Archive for the ‘Quarter in Review’ Category



July 5th, 2017

GC Capital Ideas Top Stories: Second Quarter, 2017

Posted at 1:00 AM ET

1. Chart: The Matrix of Cyber and Property Lines Insurance Coverage: Chart examines the policy coverage matrix between cyber and property lines of insurance coverage. Below shows how the four types of subject matter (columns A-D) are generally covered by direct policies, relative to the various types of cyber and property perils (rows 1-5). Where cover is predominantly provided by property or cyber, the relevant icon is shown in blue. Where there is a degree of ambiguity, or coverage is limited, the icon is shown in gray.

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2. Guy Carpenter Sees Market Shift Towards Core Model Strategy: Insurers and reinsurers are increasingly adopting a core model strategy based around a detailed assessment of its capabilities, instead of the multi-model or blended approach as investment in modeling capabilities comes under pressure, says Matthew Eagle, Head of GC Analytics® - International at Guy Carpenter.

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3. China Risk Oriented Solvency System (C-ROSS): The China Insurance Regulatory Commission (CIRC) is instituting sweeping changes through its three-tiered China Risk Oriented Solvency System (C-ROSS) framework that will dramatically impact how (re)insurers conduct business. It will strengthen capital requirements, risk management and transparency disclosures - bringing China in line with, and in some cases overtaking, global standards. The C-ROSS framework is similar to Solvency II: three tiers focusing on quantitative, qualitative and disclosure requirements.

Read the article>>


4. Managing Catastrophe Model Uncertainty, Issues and Challenges: Here we repeat our series authored by John Major, which focuses on the issues and challenges in managing catastrophe model uncertainty.

Read the article>>


5. Measuring Cyber Aggregation Risk: Cyber risk is now an embedded feature of the global risk landscape, and preventative risk management and post-event remediation are gaining importance as shareholders, customers, supply chain partners and regulators are increasingly focused on how companies are managing for cyber risks. Insurance is becoming an important piece of the strategy for helping businesses address these risks.

Read the article>>


6. Disruptive Forces Redefining the Role of Insurance: Fundamental disruptive forces are driving monumental changes in the global economy at an unprecedented rate. These forces compel the (re)insurance industry to adjust to the new reality and capitalize on the opportunities created.

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7. Insurtech in China: Revolutionizing the Insurance Industry: China’s capital markets aren’t yet mature enough to support financial innovation; meanwhile, existing state-owned financial institutions are not reforming quickly enough. This gap in supply has provided opportunities for Chinese fintech players - who are being supported by rapidly growing online ecosystems and a tech-savvy population - in diverse fields ranging from investing to payments.

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8. Increasing External Demands Compel Companies to Improve Risk Management Disclosures: Guy Carpenter released its latest Enterprise Risk Management (ERM) Benchmark Review in 2014, providing 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.

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9. Chart: Combined Ratio for Guy Carpenter Reinsurance Composite, YE 2016: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2005 through year-end 2016.

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10. Guy Carpenter Reports Moderating Reinsurance Pricing Decline at January 1, 2017 Renewals: Guy Carpenter & Company reports the decline in reinsurance pricing moderated at the January 1, 2017 renewal across most classes of business and geographies, as compared to the past three renewal seasons.  Several sectors experienced increased loss activity, which had only a localized impact on pricing while capacity remained plentiful. After remaining fairly stable in 2015, dedicated reinsurance capital increased by 5 percent from January 1, 2016 to January 1, 2017 as calculated by Guy Carpenter and A.M. Best. The convergence capital segment increased by 10 percent.

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May 4th, 2017

GC Capital Ideas Top Stories: First Quarter 2017

Posted at 1:00 AM ET

1. Chart: Solvency II Ratios as of End of H1 2016: Chart presents (re)insurers’ Solvency II ratios compiled by Guy Carpenter for the first half of 2016. Many companies publish their solvency ratios without being required to do so, and some others actually specify target solvency ratio ranges as part of their risk appetite and financial targets. Solvency ratios are another metric for investors to use when assessing the relative financial strength of companies - and (re)insurance buyers can do the same when assessing counterparty risk.

