GC Capital Tip: Chart Room:  We all know that a picture is worth a thousand words. That’s why GC Capital Ideas has the Chart Room. If you want to get a quick sense of important industry trends, the Chart Room provides snapshots of everything from extreme mortality bond issuances to the Guy Carpenter World Rate on Line Index. Each includes a brief summary and simple instructions for downloading the chart. We encourage you to use these charts in your presentations, along with the proper attribution.

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Guy Carpenter Asia Pacific Climate Impact Centre: Updated Prediction of Seasonal Tropical Cyclone Activity over the Western North Pacific for 2010:  This is an update of the predictions of the annual number of tropical cyclones in the western North Pacific for 2010 that we issued on April 26, 2010. These updates are made based on new information for the months of April and May 2010.

Read the article »

Reinsurance Renewal July 1, 2010: Capital Cushion Continues to Impact Pricing:   Further erosion of rates was evident at the July 1, 2010 reinsurance renewal. Property rates were down by as much 15 percent despite substantial catastrophe loss activity in the first half of 2010. Heavy losses from the Chilean earthquake were insufficient to turn prices outside the areas immediately affected by the earthquake, despite the announcement of large increases in estimates from the largest European reinsurers. In the energy and casualty sectors, conditions were flat or down, but the Deepwater Horizon rig disaster may exert upwards pressure as more information emerges. Excess capital remains available to absorb losses as evidenced by continuing share buy-backs and the substitution of equity capital with less expensive debt.

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Terrorism Risk Highlighted at OECD Meeting by Guy Carpenter’s Director of Reinsurance Market Management, Chris Klein:  Guy Carpenter’s Director of Reinsurance Market Management, Chris Klein, spoke at a recent Organization of Economic Cooperation and Development meeting focusing on terrorism. Guy Carpenter’s (re)insurance industry report “Terrorism - Reinsurers Standing By,” was released in conjunction with the meeting. He presented a wide-ranging overview of how the reinsurance industry weathered the recent global financial crisis.

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Catastrophe Bond Update: First Quarter 2010 - Heavy Smoke, Some Fire…Encouraging Conditions Persist*: In the first quarter of 2010, two catastrophe bond transactions were completed, and USD300 million of risk capital was issued. In response to strong investor demand, both transactions closed within initial price guidance and were upsized relative to announced placement targets. While this activity furthers the integration of the capital markets into the risk management processes of protection buyers, on balance, issuance volumes for the quarter were perhaps a bit lighter than expected at the close of 2009.

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Chart: Insurance Linked Securities Issuance, by Peril, 1997 Through April 1, 2010*:   On a standalone basis, the two most frequently securitized perils are U.S. hurricane USD (7.08 billion) and U.S. earthquake (USD 4.71 billion). Other perils securitized on a standalone basis include European windstorm, Japanese earthquake and, to a lesser extent, Japanese typhoon. Multi-peril transactions, in which the same dollar of risk principal is exposed to at least two or more perils accounts for 42 percent of total risk principal issued. Insurance linked securities (ILS) investors typically prefer single-peril / single-zone transactions as they provide greater ability to construct granular portfolios according to each investor’s risk preferences. ILS sponsors however, particularly large national and global writers with aggregate concerns across multiple perils and geographic zones, often prefer to economize risk transfer spend by applying a single limit across different non-correlated perils, for example U.S. hurricane and earthquake.

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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/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., which is authorized and regulated by the Financial Services Authority. 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, Inc. 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.

1. Catastrophe Bond Update: First Quarter 2010 - Heavy Smoke, Some Fire…Encouraging Conditions Persist*:    In the first quarter of 2010, two catastrophe bond transactions were completed, and USD300 million of risk capital was issued. In response to strong investor demand, both transactions closed within initial price guidance and were upsized relative to announced placement targets. While this activity furthers the integration of the capital markets into the risk management processes of protection buyers, on balance, issuance volumes for the quarter were perhaps a bit lighter than expected at the close of 2009.

