January 8th, 2018

GC Capital Ideas: Top Stories in 2017

Posted at 1:00 AM ET

GC Capital Ideas takes a look back at the top stories of 2017.

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

Read the article >>


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

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4. Increasing External Demands Compel Companies to Improve Risk Management Disclosures: Guy Carpenter released an Enterprise Risk Management (ERM) Benchmark Review in 2014, providing an in-depth analysis of risk management practices and policies of 67 insurance and reinsurance companies located in Europe, United States, Bermuda, and Asia-Pacific. Based on publicly-available data from financial and risk reports, Guy Carpenter’s ERM Benchmark Review reveals that most (re)insurers are managing capital with metric-based frameworks and are publishing more about their risk management targets than seen in Guy Carpenter’s 2009 analysis.

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5. Chart: Solvency II Ratios as of End of H1 2016: Chart presents (re)insurers’ Solvency II ratios compiled by Guy Carpenter for the first half of 2016. Many companies publish their solvency ratios without being required to do so, and some others actually specify target solvency ratio ranges as part of their risk appetite and financial targets.

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

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7. Solvency II: Assessing Counterparty Default Risk: Counterparty default risk is one of the core components of the SCR. This module has undergone substantial change over the several quantitative impact studies, as the supervisors attempted to find an appropriate measure of the risk.

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8. 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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9. 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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10. 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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January 5th, 2018

Week’s Top Stories: December 30, 2017 - January 5, 2018

Posted at 4:58 PM ET

Guy Carpenter Reports US Insurance Market at a Crossroads but Opportunity Exists: Guy Carpenter today released a study outlining a dynamic insurance industry facing a changing economy and pressure in once-stable lines, but with opportunity for those with management skill and understanding of risk.

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Chart: Return on Equity for Guy Carpenter Reinsurance Composite, Q3, 2017: Chart presents return on equity for the Guy Carpenter Global Reinsurance Composite, 2005 through third quarter, 2017.

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Chart: Combined Ratio for Guy Carpenter Reinsurance Composite, Q3, 2017: Chart presents combined ratio of the Guy Carpenter Reinsurance Composite, 2005 through third quarter, 2017.

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Flood Insurance: The 2018 Market Opportunity: Among all natural hazards, flood is the most costly and the most impactful on people. The Insurance Information Institute estimates that only 12 percent of homeowners purchase flood insurance, and most of the purchases are through the National Flood Insurance Program (NFIP). The gap in flood insurance protection represents up to a USD 40 billion potential new market for private insurers in the United States, according to Jonathan Hayes, Managing Director, Guy Carpenter.

Read the article >>


Exploring the P&C Industry: Recent Market Dynamics and Industry Performance: The property and casualty (P&C) insurance industry continues to face economic and market-based challenges. New risks demand coverage; catastrophes are surfacing in unexpected ways and experience shifts are driving casualty lines’ capital needs. In this current environment of disruption and dynamic innovation, managers must analyze all factors in order to adapt to changing opportunities.

Read the article >>


And you may have missed…..

Run-off Specialists Are Gearing Up for Increased Flows: Transaction volumes in the run-off market will continue to grow as a consequence of an influx of capital and increased amounts of buyers and sellers of legacy reserves, according to Andrew Beecroft, Head of M&A Advisory, GC Securities*.

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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.

January 4th, 2018

Chart: Return on Equity for Guy Carpenter Reinsurance Composite, Q3, 2017

Posted at 1:00 AM ET

Chart presents return on equity for the Guy Carpenter Global Reinsurance Composite, 2005 through third quarter, 2017.

Continue reading…

January 3rd, 2018

GC Capital Ideas Top Stories: Fourth Quarter, 2017

Posted at 1:00 AM ET

1. Guy Carpenter Reports US Insurance Market at a Crossroads but Opportunity Exists: Guy Carpenter today released a study outlining a dynamic insurance industry facing a changing economy and pressure in once-stable lines, but with opportunity for those with management skill and understanding of risk.