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2. Guy Carpenter Reports Moderating Reinsurance Pricing Decline at January 1, 2017 Renewals: Guy Carpenter & Company reports the decline in reinsurance pricing moderated at the January 1, 2017 renewal across most classes of business and geographies, as compared to the past three renewal seasons.  Several sectors experienced increased loss activity, which had only a localized impact on pricing while capacity remained plentiful. After remaining fairly stable in 2015, dedicated reinsurance capital increased by 5 percent from January 1, 2016 to January 1, 2017 as calculated by Guy Carpenter and A.M. Best. The convergence capital segment increased by 10 percent.

Read the article>>


3. Chart: Top Ten Significant Insured Loss Events: 2016: The table lists the latest estimates for the top ten significant insured loss events for 2016.

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4. China Risk Oriented Solvency System (C-ROSS): The China Insurance Regulatory Commission (CIRC) is instituting sweeping changes through its three-tiered China Risk Oriented Solvency System (C-ROSS) framework that will dramatically impact how (re)insurers conduct business. It will strengthen capital requirements, risk management and transparency disclosures - bringing China in line with, and in some cases overtaking, global standards. The C-ROSS framework is similar to Solvency II: three tiers focusing on quantitative, qualitative and disclosure requirements.

Read the article>>


5. Managing Catastrophe Model Uncertainty, Issues and Challenges: Here we repeat our series authored by John Major, which focuses on the issues and challenges in managing catastrophe model uncertainty.

Read the article>>


6. Increasing External Demands Compel Companies to Improve Risk Management Disclosures: Guy Carpenter released its latest Enterprise Risk Management (ERM) Benchmark Review in 2014, providing 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.

Read the article>>


7. Global Risks Report 2017: The Global Risks Report 2017, produced by the World Economic Forum with support from Marsh & McLennan Companies and other partners, was published. Now in its twelfth edition, the report provides insights into the key global risks facing businesses as well as the collective view of risk experts in all sectors as to the most significant threats to global prosperity over the next decade. The Global Risks Report 2017 will inform discussions at the World Economic Forum’s annual meeting in Davos, Switzerland.

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8. Disruptive Forces Redefining the Role of Insurance: Fundamental disruptive forces are driving monumental changes in the global economy at an unprecedented rate. These forces compel the (re)insurance industry to adjust to the new reality and capitalize on the opportunities created.

Read the article>>


9. Further Considerations on the Hurricane “Shield” Theory: A New York Times article titled “Conditions That Form More Hurricanes Also Protect U.S., Study Finds” notes a hurricane “shield” for the U.S. coast during busy hurricane seasons. The article, based on recent research by James Kossin, provides valuable insight, including some notes of caution from other experts in the field, but the observations should be treated with a moment of pause.

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10. Solvency II Equivalence in the International (Re)insurance Landscape: The concept of equivalence under Solvency II determines to what extent (re)insurance entities outside Europe can operate within the European Union (EU) while relying solely on their local solvency standards. The ability to operate in the EU is a significant issue that impacts multinational (re)insurance companies and groups.

Read the article>>


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January 5th, 2017

GC Capital Ideas Top Stories: Fourth Quarter, 2016

Posted at 1:00 AM ET

1. Hurricane Matthew: Hurricane Matthew became a rare Category 5 hurricane on the Saffir-Simpson scale, with maximum sustained winds of 160 mph. The hurricane followed the western edge of a subtropical ridge to inflict catastrophic damage to Haiti as a Category 4 hurricane before crossing eastern Cuba, and turning to the northwest through the Bahamas towards Florida.

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2. Chart: Where Do (Re)insurers See Biggest Growth Opportunities?: Chart highlights the result of a survey taken of 107 insurance and reinsurance professionals conducted by Guy Carpenter at the 2016 annual meeting of the Property Casualty Insurers Association of America when asked where they see the biggest growth opportunities.

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3. Increasing External Demands Compel Companies to Improve Risk Management Disclosures: Guy Carpenter released its latest Enterprise Risk Management (ERM) Benchmark Review in 2014, providing 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.

