Tropical depression Isaac was downgraded from tropical storm status as of the 5PM EDT advisory Thursday. Isaac was and still is a large feature. Isaac trailed feeder bands as far as 750 miles (1,200 km) east of New Orleans, causing 5 inches of rain as far away as Charleston, South Carolina. Tropical storm force winds spanned at least 400 miles during the storm. Central pressure during landfall was about 968 mb, consistent with some category-3 hurricanes.

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In general terms primary rates on global marine and energy covers were flat. Despite the relatively recent large losses that occurred even energy rate increases tailed off somewhat. There were no specific moves to increase primary rates, which filtered through to marine reinsurance placements, where individual accounts were treated on case by case bases. There did not appear to be any particular areas where reductions were seen. These only occurred if there were specific extenuating circumstances. Marine ILW contracts were one area where pricing and attachment levels increased, primarily driven by the Costa Concordia loss. The original loss reserve recently increased to the USD1 billion level.

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Reinsurance renewals took place against a backdrop of plentiful capacity at July 1, 2012. Capital has continued to strengthen through the second quarter of 2012, moderating pricing pressures, according to a briefing released today by Guy Carpenter & Company.

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Global

Generally, marine and energy reinsurance pricing increased modestly for programs not affected by losses, while those hit sustained reinsurance rate increases of around 10 percent, on average.

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London Market Excess Loss (LMX) & Global Retrocession

April 2011 and prior renewals with energy (particularly, energy liability) experienced exposure paid rate increases of approximately 20 percent. This represented the first opportunity to re-rate since Deep Water Horizon (DWH). Pricing for non-energy classes remained flat but with little downward pressure. Following the Gryphon loss in April, the energy market hardened further. While there are relatively few excess of loss placements renewing at this time, the perception in the market was that rates are likely to harden further where energy related coverage is sought. There has been very little demand for any additional Gulf of Mexico wind limits prior to the wind season, as original rates remained static and insurers maintained or reduced their aggregate. Retro renewals outside the January 1 renewals are rare, but those that did happen paid increases similar to those at January 1 - between 20 percent and 25 percent. Marine industry loss warranty covers tend to attach mid-year and renewed generally at expiring rates. They experienced rate increases following DWH and generally were in excess of any potential loss from Gryphon ‘A’.

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Guy Carpenter & Company announced the expansion of its Global Marine & Energy Specialty with a number of key appointments. Effective immediately, Scott Price has been named Head of U.S. Marine & Energy, reporting directly to James Summers, Head of Global Marine & Energy Specialty. Steve Vivian, also reporting to Mr. Summers, has assumed a new role with responsibility for assisting in the development of the Specialty’s global marine business.

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Each year the Global Risks Network - a partnership that includes the World Economic Forum, Marsh & McLennan Companies and others - identifies major global risks, assesses their economic impact, and recommends mitigation solutions. The findings of the Global Risks Network are captured annually in the World Economic Forum’s Global Risks Report.

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Reinsurance rate on line (ROLs) for the international marine and energy market varied by sector at the January 1, 2011 renewal. Hull and war and marine liability were both flat, with cargo flat to down 5 percent and energy and energy liability up 10 percent to 15 percent.

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US marine and energy rates on line generally renewed at expiring terms for loss-free programs, and very few programs had losses. Those that did saw reinsurance rate increases of up to 10 percent, but they mitigated the cost by increasing retentions.

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