January 9th, 2017

GC Capital Ideas Top Stories: For The Year 2016

Posted at 1:00 AM ET

A look back at 2016’s most viewed stories.

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.

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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.

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3. 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.

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4. 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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5. Evolution of Risk Capital: The continued flow of new capital into the (re)insurance industry constitutes the largest change to the sector’s capital structure in recent memory. New capital has entered the market through investments in insurance-linked securities (ILS) funds, sidecars, hedge fund-backed reinsurance companies and collateralized reinsurance vehicles. Investors have increasingly been attracted to low correlation returns from catastrophe risk relative to traditional capital markets risks and the attractive yield for the measured (re)insurance risk relative to other investments, particularly in the current low inflation, low yield era.

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6. 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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7. Chart: 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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8. 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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9. 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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10. 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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January 6th, 2017

Week’s Top Stories: December 31, 2016 — January 6, 2017

Posted at 7:30 AM ET

Chart: Combined Ratio For Guy Carpenter Reinsurance Composite, Q3, 2016: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2005 through third quarter, 2016.

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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.

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: 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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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>>


And, You May Have Missed…

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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January 5th, 2017

Guy Carpenter Reports Moderating Reinsurance Pricing Decline at January 1, 2017 Renewals

Posted at 7:00 AM ET

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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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.

Read the article>>


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.

Read the article>>


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.

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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.

Read the article>>


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.

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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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January 4th, 2017

Chart: Combined Ratio For Guy Carpenter Reinsurance Composite, Q3, 2016

Posted at 1:00 AM ET

Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2005 through third quarter, 2016.

Continue reading…

January 3rd, 2017

GC Capital Ideas Top Stories: December, 2016

Posted at 1:00 AM ET

1. 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.

Read the article>>


2. 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>>


3. Public Sector Risk Financing Perspectives in the United States: National Flood Insurance Program (NFIP): In September 2016, the Federal Emergency Management Agency (FEMA) took the historic step of purchasing reinsurance for the National Flood Insurance Program (NFIP).

Read the article>>


4. 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>>


5. Guy Carpenter Appoints James Nash President of New International Division: Guy Carpenter announced the appointment of James Nash to the newly-created role of President, International, subject to regulatory approval. Mr. Nash, who currently runs Guy Carpenter’s Asia Pacific operations, will continue reporting to Peter Hearn, President and CEO of Guy Carpenter, and will relocate to London.

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6. 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>>


7. Guy Carpenter Forms New Global Strategic Advisory Organization to Provide Clients with Enhanced Solutions: Guy Carpenter announced a newly-created Global Strategic Advisory organization comprised of its Advisory, Analytics, Structured Risk, M&A Advisory, Lloyd’s Capital, and Business Intelligence capabilities.

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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.

Read the article>>


9. 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.

Read the article>>


10. 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>>


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

January 2nd, 2017

GC Capital Tip: Find Older Articles

Posted at 1:00 AM ET

During busy times of the year, we add articles quickly. So, what you see on the front page of GC Capital Ideas one day may not be there the next. The article has not disappeared; it has just moved to the next page. Articles are listed in the order in which they were published. The newest is at the top of the front page. To see those that are a bit older, go to the bottom of a page and click the “Older Entries” link.

Continue reading…

December 30th, 2016

Week’s Top Stories: December 24 — 30, 2016

Posted at 7:30 AM ET

Chart: Source Of Earnings For Guy Carpenter Reinsurance Composite, Q3, 2016: Chart presents source of earnings for the Guy Carpenter Global Reinsurance Composite for the third quarter, 2016 compared to the third quarter, 2015.

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Chart: Return On Equity For Guy Carpenter Reinsurance Composite, Q3, 2016: Chart presents return on equity for the Guy Carpenter Global Reinsurance Composite, 2005 through third quarter, 2016.

Read the article>>


Public Sector Risk Financing Perspectives in the United States: National Flood Insurance Program (NFIP): In September 2016, the Federal Emergency Management Agency (FEMA) took the historic step of purchasing reinsurance for the National Flood Insurance Program (NFIP).

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.

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…

Chart: Which Market Forces Do (Re)insurers See as the Most Disruptive?: 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 which market forces are viewed as the most disruptive to the (re)insurance industry.

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


December 29th, 2016

Chart: Return On Premiums For Guy Carpenter Reinsurance Composite, Q3, 2016

Posted at 1:00 AM ET

Chart presents return on premiums for the Guy Carpenter Global Reinsurance Composite, 2005 through third quarter, 2016.

Continue reading…

December 28th, 2016

Chart: Return On Equity For Guy Carpenter Reinsurance Composite, Q3, 2016

Posted at 1:00 AM ET

Chart presents return on equity for the Guy Carpenter Global Reinsurance Composite, 2005 through third quarter, 2016.

Continue reading…