Posts Tagged ‘Month in Review’



September 1st, 2016

GC Capital Ideas Top Stories: August, 2016

Posted at 1:00 AM ET

1. Chart: Overall Losses and Insured Losses 1980 To 2014: Chart shows the widening gap between economic loss and insured loss for the period 1980 to 2014.

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2. Chart: Percentage of Insured Versus Uninsured Natural Catastrophes (2000 To 2015): Chart shows the global percentage of insured natural catastrophe loss versus uninsured natural catastrophe loss for the period 2000 to 2015.

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3. Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

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4. Chart: Evolution of Market Price, Capacity, Limit for Terror Pools: Chart shows the evolution of international reinsurance market price, capacity and limit for terror pools from 2009 to 2014.

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5. Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

Read the article>>


6. Unmanned Aerial Systems/Drones: Growth projections for the drone or Unmanned Aerial Systems (UAS) sector are nothing short of phenomenal, as the opportunities and advantages afforded by using this type of machinery in construction, agriculture, energy/utilities, mining, real estate, news media, film production and public safety become increasingly more apparent each passing day. Nevertheless, the potential economic benefits are considered to be vast, expecting to generate an estimated economic benefit of USD82 billion along with 100,000 jobs by 2025.

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7. Bluecut And Clayton Wildfires, California: The Bluecut and Clayton fires have caused significant impacts to affected areas and pose an ongoing serious threat to life and property. No serious injuries or deaths have been reported, however, the fires have destroyed multiple structures.

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8. U.S. Northern Gulf Floods: In the U.S. Northern Gulf States, a significant and historic flood event has affected areas of southern Louisiana and Mississippi. Flood impacts have been particularly severe in areas of Baton Rouge and Hammond, Louisiana. Media reports indicate at least six fatalities, several thousand water rescues and at least 2,700 homes affected.

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9. Chart: Global Property Catastrophe ROL Index 1990 to 2016: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2016.

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10. China Risk Oriented Solvency System (C-ROSS): The China Insurance Regulatory Commission (CIRC) is instituting sweeping changes through its three-tiered China Risk Oriented Solvency System (C-ROSS) framework that will dramatically impact how (re)insurers conduct business. It will strengthen capital requirements, risk management and transparency disclosures - bringing China in line with, and in some cases overtaking, global standards. The C-ROSS framework is similar to Solvency II: three tiers focusing on quantitative, qualitative and disclosure requirements.

Read the article>>


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August 2nd, 2016

GC Capital Ideas Top Stories: July, 2016

Posted at 1:00 AM ET

1. Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

Read the article>>


2. China Risk Oriented Solvency System (C-ROSS): The China Insurance Regulatory Commission (CIRC) is instituting sweeping changes through its three-tiered China Risk Oriented Solvency System (C-ROSS) framework that will dramatically impact how (re)insurers conduct business. It will strengthen capital requirements, risk management and transparency disclosures - bringing China in line with, and in some cases overtaking, global standards. The C-ROSS framework is similar to Solvency II: three tiers focusing on quantitative, qualitative and disclosure requirements.

Read the article>>


3. Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

Read the article>>


4. Cyber Gaps in Traditional Insurance Products/Standalone Insurance Products: Although the insurance market has developed a dedicated product line that addresses the initial risks faced by companies, such as data breach and business interruption due to network failure, traditional insurance products in their design have not historically contemplated the exposure to protect against cyber risks. Companies can purchase cyber specific cover in the form of extensions to traditional policies or as standalone cyber policies.

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5. Super Typhoon Nepartak: Super Typhoon Nepartak made landfall on the southeast coast of Taiwan around 22 UTC on July 7, before final landfall as a tropical storm on Mainland China around 06 UTC on July 9. Nepartak has rendered significant flood impacts both in Taiwan and Mainland China according to media reports, with at least 10 and three dead in Mainland China and Taiwan, respectively. Flood impacts have been especially severe in Mainland China, which was affected by excessive monsoon rains just prior to Nepartak.

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6. Managing Catastrophe Model Uncertainty, Issues and Challenges: Here we repeat our series authored by John Major, which focuses on the issues and challenges in managing catastrophe model uncertainty.

