Posts Tagged ‘subprime’



January 5th, 2009

Cats and Credit Push Prices Up

Posted at 1:00 AM ET

Global Reinsurance Review January 2009

Reinsurance rate increases were moderate on average at the January 1, 2009 renewal. The Guy Carpenter World Rate on Line (ROL) Index rose 8 percent, in response to the dual pressures of a financial catastrophe and the second most expensive property catastrophe year on record. The degree to which prices increased was tempered by large capital positions at the beginning of 2008, enabling carriers to absorb the year’s losses, but this is where the generalizations end. Loss history, geography, and line of business led to wide differences in pricing. Expectations of another above-average storm year and the uncertainty surrounding the credit crisis underscore the need for continued capital management discipline in the coming year.

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November 14th, 2008

Week’s Top Stories: Nov 8 - 14, 2008

Posted at 1:00 AM ET

Book Value Update: Earnings Announcement Impact: the erosion of balance sheets continues, as the effects of a global financial catastrophe spread across financial markets.

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Get Credit for Your ECM with S&P: Standard & Poor’s (S&P) has released a new framework for determining whether a carrier’s own ECM can receive partial credit in the S&P capital adequacy evaluation.

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Financial Catastrophes: No Storm, Plenty of Damage: throughout 2008, every major city in the world felt the reverberations of a “financial catastrophe,” triggered by the collapse of the subprime mortgage market.

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Uncover and Mitigate Product Liability Risk: Avert a Casuaty Catastrophe: Casualty Cat, a new model developed jointly by Guy Carpenter and Arium, Ltd., seeks to identify the hidden product liability accumulations in a carrier’s portfolio and delivers the insights needed for informed action.

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Defining the Value of Risk Management: the fundamental activity of risk-bearers has not been measurable, leaving a cloud of ambiguity in the middle of every carrier’s operation.

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Most Popular Keyword: asset impairment

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Alternatives to Alternative Capital: (re)insurers have come to expect that alternative sources of capital will always be available, but the well may be at risk of running dry.

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November 12th, 2008

Financial Catastrophes: No Storm, Plenty of Damage

Posted at 1:00 AM ET

Andrew Marcell, CEO of Americas
Contact

We live in a world at risk, but sometimes, the threats take new forms. Even as we are coming out of an above-average U.S. storm season, carriers are focused on a new type of disaster. Throughout 2008, every major city in the world felt the reverberations of a “financial catastrophe,” triggered by the collapse of the subprime mortgage market. This event has put severe pressure on both sides of the balance sheet and proved that an economic event can have the power to move the market.

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October 28th, 2008

Capital Drought on the Horizon?

Posted at 8:59 AM ET

David Priebe, Chairman of Global Client Development
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Earlier this year, the (re)insurance industry celebrated an abundance of capital. Buybacks and dividends were common, as carriers struggled to find productive uses for their extra cash. Only a few months later, we are in the midst of a financial catastrophe that is wreaking havoc on balance sheets and constraining carrier access to capital. And, the situation could worsen. A major catastrophe event could place substantial demands on (re)insurer capital in a climate where replenishment would be both time-consuming and costly.

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October 27th, 2008

ERM: Part of the Answer to the Financial Catastrophes

Posted at 5:00 PM ET

Peter Zaffino, President & CEO
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While hurricanes spun through the Gulf of Mexico last month, a larger catastrophe ripped through New York, London, Shanghai, and every other major financial center in the world. Tropical Storm Credit Crisis (which started as Tropical Depression Subprime) intensified quickly and became a Financial Catastrophe that destroyed vast amounts of shareholder wealth.

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September 10th, 2008

Chart: Global Stock Markets Under Pressure

Posted at 2:28 PM ET

On the asset front, the majority of insurers and reinsurers have reported minimal direct exposure to mortgage-backed securities, while a few large global players have reported losses in the USD billions. Indirectly, the weak economy, compounded by fears of global financial collapse, is leading to a bear market in equities. This is putting pressure on reinsurer finances. Given the standard definition of a bear market as a 20 percent decline in price, both France and Germany are experiencing bear market conditions, which are also reflected in the UK FTSE 1000.

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September 7th, 2008

Capital Constraints: The New Reality?

Posted at 5:44 PM ET

Mark Hewett, Chairman of London Operations
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For several years, carriers have enjoyed a period of low insured losses, and access to cash has not been a problem. Traditional sources have been bolstered by the largesse of hedge funds, private equity funds, and even the wealth of high-net worth investors through a variety of insurance-linked securities (ILS). But, credit market turmoil has brought these conditions to an unceremonious close.

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September 7th, 2008

World Catastrophe Reinsurance Market 2008

Posted at 1:35 PM ET

Catastrophe reinsurance rates declined for the second year in a row. Price competition intensified as a result of abundant capital, lower than average catastrophe losses, and strong overall profitability. But, reinsurance rates are projected to decrease at a slower pace in 2009 than in 2008, as reinsurers face earnings pressure from a number of sources.

According to the Guy Carpenter World Rate on Line (ROL) Index, rates declined by 10 percent on average in 2008. This compares to a 6 percent drop in property-catastrophe ROL for the same period in 2007.

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September 6th, 2008

Under Pressure: Rate Drops Slowed by Asset Squeeze

Posted at 5:56 PM ET

Christopher Klein, Global Head of Business Intelligence
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The next renewal period may be four months away, but it is uppermost in everyone’s mind across the (re)insurance industry. Without a crystal ball, it is impossible to predict the market’s exact trajectory, but several trends have become evident in 2008. Absent a mega-catastrophe, rates likely will continue to trend downward but will be tempered by pressure on investment gains arising from the ongoing effects of the global credit crunch and reinsurers’ fears of an imminent market-changing disaster.

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