carpenter’s Rate on Line Index: Here we review recent GC Capital Ideas Chart Room entries highlighting Guy Carpenter’s Rate on Line Index.

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2. Industry Reserve Update - Which Way Is The Cycle Turning?: With the release of the 2013 annual statutory statements, we have updated the Guy Carpenter reserve cycle analysis as shown in the chart. Overall, the figures indicate a trend showing the industry continuing to release reserves through this year, as two lines of business appear to exert the greatest impact on the cycle.

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3. April Renewals Bring Price Reductions & Focus on Tailored Coverage: Guy Carpenter reports that the April 1, 2014 renewal was marked by price reductions and more tailored reinsurance coverage. Strong balance sheets, an abundance of capacity and a consolidation of buying led to lower reinsurance pricing across most territories and business segments at the renewal.

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4. Chart: Confirmed Annual U.S. Tornado Activity: The chart reports confirmed annual U.S. tornado activity from 1950 to 2013 of F2 or higher strength with wind speeds of 113 mph and higher on the Fujita scale.

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5. Severe Weather Outbreak in U.S.: April 26 to 30, 2014: A multi-day severe weather outbreak rendered severe impacts from April 26 to 30 affecting a large area of the United States.

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6. Guy Carpenter Asia-Pacific Climate Impact Centre Publishes New Annual Report: The Guy Carpenter Asia-Pacific Climate Impact Centre (GCACIC), a joint initiative of the City University of Hong Kong and Guy Carpenter, today released its fifth annual report presenting the highlights of the GCACIC’s research activities from the past year. The report details the findings of 16 projects conducted by the GCACIC, which focus on climate problems in the Asia-Pacific region as well as on a global scale.

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7. January 1, 2014 Renewals Bring Downward Pressure on Pricing: Guy Carpenter & Company reports that reinsurance rates-on-line fell at the January 1, 2014 renewal in nearly all classes and regions. According to Guy Carpenter’s 2014 global renewal report, strong balance sheets, relatively low loss experiences and an unprecedented influx of convergence capital spurred competition and innovation at renewal. These factors led in turn to surplus capacity across most business segments as competition spilled beyond property catastrophe lines.

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8. Review of the Asia Pacific Market: Here we review recent GC Capital Ideas stories related to the Asia Pacific region.

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9. Review of Space Risks and Insurance Solutions: Here we review recent GC Capital Ideas stories on space risk and related insurance solutions.

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10. Trends in Convergent Capital in the Reinsurance Sector: Here we review GC Capital Ideas entries highlighting trends in convergent capital in the reinsurance sector.

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Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., 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 Corp., 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.

May 1st, 2014

GC Capital Ideas Top Stories: April, 2014

Posted at 1:00 AM ET

1. April Renewals Bring Price Reductions & Focus on Tailored Coverage: Guy Carpenter reports that the April 1, 2014 renewal was marked by price reductions and more tailored reinsurance coverage. Strong balance sheets, an abundance of capacity and a consolidation of buying led to lower reinsurance pricing across most territories and business segments at the renewal.

Read the article>> 

 

2. Chart: Global Property Catastrophe ROL Index: The Guy Carpenter Global Property Catastrophe Rate on Line index is presented for 1990 through 2014.  The index fell by 11 percent at January 1, 2014.

Read the article>> 

 

3. Guy Carpenter and Oliver Wyman Publish Third Annual Insurance Risk Benchmarks Report: Guy Carpenter and its sister company, Oliver Wyman, the international management consulting firm, published the third annual Insurance Risk Benchmarks in September of 2013. We highlight the report here again.

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4. ERM Benchmark Review, 2013 Update: In April and October 2009, Guy Carpenter published two briefings titled “Risk Profile, Appetite and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness.” This briefing is an update of those studies that summarizes the information publicly disclosed on enterprise risk management (ERM) measures.

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5. Chart: Chile Holds Spot on Most Expensive Earthquakes for Insurers: In light of the April 1 magnitude 8.2 earthquake in Chile we highlight a spring 2013 GC Capital Ideas table ranking the most expensive earthquakes for insurers. A seismic event in 2010 put the South American nation on that list.