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7. Evolution of Risk Capital: The continued flow of new capital into the (re)insurance industry constitutes the largest change to the sector’s capital structure in recent memory. New capital has entered the market through investments in insurance-linked securities (ILS) funds, sidecars, hedge fund-backed reinsurance companies and collateralized reinsurance vehicles. Investors have increasingly been attracted to low correlation returns from catastrophe risk relative to traditional capital markets risks and the attractive yield for the measured (re)insurance risk relative to other investments, particularly in the current low inflation, low yield era.

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8. Stochastic-based BCAR: Do You Understand Your “Capital-print”?: Technology and innovation continue to change the world around us, creating both opportunities and new challenges for the (re)insurance industry. Advances in risk quantification such as predictive analytics and capital modeling, to name a few, are changing the way we underwrite, price and manage risk. Similarly, technology is allowing A.M. Best (Best’s) to advance the analytics of risk supporting its assessment of balance sheet strength. Taking advantage of stochastic modeling technology, the evaluation of risk within Best’s capital model is undergoing a fairly substantial overhaul to broaden the lens used to analyze risk relative to capital. The technology allows efficient production of multiple capital metrics adjusted for a range of risk levels rather than risk represented by just one data point, providing deeper insights into balance sheet strength, risk profile and risk appetite.

Read the article>>


9. Chart: Combined Ratio For Guy Carpenter Reinsurance Composite, Q1 2016: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2005 through first quarter 2016.

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10. Chart: Global Property Catastrophe ROL Index 1990 to 2016: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2016.

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July 5th, 2016

GC Capital Ideas Top Stories: June, 2016

Posted at 1:00 AM ET

1. Potential Losses From the Kumamoto Earthquake: The catastrophe modeling firm RMS estimated the economic loss for property risks to be between USD2.5 billion and USD3.5 billion. This estimate includes only residential, commercial, and industrial property and contents. Catastrophe modeling firm AIR estimated the insured loss to be between USD1.7 billion and USD2.9 billion for property risks. Both catastrophe modeling firms’ estimates exclude infrastructure, business interruption and contingent business interruption.

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2. Reserving and Capital Setting: Sizing the Problem: There are three main questions to be tackled in sequence:

  1. Which emerging risks potentially expose my company?
  2. What means do I have to quantify those risks?
  3. How are these risks likely to crystalize?

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3. Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

Read the article>>


4. Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

Read the article>>


5. China Risk Oriented Solvency System (C-ROSS): The China Insurance Regulatory Commission (CIRC) is instituting sweeping changes through its three-tiered China Risk Oriented Solvency System (C-ROSS) framework that will dramatically impact how (re)insurers conduct business. It will strengthen capital requirements, risk management and transparency disclosures - bringing China in line with, and in some cases overtaking, global standards. The C-ROSS framework is similar to Solvency II: three tiers focusing on quantitative, qualitative and disclosure requirements.

Read the article>>


6. Chart: Source Of Earnings For Guy Carpenter Reinsurance Composite, Q1 2016: Chart presents source of earnings for the Guy Carpenter Global Reinsurance Composite for the first quarter, 2016 compared to the first quarter, 2015.

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7. Guy Carpenter Appoints CEO of GC Stockholm: Guy Carpenter announced the appointment of Tobias Andersson as CEO of GC Stockholm, effective April 1, 2017. He will succeed Tomas Ljungqvist, who will become Chairman of the division.

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8. Chart: Return On Equity For Guy Carpenter Reinsurance Composite, Q1 2016: Chart presents return on equity for the Guy Carpenter Global Reinsurance Composite, 2005 through first quarter 2016.

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9. Guy Carpenter Forms Strategic Alliance to Develop Cyber Aggregation Model: Guy Carpenter & Company announced the formation of a strategic alliance with Symantec Corporation, a global leader in cyber security, to create a cyber aggregation model. The model will include a comprehensive catalogue of cyber scenarios from which insurers can derive frequency and severity distributions to measure the potential financial impact of loss from both affirmative cyber coverages and “silent” all-risk policies where cyber is the peril, but no cyber exclusions exist.

