Guy Carpenter today announced the release of GC AdvantagePoint®, a pioneering portfolio and risk management platform. GC AdvantagePoint is designed to help insurance companies translate vast amounts of data to help leaders set strategy and improve underwriting profitability, understand risk concentration and make more informed risk selection and deliver real-time catastrophe tracking and improved claims management.
Posts Tagged ‘profitability’
Guy Carpenter & Company once again hosted the Reinsurance Symposium in Baden-Baden on October 18. Focusing on the theme of “Consolidation: Who Wins in the Race for Scale?”, leading industry figures shared their views on the recent merger & acquisition activity in the insurance and reinsurance arena, commenting on its impact on market dynamics, the key drivers for consolidation and what factors will contribute to success in the push for scale.
“The reinsurance market is going through a consolidation phase,” wrote Swiss Re in 1998 (1), and here we go again, or so it seems. Since 2014, there have been four mergers and acquisitions (M&As) within the reinsurance space (2) that are pure consolidations rather than transactions by an acquirer from outside the sector. To date, we estimate that this consolidation wave has affected some USD 11 billion of net premium income and 5 percent of the global reinsurance market. However, that is short of the USD 16 billion and 13 percent, respectively, for the mid-1990s. There is nothing unusual about M&A. It is a cyclical phenomenon and very much in tune with the broader financial market environment.
Guy Carpenter & Company announced the release of the 2015 Insurance Risk Benchmarks Report titled, Risk and Opportunity In the year of ORSA: Annual Statistical Review. The report is produced annually through Guy Carpenter’s ongoing Insurance Risk Benchmarks research project, which focuses robust analytics on risk and performance in the U.S. property/casualty (P&C) insurance industry.
While the alternative capital entering reinsurance markets has spurred transactions in accordance with the anti-correlation theory, other investors that have entered the market via acquisition of businesses have certainly blurred the theory’s parameter of the required level of underwriting margin.
A carrier’s need for growth and profitability has to be closely monitored and controlled in the PA/MGA space. Every respondent in this year’s survey indicated that they had audit procedures in place to assure adherence to established risk selection and underwriting guidelines, financial billing, collection, remittance and banking guidelines, claim reporting, adjusting and settlement guidelines. Even though some changes have taken place in the number of audits conducted each year, including a notable increase in the percent of respondents doing four or more audits, rising to its highest level since 2008, this year’s results reflect the current and historical importance of the carriers’ PA/MGA management process.
The challenge of balancing profitability with market share continues for carriers writing PA/MGA program business. This market dynamic was reflected in the level of responses for maintaining rate level (56 percent) and new business production (50 percent) as the largest challenges.
Even though responses to the questions on the perceived size of the PA/MGA market continue to reflect it as large, the respondents this year returned to the views of the earliest years of the survey. The largest percentage of respondents (43 percent) believed the market to be sized at USD30 billion to USD40 billion. This range tied with the percentage of respondents (43 percent) believing that the market is sized at USD20 billion to USD30 billion. Interestingly, no respondents believed the market was smaller than USD20 billion or larger than USD50 billion, a first. Fourteen percent of respondents felt the market stood between USD40 to USD50 billion, the highest that number has been since 2008 when it came in at 13 percent.