Archive for the ‘Week in Review’ Category



December 2nd, 2016

Week’s Top Stories: November 26 – December 2, 2016

Posted at 7:30 AM ET

Chart: What is the Biggest Threat to (Re)insurers’ Plans for Growth?: 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 what they see as the biggest threat to their plans for growth.

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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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Sevier County Wildfires: Wildfire activity has rendered severe impacts to areas of Sevier County, Tennessee including the Gatlinburg and Pigeon Forge areas. The fire activity began late Sunday on Chimney Tops Mountain as a 10 acre fire that grew at an extreme rate Monday evening due to strong, gusty winds. Wind gusts well in excess of 60 mph carried embers a considerable distance to start new fires in extremely dry vegetation from recent drought. Gusty winds also brought trees down onto powerlines sparking new fires in surrounding dry vegetation.

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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>>


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>>


And, You May Have Missed…

Asia Pacific Catastrophe Report 2016: Executive Summary: Losses: Earthquakes in Taiwan and the Kumamoto prefecture of Japan and floods in southern China were the largest events. The reinsurance share of these losses appears modest. Barring a major catastrophe before the end of the year, catastrophe reinsurers are expected to return a healthy profit in Asia Pacific for the fourth year in a row.

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November 25th, 2016

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

Posted at 7:30 AM ET

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.

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Reserving and Capital Setting: The Crystalization of Emerging Risks: As discussed in the Executive Summary of this report, the term “crystalization of risk” refers to the timescale over which we realize that the risk is manifesting itself and how this view changes until ultimate understanding of quantum is reached and all liabilities are discharged. The “Reserving Risks” section in last year’s report, Ahead of the Curve: Understanding Emerging Risks looked at how information emerges in the presence of reserving cycles. The profit or loss in any particular financial year is made up of not only the profit or loss from the same accident year but also any recognized changes in the reserves on prior years.

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Asia Pacific Catastrophe Report 2016: Executive Summary: Convergence Capital: “Convergence” or “alternative” capital, which first entered the reinsurance market with catastrophe bonds, has grown steadily over the past ten years and now also includes industry loss warranties, sidecars and collateralized reinsurance. Convergence capital now accounts for just under 20 percent of the global catastrophe limit.

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Technology Innovation Identified as Top Growth Opportunity for (Re)insurance Industry in 2017, According to Guy Carpenter Annual Market Pulse Survey: Technology innovation will provide the biggest growth opportunities for (re)insurers in the year ahead, according to a survey released today by Guy Carpenter & Company. Now in its fifth year, the annual survey polled executives from insurance and reinsurance companies during the 2016 Property Casualty Insurers Association of America (PCIAA) Annual Meeting held in Dallas, Texas. The goal of this year’s survey was to identify the top opportunities and threats to profitable growth in the year ahead, as well as examine the most significant disruptive forces impacting the industry.

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

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And, You May Have Missed…

Increasing Confidence and Transparency in Your Catastrophe Risk Decisions: Could you afford to find that the portfolio you just acquired in North Carolina is more exposed to hurricane than previously assumed? What if next year’s Category 2 hurricane caused a loss in excess of 15 percent of your policyholders’ surplus?  How will the changes in the U.S. Geological Survey National Seismic Hazard Maps impact your exposure to earthquake risk in the central and eastern United States?

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*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities LLC, a US registered broker-dealer and member FINRA/NFA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade, Canary Wharf, London E14 5HS. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities LLC, MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product. **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.

November 18th, 2016

Week’s Top Stories: November 12 - 18, 2016

Posted at 7:30 AM ET

7.8 Mw Earthquake in New Zealand: A magnitude (Mw) 7.8 earthquake struck central New Zealand on November 13, according to the U.S. Geological Survey (USGS). The quake occurred at 11:02 PM local time (11:02 UTC) about 93 kilometers (57 miles) north-northeast of Christchurch and about 215 kilometers (133 miles) southwest of Wellington.