Read the article>>


4. Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

Read the article>>


5. Managing Catastrophe Model Uncertainty, Issues and Challenges: Here we repeat our series authored by John Major, which focuses on the issues and challenges in managing catastrophe model uncertainty.

Read the article>>


6. China Risk Oriented Solvency System (C-ROSS): The China Insurance Regulatory Commission (CIRC) is instituting sweeping changes through its three-tiered China Risk Oriented Solvency System (C-ROSS) framework that will dramatically impact how (re)insurers conduct business. It will strengthen capital requirements, risk management and transparency disclosures - bringing China in line with, and in some cases overtaking, global standards. The C-ROSS framework is similar to Solvency II: three tiers focusing on quantitative, qualitative and disclosure requirements.

Read the article>>


7. Chart: The Matrix of Cyber and Property Lines Insurance Coverage: Chart examines the policy coverage matrix between cyber and property lines of insurance coverage. Below shows how the four types of subject matter (columns A-D) are generally covered by direct policies, relative to the various types of cyber and property perils (rows 1-5). Where cover is predominantly provided by property or cyber, the relevant icon is shown in blue. Where there is a degree of ambiguity, or coverage is limited, the icon is shown in gray.

Read the article>>


8. MMC Cyber Risk Handbook 2016: Increasing Resilience in the Digital Economy: The Cyber Risk Handbook 2016 presents views from Marsh & McLennan’s cyber leaders and leading third-party experts with whom we collaborate on how companies can assess cyber risks, develop comprehensive strategies and align their people to bolster cyber risk management.

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9. Measuring Cyber Aggregation Risk: Cyber risk is now an embedded feature of the global risk landscape, and preventative risk management and post-event remediation are gaining importance as shareholders, customers, supply chain partners, and regulators are increasingly focused on how companies are managing for cyber risks. Insurance is becoming an important piece of the strategy for helping businesses address these risks.

Read the article>>


10. A.M. Best’s More Transparent Ratings Criteria Provide Benefits to Insurers That Proactively “Own Their Ratings”: Maintaining or improving ratings is a priority for most insurers. This can be challenging amid increasing demands for companies to “own their risk” (Own Risk and Solvency Assessment “ORSA”) in an environment of evolving rating agency requirements, including A.M. Best’s (Best) proposed ratings methodology and Stochastic-based Best’s Capital Adequacy Ratio (BCAR) criteria.

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October 4th, 2016

GC Capital Ideas Top Stories: Third Quarter 2016

Posted at 1:00 AM ET

1. Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

Read the article>>


2. China Risk Oriented Solvency System (C-ROSS): The China Insurance Regulatory Commission (CIRC) is instituting sweeping changes through its three-tiered China Risk Oriented Solvency System (C-ROSS) framework that will dramatically impact how (re)insurers conduct business. It will strengthen capital requirements, risk management and transparency disclosures - bringing China in line with, and in some cases overtaking, global standards. The C-ROSS framework is similar to Solvency II: three tiers focusing on quantitative, qualitative and disclosure requirements.

Read the article>>


3. 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.

Read the article>>


4. Chart: Overall Losses and Insured Losses 1980 To 2014: Chart shows the widening gap between economic loss and insured loss for the period 1980 to 2014.

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5. Chart: Percentage of Insured Versus Uninsured Natural Catastrophes (2000 To 2015): Chart shows the global percentage of insured natural catastrophe loss versus uninsured natural catastrophe loss for the period 2000 to 2015.

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6. The Insurance Of Things & Industry 4.0 - A Matrix View: Technological progress and the accumulation of assets have not only stimulated the development of insurance products; they have in turn been nurtured by the availability of these offerings.

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7. 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.

Read the article>>


8. Guy Carpenter Sees Market Shift Towards Core Model Strategy: Insurers and reinsurers are increasingly adopting a core model strategy based around a detailed assessment of its capabilities, instead of the multi-model or blended approach as investment in modeling capabilities comes under pressure, says Matthew Eagle, Head of GC Analytics® - International at Guy Carpenter.