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10. Chart: Global Property Catastrophe ROL Index 1990 to 2016: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2016.

Read the article>>


Click here to register to receive e-mail updates >>

June 1st, 2016

GC Capital Ideas Top Stories: May, 2016

Posted at 1:00 AM ET

1. Guy Carpenter Forms Strategic Alliance to Develop Cyber Aggregation Model: Guy Carpenter & Company announced the formation of a strategic alliance with Symantec Corporation, a global leader in cyber security, to create a cyber aggregation model. The model will include a comprehensive catalogue of cyber scenarios from which insurers can derive frequency and severity distributions to measure the potential financial impact of loss from both affirmative cyber coverages and “silent” all-risk policies where cyber is the peril, but no cyber exclusions exist.

Read the article>>


2. Fort McMurray Wildfires - Canada: Recent rainfall and cooler temperatures have helped to reduce spread of the wildfire that recently rendered devastating impacts to Fort McMurray, Alberta, Canada. Nevertheless, the fire continues to grow outside the city and has now claimed 2,020 square kilometers (790 square miles), according to media reports. A general trend of cooler temperatures is expected through this week, before another warming trend next weekend.

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3. Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

Read the article>>


4. China Risk Oriented Solvency System (C-ROSS): The China Insurance Regulatory Commission (CIRC) is instituting sweeping changes through its three-tiered China Risk Oriented Solvency System (C-ROSS) framework that will dramatically impact how (re)insurers conduct business. It will strengthen capital requirements, risk management and transparency disclosures - bringing China in line with, and in some cases overtaking, global standards. The C-ROSS framework is similar to Solvency II: three tiers focusing on quantitative, qualitative and disclosure requirements.

Read the article>>


5. Stochastic-based BCAR: Do You Understand Your “Capital-print”?: Technology and innovation continue to change the world around us, creating both opportunities and new challenges for the (re)insurance industry. Advances in risk quantification such as predictive analytics and capital modeling, to name a few, are changing the way we underwrite, price and manage risk. Similarly, technology is allowing A.M. Best (Best’s) to advance the analytics of risk supporting its assessment of balance sheet strength. Taking advantage of stochastic modeling technology, the evaluation of risk within Best’s capital model is undergoing a fairly substantial overhaul to broaden the lens used to analyze risk relative to capital. The technology allows efficient production of multiple capital metrics adjusted for a range of risk levels rather than risk represented by just one data point, providing deeper insights into balance sheet strength, risk profile and risk appetite.

Read the article>>


6. Chart: Global Property Catastrophe ROL Index 1990 to 2016: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2016.

Read the article>>


7. Increasing Confidence and Transparency in Your Catastrophe Risk Decisions: Could you afford to find that the portfolio you just acquired in North Carolina is more exposed to hurricane than previously assumed? What if next year’s Category 2 hurricane caused a loss in excess of 15 percent of your policyholders’ surplus?  How will the changes in the U.S. Geological Survey National Seismic Hazard Maps impact your exposure to earthquake risk in the central and eastern United States?

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8. Risk Analytic Tools: Public sector-related data can be expansive, containing census data, property risk characteristics, historical loss information, risk rating matrices and natural hazard event scientific tracking. In order to facilitate packaging the sometimes unwieldy data in a way that is useful for risk decision making, utilizing outside resources to improve data transparency can be valuable. Public sector resources devoted to building tools that measure risks that are perceived as “uninsurable” can unlock private sector funding.

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9. Cyber Risk: As businesses, both large and small, throughout all sectors of industry, become more and more reliant on technology to improve service efficiencies and functionalities, cyber risk has become one of the most pressing public topics addressed in corporate boardrooms and by governments across the globe. The corresponding awareness of a business’s susceptibility to a cyber-attack has grown along with a spate of high-profile attacks. Consequently, cyber risk is now an embedded feature of the global risk landscape, not only as a privacy/network liability, which is where much of the publicity has arisen, but also as a peril affecting traditional insurance lines.