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2. April 1 Reinsurance Renewals: Rates Lower; Returns Under Pressure:  The April 1, 2010 reinsurance renewals are dominated by Asia, but were conducted with one eye on the catastrophes that occurred elsewhere in the world. Reinsurance rates in most cases continued the decline experienced at January 1, 2010 which occurred largely because of the effects of healthier (re)insurer balance sheets. The large earthquake in Chile, and, to a lesser extent, windstorm Xynthia in Europe, both striking in the first quarter of 2010, caused pause for thought. There are several significant renewals at April 1 in the US, which did not show signs of any impact from the recent global loss activity. There was some evidence of price tightening in parts of Latin America. The Chile situation remains uncertain and earthquake losses generally develop more slowly than wind events. Up to half of catastrophe loss ratio budgets were consumed, causing reduced headroom for a larger catastrophe later in the year. This scenario, along with buoyant balance sheets, lower investment yields and thinner reserve releases will put pressure on returns, sustaining active capital management and perhaps, in time, stabilizing the market.

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3. A National Flood Modeling Solution for Mainland France:  Guy Carpenter has developed a state-of-the-art probabilistic flood model for mainland France in collaboration with hydrological and hydraulic modeling experts, JBA Consulting and Intermap Technologies, a global provider of high-quality 3D digital elevation models.

Read the article »

4. Chart: Insurance Linked Securities Issuance, by Peril, 1997 Through April 1, 2010*: On a standalone basis, the two most frequently securitized perils are U.S. hurricane (USD7.08 billion) and U.S. earthquake (USD 4.71 billion). Other perils securitized on a standalone basis include European windstorm, Japanese earthquake and, to a lesser extent, Japanese typhoon. Multi-peril transactions, in which the same dollar of risk principal is exposed to at least two or more perils accounts for 42 percent of total risk principal issued. Insurance linked securities (ILS) investors typically prefer single-peril / single-zone transactions as they provide greater ability to construct granular portfolios according to each investor’s risk preferences. ILS sponsors however, particularly large national and global writers with aggregate concerns across multiple perils and geographic zones, often prefer to economize risk transfer spend by applying a single limit across different non-correlated perils, for example U.S. hurricane and earthquake.

Read the article »

5. 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 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 »

6. June 1 Reinsurance Rate Decreases are One Positive Development for Florida Companies:  At each Florida renewal season there are many challenges companies face in designing and placing their reinsurance programs. This year was no exception. While companies deal with navigating the challenges of the Florida Hurricane Catastrophe Fund integration each year, 2010 also included heightened commentary by rating agencies regarding acceptable risk transfer approaches, the Florida Office of Insurance Regulation’s own views on risk transfer and an environment of continuing economic turmoil specific to the Florida insurance environment.

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7. Explosion and Fire at Offshore Oil Rig, Gulf of Mexico:  An explosion and large fire on an oil rig in the Gulf of Mexico left 11 workers missing and 17 others injured on April 20. The blaze on the Deepwater Horizon drilling rig, which broke out around 22:00 local time, sent flames and smoke high into the sky about 40 miles off the coast of Louisiana. Seventeen workers were injured, three critically, and rescuers are still searching for 11 missing people. It was not known whether the missing workers were able to make it to one of the rig’s lifeboats. Reports said the rig, which is owned by Transocean Ltd, was under contract to the oil giant BP at a cost of USD533,000 (EUR 395,000) a day and doing exploratory drilling. The rig is listing badly and threatening to topple over, the US Coast Guard said. Reports said the rig, which was built in 2001 in South Korea at a cost of about USD350 million, has a replacement value of up to USD700 million today. Transocean said the 400-by-250-foot (120-by-80 meter) rig is located approximately 42 miles offshore Venice, Louisiana, on Mississippi Canyon block 252.

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8. 2010 Hurricane Season Begins: Knowing, Understanding and Better Managing the Risks:  The 2010 hurricane season kicked-off on June 1 and the meteorological forces wasted no time in getting down to business. Tropical storm Agatha slammed into Central America, killing at least 101 people. The hurricane season kick-off and the storm occurred as backdrops to the wrap up of the June 1, 2010 reinsurance renewals, traditionally centered on the Florida property marketplace.

