The growth in the Guy Carpenter Global Reinsurance Composite is illustrated below, covering 2011 to first quarter 2013.
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Here we rank the most viewed GC Capital Ideas Chart Room entries of the last half year.
1. Chart: Guy Carpenter Global Rate on Line Index, January 2013: The Guy Carpenter Global Property Catastrophe Reinsurance Rate on Line (ROL) index fell marginally at the January 1, 2013, renewal. This is the seventh consecutive annual renewal in which changes to the index have equaled 10 percent or less, indicating a global market with capacity appropriate to meet demand.
2. Chart: Guy Carpenter Regional Rate on Line Index, January 2013: There was variation regionally in the Guy Carpenter Regional Property Catastrophe Reinsurance Rate on Line (ROL) index. U.S. property catastrophe pricing was most affected by the landfall of Superstorm Sandy while other regions were flat to down.
3. Chart: Global Significant Insured Losses, 2011 to Q4 2012: 2012 insured losses in aggregate were “normal.”
4. Chart: U.S. and Bermuda Property-Casualty M&A Activity, 2004 to 2012: For the property and casualty sector, market consolidation was at the periphery.
5. Chart: Long-Term Evolution of Shareholders’ Funds, 1998 to Q3 2012: Dedicated reinsurance capital was at a record high immediately prior to Superstorm Sandy.
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Dedicated reinsurance capital was at a record high immediately prior to Superstorm Sandy.
Guy Carpenter has published a new briefing: Superstorm Sandy: Initial Impacts and Implications
Although the 2011 investment return of 1.9 percent was weak relative to previous years, Lloyd’s conservative investment strategy has partially insulated it from some of the more damaging volatility seen across a number of markets since the onset of the financial crisis in 2008 and continuing through 2011.
The July 1, 2012, renewal took place against a backdrop of plentiful reinsurance capital. During the first quarter of 2012, the Guy Carpenter Global Reinsurance Composite’s capital position increased by 4 percent to USD184.5 billion (see Figure 1). Dedicated reinsurance capital has continued to strengthen through the second quarter, moderating pricing pressures. One important factor driving these trends has been benign catastrophe activity. Although there have been upward revisions to the catastrophe losses that hit the United States during the first quarter and more US storm and wildfire activity in the second quarter, insured losses during the first six months of the year totaled about USD11 billion. (1) This is significantly below the USD76 billion recorded during the same period of 2011.
Chart presents the long-term evolution of shareholders’ funds for the Guy Carpenter Global Reinsurance Composite.
Despite suffering one of the biggest loss years ever in 2011, the reinsurance sector’s dedicated capital position was slightly up at around USD178 billion by the end of the year. During the January 2012, renewal global property catastrophe rates on line increased 9.5 percent, reflecting in part the heavy catastrophe losses sustained in 2011. Since then, loss activity has been relatively light. Insured losses during the first five months of 2012 were estimated to be around USD6 billion, well below the USD75 billion recorded during the same period of 2011. Benign catastrophe activity has again strengthened reinsurers’ balance sheets and Guy Carpenter now estimates that the global reinsurance sector’s capital position is about USD15 billion in excess of historical trends, given risks assumed. The reinsurance sector continues to function normally and, in the absence of a significant cat loss burden, the improving capital position is likely to contain any attempt at price increases throughout the year.