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10. Guy Carpenter Reports on Kumamoto Earthquake, Seismic Risk and Earthquake Cover in Japan: Guy Carpenter & Company released a briefing and analysis of the Kumamoto Earthquake that struck Japan in April 2016.

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May 2nd, 2016

GC Capital Ideas Top Stories: April, 2016

Posted at 1:00 AM ET

1. China Risk Oriented Solvency System (C-ROSS): The China Insurance Regulatory Commission (CIRC) is instituting sweeping changes through its three-tiered China Risk Oriented Solvency System (C-ROSS) framework that will dramatically impact how (re)insurers conduct business. It will strengthen capital requirements, risk management and transparency disclosures - bringing China in line with, and in some cases overtaking, global standards. The C-ROSS framework is similar to Solvency II: three tiers focusing on quantitative, qualitative and disclosure requirements.

Read the article>>


2. Chart: Combined Ratio For Guy Carpenter Reinsurance Composite, YE 2015: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2004 through year end 2015.

Read the article>>


3. Chart: Global Property Catastrophe ROL Index 1990 to 2016: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2016.

Read the article>>


4. Guy Carpenter Announces Senior Promotion and Appointment: Guy Carpenter & Company announced that Peter Stubbings has been promoted to CEO of the firm’s Bermuda operations, with immediate effect. In addition, Richard Keegan is to join the Bermuda team as Senior Vice President in May.

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5. Guy Carpenter Reports Stable Capital at January 1, 2016 Renewals: Guy Carpenter & Company reports that overall capital levels dedicated to reinsurance have stabilized, showing no growth for the first time in several years.  In a highly competitive environment, companies assessed broader opportunities and the rate of incoming capital slowed. However, moderate loss experience kept capacity at abundant levels for the January 1, 2016 renewals. The continued scarcity of costly catastrophe losses and more than adequate capacity led to reinsurance pricing reductions, although there are signs the rate of descent is slowing as compared to 2015.

Read the article>>


6. Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

Read the article>>


7. Chart: Return On Equity For Guy Carpenter Reinsurance Composite, YE 2015: Chart presents return on equity for the Guy Carpenter Global Reinsurance Composite, 2004 through year end 2015.

Read the article>>


8. Chart: Source Of Earnings For Guy Carpenter Reinsurance Composite, YE 2015: Chart presents source of earnings for the Guy Carpenter Global Reinsurance Composite for the year end, 2015 compared to the year end, 2014.

Read the article>>


9. US Residual Markets: The US residual property insurance market segment is comprised of Fair Access to Insurance Requirements (FAIR) Plans, Beach and Windstorm Plans and two state run insurance companies - Florida Citizens Property Insurance Company (Florida Citizens) and Louisiana Citizens Property Insurance Corporation (Louisiana Citizens). These insurance facilities grew out of the civil strife in the 1960s to ensure continued access to insurance in urban areas. Over time they have evolved and their mandate has grown beyond their urban focus. Today these facilities are significant providers of some of the most wind- and earthquake-exposed property insurance in the country.

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10. Microinsurance Consortium and Venture Incubator Announces New Name: The Microinsurance Consortium, led by a group of leading companies in the insurance industry, announced a new name for their microinsurance venture incubator (MVI) - Blue Marble Microinsurance. The consortium consists of American International Group, Inc., Aspen Insurance Holdings Limited, Guy Carpenter & Company, LLC together with Marsh & McLennan Companies, Inc., Hamilton Insurance Group, Ltd., Old Mutual plc, Transatlantic Reinsurance Company, XL Catlin, and Zurich Insurance Group.

Read the article>>


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April 4th, 2016

GC Capital Ideas Top Stories: March, 2016

Posted at 1:00 AM ET

1. Chart: Top Ten Catastrophe Bond Transactions for 2015: The table lists the top ten catastrophe bond transactions that were completed in 2015.

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2. Insured Versus Uninsured Loss: There are a number of factors that contribute to the gap between economic loss and insured loss and as new risks emerge such as climate change and political risk, this gap will only continue to widen.

