2010 Hurricane Season Begins: Knowing, Understanding and Better Managing the Risks, Part I: State of the Florida Marketplace:   The 2010 hurricane season kicked-off on June 1 and the meteorological forces wasted no time in getting down to business. Tropical storm Agatha slammed into Central America, killing at least 101 people. The hurricane season kick-off and the storm occurred as backdrops to the wrap up of the June 1, 2010 reinsurance renewals, traditionally centered on the Florida property marketplace.

2010 Hurricane Season Begins: Knowing, Understanding and Better Managing the Risks, Part II: Florida Hurricane Catastrophe Fund, Innovative Products: One of the critical components in the majority of Florida contracts renewing at June 1 is the structure of the Florida Hurricane Catastrophe Fund (FHCF). While factors influencing the FHCF structure overall were dealt with earlier than in prior years, there remained questions regarding the viability of the TICL layer and rating agencies’ treatment of TICL within the reinsurance structure.

2010 Hurricane Season Begins: Knowing, Understanding and Better Managing the Risks, Part III: 2010 Hurricane Forecast: To coincide with the start of the hurricane season, Guy Carpenter has summarized the various forecasters’ predictions for the 2010 season. Several meteorologists have released forecasts for the forthcoming hurricane season and there seems to be a general consensus that 2010 will see unusually high activity. If this prediction proves to be true, the 2010 hurricane season will stand in sharp contrast to the relatively quiet 2009 season.

2010 Hurricane Season Begins: Knowing, Understanding and Better Managing the Risks, Part IV: Tools for Understanding and Managing Risk: Guy Carpenter offers the solutions to help (re)insurers manage the risks associated with hurricane exposures and preparedness through our forward looking hazard forecasting tools. Assessing the impact and potential loss damage of hurricane activity on a risk portfolio can now be accomplished with more detailed information than ever before.

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Lara Mowery, Managing Director and Julian Alovisi, Senior Vice President
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Guy Carpenter offers the solutions to help (re)insurers manage the risks associated with hurricane exposures and preparedness through our forward looking hazard forecasting tools. Assessing the impact and potential loss damage of hurricane activity on a risk portfolio can now be accomplished with more detailed information than ever before.

Continue reading…

Lara Mowery, Managing Director and Julian Alovisi, Senior Vice President
Contact

To coincide with the start of the hurricane season, Guy Carpenter has summarized the various forecasters’ predictions for the 2010 season. Several meteorologists have released forecasts for the forthcoming hurricane season and there seems to be a general consensus that 2010 will see unusually high activity. If this prediction proves to be true, the 2010 hurricane season will stand in sharp contrast to the relatively quiet 2009 season.

Continue reading…

Lara Mowery, Managing Director and Julian Alovisi, Senior Vice President
Contact

Florida Hurricane Catastrophe Fund

One of the critical components in the majority of Florida contracts renewing at June 1 is the structure of the Florida Hurricane Catastrophe Fund (FHCF). While factors influencing the FHCF structure overall were dealt with earlier than in prior years, there remained questions regarding the viability of the TICL layer and rating agencies’ treatment of TICL within the reinsurance structure. In 2009 there was considerable concern regarding the viability of this upper layer of coverage due to the impact of the financial crisis on the municipal bond market, which the FHCF utilizes to pay post event claims above their available cash on hand. Statutorily, the legislature reduced coverage offered by USD2 billion to USD10 billion last year. Due in part to companies’ concerns regarding the timing of payments received from TICL, only USD5.56 billion was taken up. Of this, approximately 65 percent was selected by Citizens Property Insurance Corporation (Citizens).

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Lara Mowery, Managing Director and Julian Alovisi, Senior Vice President
Contact

The 2010 hurricane season kicked-off on June 1 and the meteorological forces wasted no time in getting down to business. Tropical storm Agatha slammed into Central America, killing at least 101 people. The hurricane season kick-off and the storm occurred as backdrops to the wrap up of the June 1, 2010 reinsurance renewals, traditionally centered on the Florida property marketplace.

Continue reading…

Lara Mowery, Managing Director

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At each Florida renewal season there are many challenges companies face in designing and placing their reinsurance programs. This year was no exception. While companies deal with navigating the challenges of the Florida Hurricane Catastrophe Fund (FHCF) integration each year, 2010 also included heightened commentary by rating agencies regarding acceptable risk transfer approaches, the Florida Office of Insurance Regulation’s (OIR’s) own views on risk transfer and an environment of continuing economic turmoil specific to the Florida insurance environment.

In a positive development for these companies, reinsurance pricing continued its 2010 trend of price declines and dropped year over year on a risk adjusted basis by 10 percent to 12 percent on average. This drop returns pricing to a level close to that seen in 2008, particularly in upper layers.

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Record Number of Guy Carpenter Brokers Selected in 2009,
Accounting for More Than Half of All Industry Honorees

An unprecedented 29 members of Guy Carpenter & Company, LLC’s global broking team have been selected to Risk & Insurance magazine’s 2009 “Reinsurance Power Brokers” list, the highest number among all reinsurance intermediaries. The annual Power Brokers directory, now in its third year, honors individual reinsurance brokers for creativity in solving clients’ risk management issues, depth of practice or line-of-business expertise, and superior client service.

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Global Property Specialty and Business Intelligence Unit
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Property-catastrophe reinsurance rate increases were steady at the July 1, 2009 renewal. In the United States and Latin America, capacity was sufficient to meet demand. U.S. property-catastrophe reinsurance rates increased 15 percent year-over-year, in line with the trend from January to June. In Latin America, preliminary data varied by country, but upward pressure on pricing was offset by supply and local market competition to keep reinsurance rate increases contained. For the marine sector, rates were up 5 percent to 10 percent, based mostly on loss history and catastrophe exposure. With four major renewal periods covered this year, a sense of calm has emerged. The general reinsurance market is tepid, with a few hotspots based on region- or program-specific factors.

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Lara Mowery, Managing Director and Head of Global Property Specialty
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Property-catastrophe reinsurance rates increased by 15 percent at the Florida-centric June 1, 2009 renewal — compared to a 15 percent decline a year ago. Capacity was more limited than in recent years — however, still adequate to complete renewals. Though the ultimate result was higher than the 10 percent to 14 percent change for U.S. national reinsurers at April 1, 2009, the intricacies of the Florida market render it directionally consistent with the overall rate trend for this year. Constraints on capital have pushed risk-transfer pricing higher, but shortages were not so severe that rates spiked as they did in 2006.

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Lara Mowery, Managing Director and Head of Global Property Specialty
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Reinsurance rates continued to increase for the U.S. property-catastrophe reinsurance market at the April 1, 2009 renewal, extending the trend that began at the beginning of the year. National programs were up 10 percent to 14 percent on a risk-adjusted basis, with those in the Northeast seeing 6 percent to 8 percent increases. This compares to a reinsurance rate increase of 11 percent on average at the January 1, 2009 renewal.

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