An increasing number of (re)insurers are therefore adopting comprehensive climate change strategies to recognize the potential impact on their businesses. Investing in solutions that help predict the likely effects of global warming on the location, intensity and cost of weather-related catastrophes is critical to acquiring a better understanding of climate change risk.
Posts Tagged ‘Catastrophes’
Although there has been a significant increase in both economic and insured losses from natural catastrophes in recent decades, it is important to put these numbers in context. With the exception of coastal flood, inland flood and drought, the wholesale attribution of rising financial losses to an increase in hazard frequency can be misleading. Statements concerning the influence of global warming on loss trends would be better served if normalized by factors such as inflation, (per capita) gross domestic product, total insured value, population density and annualized property value. Indeed, the IPCC agrees that ignoring these factors leaves an upward trend in losses for purely economic reasons, notwithstanding any behavior in the peril. As an example, the recent “trend” in hurricane losses for the coastal United States loses clarity when normalized by inflation and population density. (1)
The Tohoku rupture of 2011 changed the market’s understanding of seismic risk in Japan. The Mw 9.0 event occurred in an area where earthquakes of up to only Mw 8.4 were thought possible. Following the event there was increased publicity surrounding the so-called Tokyo Fragment theory and discussion around the potentially increased probability of earthquakes near Tokyo.
Tropical Storm Karen is poised to become the first named storm to hit the United States this season. Karen, as of 2PM Eastern Daylight Time, was 240 miles south-southwest of the mouth of the Mississippi River and 275 miles south-southeast of Morgan City, Louisiana. The storm is moving north-northwest at ten miles per hour. According to the NHC, a turn toward the north and a decrease in forward speed are expected by early Saturday, with a turn toward the northeast on Sunday.
Guy Carpenter published a new report highlighting emerging risks facing the (re)insurance sector, including cyber risk, climate change and space risk. The report seeks to identify pressing emerging risks confronting the sector, as well as analyze their implications on businesses and (re)insurers.
Here we review recent GC Capital Ideas stories that have reported catastrophe bond transactions in which GC Securities was involved.
A wildfire northeast of Colorado Springs, Colorado has become the state’s most destructive wildfire in history. The Black Forest Fire has destroyed 360 homes, surpassing the 347 homes destroyed in the Waldo Canyon Fire last year. At least 14 homes have been partially damaged and 79 homes could not be verified. The blaze covers about 15,000 acres of land and has no solid containment lines. The fire has forced the evacuation of more than 38,000 people in areas nearby, including parts of Colorado Springs. No deaths or injuries have been reported.
Guy Carpenter has published a new briefing: 2013 Atlantic Hurricane Activity to Reach or Exceed 1995-2012 Average. The 2013 Atlantic hurricane season is expected to be a busy one, carrying at least average activity with respect to the 1995-2012 “active” period. Seasonal outlook providers consistently emphasize two factors: the absence of El Niño, which implicates average activity, and higher tropical Atlantic sea-surface temperatures (SSTs), which implicate higher activity.
GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/SIPC, today announced the placement of the Series 2013-1 Notes, with notional principal of $175,000,000, through a newly formed catastrophe bond shelf program, Blue Danube II Ltd., to benefit Allianz. This is the second time that Allianz has accessed PCS-MITT triggered cat bond protection and the eighth overall cat bond issuance benefitting Allianz since 2007.
Risk Capital Outstanding
Total risk capital outstanding increased during the first quarter of 2013, reaching an all-time high water mark of USD15.0 billion - up from USD14.83 billion at year-end 2012, representing a net increase of 1.13 percent (USD168 million). This is the eighth consecutive quarter of growth in risk capital outstanding. Risk capital outstanding is up more than 17 percent since the end of the first quarter of 2012.