Read the article>>

 

3. Guy Carpenter Reports Stable Capital at January 1, 2016 Renewals: Guy Carpenter & Company reports that overall capital levels dedicated to reinsurance have stabilized, showing no growth for the first time in several years. In a highly competitive environment, companies assessed broader opportunities and the rate of incoming capital slowed. However, moderate loss experience kept capacity at abundant levels for the January 1, 2016 renewals. The continued scarcity of costly catastrophe losses and more than adequate capacity led to reinsurance pricing reductions, although there are signs the rate of descent is slowing as compared to 2015. 

Read the article>>

 

4. Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

Read the article>>

 

5. Microinsurance Consortium and Venture Incubator Announces New Name: The Microinsurance Consortium, led by a group of leading companies in the insurance industry, announced a new name for their microinsurance venture incubator (MVI) - Blue Marble Microinsurance. The consortium consists of American International Group, Inc., Aspen Insurance Holdings Limited, Guy Carpenter & Company, LLC together with Marsh & McLennan Companies, Inc., Hamilton Insurance Group, Ltd., Old Mutual plc, Transatlantic Reinsurance Company, XL Catlin, and Zurich Insurance Group.

Read the article>>

 

6. Chart: Global Property Catastrophe ROL Index 1990 to 2016: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2016.

Read the article>> 

 

7. Managing Catastrophe Model Uncertainty, Issues and Challenges: Here we repeat our series authored by John Major, which focuses on the issues and challenges in managing catastrophe model uncertainty.

Read the article>> 

 

8. Guy Carpenter Cites El Niño and North Atlantic Oscillation as Key Climate Drivers in 2015: Guy Carpenter reported that 2015 marked one of the strongest El Niño periods on record, while a positive phase of the North Atlantic Oscillation (NAO) was evident both at the beginning and close of the year.

Read the article>> 

 

9. China Risk Oriented Solvency System (C-ROSS): The China Insurance Regulatory Commission (CIRC) is instituting sweeping changes through its three-tiered China Risk Oriented Solvency System (C-ROSS) framework that will dramatically impact how (re)insurers conduct business. It will strengthen capital requirements, risk management and transparency disclosures - bringing China in line with, and in some cases overtaking, global standards. The C-ROSS framework is similar to Solvency II: three tiers focusing on quantitative, qualitative and disclosure requirements.

Read the article>>

 

10. The Emerging Risks Quandary, Anticipating Threats Hidden in Plain Sight: Marsh & McLennan Companies’ Global Risk Center has published a new report, The Emerging Risks Quandary. Many companies struggle to articulate the precise relevance of global and emerging risks to their business, and are poorly organized to make timely decisions. This report explores what impedes corporate efforts and sets out how companies can blend creativity and pragmatism to look beyond predictable and controllable risks to complex uncertainties that have the potential to generate more than mere volatility in corporate earnings.

Read the article>> 

 

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Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities LLC, 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 LLC, 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.

March 1st, 2016

GC Capital Ideas Top Stories: February, 2016

Posted at 1:00 AM ET

1. Guy Carpenter Reports Stable Capital at January 1, 2016 Renewals: Guy Carpenter & Company reports that overall capital levels dedicated to reinsurance have stabilized, showing no growth for the first time in several years.  In a highly competitive environment, companies assessed broader opportunities and the rate of incoming capital slowed. However, moderate loss experience kept capacity at abundant levels for the January 1, 2016 renewals. The continued scarcity of costly catastrophe losses and more than adequate capacity led to reinsurance pricing reductions, although there are signs the rate of descent is slowing as compared to 2015. 

Read the article>>

 

2. Meeting the Challenges: Catastrophe Modeling: The insurance industry relies to a large extent on catastrophe models to manage catastrophe risk. Regulators and rating agencies recognize this fact by asking companies to justify their modeling approach. The underlying objective of such rules is to encourage companies to have a robust and consistent process to use modeling tools responsibly.