Read the article »

9. Solvency II In Depth:  Guy Carpenter & Company, LLC sponsored this extended roundtable discussion that considered the progress made by (re)insurance as the Solvency II regime approaches. Held in London, it was attended by a number of UK and continental Europe industry leaders, including Guy Carpenter Managing Director and European Solutions Group Leader Eric Paire. We present the text of the roundtable discussion here as it appeared in Reinsurance Magazine.

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10. Solvency II - Non-Life Underwriting Risk in Light of QIS 5:  On April 15th, 2010, the European Commission (EC) published its draft technical specifications for the next Quantitative Impact Study (QIS) 5, which will be implemented from August to November of 2010. Based on empirical evidence, the general calibration of the standard formula solvency capital requirement (SCR) may fall between the calibration of QIS 4 and the calibration seen in the rigid proposals of the various consultation papers (CP) submitted during 2009. This article takes a deeper look at the calibration of non-life underwriting risk as part of the overall SCR calculation.

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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/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., which is authorized and regulated by the Financial Services Authority. 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, Inc. 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.

Reinsurance Renewal July 1, 2010:  Capital Cushion Continues to Impact Pricing:  Further erosion of rates was evident at the July 1, 2010 reinsurance renewal. Property rates were down by as much 15 percent despite substantial catastrophe loss activity in the first half of 2010.  Heavy losses from the Chilean earthquake were insufficient to turn prices outside the areas immediately affected by the earthquake, despite the announcement of large increases in estimates from the largest European reinsurers. In the energy and casualty sectors, conditions were flat or down, but the Deepwater Horizon rig disaster may exert upwards pressure as more information emerges. Excess capital remains available to absorb losses as evidenced by continuing share buy-backs and the substitution of equity capital with less expensive debt.

Read the article »

Initial Reactions to Health Care Reform: An Insurer and Reinsurer Perspective: With the passing of the Patient Protection and Affordable Care Act, the environment for health insurers has drastically changed. What we do know is that these changes will have a significant and immediate impact on every organization conducting business in the health care arena. In order to assess the current situation, brokers throughout Guy Carpenter & Company, LLC reached out to our business partners in all segments of the health care industry. In total, Guy Carpenter spoke with 24 various organizations about the immediate and long term effects of health care reform.

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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 »

The Time Profile of Risk: From the Desk of Guy Carpenter’s Chief Actuary:  According to the draft European Union Solvency II directives, companies will need to provide an “own risk and solvency assessment” (ORSA). The Committee of European Insurance and Occupational Pensions Supervisors has prepared an issues paper that provides guidance to assist (re)insurers in implementing the ORSA.

Read the article »

Guy Carpenter Asia Pacific Climate Impact Centre: Updated Prediction of Seasonal Tropical Cyclone Activity over the Western North Pacific for 2010:  This is an update of the predictions of the annual number of tropical cyclones in the western North Pacific for 2010 that we issued on April 26, 2010. These updates are made based on new information for the months of April and May 2010.

Read the article »

Most Popular Keyword:    flooding in france

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Terrorism - Reinsurers Standing By:  As we approach the ninth anniversary of the September 11, 2001 attacks, the threat from terrorism continues to pose a risk to the (re)insurance industry. The nature of the threat has changed since 2001, but terrorism remains a constant and serious risk with global recorded terror incidents at historic highs. Terrorist organizations operating in unstable countries present a danger to the world, and the recent flurry of terrorist activity serves as a reminder that individuals and groups remain a serious threat.

Read the article »

Click here to register for e-mail updates »

1. A National Flood Modeling Solution for Mainland France:  Guy Carpenter has developed a state-of-the-art probabilistic flood model for mainland France in collaboration with hydrological and hydraulic modeling experts, JBA Consulting and Intermap Technologies, a global provider of high-quality 3D digital elevation models.

Read the article »

2. June 1 Reinsurance Rate Decreases are One Positive Development for Florida Companies: At each Florida renewal season there are many challenges companies face in designing and placing their reinsurance programs. This year was no exception. While companies deal with navigating the challenges of the Florida Hurricane Catastrophe Fund integration each year, 2010 also included heightened commentary by rating agencies regarding acceptable risk transfer approaches, the Florida Office of Insurance Regulation’s own views on risk transfer and an environment of continuing economic turmoil specific to the Florida insurance environment.

