Posts Tagged ‘loss reserves’



December 18th, 2014

Cycle Mitigation: Part II

Posted at 1:00 AM ET

Incorporating reserve value added (RVA) into reinsurance decision making for long-tail lines is a step in the right direction. However, it is not the full story, as the decision is still typically made in the context of a single accident year and usually for a single line of business in isolation. The cycle correlations clearly show that this is sub-optimal. We are encouraging our clients a step further along the sophistication and hence simplicity/complexity spectrum.

Continue reading…

December 17th, 2014

Guy Carpenter Launches MetaRisk® Reserve™ 4.0

Posted at 5:30 AM ET

Guy Carpenter announced today the launch of MetaRisk Reserve 4.0TM. The latest version of this powerful reserve risk modeling tool delivers improved statistical models and an enhanced user interface.

Continue reading…

December 17th, 2014

Cycle Mitigation: Part I

Posted at 1:00 AM ET

So what can be done to mitigate such cyclical effects? The first steps are to acknowledge them and to try to quantify their impact. The latter is more of a challenge than the former. Most internal capital models are not truly multiyear and arguably fail to adequately capture both the correlation between lines of business and in particular across accident years. Cycle (and recognition pattern) scenario testing is a good way to achieve this. This provides a neat and practical way to correlate between years and lines of business.

Continue reading…

December 16th, 2014

Impact on Results

Posted at 1:00 AM ET

To consider the impact that these cycles may have on the financial statements and solvency positions of insurers there has to be an understanding of the magnitude of any change in ultimate loss and the likely timing of the recognition of that change. The profit or loss in any financial year is a combination of the profit and loss from that accident year and also any recognized changes in the reserves from prior years.

Continue reading…

December 15th, 2014

Reserving Risks

Posted at 1:00 AM ET

The previous sections suggested how “dark matter” can be lurking on an insurer’s balance sheets in the form of a casualty catastrophe or an emerging and not as yet fully understood risk such as cyber. While there have been significant advances in quantifying the uncertainty pertaining to these risks, it is worth considering how they may manifest themselves in the future and what can be done about them now to protect from the “dark matter” downside.

Continue reading…

October 29th, 2014

Managing Reserve Risk

Posted at 1:00 AM ET

michelle-harnick-smallMichelle Harnick, Managing Director

Contact

Given that the leading cause of financial impairment of insurance companies is inadequate reserves and our view that a reserve “cycle” not only exists but may soon enter a period of adverse development, Guy Carpenter has spent considerable resources researching and building models to better understand and manage reserve risk.

Continue reading…

October 27th, 2014

The Insurance Risk Benchmarks Research: Insights for the Industry and the E&S Market

Posted at 1:00 AM ET

woolstenhulme_micah_photo-smallMicah Woolstenhulme, Manager, ERM Services, Strategic Advisory

Contact

The Insurance Risk Benchmarks Research is an ongoing project sponsored by Guy Carpenter & Company and Oliver Wyman to assist property/casualty (P&C) companies with profiling enterprise risk. Articulating an individual company’s risk profile requires assessment of both absolute and relative financial uncertainties. The absolute uncertainties can ultimately be codified in an economic capital model, but robust review of relative historical performance invariably improves the codification of certain systemic risks.

Continue reading…

October 26th, 2014

Guy Carpenter and Oliver Wyman Publish Annual Insurance Risk Benchmarks Research

Posted at 7:30 AM ET

Guy Carpenter and Oliver Wyman, both wholly owned subsidiaries of Marsh & McLennan Companies, released the 2014 Insurance Risk Benchmarks Research: Annual Statistical Review, the first in a two-part series detailing research executed in collaboration with Columbia University. This, the fourth annual report, provides detailed analysis and insight on the property/casualty industry to help insurers strategically evaluate and benchmark inputs to economic capital models.

Continue reading…

October 26th, 2014

A.M. Best’s New Analytics Will Broaden and Improve P&C Industry Capital Modeling and Benchmarking of Tolerances

Posted at 1:00 AM ET

snyder_jack_100eric-simpson-smallmark-murry-small-1201Jack Snyder, Managing Director, Business Development and Head of the Rating Agency Practice, Strategic Advisory; Eric Simpson, Managing Director in the Rating Agency Practice and Mark Murray, Senior Vice President in the Rating Agency Practice

Contact

A.M. Best’s rating analytics continue to evolve and the pace of change is accelerating as the industry embraces more analytical tools, emerging best practices, and peer benchmarking.

Continue reading…

October 13th, 2014

Understanding Emerging Risks: Executive Summary

Posted at 1:00 AM ET

(Re)insurers today face a degree of change and uncertainty that appears to be evolving at an ever quickening pace. Guy Carpenter has published a report, Ahead of the Curve: Understanding Emerging Risks, highlighting emerging risks facing the (re)insurance sector, including cyber-attacks, terrorism and new compensation structures for long-term bodily injuries. The report seeks to identify and categorize these risks that are now confronting the sector, as well as analyze their implications on businesses and (re)insurers.

Continue reading…