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6. January 1, 2014 Renewals Bring Downward Pressure on Pricing: Guy Carpenter & Company reports that reinsurance rates-on-line fell at the January 1, 2014 renewal in nearly all classes and regions. According to Guy Carpenter’s 2014 global renewal report, strong balance sheets, relatively low loss experiences and an unprecedented influx of convergence capital spurred competition and innovation at renewal. These factors led in turn to surplus capacity across most business segments as competition spilled beyond property catastrophe lines.

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7. Periodic Payment Orders: Here we bring together the GC Capital Ideas two part series on periodic payment orders authored by Victoria Jenkins.

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8. Chart: Regional Property Catastrophe ROL Index: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

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9. 8.2Mw Earthquake Near Chile Coast: An 8.2-magnitude earthquake was reported by the U.S. Geological Survey (USGS) about 40 miles off the northern coast of Chile on the evening of April 1. More than 60 aftershocks were reported following the initial event, one of which was measured of magnitude 6.2. Shaking was felt as far away as La Paz Bolivia, over 290 miles (470 km) away.

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10. Chart: Rate Movements by Business Segment: Reports rate movements at January 1, 2014.

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Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., 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 Corp., 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.

April 7th, 2014

GC Capital Ideas Top Stories: March 2014

Posted at 1:00 AM ET

1. 2013 Closes with Near Record Catastrophe Bond Issuance According to GC Securities*: GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member of FINRA/SIPC, released an analysis of activity and trends within the catastrophe risk market from the fourth quarter of 2013, also including the outlook for 2014. According to the report, influence from direct capital markets’ participation in reinsurance programs, coupled with catastrophic insured losses well below historical averages in 2013, put significant pressure on global catastrophic reinsurance pricing. As a result of significantly reduced pricing, relative to recent years, approximately $7.1 billion worth of new property and casualty (P&C) catastrophe bonds were issued in 2013 - the second highest record year for P&C issuance.

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2. Time Off for Certain Behavior: Behavioral economics is a fascinating field and one which actuaries should be aware of in their everyday work. It is the study of inherent biases in human decision-making. Many examples of these biases have been cited in connection with the financial crisis, and increasingly the implications for insurance are being examined. In a speech entitled ‘The Human Face of Regulation’ in April 2013, Martin Wheatley, chief executive of the Financial Conduct Authority (FCA), explained how the FCA is going to use the principles of behavioral economics in the protection of the consumer.

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3. January 2014 Renewal Report: Capacity: Evolution, Innovation and Opportunity: The January 1, 2014 renewal saw rates on line (ROLs) fall significantly in nearly all regions and business segments as relatively low loss experiences, strong balance sheets and an influx of capital spurred competition and innovation in the reinsurance market. This culminated in a marketplace focused on meeting individual client needs as reinsurers reacted to the challenge posed by alternative markets and alternative markets, in turn, sought to deliver unique solutions. Insurers also looked to capitalize by adapting their buying strategies and prioritizing their risk transfer goals.

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4. Cyber Review: As Guy Carpenter launches its new Cyber Solutions Specialty Practice, we review recent GC Capital Ideas stories on cyber.

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5. Chart: Global Property Catastrophe ROL Index: The Guy Carpenter Global Property Catastrophe Rate on Line index is presented for 1990 through 2014.  The index fell by 11 percent at January 1, 2014.

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6. Increasing External Demands Compel Companies to Improve Risk Management Disclosures: Guy Carpenter released its latest Enterprise Risk Management (ERM) Benchmark Review that provides an in-depth analysis of risk management practices and policies of 67 insurance and reinsurance companies located in Europe, United States, Bermuda, and Asia-Pacific. Based on publicly-available data from financial and risk reports, Guy Carpenter’s ERM Benchmark Review reveals that most (re)insurers are managing capital with metric-based frameworks and are publishing more about their risk management targets than seen in Guy Carpenter’s 2009 analysis. Capital market, legislative, and regulatory influences, such as the approaching implementation of Solvency II, are expected to further compel company managements to better recognize and analyze the risks of their enterprises.