Read the article>>


9. Chart: Evolution of Market Price, Capacity, Limit for Terror Pools: Chart shows the evolution of international reinsurance market price, capacity and limit for terror pools from 2009 to 2014.

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10. Solvency II Equivalence In The International (Re)insurance Landscape: The concept of equivalence under Solvency II determines to what extent (re)insurance entities outside Europe can operate within the European Union (EU) while relying solely on their local solvency standards. The ability to operate in the EU is a significant issue that impacts multinational (re)insurance companies and groups.

Read the article>>


Click here to register to receive e-mail updates >>

July 11th, 2016

GC Capital Ideas Top Chart Room Entries: Second Quarter, 2016

Posted at 1:00 AM ET

From one of GC Capital Ideas’ more popular categories, we highlight the top Chart Room stories viewed during the second quarter of 2016:

Continue reading…

July 6th, 2016

GC Capital Ideas Top Stories: Second Quarter 2016

Posted at 1:00 AM ET

1. China Risk Oriented Solvency System (C-ROSS): The China Insurance Regulatory Commission (CIRC) is instituting sweeping changes through its three-tiered China Risk Oriented Solvency System (C-ROSS) framework that will dramatically impact how (re)insurers conduct business. It will strengthen capital requirements, risk management and transparency disclosures - bringing China in line with, and in some cases overtaking, global standards. The C-ROSS framework is similar to Solvency II: three tiers focusing on quantitative, qualitative and disclosure requirements.

Read the article>>


2. Guy Carpenter Forms Strategic Alliance to Develop Cyber Aggregation Model: Guy Carpenter & Company announced the formation of a strategic alliance with Symantec Corporation, a global leader in cyber security, to create a cyber aggregation model. The model will include a comprehensive catalogue of cyber scenarios from which insurers can derive frequency and severity distributions to measure the potential financial impact of loss from both affirmative cyber coverages and “silent” all-risk policies where cyber is the peril, but no cyber exclusions exist.

Read the article>>


3. 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.

Read the article>>


4. Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

Read the article>>


5. 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.

Read the article>>


6. 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.

Read the article>>


7. Chart: Combined Ratio For Guy Carpenter Reinsurance Composite, YE 2015: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2004 through year end 2015.

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8. Potential Losses From the Kumamoto Earthquake: The catastrophe modeling firm RMS estimated the economic loss for property risks to be between USD2.5 billion and USD3.5 billion. This estimate includes only residential, commercial, and industrial property and contents. Catastrophe modeling firm AIR estimated the insured loss to be between USD1.7 billion and USD2.9 billion for property risks. Both catastrophe modeling firms’ estimates exclude infrastructure, business interruption and contingent business interruption.

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9. Guy Carpenter Announces Senior Promotion and Appointment: Guy Carpenter & Company announced that Peter Stubbings has been promoted to CEO of the firm’s Bermuda operations, with immediate effect. In addition, Richard Keegan is to join the Bermuda team as Senior Vice President in May.

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10. Managing Catastrophe Model Uncertainty, Issues and Challenges: Here we repeat our series authored by John Major, which focuses on the issues and challenges in managing catastrophe model uncertainty.

Read the article>>


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April 6th, 2016

GC Capital Ideas Top Chart Room Entries: First Quarter, 2016

Posted at 1:00 AM ET

From one of GC Capital Ideas’ more popular categories, we highlight the top Chart Room stories viewed during the first quarter of 2016:

 

1. 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.

Read the article>>

 

2. Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

Read the article>>

 

3. 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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4. Catastrophe Bond Issuance and Capital Outstanding - 1998 to YE 2015: The chart below presents catastrophe bond issuance through 2015. Total bond issuance for the year 2015 was the fourth highest historically.

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5. Alternative Capacity as a Percentage of Catastrophe Reinsurance Limit: The chart below 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.

April 5th, 2016

GC Capital Ideas Top Stories: First Quarter 2016

Posted at 1:00 AM ET

1. 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.

Read the article>>

 

2. 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.

Read the article>>

 

3. 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.

Read the article>>

 

4. 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.

