As we approach the April 2015 reinsurance renewal, we look back at the Jan. 1 renewal.
Posts Tagged ‘Casualty’
Here we review recent GC Capital Idea stories on catastrophe models that focus on exposures beyond catastrophe property risk:
Micah Woolstenhulme, Manager, ERM Services, Strategic Advisory
The Insurance Risk Benchmarks Research is an ongoing project sponsored by Guy Carpenter & Company and Oliver Wyman to assist property/casualty (P&C) companies with profiling enterprise risk. Articulating an individual company’s risk profile requires assessment of both absolute and relative financial uncertainties. The absolute uncertainties can ultimately be codified in an economic capital model, but robust review of relative historical performance invariably improves the codification of certain systemic risks.
Here we review recent GC Capital Ideas stories on how better analytics can support (re)insurers’ capital modeling and benchmarking.
Here we review recent GC Capital Ideas stories on mounting concerns over cyber-attacks.
Eighty-nine percent of property and casualty (P&C) risk capital (based only on 144A cat bond transactions) had a bond tenor of either three or four years in 2014, a decrease from 93 percent in 2013. This was due to increased usage of risk periods longer than four years. This was largely influenced by Sanders Re 2014-1, a USD300 million five year transaction benefiting Allstate (Q2) and Kilimanjaro Re 2014-2, a USD500 million five year transaction benefiting Everest Re (Q4). Investors were receptive to longer-term transactions (a position we expect will continue into 2015) as both deals were oversubscribed. However, such deals closed either above or at the midpoint of initial price guidance, indicating that investors required additional compensation for risk periods longer than four years. Sponsors continued to express interest in bonds with risk periods beyond five years, which we expect will persist through 2015 and beyond.
Eighty-one percent of the property and casualty (P&C) risk capital (based only on 144A cat bond transactions) was structured with an indemnity trigger on either a per-occurrence, annual aggregate or multi-year aggregate basis. The use of indemnity triggers increased steadily from a low of 30 percent in 2011 to 55 percent in 2013.
After one of the slowest third quarters to date for 144A property and casualty (P&C) catastrophe bond issuance, the fourth quarter saw a flurry of activity that resulted in full year 144A P&C cat bond issuance exceeding USD8 billion - an industry record. Total risk capital outstanding as of December 31, 2014 equaled USD22.868 billion, the highest level of outstanding risk capital the market has ever supported.