Read the article>>

 

3. Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

Read the article>>

 

4. Catastrophe Bond Update: Fourth Quarter And Full Year 2015: 144A property and casualty (P&C) catastrophe bond primary issuance levels were uncharacteristically low in the fourth quarter with an aggregate notional of USD 1.425 billion of 144A P&C catastrophe bonds issued benefiting five sponsors. The 2015 full year primary issuance of 144A P&C catastrophe bonds totaled USD 5.917 billion from 25 transactions benefiting 24 sponsors. 144A P&C risk capital outstanding as of December 31, 2015 totaled USD 22.640 billion, which is 0.56 percent lower than 2014’s all-time high in the 144A P&C catastrophe bond market.

Read the article>>

 

5. Microinsurance Consortium and Venture Incubator Announces New Name: The Microinsurance Consortium, led by a group of leading companies in the insurance industry, announced a new name for their microinsurance venture incubator (MVI) - Blue Marble Microinsurance. The consortium consists of American International Group, Inc., Aspen Insurance Holdings Limited, Guy Carpenter & Company, LLC together with Marsh & McLennan Companies, Inc., Hamilton Insurance Group, Ltd., Old Mutual plc, Transatlantic Reinsurance Company, XL Catlin, and Zurich Insurance Group.

Read the article>>

 

6. Chart: Global Property Catastrophe ROL Index 1990 to 2016: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2016.

Read the article>>

 

7. Marsh and McLennan Companies, in Collaboration With the World Economic Forum, Publish the 11th Annual Global Risks Report: Disruptive shifts in technology, geopolitics, societal expectations, and economic patterns are creating instabilities that are directly impacting events in the world today. The World Economic Forum’s eleventh Global Risks Report highlights the issues that will exacerbate volatility and uncertainty over the next decade - while also presenting opportunities for governments and businesses to build resilience and deliver sustainable growth.

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8. Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

Read the article>> 

 

9. Partnerships: The Way To Public Sector Risk Financing: The impact that catastrophic loss can have on the fiscal position and tax base of government entities across the globe is significant. Impacted areas can take decades to recover when economic recovery is limited. Approximately 73 percent or USD 2.7 trillion of natural catastrophe losses globally between 1970 and 2014 were uninsured. The creation of private sector pre-financing options will not only relieve the burden on taxpayers and in turn, public finances, but will migrate the management of these catastrophes to insurance and reinsurance companies where claims handling and risk management is core to their operations. This allows local economies to come back on line more quickly.

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10. Winter Storm - January 21-23, 2016: From January 21-23, a significant winter storm affected areas of the United States from the Southeast to the Mid-Atlantic to New England. The winter storm, unofficially named “Jonas” by the Weather Channel, produced significant snowfall totals from Washington D.C. to the New York Metro area, breaking many daily snowfall records. Strong winds together with blowing snow often reduced visibility below a quarter mile. Strong onshore winds brought hurricane-force wind gusts to some areas and drove a storm surge impacting areas of Delaware and New Jersey.

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*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities LLC, 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 LLC, 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.

February 1st, 2016

GC Capital Ideas Top Stories: January, 2016

Posted at 1:00 AM ET

1. Guy Carpenter Reports Stable Capital at January 1, 2016 Renewals: Guy Carpenter & Company reports that overall capital levels dedicated to reinsurance have stabilized, showing no growth for the first time in several years.  In a highly competitive environment, companies assessed broader opportunities and the rate of incoming capital slowed. However, moderate loss experience kept capacity at abundant levels for the January 1, 2016 renewals. The continued scarcity of costly catastrophe losses and more than adequate capacity led to reinsurance pricing reductions, although there are signs the rate of descent is slowing as compared to 2015.

Read the article>>

 

2. Chart: Global Property Catastrophe ROL Index 1990 to 2016: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2016.

Read the article>>

 

3. Microinsurance Consortium and Venture Incubator Announces New Name: The Microinsurance Consortium, led by a group of leading companies in the insurance industry, announced a new name for their microinsurance venture incubator (MVI) - Blue Marble Microinsurance. The consortium consists of American International Group, Inc., Aspen Insurance Holdings Limited, Guy Carpenter & Company, LLC together with Marsh & McLennan Companies, Inc., Hamilton Insurance Group, Ltd., Old Mutual plc, Transatlantic Reinsurance Company, XL Catlin, and Zurich Insurance Group.