Read the article »

3. 2010 Hurricane Season Begins: Knowing, Understanding and Better Managing the Risks:  The 2010 hurricane season kicked-off on June 1 and the meteorological forces wasted no time in getting down to business. Tropical storm Agatha slammed into Central America, killing at least 101 people. The hurricane season kick-off and the storm occurred as backdrops to the wrap up of the June 1, 2010 reinsurance renewals, traditionally centered on the Florida property marketplace.

Read the article »

4. Global Reinsurance Composite Net Income Declines, Investment Income Recovers in 1 Q, 2010:  The Guy Carpenter Global Reinsurance Composite’s net income declined in the first quarter of 2010 compared with the same quarter in 2009. The companies comprising the group showed an aggregate net gain of USD1.4 billion, a decline of 31 percent from the first quarter of 2009. The primary driver was an increase in non-life underwriting losses.

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5. 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 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 »

6. Terrorism - Reinsurers Standing By:  As we approach the ninth anniversary of the September 11, 2001 attacks, the threat from terrorism continues to pose a risk to the (re)insurance industry. The nature of the threat has changed since 2001, but terrorism remains a constant and serious risk with global recorded terror incidents at historic highs. Terrorist organizations operating in unstable countries present a danger to the world, and the recent flurry of terrorist activity serves as a reminder that individuals and groups remain a serious threat.

Read the article »

7. Catastrophe Bond Update: First Quarter 2010 - Heavy Smoke, Some Fire…Encouraging Conditions Persist*:  In the first quarter of 2010, two catastrophe bond transactions were completed, and USD300 million of risk capital was issued. In response to strong investor demand, both transactions closed within initial price guidance and were upsized relative to announced placement targets. While this activity furthers the integration of the capital markets into the risk management processes of protection buyers, on balance, issuance volumes for the quarter were perhaps a bit lighter than expected at the close of 2009.

Read the article »

8. The Time Profile of Risk: From the Desk of Guy Carpenter’s Chief Actuary:  According to the draft European Union Solvency II directives, companies will need to provide an “own risk and solvency assessment” (ORSA). The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) has prepared an issues paper that provides guidance to assist (re)insurers in implementing the ORSA.

Read the article »

9. Demand for Insurance Solutions Grows as Volcanic Ash Disrupts Supply Chains…Again:  Traditionally, insurance coverage for supply chain disruption has required physical damage to the insured’s assets to trigger a claim. However, following ongoing air traffic disruption caused by the eruption of Iceland’s Eyjafjallajökull volcano, as well as industrial action in key transport sectors and civil unrest overseas, Guy Carpenter sister company Marsh has seen increased interest from organizations wanting supply chain insurance that includes coverage for losses from non-physical damage.

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10. Solvency II - Non-Life Underwriting Risk in Light of QIS 5:  On April 15th, 2010, the European Commission published its draft technical specifications for the next Quantitative Impact Study (QIS) 5, which will be implemented from August to November of 2010. Based on empirical evidence, the general calibration of the standard formula solvency capital requirement (SCR) may fall between the calibration of QIS 4 and the calibration seen in the rigid proposals of the various consultation papers submitted during 2009. This article takes a deeper look at the calibration of non-life underwriting risk as part of the overall SCR calculation.

Read the article »

Click here to register to receive e-mail updates »

*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/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., which is authorized and regulated by the Financial Services Authority. 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, Inc. 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.

Reinsurance Renewal July 1, 2010: Capital Cushion Continues to Impact Pricing: Further erosion of rates was evident at the July 1, 2010 reinsurance renewal. Property rates were down by as much 15 percent despite substantial catastrophe loss activity in the first half of 2010. Heavy losses from the Chilean earthquake were insufficient to turn prices outside the areas immediately affected by the earthquake, despite the announcement of large increases in estimates from the largest European reinsurers. In the energy and casualty sectors, conditions were flat or down, but the Deepwater Horizon rig disaster may exert upwards pressure as more information emerges. Excess capital remains available to absorb losses as evidenced by continuing share buy-backs and the substitution of equity capital with less expensive debt.