Read the article>>

 

5. Own Risk and Solvency Assessment (ORSA) Framework: (Re)insurers that are required to implement Own Risk and Solvency Assessment (ORSA), or a similar framework such as Internal Capital Adequacy Assessment Process (ICAAP), may benefit by adopting a strong ORSA/enterprise risk management (ERM) framework. One such framework that could work on a global basis is illustrated below.

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6. Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

Read the article>>

 

7. Managing Catastrophe Model Uncertainty, Issues and Challenges: Here we repeat our series authored by John Major, which focuses on the issues and challenges in managing catastrophe model uncertainty.

Read the article>>

 

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

Read the article>>

 

9. Insured Versus Uninsured Loss: There are a number of factors that contribute to the gap between economic loss and insured loss and as new risks emerge such as climate change and political risk, this gap will only continue to widen.

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10. The Emerging Risks Quandary, Anticipating Threats Hidden in Plain Sight: Marsh & McLennan Companies’ Global Risk Center has published a new report, The Emerging Risks Quandary. Many companies struggle to articulate the precise relevance of global and emerging risks to their business, and are poorly organized to make timely decisions. This report explores what impedes corporate efforts and sets out how companies can blend creativity and pragmatism to look beyond predictable and controllable risks to complex uncertainties that have the potential to generate more than mere volatility in corporate earnings.

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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.

January 5th, 2016

GC Capital Ideas Top Stories: Fourth Quarter 2015

Posted at 1:00 AM ET

1. 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.

Read the article>>

 

2. Chart: Global Property Catastrophe ROL Index 1990 to 2015: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2015.

Read the article>>

 

3. 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.

Read the article>>

 

4. Marsh & McLennan Companies Publishes Cyber Risk Handbook: Cyber risk is an escalating threat and one of the most challenging issues facing the world today. Attacks are becoming more frequent, more intense and more sophisticated. Motivations are wide-ranging - from financial gain to threatening critical infrastructure and national security - and the nature of attacks is constantly changing. With cyber risk, there is an active adversary so defenses need to be increasingly sophisticated to keep pace.

Read the article>>

 

5. Fifth Annual Insurance Risk Benchmarks Report from Guy Carpenter: Guy Carpenter & Company announced the release of the 2015 Insurance Risk Benchmarks Report titled, Risk and Opportunity In the year of ORSA: Annual Statistical Review. The report is produced annually through Guy Carpenter’s ongoing Insurance Risk Benchmarks research project, which focuses robust analytics on risk and performance in the U.S. property/casualty (P&C) insurance industry.

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6. Cyber Risks: Aggregation: Businesses and (re)insurers should be concerned by risk aggregation, given the possibility of single attacks leading to losses across a large number of firms, which can create counter-party risk for the insured and potential failure for the insurer. At the moment, a large systemic event has not materialized, but that does not mean that the risk is not present.

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7. Port of Tianjin Explosions Set to Become One of Asia’s Largest Insured Man-Made Loss Events: Potential Losses Between USD 1.6 Billion to USD 3.3 Billion: Guy Carpenter released a report on the Port of Tianjin Explosions. The report provides initial loss estimates and outlines the many variables involved in assessing the losses emanating from the two massive initial explosions that occurred at Tianjin Port on August 12 of this year.

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8. Cyber Risk: As businesses, both large and small, throughout all sectors of industry, become more and more reliant on technology to improve service efficiencies and functionalities, cyber risk has become one of the most pressing public topics addressed in corporate boardrooms and by governments across the globe. The corresponding awareness of a business’s susceptibility to a cyber-attack has grown along with a spate of high-profile attacks. Consequently, cyber risk is now an embedded feature of the global risk landscape, not only as a privacy/network liability, which is where much of the publicity has arisen, but also as a peril affecting traditional insurance lines. Therefore, preventative and post-event remediation are gaining importance as shareholders, regulators and rating agencies are increasingly focused on enterprise risk management activities for cyber risks.

