Source:  Guy Carpenter & Company, LLC

Source: Guy Carpenter & Company, LLC

The weighted average of the combined ratio of the Guy Carpenter Global Reinsurance Composite increased from 92.1 percent at end of year 2009 to 102.5 percent at first half 2010, the highest combined ratio since 2005, the year of the Katrina/Rita/Wilma Hurricanes.

Source: Guy Carpenter & Company, LLC

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Shareholders’ funds for the companies in the Guy Carpenter Global Reinsurance Composite decreased by 0.8 percent to USD109 billion between December 31, 2009 and June 30, 2010. The increase in shareholders’ funds from retained earnings and the unrealized increase in asset values were offset by share buy-backs, dividends and currency effects.

Source: Guy Carpenter & Company, LLC

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Total earnings for the Guy Carpenter Global Reinsurance Composite in the first half of 2010 decreased by 6.4 percent to USD4.8 billion compared with the same period in 2009. The principal driver was an underwriting loss of USD901 million compared with profit of USD2.4 billion in the prior year.

Source:  Guy Carpenter & Company, LLC

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Market behavior is similar to earlier patterns. Overall 2010 quoting behavior was less volatile than 2009 with average quotes in the range of declines of 10 percent to increases of 10 percent versus 2009 when the range was declines of 15 percent to increases of 15 percent.

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The rate decreases for U.S. property cat were as expected across the July 1 renewals. Preliminary analysis of the renewal data shows that pricing was down in a range equal to earlier renewals on a risk- adjusted basis, decreasing 10 percent to 15 percent.  Overall, pricing for the year ended down 12 percent.

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Source: Guy Carpenter; Highline Data

Data presenting the ratio of IBNR Reserves to Initial Accident Year Reserves. The trend follows the underwriting cycle. In a soft market, IBNR is not as generous. In a harder market, where premiums are higher and more dollar per unit of risk is being earned, IBNR is more generous.

This chart represents the 144A Catastrophe Bond market. Capital outstanding peaked at approximately USD14 billion in 2007 and has remained fairly stable at approximately USD12 billion. It should be noted that other formats exist for investors, in addition to the 144A realm, such as the industry loss warranty market and collateralized reinsurance.

Source: Guy Carpenter & Company, LLC

*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/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., which is authorized and regulated by the Financial Services Authority. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies, Inc. 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.

Source: Guy Carpenter & Company, LLC

The property per risk reinsurance market experienced relatively loss free years from 2002-2007 along with high premiums.