Read the article>>

 

4. Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

Read the article>>

 

5. Developments in Asia Pacific: Overview: Asia Pacific is a diverse mix of countries encompassing nearly one-third of the earth’s landmass and more than one half of its population. Given the broad spectrum of economic and regulatory sophistication across the region, the approach to insurance regulation has varied on a country-by-country basis as each regime adapts solvency principles to their own needs and political realities.

Read the article>>

 

6. Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

Read the article>>

 

7. Chart: Catastrophe Bond Issuance and Capital Outstanding - 1998 to YE 2015: The chart presents catastrophe bond issuance through 2015. Total bond issuance for the year 2015 was the fourth highest historically.

Read the article>>

 

8. Guy Carpenter Names Matthias Meyenhofer as Head of Global Partners EMEA: Guy Carpenter & Company, LLC, announced the appointment of Matthias Meyenhofer as Managing Director, Guy Carpenter, effective immediately.

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9. Chart: Estimated Dedicated Reinsurance Sector Capital, 2012 to YE 2015: The chart shows that a preliminary estimate of total capital dedicated to reinsurance is approximately USD 400 billion, unchanged from the previous year.

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10. Chart: Significant Insured Losses - 2011 to YE 2015: Reports losses by quarter.

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January 4th, 2016

GC Capital Ideas Top Stories: December, 2015

Posted at 1:00 AM ET

1. The Rise of Emerging Risk and Casualty Catastrophe Models: The modeling of emerging and casualty catastrophe risks remains challenging and the models continue to vary in their approach, level of development and industry acceptance. With the potential scenarios numerous, diverse and constantly changing, there is no single model or approach that could contemplate all of them. Furthermore, the various disaster scenarios with which carriers are being increasingly confronted needs to be prioritized and synthesized within their enterprise risk management framework. By their very definition, there may be limited data on hand on which to base any modeling. As a result, much of the industry continues to rely on multiple models and actuarial approaches that encompass model applications, probable maximum loss (PML) estimates, realistic disaster scenarios, experience and exposure ratings to create a broad set of scenarios and deterministic views.

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2. GC Securities* Report Shows Catastrophe Bond Market Continues to Hold Steady: GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/NFA/SIPC, released a briefing and analysis of catastrophe bond activity for the third quarter of 2015, which shows healthy activity across the market and marks the fourth highest third quarter catastrophe bond issuance on record.

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3. Microinsurance Consortium and Venture Incubator Announces New Name: The Microinsurance Consortium, led by a group of leading companies in the insurance industry, announced a new name for their microinsurance venture incubator (MVI) - Blue Marble Microinsurance. The consortium consists of American International Group, Inc., Aspen Insurance Holdings Limited, Guy Carpenter & Company, LLC together with Marsh & McLennan Companies, Inc., Hamilton Insurance Group, Ltd., Old Mutual plc, Transatlantic Reinsurance Company, XL Catlin, and Zurich Insurance Group.

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4. Chart: Combined Ratio For Guy Carpenter Reinsurance Composite, Q3 2015: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2004 through third quarter 2015.

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5. Chart: Global Property Catastrophe ROL Index 1990 to 2015: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2015.

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6. Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

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7. Update on China Counterparty Risk Charges for Offshore Reinsurers: China’s developing insurance market is a potential bright spot for growth in an otherwise challenging landscape for global reinsurers. Driven by a maturing economy and expected increases in household penetration ratios, property/casualty insurance premium, totaling USD 121.6 billion in 2014, is projected to increase to roughly USD 300 billion by 2030.

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8. Managing Catastrophe Model Uncertainty, Issues and Challenges: Here we repeat our series authored by John Major, which focuses on the issues and challenges in managing catastrophe model uncertainty. 

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9. Developments in Europe: Solvency II: After a long period of discussion and many delays, the new European insurance regulatory regime, Solvency II, will commence in January 2016. The rules will be compulsory for all insurance and reinsurance companies and groups in the European Economic Area (EEA). The three pillar approach of Solvency II for (i) quantitative capital requirements, (ii) qualitative risk management standards and (iii) reporting specifications, was derived from the international banking sector regulation (Basel II and Basel III). The Solvency II rules were developed over a period of more than 15 years, and there are many reasons for the long delay. Two notable reasons are differing business models from country to country and pressure on long-term guarantee products.