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Asia Pacific Catastrophe Report 2016: Executive Summary: Volcano Potential in Asia Pacific: Later in 2016, Guy Carpenter plans to release a report on the potential for losses caused by volcanic eruption across the region and the implications from an insurance point of view.

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Technology Innovation Identified as Top Growth Opportunity for (Re)insurance Industry in 2017, According to Guy Carpenter Annual Market Pulse Survey: Technology innovation will provide the biggest growth opportunities for (re)insurers in the year ahead, according to a survey released by Guy Carpenter & Company. Now in its fifth year, the annual survey polled executives from insurance and reinsurance companies during the 2016 Property Casualty Insurers Association of America (PCIAA) Annual Meeting held in Dallas, Texas. The goal of this year’s survey was to identify the top opportunities and threats to profitable growth in the year ahead, as well as examine the most significant disruptive forces impacting the industry.

Read the article>>


Reserving and Capital Setting: The Crystalization of Emerging Risks: As discussed in the Executive Summary of this report, the term “crystalization of risk” refers to the timescale over which we realize that the risk is manifesting itself and how this view changes until ultimate understanding of quantum is reached and all liabilities are discharged. The “Reserving Risks” section in last year’s report, Ahead of the Curve: Understanding Emerging Risks looked at how information emerges in the presence of reserving cycles. The profit or loss in any particular financial year is made up of not only the profit or loss from the same accident year but also any recognized changes in the reserves on prior years.

Read the article>>


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.

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And, You May Have Missed…

Strategic Growth Analysis - The Guy Carpenter Approach: The changes in today’s property and casualty (P&C) insurance marketplace present insurers with many challenges to capital management and risk transfer techniques. Insurers are compelled to leverage their capital positions to increase and diversify their market shares to an unprecedented degree.  Preserving the status quo is not an option for long-term viability.  Profitable growth is a key priority for companies seeking additional return.  Companies need to enter new lines of business or geographies strategically with proper analysis. Guy Carpenter offers proprietary analytical tools, intellectual capital and expertise to help companies determine and evaluate their growth plans while maintaining an acceptable level of risk and profitability.

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November 11th, 2016

Week’s Top Stories: November 5 - 11, 2016

Posted at 7:30 AM ET

Technology Innovation Identified as Top Growth Opportunity for (Re)insurance Industry in 2017, According to Guy Carpenter Annual Market Pulse Survey: Technology innovation will provide the biggest growth opportunities for (re)insurers in the year ahead, according to a survey released by Guy Carpenter & Company. Now in its fifth year, the annual survey polled executives from insurance and reinsurance companies during the 2016 Property Casualty Insurers Association of America Annual Meeting held in Dallas, Texas. The goal of this year’s survey was to identify the top opportunities and threats to profitable growth in the year ahead, as well as examine the most significant disruptive forces impacting the industry.

Read the article>>


Asia Pacific Catastrophe Report 2016: Executive Summary: Mergers and Acquisitions: In 2015, outbound mergers and acquisitions (M&A) abounded in the region, but a pause in transactions occurred in 2016. The flow of inbound M&A increased this year, largely caused by overseas companies making significant investments in joint ventures following recent regulatory changes in India.

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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>>


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>>


Analytics: Fueling Risk-Informed Decisions: Today’s rapidly changing global environment presents insurers with many challenges and opportunities as capital management and risk transfer techniques evolve at an unprecedented pace. Stakeholders, regulators and ratings agencies are deepening their focus on risk management practices, and revolutionary developments in technology, including the Internet of Things and hyper-connectivity, are driving companies to adapt to the challenges that senior management faces to support risk management decisions material to their business.

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And, You May Have Missed…

Newest Versions of Patented Capital Modeling Tools Enhance Automation and Integration, Estimate Inflationary Risk, and Improve Run-Time: Guy Carpenter Introduces MetaRisk® ReserveTM 5 and MetaRisk® 9: Guy Carpenter announced the launch of MetaRisk® ReserveTM 5 and MetaRisk® 9, the latest updates to its powerful suite of capital modeling tools built on more than 25 years of research and development.

