A collateralized reinsurance transaction is one in which a market creates a trust account at the inception of the contract term and funds the account in an amount equal to the contract limit (less certain deductions). This funding mechanism provides the client with readily accessible funds in the event of a loss that are segregated from the other assets of the market and remains available even if the market becomes insolvent. A collateralized reinsurance transaction also requires a pre-negotiated release of assets in the trust fund back to the market if there are no losses or if loss development is less than the contract limit.
Posts Tagged ‘reinsurance intermediaries’
Massimo Reina, CEO, Continental Europe & MENA, Guy Carpenter & Company, LLC
It should come as no surprise that there is a general trend among larger cedents to centralize reinsurance buying decisions and retentions and to bundle homogeneous products. This has become possible with the improvement of available portfolio data. This practice has some obvious advantages for buyers, such as reduced spend, reduced administration, improved control over counter-party credit risks and, possibly, retention of additional profits that would otherwise be ceded to reinsurers.
Alex Moczarski, President and CEO, Guy Carpenter and Chairman, Marsh & McLennan Companies International, provides concluding remarks at the Guy Carpenter press briefing at the Monte Carlo Rendez-Vous in this GC Capital Ideas videocast. He said “The focus for many in the industry continues to be on the deflationary effect of excess capital. This can lead to negative introspection or just waiting for the ‘big one’ to strike. Such passivity won’t do. We must take the initiative. For a broker, this means constant innovation, anticipation of clients’ needs and delivering the best solutions.
GC Videocast - Rendez-Vous Press Briefing 2014 (James Nash) Asia Pacific Sees Increased Understanding and Quantification of Catastrophe Risk
James Nash, CEO of Asia-Pacific Operations, Guy Carpenter, considered the potential that existed in Asia-Pacific. “It is a blend of mature and emerging markets,” he said, “full of opportunities and challenges, and it requires all market participants to have a broad and diverse set of skills and offerings.” He continued: “As regulation develops across the region, and insurers are open to a wider array of modelling options by vendor and peril, we are seeing an increase in the understanding and quantification of the catastrophe risk in the region. This in turn leads to more transparent risk and capital management decision-making,” but, “at this stage the majority of alternative capital activity remains in the mature markets of Japan and Australia.”
GC Videocast - Rendez-Vous Press Briefing 2014 (Nick Frankland) Centralization of the Reinsurance Buying Process in EMEA
Nick Frankland, CEO of EMEA operations, Guy Carpenter, reviewed developments in EMEA, where newer capital is yet to have a significant impact. He described the region as “a mature, stable market saturated with existing capacity and clients tending towards buying less reinsurance.” This approach to purchasing he said reflected the continuing centralization of the buying process. “Groups are taking a longer-term and more strategic rather than short-term tactical approach,” he stated. “This in turn has seen a smaller number of reinsurers selected as long-term strategic partners.” Opportunities for growth in such an environment however still remain, he said. “Future growth for a reinsurance broker demands a thoughtful, strategic, analytical and intellectual value offering above and beyond traditional structuring and placing.”
The growing presence of the capital markets, over capacity in most lines and territories, and the ongoing rationalization of buying strategies are not only influencing market dynamics, but also the continuing evolution of the broker into a capital and risk advisor. This is according to the panel of speakers at the seventh annual press briefing held at the Reinsurance Rendez-Vous 2014 in Monte Carlo by Guy Carpenter & Company, the leading global risk and reinsurance specialist, and wholly owned subsidiary of Marsh & McLennan Companies.
Georg H. Fülles, Head of European Casualty Strategy and Morley Speed, Managing Director
Reinsurance buyers in Continental Europe have complained for decades about an imbalance between property lines and casualty lines in the depth of knowledge and services offered by brokers. Reinsurance broking has predominately been driven by expertise in property lines and, particularly, in the natural catastrophe area. Guy Carpenter has recently closed this gap with its new Casualty Solutions Group (CSG).
Guy Carpenter hosted “Transferring Risk - Is the Insurance and Reinsurance Industry Adequately Serving its Clients?” the Reinsurance Symposium held in Baden-Baden on October 20, 2013. The event explored a range of topics including: the gap between economic and insured losses; how new capital entering the market can move beyond property catastrophe; and measures to provide coverage for new and emerging risks.
Reinsurance continues to play an important role for program issuing carriers. Seventy-six percent of respondents to the survey this year (66 percent last year) indicated the use of both direct reinsurers and intermediaries, while 18 percent indicated their use of intermediaries exclusively.