Read the article »

Guy Carpenter Asia-Pacific Climate Impact Centre Publishes New Report on Interannual and Interdecadal Variations of Tropical Cyclone Activity in South China Sea:   The Guy Carpenter Asia-Pacific Climate Impact Centre (GCACIC), a joint initiative of Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist, and the City University of Hong Kong, has published a new paper on tropical cyclone activity variations between 1965 and 2005 in the South China Sea region. The report identifies trends over the years and decades during this period, and the factors that drove these variations.

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The Time Profile of Risk:  From the Desk of Guy Carpenter’s Chief Actuary:   According to the draft European Union Solvency II directives, companies will need to provide an “own risk and solvency assessment” (ORSA). The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) has prepared an issues paper that provides guidance to assist (re)insurers in implementing the ORSA.

Read the article »

Update: Hurricane Alex:   Hurricane Alex has made landfall near Soto La Marina and La Pesca in Mexico’s Tamaulipas State as a category 2 hurricane, according to the National Hurricane Center (NHC). The storm made landfall around 02:00 UTC on July 1 with sustained winds of around 105 mph (165 kmph). The NHC said Alex was the first category 2 hurricane to develop in June in the Atlantic since Hurricane Alma in 1966.

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 »

Most Popular Keyword:   Guy Carpenter rol index

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2010 Hurricane Season Begins: Knowing, Understanding and Better Managing the Risks, Part I: State of the Florida Marketplace: The 2010 hurricane season kicked-off on June 1 and the meteorological forces wasted no time in getting down to business. Tropical storm Agatha slammed into Central America, killing at least 101 people. The hurricane season kick-off and the storm occurred as backdrops to the wrap up of the June 1, 2010 reinsurance renewals, traditionally centered on the Florida property marketplace.

Read the article »

Click here to register for e-mail updates »

GCCapitalIdeas.com has been nominated for membership in the Lexis/Nexis Insurance Law Community (ILC) “Top 50 Insurance Blogs.” When considering blogs for membership, ILC looks for frequent posts, timely topics and quality writing. Guy Carpenter & Company, LLC is proud that GCCapitalIdeas has been nominated.    

ILC is asking readers to comment on and support the nominations directly on its site.  If you would like to offer a comment on your favorite nominees, please click here to be taken to the ILC comment site. 

It is easy and only takes a minute to vote. You may click here to register without charge.  The comment period for nominations will close on July 9, 2010.  

We thank you for following and supporting GCCapitalIdeas.com

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/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., which is authorized and regulated by the Financial Services Authority. 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.

Reinsurance Renewal July 1, 2010:  Capital Cushion Continues to Impact Pricing, Part I:  Introduction and US Property:  Further erosion of rates was evident at the July 1, 2010 reinsurance renewal. Property rates were down by as much 15 percent despite substantial catastrophe loss activity in the first half of 2010. Heavy losses from the Chilean earthquake were insufficient to turn prices outside the areas immediately affected by the earthquake, despite the announcement of large increases in estimates from the largest European reinsurers. In the energy and casualty sectors, conditions were flat or down, but the Deepwater Horizon rig disaster may exert upwards pressure as more information emerges. Excess capital remains available to absorb losses as evidenced by continuing share buy-backs and the substitution of equity capital with less expensive debt.

Read the article »

The Time Profile of Risk: From the Desk of Guy Carpenter’s Chief Actuary:  According to the draft European Union Solvency II directives, companies will need to provide an “own risk and solvency assessment” (ORSA). The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) has prepared an issues paper that provides guidance to assist (re)insurers in implementing the ORSA.

Read the article »

Terrorism Risk Insurance 2010:  Marsh survey reveals more than 60 percent of organizations bought coverage in 2009:  Despite an ever-changing terrorism risk insurance market, businesses from every industry sector continue to purchase coverage - more than 60 percent of organizations surveyed by Marsh bought coverage in 2009. This report provides a snapshot of the major issues and trends surrounding terrorism insurance in 2010. 