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November 4th, 2016

Week’s Top Stories: October 29 – November 4, 2016

Posted at 6:30 AM ET

Asia Pacific Catastrophe Report 2016: Executive Summary: In the Asia Pacific region, purchases in original currency terms of total catastrophe treaty reinsurance limit grew year on year. Increased purchase in Japan largely drove the growth, with lesser growth experienced in India and China. Changes in pro rata arrangements at some Australian cedents reduced the overall catastrophe excess of loss requirements from Australia; these movements were not large enough to push the overall region-wide purchase backwards.

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

1. Which emerging risks potentially expose my company?

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

3. How are these risks likely to crystalize?

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Emerging Practices in Risk Tolerances: Insurers have long embraced the concept of risk tolerances. In some cases, the risk tolerances were expressly stated in a company’s enterprise risk management (ERM) policy document or in other cases exhibited in the course of normal operations.

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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 proposed ratings methodology and Stochastic-based Best’s Capital Adequacy Ratio (BCAR) criteria.

Read the article>>


Analytics: Fueling Risk-Informed Decisions: Today’s rapidly changing global environment presents insurers with many challenges and opportunities as capital management and risk transfer techniques evolve at an unprecedented pace. Stakeholders, regulators and ratings agencies are deepening their focus on risk management practices, and revolutionary developments in technology, including the Internet of Things and hyper-connectivity, are driving companies to adapt to the challenges that senior management faces to support risk management decisions material to their business.

Read the article>>


And, You May Have Missed…

Industry Must Expand Terrorism-Related Cover: In the wake of recent terror-related attacks, the insurance industry must expand its role of supporting the financial resilience of economies. This includes further clarifying the industry’s position alongside government-sponsored terrorism pools, according to Emma Karhan, Managing Director, Guy Carpenter.

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October 28th, 2016

Week’s Top Stories: October 22 - 28, 2016

Posted at 6:30 AM ET

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 proposed ratings methodology and Stochastic-based Best’s Capital Adequacy Ratio (BCAR) criteria.

Read the article>>


Emerging Practices in Risk Tolerances: Insurers have long embraced the concept of risk tolerances. In some cases, the risk tolerances were expressly stated in a company’s enterprise risk management (ERM) policy document or in other cases exhibited in the course of normal operations.

Read the article>>


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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Solvency II: An Era of Greater Risk-Driven Management: On January 1, 2016, the Solvency II regulatory regime took effect. Some celebrated; others were weary from the months and years of preparation

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US Property/Casualty Insurers Facing Increasingly Complex Operating Environment: Guy Carpenter Report: Guy Carpenter & Company released a study which found that, in a challenging operating environment, only 40 of the top 100 US property/casualty insurers reported an underwriting profit over the last five accident years.

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And, You May Have Missed…

Baden-Baden Reinsurance Symposium Explores Ways of Bridging Protection Gap: Guy Carpenter & Company hosted the Reinsurance Symposium in Baden-Baden on October 23. The eighth year that the firm has hosted the event, the theme this year was “Bridging the Gap - Is the industry doing enough to attract risk from the public to the private sector?”

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October 21st, 2016

Week’s Top Stories: October 15 - 21, 2016

Posted at 6:30 AM ET

Reserving and Capital Setting: Background and Challenges: Loss reserves are arguably one of the most difficult risks to estimate and monitor. In fact, inadequate pricing and deficient loss reserves have been the leading cause of property/casualty company impairments. According to A.M. Best, from 1969 to 2009 they triggered approximately 40 percent of all impairments - four times more than those emanating from natural catastrophes. There are many uncertainties in managing long-tailed, heavily legislated lines of business that can be triggered from emerging risks. Unforeseen inflation and anticipated legislative changes over a 10 to 30 year period present many demands.

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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.

Read the article>>


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>>


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>>


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>>


And, You May Have Missed…

Managing Volatility Key To Solvency II Transition: The impact of the Solvency II capital ratio on composite life and property/casualty balance sheets is proving more substantial than some companies initially expected, according to Eric Paire, Head of Global Partners & Strategic Advisory, EMEA at Guy Carpenter. This development is due to the double impact of market volatility and volatility within the solvency ratio itself.

