Posts Tagged ‘reinsurance co’



June 17th, 2014

Alternative Market’s Impact On Traditional Reinsurers

Posted at 1:00 AM ET

The April 1, 2014 and June 1, 2014 renewals indicate that competition from the capital markets continues to play a major role in the abundance of reinsurance capacity that is placing pressure on pricing. Here we review Guy Carpenter analyses examining the impact of the alternative markets on traditional reinsurers and how reinsurance carriers are expected to face that challenge through the year. 

Catastrophe Bond Outlook for 2014: The growing influence of alternative markets capacity is pressuring traditional reinsurers’ business model and challenging them to compete against a model with lower-cost of capital that continues to enter the reinsurance market. Most reinsurance companies have responded to the challenge by leveraging their incumbent status on reinsurance programs, offering similar or better terms and similar or reduced pricing. Particularly, traditional players are emphasizing their ability to efficiently provide reinstatements, which are seen by many as a critical part of core reinsurance programs, particularly for working reinsurance layers. Traditional players are also hedging their bets and creating their own capital markets divisions to attract, manage and utilize capital from third-party sources whether in the form of fund management, managed accounts or sidecars. This will allow reinsurers the opportunity to securitize the most capital-intensive parts of the business while providing valuable cost-efficient capacity in other business lines.

Read the article>>

 

Catastrophe Bond Update, Fourth Quarter 2013: Influence from direct capital markets’ participation in reinsurance programs, coupled with catastrophic insured losses well below historical averages in 2013, put significant pressure on global catastrophic reinsurance pricing. As a result of significantly reduced pricing (relative to recent years), approximately USD7.1 billion worth of new property/casualty (P&C) catastrophe bonds were issued in 2013 - the second largest record year for P&C issuance. The year included seven new sponsors - American Coastal, American Modern, AXIS Capital, the Metropolitan Transportation Authority (MTA), QBE, Renaissance Re and the Turkish Catastrophe Insurance Pool - who collectively secured USD1.46 billion of catastrophe bond capacity. In addition to new sponsors, another prevalent change in the market was the increasing use and acceptance of indemnity-based triggers. Given that spreads have tightened between indemnity and other trigger types, sponsors were inclined to take advantage of investors’ openness to indemnity triggers to reduce coverage basis risk without a material increase in pricing relative to non-indemnity trigger pricing.

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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.

June 12th, 2014

Deployment of Collateralized Property Catastrophe Capacity

Posted at 1:00 AM ET

mowery_lara_bioLara Mowery, Global Head of Property
Contact

The impact the capital markets have had on the property catastrophe reinsurance space is undeniable. Analyzing 2013 market activity, it is also undeniable that much of the movement the market witnessed is as much driven by traditional reinsurers’ changing behaviors. While companies buying catastrophe coverage benefitted, across product type and geography, from collateralized capacity in the market, deployment of this capacity has been targeted.

Continue reading…

April 10th, 2014

GC Capital Ideas Reviews Climate Change After New IPCC Report

Posted at 1:00 AM ET

In light of the Intergovernmental Panel on Climate Change (IPCC) latest report, Climate Change 2014: Impacts, Adaptation, and Vulnerability, released on Monday, March 31, here is a review of recent GC Capital Ideas stories focused on climate change.

Responding to Climate Change:  It is vital for (re)insurers to consider how climate change could impact future losses. Global warming potentially poses a serious financial threat to the insurance industry with implications for catastrophe risk perception, pricing and modeling assumptions.

Read the article>> 

 

Climate Change: A Look into the Future: Global climate models project a best estimate of a further two to four degree (Celsius) increase in the mean temperature of the Earth by the end of this century. Although this may seem insignificant on an intuitive level, the resulting impacts are of significant concern. Sea-level rise is the most significant threat for coastal areas as a result of melting glaciers. Apart from this threat, changing weather patterns will result in drought and inland flood threats for some areas. As a general principle of climate change, changes to the mean of meteorological extreme value distributions can be expected but an increase in tail thickness (or variability) is of greater concern. The day-to-day variability that we see today will likely expand.

Read the article>> 

 

The Reality of Global Warming: The increase in the global mean air temperature, as compared to the 1951-1980 average and the surge in average oceanic heat content for the 0-700 meter layer is depicted in these graphics. The increase in oceanic heat content in particular is notable as it takes a very large amount of energy to heat such a volume of water.

Read the article>> 

 

Global Warming: Adaptation Measures: The IPCC publications represent scientific consensus among many of the world’s top scientists (and scientific consensus is difficult to achieve). Their findings are generally consistent with the broader scientific literature.

Read the article>> 

 

Global Warming: Losses: Economic losses resulting from natural disasters increased from USD75.5 Billion in the 1960s to USD659.9 Billion in the 1990s. Insured losses have also increased, and “the dominant signal is of significant increase in the values of exposure.” Furthermore, the IPCC states that “failure to adjust for time-variant economic factors yields loss amounts that are not directly comparable and a pronounced upward trend for purely economic reasons.”

Read the article>> 

 

Global Warming: The Evolving Risk Landscape: Global warming is an established scientific fact, and one that cannot be explained by statistical “noise” or natural variability alone. The single greatest threat under global warming is that of sea-level rise, which is expected to increase coastal flood frequency and severity under tropical cyclone, extratropical cyclone and tsunami events. The growing urban footprint and population density in coastal areas amplifies the financial and societal implications of such events.