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Update: Hurricane Alex:  Hurricane Alex has made landfall near Soto La Marina and La Pesca in Mexico’s Tamaulipas State as a category 2 hurricane, according to the National Hurricane Center (NHC). The storm made landfall around 02:00 UTC on July 1 with sustained winds of around 105 mph (165 kmph). The NHC said Alex was the first category 2 hurricane to develop in June in the Atlantic since Hurricane Alma in 1966.

Read the article »

A National Flood Modeling Solution for Mainland France:  Guy Carpenter has developed a state-of-the-art probabilistic flood model for mainland France in collaboration with hydrological and hydraulic modeling experts, JBA Consulting (JBA) and Intermap Technologies (Intermap), a global provider of high-quality 3D digital elevation models.

Read the article »

Most Popular Keyword:    tropical storm alex

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Accounting and Accountability: Fair Value and Convergence:   Fair value accounting - also known as “mark-to-market” - has appeared in the headlines quite frequently, largely because of the ongoing financial catastrophe. Recent statements by the Securities and Exchange Commission (SEC), Financial Accounting Standards Board (FASB), and International Accounting Standards Board (IASB) have fueled the debate, and the U.S. government’s USD700 billion bailout package requires that the SEC perform a study on the impact of fair value accounting on financial institutions … and suspend the practice, if necessary.

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GCCapitalIdeas.com has been nominated for membership in the Lexis/Nexis Insurance Law Community (ILC) “Top 50 Insurance Blogs.” When considering blogs for membership, ILC looks for frequent posts, timely topics and quality writing. Guy Carpenter & Company, LLC is proud that GCCapitalIdeas has been nominated.    

ILC is asking readers to comment on and support the nominations directly on its site.  If you would like to offer a comment on your favorite nominees, please click here to be taken to the ILC comment site. 

It is easy and only takes a minute to vote. You may click here to register without charge.  The comment period for nominations will close on July 9, 2010.  

We thank you for following and supporting GCCapitalIdeas.com

A National Flood Modeling Solution for Mainland France:   Guy Carpenter has developed a state-of-the-art probabilistic flood model for mainland France in collaboration with hydrological and hydraulic modeling experts, JBA Consulting (JBA) and Intermap Technologies (Intermap), a global provider of high-quality 3D digital elevation models.

Read the article »

2010 Hurricane Season Begins: Knowing, Understanding and Better Managing the Risks:   The 2010 hurricane season kicked-off on June 1 and the meteorological forces wasted no time in getting down to business. Tropical storm Agatha slammed into Central America, killing at least 101 people. The hurricane season kick-off and the storm occurred as backdrops to the wrap up of the June 1, 2010 reinsurance renewals, traditionally centered on the Florida property marketplace.

Read the article »

Terrorism - Reinsurers Standing By:   As we approach the ninth anniversary of the September 11, 2001 attacks, the threat from terrorism continues to pose a risk to the (re)insurance industry. The nature of the threat has changed since 2001, but terrorism remains a constant and serious risk with global recorded terror incidents at historic highs. Terrorist organizations operating in unstable countries present a danger to the world, and the recent flurry of terrorist activity serves as a reminder that individuals and groups remain a serious threat.

Read the article »

Floods in Southeast France:   Heavy rain on June 15-16 has triggered severe flash floods in southeastern France, killing at least 22 people according to the latest estimates from local authorities. The damage and disruption has been widespread, with hundreds of homes inundated and thousands reported to be without electricity or phone lines. Officials said around 10 people remain missing and they fear the death toll could rise. The southeastern province of Alpes Cote d’Azur has been particularly badly affected, with officials in the Var department saying that damage is severe. Reports said that between 1,500 and 2,500 people were forced to evacuate their homes and spend the night in schools or other temporary shelters, and some 104,000 houses remain without electricity in the aftermath of the flooding.

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 »

Most Popular Keyword:   flooding in france

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Impact of Earnings Volatility on Price/Book Ratios:   The link between a company’s earnings and its share price is intuitive and well documented. Equally logical, although far less studied, is the correlation between the volatility of earnings and share price. The favorable impact of stable earnings on market valuation is intuitive considering market capitalization represents a view of future discounted cash flows and unexpected earnings volatility reduces the predictability of those cash flows.

