Posts Tagged ‘Casualty’



September 2nd, 2015

Dynamic Cat Bond Environment in First Half of 2015

Posted at 1:00 AM ET

A high-volume of maturities coupled with a diverse and steady stream of new issuances created a dynamic catastrophe bond environment in the first six months of 2015.

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August 31st, 2015

July U.S. Casualty Renewal

Posted at 1:00 AM ET

Consistent with Guy Carpenter’s post-January 1, 2015 renewal report, the U.S. casualty reinsurance market continued to soften on both quota share and excess of loss reinsurance programs. This trend continues to be driven by the reduction in property catastrophe premiums, causing reinsurers to further diversify their overall premium writings into casualty lines and by the improved loss ratios among these underlying lines of business. As a result, reinsurance pricing continued to soften via ceding commissions increases on quota share placements (albeit at a slower pace than in 2014 and earlier in 2015) and rate decreases on excess of loss placements (subject to stable loss experience).

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August 24th, 2015

PA/MGA Growth Through Acquisitions, Part II

Posted at 1:00 AM ET

The vast majority of the respondents to Guy Carpenter’s survey of managing general agents intend to use company funds or company stock (if applicable) to make acquisitions (81 percent this year versus 47 percent in 2012). Despite access to bank financing, private equity and venture capital options, respondents showed no interest in employing those financial vehicles. It appears insurance companies continue to have ample capital and would use their own resources rather than go to outside sources.

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August 20th, 2015

PA/MGA Growth Through Acquisitions, Part I

Posted at 1:00 AM ET

The survey indicates a dramatic shift in the percent of program carriers interested in making acquisitions, following a couple of years of steady decline. This year, 69 percent of respondents indicated an interest in growing through acquisitions (up from 44 percent in 2012). When queried on the types of acquisitions they are seeking, most respondents’ interests appear to be acquiring either MGA/PA firms (63 percent) or teams of people (32 percent). This year none of the respondents was interested in acquiring third party administrators or wholesalers. Interest in carriers buying other insurance carriers remained relatively unchanged at 19 percent.

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August 19th, 2015

PA/MGA Reinsurance Purchasing

Posted at 1:00 AM ET

Reinsurance continues to play an important role for program issuing carriers. Sixty-nine percent of respondents to the survey this year indicated the use of both direct reinsurers and intermediaries, down slightly from 76 percent in 2012. Those managing their purchase through intermediaries exclusively increased to 25 percent of respondents from 18 percent in the prior year.

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August 18th, 2015

PA/MGA Risk Sharing

Posted at 1:00 AM ET

Program managers may also manage the performance of their programs through the pursuit of risk sharing on behalf of their PA/MGA partners. As we saw in past surveys, not all respondents require risk sharing. This year, a significant number of respondents said they utilize a sliding scale commission structure (92 percent versus 76 percent for the prior survey year). The percent of respondents utilizing some type of captive structure fell this year to 8 percent from 24 percent in the prior year. Alternately, 19 percent of the respondents will still pay flat commissions, a sizeable drop from 36 percent in 2012.

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August 17th, 2015

PA/MGA Performance Management

Posted at 1:00 AM ET

A carrier’s need for growth and profitability has to be closely monitored and controlled in the PA/MGA space. Every respondent in this year’s survey indicated that they had audit procedures in place to assure adherence to established risk selection and underwriting guidelines, financial billing, collection, remittance and banking guidelines, claim reporting, adjusting and settlement guidelines. Even though some changes have taken place in the number of audits conducted each year, including a notable increase in the percent of respondents doing four or more audits, rising to its highest level since 2008, this year’s results reflect the current and historical importance of the carriers’ PA/MGA management process. 

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August 13th, 2015

PA/MGA Operating Platform

Posted at 1:00 AM ET

Carriers continue to maintain flexibility regarding their requirements for the services they expect their PA/MGA partners to perform and what they feel they need to control. As in the 2012 survey, respondent carriers expect their PAs/MGAs to underwrite (100 percent of respondents), rate, quote, bind business (100 percent) and issue and service policies (94 percent). The survey indicates carriers expect their PAs/MGAs to perform premium audits (56 percent) and loss control services (69 percent). Most of the other services, even though not required or expected of PAs/MGAs, are often performed by them, a third party, or in many cases, the carriers’ themselves.

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August 12th, 2015

PA/MGA Personal Lines Appetite

Posted at 1:00 AM ET

On the personal lines appetite side of Guy Carpenter’s MGA survey, auto grew by 13 percentage points and umbrella grew by 6 percentage points over the previous survey in terms of pursuing growth. Both homeowners and medical were unchanged.

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August 11th, 2015

PA/MGA Commercial Lines Appetite

Posted at 1:00 AM ET

A line by line comparison of respondents’ appetites in the prior year’s survey with those of this year reveals some changes in emphasis. Workers compensation and medical malpractice experienced large growth in percent of respondents who were currently writing, looking for new growth or aggressively seeking growth. The property line grew by 6 percentage points to become only the second line, outside of general liability, where the majority of respondents say they are pursuing business. Inland marine, accident & health and professional liability for insurance agents showed significant declines in business pursuit. Overall, many of the lines saw drops in appetite or remained unchanged. It appears that current economic conditions and elevating loss ratios are keeping carriers’ growth expectations in commercial lines business relatively flat.

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