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9. Reinsurance Mergers and Acquisitions Deja-vu, Buyers Beware: Since 2014, there have been four mergers and acquisitions (M&As) within the reinsurance space that are pure consolidations rather than transactions by an acquirer from outside the sector. To date, we estimate that this consolidation wave has affected some USD 11 billion of net premium income and 5 percent of the global reinsurance market. However, that is short of the USD 16 billion and 13 percent, respectively, for the mid-1990s. There is nothing unusual about M&A. It is a cyclical phenomenon and very much in tune with the broader financial market environment.

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10. Regulatory Challenges and Opportunities for (Re)insurers: (Re)insurers are being challenged as the regulatory environment becomes more complex, with regulation increasing considerably at multiple levels in numerous jurisdictions throughout the world. Insurers are facing new costs and pressures in their efforts to manage the regulatory landscape.

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October 5th, 2015

GC Capital Ideas Top Stories: Third Quarter 2015

Posted at 1:00 AM ET

1. Port of Tianjin Explosions Set to Become One of Asia’s Largest Insured Man-Made Loss Events: Potential Losses Between USD 1.6 Billion to USD 3.3 Billion: Guy Carpenter released a report on the Port of Tianjin Explosions. The report provides initial loss estimates and outlines the many variables involved in assessing the losses emanating from the two massive initial explosions that occurred at Tianjin Port on August 12 of this year.

Read the article>>

 

2. Guy Carpenter Examines Emerging Risks Impacting the (Re)insurance Industry: Guy Carpenter published a new report, A Clearer View of Emerging Risks, which examines four key areas where risks continue to emerge or are largely unknown.

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3. The Proliferation of Mergers & Acquisitions in Specialty Markets: New capital inflows, excess capacity and few catastrophe losses have contributed to falling reinsurance prices and a challenging environment for specialty insurers and reinsurers. These factors have driven predictions of a forthcoming wave of market consolidation, which appeared to become a reality in late 2014 and 2015 when a series of rumors and announcements related to a number of large (re)insurers grabbed headlines.

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4. Solvency II Horizon: Challenges and Strategic Impact: After a long period of discussion and many delays, the new European insurance regulatory regime, Solvency II, will commence in January 2016. The rules will be compulsory for all insurance and reinsurance companies and groups in the European Economic Area. The Solvency II rules were developed over a period of more than 15 years, and there are many reasons for the long delay. Two notable reasons are differing business models from country to country and pressure on long-term guarantee products in the private pension system created by the low interest rate environment.

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5. Dedicated Reinsurance Capital Estimate at July 1, 2015: Guy Carpenter’s estimate of dedicated reinsurance sector capital as of July 1, 2015 was again produced through our work with A.M. Best. Our estimate is not a simple aggregation of the capital of all companies that write reinsurance since some capital is allocated to the insurance business or other outside interests. In fact, we have seen increased evidence that some companies are shifting capital toward insurance lines and away from reinsurance lines based on the current rate environment. A.M. Best and Guy Carpenter have estimated the amount of capital dedicated to writing reinsurance by reviewing A.M. Best’s proprietary capital model (BCAR) results as well as line of business allocations. Our current estimate of total capital dedicated to reinsurance is approximately USD 400 billion of which the convergence capital, including catastrophe bonds, industry loss warranties (ILWs), collateralized reinsurance and sidecars is USD 66 billion.

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6. Today’s Reality, Recent Merger & Acquisition Activity: Recent merger & acquisition (M&A) activity is highlighted in the following list of sizeable transactions.

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7. Chart: Global Property Catastrophe ROL Index 1990 to 2015: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2015.

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8. Guy Carpenter Assesses Implications of Current Market Dynamics on Pricing Environment: Challenging market conditions due to abundant capacity, the ongoing influx of new capital and limited loss experience, continue to put pressure on the reinsurance sector, while recent M&A activity is adding a new dynamic to the mix. This is according to the panel of speakers at the eighth annual press briefing held at the Reinsurance Rendez-Vous 2015 in Monte Carlo, by Guy Carpenter & Company, LLC, a leading global risk and reinsurance specialist and a wholly owned subsidiary of Marsh & McLennan Companies.

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9. Emerging Risks: Modeling Considerations Moving Forward: Technological progress is accelerating at a rapid pace and with it are the risks and opportunities that accompany those changes in many different segments of our economy.

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10. 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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