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2010 Hurricane Season Begins: Knowing, Understanding and Better Managing the Risks, Part I: State of the Florida Marketplace:   The 2010 hurricane season kicked-off on June 1 and the meteorological forces wasted no time in getting down to business. Tropical storm Agatha slammed into Central America, killing at least 101 people. The hurricane season kick-off and the storm occurred as backdrops to the wrap up of the June 1, 2010 reinsurance renewals, traditionally centered on the Florida property marketplace.

Read the article »

2010 Hurricane Season Begins: Knowing, Understanding and Better Managing the Risks, Part III: 2010 Hurricane Forecast: To coincide with the start of the hurricane season, Guy Carpenter has summarized the various forecasters’ predictions for the 2010 season. Several meteorologists have released forecasts for the forthcoming hurricane season and there seems to be a general consensus that 2010 will see unusually high activity. If this prediction proves to be true, the 2010 hurricane season will stand in sharp contrast to the relatively quiet 2009 season.

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2010 Hurricane Season Begins: Knowing, Understanding and Better Managing the Risks, Part II: Florida Hurricane Catastrophe Fund, Innovative Products: One of the critical components in the majority of Florida contracts renewing at June 1 is the structure of the Florida Hurricane Catastrophe Fund (FHCF). While factors influencing the FHCF structure overall were dealt with earlier than in prior years, there remained questions regarding the viability of the TICL layer and rating agencies’ treatment of TICL within the reinsurance structure.

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2010 Hurricane Season Begins: Knowing, Understanding and Better Managing the Risks, Part IV: Tools for Understanding and Managing Risk: Guy Carpenter offers the solutions to help (re)insurers manage the risks associated with hurricane exposures and preparedness through our forward looking hazard forecasting tools. Assessing the impact and potential loss damage of hurricane activity on a risk portfolio can now be accomplished with more detailed information than ever before.

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Terrorism - Reinsurers Standing By, Part II: Risks, Threats and Exposures: The threat posed by terrorism has changed significantly since the catastrophic events of September 11, 2001, but it remains a constant and serious risk with global recorded terror incidents at historic highs. The nature of the risk is wide-ranging, with many countries threatened by international groups and domestic terrorism. Certainly, the threat posed by fundamentalist Islamic terrorists has changed a great deal since 2001. For insurers with terrorism risk on their books, it is important to understand how the terrorism threat has evolved, the varying risks in different regions and what developments are likely in 2010 and beyond.

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Optimize Capital Allocation with Co-xTVaR: In choosing a capital allocation method, firms must balance the sophistication of the method with calculation time and resource commitment. One approach, co-xTVaR, strikes a balance between theoretical soundness and efficiency. In a capital-constrained environment, using co-xTVaR to allocate the cost of capital can provide a clear competitive advantage.

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2010 Hurricane Season Begins: Knowing, Understanding and Better Managing the Risks, Part I: State of the Florida Marketplace:   The 2010 hurricane season kicked-off on June 1 and the meteorological forces wasted no time in getting down to business. Tropical storm Agatha slammed into Central America, killing at least 101 people. The hurricane season kick-off and the storm occurred as backdrops to the wrap up of the June 1, 2010 reinsurance renewals, traditionally centered on the Florida property marketplace.

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June 1 Reinsurance Rate Decreases are One Positive Development for Florida Companies:  At each Florida renewal season there are many challenges companies face in designing and placing their reinsurance programs. This year was no exception. While companies deal with navigating the challenges of the Florida Hurricane Catastrophe Fund integration each year, 2010 also included heightened commentary by rating agencies regarding acceptable risk transfer approaches, the Florida Office of Insurance Regulation’s own views on risk transfer and an environment of continuing economic turmoil specific to the Florida insurance environment.

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Global Reinsurance Composite Net Income Declines, Investment Income Recovers in 1 Q, 2010:   The Guy Carpenter Global Reinsurance Composite’s net income declined in the first quarter of 2010 compared with the same quarter in 2009. The companies comprising the group showed an aggregate net gain of USD1.4 billion, a decline of 31 percent from the first quarter of 2009. The primary driver was an increase in non-life underwriting losses.