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7. Guy Carpenter Makes Senior Promotions: Guy Carpenter announced that Massimo Reina was promoted to the position of CEO of Continental Europe and MENA, with immediate effect. He succeeded Peter Stubbings, who took up the position of Chairman of the firm’s Bermuda operations.

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8. Global Catastrophe Review, 2013: The year provided a respite for the (re)insurance industry following above-average losses in 2011 and 2012, with insured losses from natural catastrophes and man-made disasters estimated at around USD40 billion, according to Guy Carpenter & Company. This is considerably less than the ten-year average loss of approximately USD60 billion and well below the most significant years of 2005 and 2011. This can be partly attributed to the unusually quiet 2013 Atlantic tropical season. About 47 percent of insured losses in 2013 were reported in the Americas, 31 percent in Europe and 20 percent in Asia and Australasia.

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9. Chart: Rate Movements by Business Segment: Reports rate movements at January 1, 2014.

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10. What is Food Security? : Food security exists when all people, at all times, have physical, social and economic access to sufficient safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life. Fundamentally food has to be safe, nutritious and available in sufficient quantity. On a global scale these are always achievable. It is at a country or smaller geographic territory-level where problems often arise.

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*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., 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 Corp., 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 6th, 2014

GC Capital Ideas Top Stories: February 2014

Posted at 1:00 AM ET

1. Chart: Rate Movements by Business Segment: Report on rate movements at January 1, 2014.

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2. Chart: Top Ten Catastrophe Bond Transactions: The chart ranks deals in 2013, as compiled by GC Securities*, a division of MMC Securities Corporation.

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3. Global Catastrophe Review, 2013: 2013 provided a respite for the (re)insurance industry following above-average losses in 2011 and 2012, with insured losses from natural catastrophes and man-made disasters estimated at around USD40 billion, according to Guy Carpenter & Company. This is considerably less than the ten-year average loss of approximately USD60 billion and well below the most significant years of 2005 and 2011. This can be partly attributed to the unusually quiet 2013 Atlantic tropical season.

Read the article>>

 

4. January 2014 Renewal Report: Capacity: Evolution, Innovation and Opportunity: The January 1, 2014 renewal saw rates on line fall significantly in nearly all regions and business segments as relatively low loss experiences, strong balance sheets and an influx of capital spurred competition and innovation in the reinsurance market. This culminated in a marketplace focused on meeting individual client needs as reinsurers reacted to the challenge posed by alternative markets and alternative markets, in turn, sought to deliver unique solutions. Insurers also looked to capitalize by adapting their buying strategies and prioritizing their risk transfer goals.

Read the article>>

 

5. Guy Carpenter’s and Oliver Wyman’s Risk Benchmark Report: Guy Carpenter and its sister company, Oliver Wyman, the international management consulting firm,  published the third annual Insurance Risk Benchmarks.

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6. Chart: Global Property Catastrophe ROL Index: The Guy Carpenter Global Property Catastrophe Rate on Line index is presented for 1990 through 2014.  The index fell by 11 percent at January 1, 2014.

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7. Climate Change Review: Here we review recent GC Capital Ideas stories that have focused on climate change.

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8. Chart: Prevalence of Annuity Settlements in Europe: For bodily injury claim settlements in Europe, the trend is shifting away from lump sums and towards annuity-type settlements, which come with risks related to longevity, inflation and hedging.

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9. Americas Catastrophe Review, 2013: As with Europe, 2013 was a year of flood in the Americas, with notable events in Alberta, Toronto and Colorado. The flood event in the Calgary, Alberta area of Canada resulted in estimated insured losses of around USD2 billion, with economic losses of USD4.8 billion.  This event, combined with flash-flooding in Toronto, Ontario in July, meant Canada experienced its most expensive insured catastrophe loss year on record.

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10. 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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*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., 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 Corp., 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.