Read the article>> 

 

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

March 13th, 2014

Catastrophe Bond Outlook for 2014

Posted at 1:00 AM ET

The growing influence of alternative markets capacity is pressuring traditional reinsurers’ business model and challenging them to compete against a model with lower-cost of capital that continues to enter the reinsurance market. Most reinsurance companies have responded to the challenge by leveraging their incumbent status on reinsurance programs, offering similar or better terms and similar or reduced pricing. Particularly, traditional players are emphasizing their ability to efficiently provide reinstatements, which are seen by many as a critical part of core reinsurance programs, particularly for working reinsurance layers. Traditional players are also hedging their bets and creating their own capital markets divisions to attract, manage and utilize capital from third-party sources whether in the form of fund management, managed accounts or sidecars. This will allow reinsurers the opportunity to securitize the most capital-intensive parts of the business while providing valuable cost-efficient capacity in other business lines.

Continue reading…

February 26th, 2014

2013 Closes with Near Record Catastrophe Bond Issuance According to GC Securities*

Posted at 11:30 PM ET

GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member of FINRA/SIPC, today released an analysis of activity and trends within the catastrophe risk market from the fourth quarter of 2013, also including the outlook for 2014. According to the report, influence from direct capital markets’ participation in reinsurance programs, coupled with catastrophic insured losses well below historical averages in 2013, put significant pressure on global catastrophic reinsurance pricing. As a result of significantly reduced pricing, relative to recent years, approximately $7.1 billion worth of new property and casualty (P&C) catastrophe bonds were issued in 2013 - the second highest  record year for P&C issuance.

Continue reading…

February 25th, 2014

Deployment of Collateralized Property Catastrophe Capacity

Posted at 1:00 AM ET

mowery_lara_bioLara Mowery, Global Head of Property
Contact

The impact the capital markets have had on the property catastrophe reinsurance space is undeniable. Analyzing 2013 market activity, it is also undeniable that much of the movement the market witnessed is as much driven by traditional reinsurers’ changing behaviors. While companies buying catastrophe coverage benefitted, across product type and geography, from collateralized capacity in the market, deployment of this capacity has been targeted.

Continue reading…

February 11th, 2014

Climate Change Review

Posted at 1:00 AM ET

Here we review recent GC Capital Ideas stories that have focused on climate change.

Responding to Climate Change: Part I: it is vital that (re)insurers consider how the changing climate could impact future losses. Global warming potentially poses a serious financial threat to (re)insurers, with implications on catastrophe risk perception, pricing and modeling assumptions.

Read the article >>

 

Responding to Climate Change: Part II: An increasing number of (re)insurers are therefore adopting comprehensive climate change strategies to recognize the potential impact on their businesses. Investing in solutions that help predict the likely effects of global warming on the location, intensity and cost of weather-related catastrophes is critical to acquiring a better understanding of climate change risk.

Read the article >>

 

Climate Change: A Look into the Future: Part I: Global climate models project a best estimate of a further two to four degree (Celsius) increase in the mean temperature of the Earth by the end of this century. Although this may seem insignificant on an intuitive level, the resulting impacts are of significant concern. Sea-level rise is the most significant threat for coastal areas as a result of melting glaciers. Apart from this threat, changing weather patterns will result in drought and inland flood threats for some areas. As a general principle of climate change, changes to the mean of meteorological extreme value distributions can be expected but an increase in tail thickness (or variability) is of greater concern. The day-to-day variability that we see today will likely expand.

Read the article >>

 

Climate Change: A Look into the Future: Part II: Global warming is also impacting drought and wildfire patterns around the world, with notable regional differences. The IPCC says that some regions of the world have experienced more intense and longer droughts (southern Europe and West Africa in particular) while other areas such as central North America and northwestern Australia have seen less frequent, less intense or shorter drought events.

Read the article >>

 

The Reality of Global Warming: The increase in the global mean air temperature, as compared to the 1951-1980 average, is depicted in Figure F-2, and the surge in average oceanic heat content for the 0-700 meter layer is depicted in Figure F-3. The increase in oceanic heat content in particular is notable as it takes a very large amount of energy to heat such a volume of water.

Read the article >>

 

Global Warming: Adaptation Measures: The Intergovernmental Panel on Climate Change (IPCC) publications represent scientific consensus among many of the world’s top scientists (and scientific consensus is difficult to achieve). Their findings are generally consistent with the broader scientific literature.

Read the article >>

 

Global Warming: Losses: Economic losses resulting from natural disasters increased from USD75.5 Billion in the 1960s to USD659.9 Billion in the 1990s. Insured losses have also increased, and “the dominant signal is of significant increase in the values of exposure.” Furthermore, the IPCC states that “failure to adjust for time-variant economic factors yields loss amounts that are not directly comparable and a pronounced upward trend for purely economic reasons.”

Read the article >>

 

The Reality of Global Warming: According to the IPCC Fourth Annual Assessment Report (AR4), the scientific consensus is that global warming is indeed an established scientific fact. The evidence is undeniable.

Read the article >>

 

Global Warming: The Evolving Risk Landscape: Global warming is an established scientific fact, and one that cannot be explained by statistical “noise” or natural variability alone. The single greatest threat under global warming is that of sea-level rise, which is expected to increase coastal flood frequency and severity under tropical cyclone, extratropical cyclone and tsunami events. The growing urban footprint and population density in coastal areas amplifies the financial and societal implications of such events.

Read the article >>

 

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

November 21st, 2013

Responding to Climate Change: Part II

Posted at 1:00 AM ET

An increasing number of (re)insurers are therefore adopting comprehensive climate change strategies to recognize the potential impact on their businesses. Investing in solutions that help predict the likely effects of global warming on the location, intensity and cost of weather-related catastrophes is critical to acquiring a better understanding of climate change risk.

Continue reading…

October 3rd, 2013

Convergence Capital’s Effect on Valuations

Posted at 1:00 AM ET

Figure F-4 highlights the relative share price performance of the reinsurance sector since January 2012, which can be considered the start of the new wave of convergence capital. The clear upward trend has benefited investors during this time.

Continue reading…