Read the article >>


2. Reinsurance Market Poised to Remain Vibrant Following Recent Catastrophe Events: While the reinsurance product has delivered compelling balance sheet solutions since its beginnings, recent catastrophic events in Mexico, the Caribbean and the United States have created a perfect opportunity for the market to showcase its ability to adapt solutions to the unique risk profiles of individual clients seeking to manage capital events, according to David Priebe, Vice Chairman, Guy Carpenter.

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3. Increasing External Demands Compel Companies to Improve Risk Management Disclosures; Guy Carpenter released an Enterprise Risk Management (ERM) Benchmark Review in 2014 providing an in-depth analysis of risk management practices and policies of 67 insurance and reinsurance companies located in Europe, United States, Bermuda, and Asia-Pacific. Based on publicly-available data from financial and risk reports, Guy Carpenter’s ERM Benchmark Review reveals that most (re)insurers are managing capital with metric-based frameworks and are publishing more about their risk management targets than seen in Guy Carpenter’s 2009 analysis.

Read the article >>


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

Read the article>>


5. Chart: Combined Ratio for Guy Carpenter Reinsurance Composite, Q3, 2017: Chart presents combined ratio of the Guy Carpenter Reinsurance Composite, 2005 through third quarter, 2017.

Read the article>>


6. Flood Insurance: The 2018 Market Opportunity: Among all natural hazards, flood is the most costly and the most impactful on people. The Insurance Information Institute estimates that only 12 percent of homeowners purchase flood insurance, and most of the purchases are through the National Flood Insurance Program (NFIP). The gap in flood insurance protection represents up to a USD 40 billion potential new market for private insurers in the United States, according to Jonathan Hayes, Managing Director, Guy Carpenter.

Read the article >>


7. Asia Pacific Catastrophe Report 2017: Executive Summary: A year marked by generally benign loss experience and few large catastrophe events meant that rates continued to remain positive for buyers in the Asia Pacific region throughout 2017. At the same time, the trend for steady growth in limit purchased continued. Much of the new limit purchased tends to be at the top of programs, and this feeds through to lower overall average rates on line (ROL), which is also reflected in the indices.

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8. California Wildfires - October 8-17, 2017 - Update: Wildfire activity has rendered especially severe impacts to certain areas of California since October 8, including areas of Napa, Sonoma and Solano Counties. Wildfire activity has also rendered impacts to areas of Orange County east of the Los Angeles Metro area.

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9. Baden-Baden Reinsurance Symposium Addresses Industry-wide Impact of Disruption: Guy Carpenter & Company hosted the Reinsurance Symposium in Baden-Baden on October 22. The ninth year that Guy Carpenter has hosted the event, the theme of the Symposium was “Profiting from Disruption.”

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10. Just Say “Know” to Insurtech: Insurtech’s impact on the insurance industry is surging, reminding us of the influence that technological change and growth bring to the modern consumer and business landscapes and individual industries  -  the development of fintech within financial services being an example.

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January 2nd, 2018

GC Capital Ideas Top Stories: December, 2017

Posted at 1:00 AM ET

1. Flood Insurance: The 2018 Market Opportunity; The U.S. insurance industry is actively seeking new opportunities for growth in a challenging market by identifying untapped customer needs. The potential flood market is over five times the size of the most often mentioned new market, cyber insurance.

Read the article>>


2. Asia Pacific Catastrophe Report 2017: Executive Summary; A year marked by generally benign loss experience and few large catastrophe events meant that rates continued to remain positive for buyers in the Asia Pacific region throughout 2017. At the same time, the trend for steady growth in limit purchased continued.

Read the article>>


3. Run-off specialists are gearing up for increased flows; Transaction volumes in the run-off market will continue to grow as a consequence of an influx of capital and increased amounts of buyers and sellers of legacy reserves, according to Andrew Beecroft, Head of M&A Advisory, GC Securities*.

Read the article>>


4. Exploring the P&C Industry: Recent Market Dynamics and Industry Performance; The property and casualty (P&C) insurance industry continues to face economic and market-based challenges. New risks demand coverage; catastrophes are surfacing in unexpected ways and experience shifts are driving casualty lines’ capital needs.

