Andrew Marcell, CEO — Americas Broking Operations
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Capital management discipline has guided the (re)insurance industry through a turbulent year. Volatile financial markets, capital constraints and general uncertainty caused many carriers, a year ago, to fret over the coming renewal and the availability of capacity. Some were calling for sharp increases in reinsurance rates, and concerns of a capital shortfall were widespread. As we have seen, however, this did not occur. Despite the calamity visited upon the global financial services industry, (re)insurers have persevered, and the coming renewal is likely to be notable for its stability.

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Andrew Marcell, CEO of Americas Operation
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From the end of April to July, the (re)insurance industry steps through a rapid succession of renewals, leaving little time to turn lessons from one into an action plan for the next. April 1, 2009 is behind us, and the Florida renewal has nearly arrived — and it will shape worldwide market conditions for July 1, 2009. We’re halfway through this annual renewals gauntlet, but the continued push forward can obscure the considerable body of knowledge our industry has accumulated.

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Guy Carpenter hosted (re)insurance industry executives from the western region of the United States on March 4 for a two-day event to discuss the challenges of managing risk and capital in a precarious economic climate. The event, “Shelter from the Storm: Managing Risk and Capital in Rough Seas,” included presentations by some of Guy Carpenter’s leading thinkers on issues from the cost and availability of capital to the effectiveness of models and the advantages of implementing an Enterprise Risk Management (ERM) framework. Ultimately, all discussions pointed back to the one crucial issue that cedents and markets will face in 2009: how to protect their balance sheets from the dual risks of financial and insured losses.

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Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist, has been awarded a grant by the Microinsurance Innovation Facility to develop a reinsurance facility for microinsurance and microfinance company operations (MFIs). The Facility, a partnership between the International Labour Organization and the Bill & Melinda Gates Foundation, promotes insurance coverage in developing countries for low-income people who otherwise would not have access to commercial coverage.

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Andrew Marcell, CEO of Americas
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We live in a world at risk, but sometimes, the threats take new forms. Even as we are coming out of an above-average U.S. storm season, carriers are focused on a new type of disaster. Throughout 2008, every major city in the world felt the reverberations of a “financial catastrophe,” triggered by the collapse of the subprime mortgage market. This event has put severe pressure on both sides of the balance sheet and proved that an economic event can have the power to move the market.

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Andrew Marcell, CEO of Americas
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The financial catastrophe that has taken hold of global financial markets has caused much consternation for (re)insurers. Balance sheets have been hit, impairing investment assets and depressing surpluses across the industry. Yet, carriers are faring better than most financial services firms (particularly those in the banking sector), largely because the industry is quite well-capitalized. Even in this capital-constrained economic climate, operating cash flows are strong, and surpluses remain deep.

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