In our fifth and final MENA Insights interview, Chris Pleasant, Managing Director of Guy Carpenter, offers an upbeat vision of the future. While the current soft market presents challenges, it belies the greater re/insurance opportunity ahead. As local insurance markets mature and the approach to reinsurance buying becomes more sophisticated, MENA will enter the next chapter of growth.
Posts Tagged ‘Lloyd’s’
In our fourth MENA Insights interview Mahomed Akoob, managing director of Hannover Re Takaful, considers the huge potential of the Takaful and Retakaful market in the region, which he thinks could grow at a faster pace than Asia. Islamic finance is driving much of the demand for Shariah compliant insurance coverage to be taken out for major infrastructure projects.
In our third MENA Insights interview Fadi AbuNahl, chief executive of Trust Re, describes how the MENA re/insurance market has developed in recent years and what has prompted greater risk retention within the underlying market. He thinks there is plenty of reinsurance premium to go around but cautions against competing on price alone. Continue reading…
In our second MENA Insights interview, Michael Watson, chairman and chief executive of Canopius, talks about how the MENA region has all the right ingredients for a growth-minded reinsurer, reveals what he thinks of Lloyd’s decision to open an office in the DIFC and why Canopius is considering establishing its own presence in the region.
Here we review recent deals of GC Securities* from the past six months and featured on GC Capital Ideas:
GC Securities* Completes 144A Indemnity Triggered Europe Windstorm Catastrophe Bond for Assicurazioni Generali S.p.A. : GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/NFA/SIPC, today announced the placement of Principal At-Risk Variable Rate Notes, with notional principal at €190,000,000, through a newly formed special purpose reinsurance vehicle domiciled in Ireland, Lion I Re Limited, to benefit Assicurazioni Generali S.p.A., an Italian insurance company and the parent company of the Generali Group. This is the first time that Assicurazioni Generali S.p.A. has utilized the cat bond market and is the first ever 144A cat bond to provide indemnity protection against Europe windstorm risks. Additionally, it is the first Italian sponsored catastrophe bond.
GC Securities* Completes Catastrophe Bond Queen Street IX Re Limited for Munich Re: GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/NFA/SIPC, today announced the placement of the Principal At-Risk Notes, with notional principal of $100,000,000, through a newly formed catastrophe bond, Queen Street IX Re Limited, to benefit Munich Re. This is the ninth Queen Street cat bond to benefit Munich Re, the eighth overall cat bond issuance benefitting Munich Re since 2011 and the first cat bond issuance benefitting Munich Re provided via an Irish special purpose reinsurance vehicle.
GC Securities* Acts as Sole Financial Advisor on the Second Largest Ever M&A Transaction in the Lloyd’s Market: GC Securities* is acting as sole financial advisor to the shareholders of Canopius Group Limited (”Canopius”) in the sale of Canopius to NKSJ Holdings, through its insurance subsidiary Sompo Japan Insurance Inc. The sale agreement was signed on December 18, 2013 and the transaction is expected to close in the second quarter of 2014, subject to regulatory approval. Upon closure this will be the second largest ever M&A transaction in the Lloyd’s market.
*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/NFA/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. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade, Canary Wharf, London E14 5HS. 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. 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. **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.
GC Securities* Acts as Sole Financial Advisor on the Second Largest Ever M&A Transaction in the Lloyd’s Market
With growth opportunities limited in mature markets, many insurers are looking to emerging markets for future expansion, in particular China, Southeast Asia and Central and Latin America. Figure F-10 highlights gross written premium (GWP) growth in emerging markets compared to developed markets from a 2003 base.
Here we bring together recent GC Capital Ideas’ posts that have focused on the BRIC (Brazil, Russia, India and China) countries.
Increased Flood Loss Potential: Making use of all available tools and practicing comprehensive exposure management will both strengthen (re)insurers’ ERM practices and allow them to make informed risk management and reinsurance decisions as they enter new markets. Certainly, flood risk is prevalent and increasing in almost every developing economy.
Lloyd’s: What Will Success Look Like? If Lloyd’s is successful in achieving the growth and diversification outlined in its near-term and long-term strategic plans, it can expect to capitalize on business opportunities in emerging market economies such as the BRIC countries (Brazil, Russia, India and China). Growth, however, will not necessarily be limited to these markets. Other countries in Southeast Asia, Eastern Europe and Latin America are experiencing strong growth and increasing insurance penetration, and these territories also present attractive opportunities for Lloyd’s.
Growth Potential in Developing Markets: Positive premium growth trends in developing markets are expected to be sustained over the next decade. During this time, emerging markets are expected to drive global economic growth, and foreign direct investment in these emerging regions is likely to increase. In Brazil alone, investment in infrastructure is expected to amount to USD550 billion over the next few years as the country prepares to host the soccer World Cup in 2014 and the summer Olympics in 2016. China and India too are expected to continue to see robust growth in the next ten years.
State of the Reinsurance Market, Part II: Inflation/Deflation Expectations, Investment Returns: Expansionary monetary policy has fueled concerns that inflation could increase in the medium term, but the picture is less clear in the near term. While consumer price indices in Brazil, Russia, India and China (BRIC), the United States and the rest of the G7 currently exhibit positive trends, consensus forecasts show borderline disinflationary trends in the nearer term in the United States and many developed markets.
The Market ratings remain the principal measure of financial strength to be applied to operations underwriting at Lloyd’s, but several rating agencies separately provide syndicate-specific analysis. These analyses can support the reinsurance-buying decision-making process, but it is dangerous to rely on them without understanding the varying underlying methodologies. (None of these products are endorsed by Lloyd’s.)
The financial strength ratings assigned to Lloyd’s by S&P, A.M. Best and Fitch have been relatively stable in the 15 years since the first rating was assigned. During this period, the (re)insurance industry and Lloyd’s itself have undergone dramatic change as they responded to the major challenges of the September 11, 2001, terrorist attacks, devastating US and Gulf of Mexico hurricanes and other natural catastrophes that occurred across the globe. The softening casualty insurance market and the global financial crisis also caused difficulties during this time. The current Lloyd’s ratings assigned by each rating agency are at their original levels - a significant achievement given that most of Lloyd’s peers have failed to recover their pre-2001 ratings.