Read the article>>


5. Addressing Flood Peril; Here we review recent GC Capital Ideas posts on Guy Carpenter’s efforts to address the flood peril.

Read the article>>


6. Little-Used Retirement Option Gets a Big Boost; With the erosion of defined benefit pension plans and uncertainty around the future of Social Security, the current workforce must find new ways to responsibly manage their income into and through retirement.

Read the article>>


7. Critical Tool for Making Strategic Enterprise Risk Management Decisions; There are indications that new A.M. Best Stochastic Based BCAR factor assignments may require more capital for companies entering a new line of business than for established writers growing in that line.

Read the article>>


8. Increasing External Demands Compel Companies to Improve Risk Management Disclosures; Guy Carpenter released an Enterprise Risk Management (ERM) Benchmark Review in 2014 providing an in-depth analysis of risk management practices and policies of 67 insurance and reinsurance companies located in Europe, United States, Bermuda, and Asia-Pacific. Based on publicly-available data from financial and risk reports, Guy Carpenter’s ERM Benchmark Review reveals that most (re)insurers are managing capital with metric-based frameworks and are publishing more about their risk management targets than seen in Guy Carpenter’s 2009 analysis.

Read the article >>


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

Read the article>>


10. Reinsurance Solutions Continue to Achieve Stability and Growth for Cedents; Since its beginnings, the reinsurance product has been a tool that delivers diversified balance sheet solutions to insurers to help protect capital, manage earnings, reduce volatility and promote profitable growth, according to James Nash, President, International, Guy Carpenter.

Read the article>>

*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.

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

January 1st, 2018

GC Capital Tip: Talk to the Author

Posted at 3:00 AM ET

Do you have a question about one of our articles? If so, contact us. Longer articles on GC Capital Ideas have a “contact” link right at the top. Clicking it will open your e-mail program and provide the appropriate address and subject line, so we can route your inquiry to the best source. If the e-mail software you use is not configured for this, e-mail us at: guy_carpenter@guycarp.com.

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December 29th, 2017

Week’s Top Stories: December 23 - 29, 2017

Posted at 9:18 AM ET

Chart: Combined Ratio for Guy Carpenter Reinsurance Composite, Q3, 2017: Chart presents combined ratio of the Guy Carpenter Reinsurance Composite, 2005 through third quarter, 2017.

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Chart: Source of Earnings for Guy Carpenter Reinsurance Composite, Q3, 2017: Chart presents source of earnings for the Guy Carpenter Global Reinsurance Composite for 9M, 2017 compared with 9M, 2016.

Read the article >>


Chart: Return on Premiums for Guy Carpenter Reinsurance Composite, Q3, 2017: Chart presents return on premiums for the Guy Carpenter Global Reinsurance Composite, 2005 through third quarter, 2017.

Read the article >>


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

Read the article >>


Exploring the P&C Industry: Recent Market Dynamics and Industry Performance: The property and casualty (P&C) insurance industry continues to face economic and market-based challenges. New risks demand coverage; catastrophes are surfacing in unexpected ways and experience shifts are driving casualty lines’ capital needs. In this current environment of disruption and dynamic innovation, managers must analyze all factors in order to adapt to changing opportunities.

Read the article >>


And you may have missed…..

Addressing Flood Peril: Here we review recent GC Capital Ideas posts on Guy Carpenter’s efforts to address the flood peril.

Read the article >>


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

December 28th, 2017

Chart: Return on Premiums for Guy Carpenter Reinsurance Composite, Q3, 2017

Posted at 1:00 AM ET

Chart presents return on premiums for the Guy Carpenter Global Reinsurance Composite, 2005 through third quarter, 2017.

Continue reading…

December 27th, 2017

Chart: Source of Earnings for Guy Carpenter Reinsurance Composite, Q3, 2017

Posted at 1:00 AM ET

Chart presents source of earnings for the Guy Carpenter Global Reinsurance Composite for 9M, 2017 compared with 9M, 2016.

Continue reading…