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10. Guy Carpenter Announces MetaRisk® 8.1, the Latest Version of its Premier Economic Capital Modeling Tool Suite: Guy Carpenter announced the release of MetaRisk® 8.1, the latest version of the industry’s leading dynamic financial analysis platform.

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*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.

December 1st, 2015

GC Capital Ideas Top Stories: November, 2015

Posted at 1:00 AM ET

1. Marsh & McLennan Companies Publishes Cyber Risk Handbook: Cyber risk is an escalating threat and one of the most challenging issues facing the world today. Attacks are becoming more frequent, more intense and more sophisticated. Motivations are wide-ranging - from financial gain to threatening critical infrastructure and national security - and the nature of attacks is constantly changing. With cyber risk, there is an active adversary so defenses need to be increasingly sophisticated to keep pace.

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2. Cyber Risks: Aggregation: Businesses and (re)insurers should be concerned by risk aggregation, given the possibility of single attacks leading to losses across a large number of firms, which can create counter-party risk for the insured and potential failure for the insurer. At the moment, a large systemic event has not materialized, but that does not mean that the risk is not present.

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3. New Products Revealed as Biggest Growth Opportunity for (Re)Insurers in 2016, According to Annual Guy Carpenter Survey: New products represent the biggest growth opportunity for (re)insurers in the year ahead, according to a survey released by Guy Carpenter. The fourth annual survey polled insurance and reinsurance executives at the 2015 Property Casualty Insurers Association of America (PCIAA) Annual Meeting, held in Hollywood, Florida. Designed to identify what (re)insurance professionals believe to be the leading opportunities and threats to growth, this year’s survey examines which areas are most in need of innovation as well as the emerging risks respondents believe will impact their plans for growth in 2016.

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4. Microinsurance Consortium and Venture Incubator Announces New Name: The Microinsurance Consortium, led by a group of leading companies in the insurance industry, announced a new name for their microinsurance venture incubator (MVI) - Blue Marble Microinsurance. The consortium consists of American International Group, Inc., Aspen Insurance Holdings Limited, Guy Carpenter & Company, LLC together with Marsh & McLennan Companies, Inc., Hamilton Insurance Group, Ltd., Old Mutual plc, Transatlantic Reinsurance Company, XL Catlin, and Zurich Insurance Group.

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5. Guy Carpenter Report Evaluates (Re)Insurance Regulatory Advancement in the Asia Pacific Region: Guy Carpenter published an assessment of the development of solvency requirements and regulatory initiatives that are impacting (re)insurers in the Asia Pacific (APAC) region. According to the report, these developments are driven by four key motivators, including the need to improve resiliency post-catastrophic loss; to increase oversight in a post-Great Recession world; to follow best practices from the banking and international insurance sectors; and finally, to satisfy domestic political pressures.

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6. Chart: Global Property Catastrophe ROL Index 1990 to 2015: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2015.

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7. In 2015, Growth and Innovation Demonstrated in Asia Pacific, according to Guy Carpenter Report: Guy Carpenter published a new report finding that prevailing market conditions continued to allow buyers in the Asia Pacific region to achieve favorable pricing, terms and conditions as capacity exceeded demand.

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8. Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

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9. Guy Carpenter Examines Shifting Public Sector Risk Landscape: Guy Carpenter announced the release of its Public Sector Risk Report, Partnerships: The Way to Public Sector Risk Financing, which examines the shifting economic and risk landscapes that are driving public sector entities to consider new approaches to risk financing.

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10. Solvency II: Assessing Counterparty Default Risk: Counterparty default risk is one of the core components of the SCR. This module has undergone substantial change over the several quantitative impact studies, as the supervisors attempted to find an appropriate measure of the risk. In the QIS 5 final report, EIOPA noted that this module received the most criticism for the “overly complex approach” relative to the materiality of counterparty default risk within the overall risk-based capital requirement. We expect to see additional changes that will simplify the calculation of risk.

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