Guy Carpenter & Company has released a special report, Succeeding under Solvency II - Pillar One: Capital Requirements. The paper is the first in a series of Guy Carpenter reports analyzing Solvency II and its attendant issues as they are finalized over the next several months.

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Solvency II Update: QIS5 Windstorm Scenarios Are Within Range of Industry Models: European insurers and reinsurers will face requirements for full compliance with the new Solvency II capital regime requirements in just over two years. Even if this introduction is phased in - as the European Commission has reportedly indicated it could be - these requirements will have a wide-ranging and profound impact on the insurance industry throughout Europe.

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Coping with Solvency II:   The timing of Solvency II regulations may create a “perfect storm” for insurers as they struggle to cope with challenging pricing and lower investment returns. Solvency II is expected to be finalized in 2011 and implemented by 2013. Under the Standard Formula, companies will be required to maintain more capital per unit of risk, encouraging diversification. Although these are good objectives in principle, they may compound an already difficult operating environment in the short-term.

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Lloyd’s of London - Solvency II Gains May Be Worth the Pain: Lloyd’s has identified three objectives for post-Solvency II implementation: 1. Agreement with the Financial Services Authority (FSA) to maintain the supervisory “status quo”; 2. Approval of a single internal model for Lloyd’s; 3. Each syndicate to reach Solvency II standards.

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QIS5 - Premium and Reserve Risk: Sufficient Consideration of Non-proportional Reinsurance?  On July 6, 2010 the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) published the technical specification for the latest Solvency II Quantitative Impact Study (QIS) 5. QIS5 is scheduled to be carried out from August to November of 2010, with a report summarizing the results scheduled for release in April of 2011. Regarding the non-life premium and reserve and risk, Guy Carpenter & Company, LLC has observed a return to capital requirements more in line with QIS4 and an implicit incentive for the use of an internal model.

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Here are the top ranked GCCapitalIdeas stories covering Casualty Catastrophe that appeared in 2010.

Casualty Catastrophe Implications of the Deepwater Horizon Oil Release Disaster: There has been no shortage of media coverage and discussion of the Deepwater Horizon oil spill and attendant insurance implications. The media has reported up to 300 lawsuits filed against BP and other defendants involved in the Deepwater Horizon oil release disaster.

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Guy Carpenter’s CasCat® Named “Insurance Initiative of the Year”: Guy Carpenter & Company, LLC announced that its CasCat® model has been named “Insurance Initiative of the Year” at the Insurance Day 2010 London Market Awards. The annual awards, presented December 2 at London’s Grosvenor House Hotel, are selected by a distinguished panel of independent judges and recognize outstanding work in the London (re)insurance market.

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Modeling Capabilities in Europe: Insurance-related catastrophe modeling has undergone a constant evolutionary drive for the past 25 years. The impetus behind the development of cat models began with the realization that large-scale events needed tracking to provide better means of managing insurance exposures to natural disasters.

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Modeling the Impact of a Casualty Catastrophe: Look no further than today’s headlines to see how a single catastrophic event or lawsuit can have far-reaching effects. Over the past few years, several incidents, seemingly isolated, have ballooned into cross-border, cross-industry and cross-business line catastrophes. Chain reactions of liability - such as the Deepwater Horizon oil spill, the collapse of Lehman Brothers and the Chinese Drywall product recall - have led insurers to ask: How do I assess the impact of a major legal liability catastrophe on my portfolio? And it’s not just the industry waiting for an answer: stockholders, analysts, rating agencies and regulators are listening, too.

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Guy Carpenter Earns Top Honors at Worldwide Reinsurance Awards: Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist and part of the Marsh & McLennan Companies, was honored with two major accolades at The Review magazine’s prestigious Worldwide Reinsurance Awards 2010. For the fourth consecutive year, Guy Carpenter won the award for “Reinsurance Broking Team of the Year” as well as the coveted “Re/Insurance Initiative of the Year” award for developing CasCat®, the insurance industry’s first casualty catastrophe model.

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(Re)Insurance Innovation: Committing to the Leading Edge, Part III: Get in the Game Early: Those who invest in and prioritize research and development - and introduce new tools and ideas - benefit from more than just the prestige of being first. Early movers define the standard to which others will have to adapt later. They shape the development of innovation, and thus its evolution, as it moves from a radically new idea to an accepted marketplace practice. In possessing this control, they hold the upper hand over their competitors, which become weighted with the burdens of the catch-up clamor.

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