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October 14th, 2016

Week’s Top Stories: October 8 - 14, 2016

Posted at 6:30 AM ET

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.

Read the article>>


Integrating & Synthesizing New Emerging Risks - Within the ERM Framework: One purpose of enterprise risk management (ERM) is to help (re)insurers determine how much capital is needed to support the risks they assume (subject to risk tolerance). Instead of segmenting portfolios and handling each peril on a standalone basis, a robust ERM methodology would use a holistic approach to risk and capital management where threats are identified and monitored, all action plans are developed and risks are measured.

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Chart: Combined Ratio For Guy Carpenter Reinsurance Composite, First Half, 2016: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2005 through first half, 2016.

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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>>


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>>


And, You May Have Missed…

Cat Modelling Challenges In Europe: 2016 marks the 60th year of the Monte Carlo Rendez-Vous. Since the first event in 1957 the insurance world has changed significantly, with economic and insured losses from natural catastrophes such as floods and hurricanes increasing dramatically.

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October 7th, 2016

Week’s Top Stories: October 1 - 7, 2016

Posted at 6:30 AM ET

Chart: Combined Ratio For Guy Carpenter Reinsurance Composite, First Half, 2016: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2005 through first half, 2016.

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Chart: Return On Premiums For Guy Carpenter Reinsurance Composite, First Half, 2016: Chart presents return on premiums for the Guy Carpenter Global Reinsurance Composite, 2005 through first half, 2016.

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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>>


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>>


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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And, You May Have Missed…

“Visual Intelligence” Critical To Advancing Response Capabilities Globally: Advances in the development of “visual intelligence” based on multiple data sources including satellite imagery and drone footage have the potential to significantly enhance claims and CAT response processes and underwriting decision making when companies harness that potential effectively, according to Dr. Beverley Adams, Head of CPR (Catastrophe Planning & Response) at Guy Carpenter.

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September 30th, 2016

Week’s Top Stories: Sept. 24 - 30, 2016

Posted at 6:30 AM ET

Chart: Source Of Earnings For Guy Carpenter Reinsurance Composite, First Half, 2016: Chart presents source of earnings for the Guy Carpenter Global Reinsurance Composite for the first half, 2016 compared to the first half, 2015.

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Longevity Risk: The impacts to society from changes in longevity and life expectancy will be wide-ranging and incredibly difficult issues to grapple with. A 2012 International Monetary Fund (IMF) study revealed that if individuals lived three years longer than expected the cost of aging could increase by 50 percent. This translates to 50 percent of 2010 gross domestic product (GDP) in advanced economies and 25 percent of 2010 GDP in emerging economies. Globally that amounts to tens of trillions of US dollars. The United Nations expects the aggregate expenses of the elderly will double over the period between 2010 and 2050. The figure below shows the projected trend of rising life expectancy to continue in all regions of the globe regardless of economic advancement.

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Increasing Confidence and Transparency in Your Catastrophe Risk Decisions: Could you afford to find that the portfolio you just acquired in North Carolina is more exposed to hurricane than previously assumed? What if next year’s Category 2 hurricane caused a loss in excess of 15 percent of your policyholders’ surplus?  How will the changes in the U.S. Geological Survey National Seismic Hazard Maps impact your exposure to earthquake risk in the central and eastern United States?

Read the article>>


Chart: Return On Equity For Guy Carpenter Reinsurance Composite, First Half, 2016: Chart presents return on equity for the Guy Carpenter Global Reinsurance Composite, 2005 through first half, 2016.

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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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And, You May Have Missed…

Typhoon Megi: In the Northwest Pacific Basin, Typhoon Megi made landfall in central Taiwan Tuesday afternoon, local time. The typhoon brought reports of excessive rainfall, flash-flooding, and roof damage for affected areas. Isolated rainfall amounts exceeding 1,250 millimeters (50 inches) were reported, with general rainfall amounts of 250 millimeters (10 inches) or more.

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