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Catastrophe Bond Update: First Quarter 2010 - Heavy Smoke, Some Fire…Encouraging Conditions Persist*:  In the first quarter of 2010, two catastrophe bond transactions were completed, and USD300 million of risk capital was issued. In response to strong investor demand, both transactions closed within initial price guidance and were upsized relative to announced placement targets. While this activity furthers the integration of the capital markets into the risk management processes of protection buyers, on balance, issuance volumes for the quarter were perhaps a bit lighter than expected at the close of 2009.

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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.

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Five Ways to Find and Manage Hidden Risks:  Some casualty risk accumulations stay hidden, but this doesn’t mean your exposure disappears. A single event could trigger a chain reaction of insured losses on professional and product liability covers, depleting your capital and possibly destroying shareholder value. In extreme cases, even solvency could be threatened. Using Guy Carpenter’s Casualty Cat model, developed jointly with Arium, Ltd., it’s possible to identify some of these “casualty catastrophe” risks early - before they drain your balance sheet.

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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/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., which is authorized and regulated by the Financial Services Authority. 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. 

June 1 Reinsurance Rate Decreases are One Positive Development for Florida Companies:   At each Florida renewal season there are many challenges companies face in designing and placing their reinsurance programs. This year was no exception. While companies deal with navigating the challenges of the Florida Hurricane Catastrophe Fund integration each year, 2010 also included heightened commentary by rating agencies regarding acceptable risk transfer approaches, the Florida Office of Insurance Regulation’s own views on risk transfer and an environment of continuing economic turmoil specific to the Florida insurance environment.

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Update: Floods in Central and Eastern Europe:   Heavy rain has triggered severe floods in parts of central and Eastern Europe since mid-May, killing at least 18 people, inundating homes and businesses and causing widespread damage and disruption. Parts of Poland, Hungary, the Czech Republic and the Slovak Republic have been flooded after days of heavy rain burst river defenses and inundated low-lying areas. The heavy rain was accompanied by strong winds, causing power outages and transportation disruption. Reports said southern Poland was the worst-affected area after the Vistula River burst its banks. Poland’s Prime Minister Donald Tusk said the damage caused by the flooding could cost around EUR2.6 billion (USD3.2 billion).

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Demand for Insurance Solutions Grows as Volcanic Ash Disrupts Supply Chains…Again: Traditionally, insurance coverage for supply chain disruption has required physical damage to the insured’s assets to trigger a claim. However, following ongoing air traffic disruption caused by the eruption of Iceland’s Eyjafjallajökull volcano, as well as industrial action in key transport sectors and civil unrest overseas, Guy Carpenter sister company Marsh has seen increased interest from organizations wanting supply chain insurance that includes coverage for losses from non-physical damage.

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Solvency II - Non-Life Underwriting Risk in Light of QIS 5:  On April 15th, 2010, the European Commission published its draft technical specifications for the next Quantitative Impact Study (QIS) 5, which will be implemented from August to November of 2010. Based on empirical evidence, the general calibration of the standard formula solvency capital requirement (SCR) may fall between the calibration of QIS 4 and the calibration seen in the rigid proposals of the various consultation papers submitted during 2009. This article takes a deeper look at the calibration of non-life underwriting risk as part of the overall SCR calculation.

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GC Videocast - Risk Tolerance Influences Economic Capital:   Guy Carpenter’s Global Chief Economist Joan Lamm-Tennant describes how economic capital is a function of the risk profile that comes from simulation based models, but it also requires knowing the company’s risk tolerance. She reviews how hedging frees up the need for economic capital and reduces volatility.

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Casualty Clash and Casualty Catastrophe Risks:   Remoteness has been used to downplay the threat, causing carriers to overlook a more immediate, though less menacing, concern. A substantial loss may not imperil company operations, but it could lead to an unexpected earnings hit, the effects of which would be magnified for shareholders. Unanticipated large losses typically result in a disproportionate impact on market capitalization. Casualty clash and catastrophe protection, consequently, can be a vital tool in managing overall financial performance.

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