Capital markets are still trying to find solid ground. Equity values are depressed both generally and for the (re)insurance industry specifically. The FTSE 100 and S&P 500 indices are down approximately 15 percent year-over-year (measured from 2007H1 to 2008H1). The Dow Jones Euro STOXX 50’s decline of 25 percent is more precipitous, but it is not as severe as the 34 p ... Continue Reading »
Chart: Global Carrier Earnings, 1H07 to 1H08
A study of several prominent risk-bearers suggests that investment gains are down profoundly across the (re)insurance industry significant. Investment gains for this group reached an aggregate USD98 million for the first half of 2007. For the same period in 2008, though, the group showed an aggregate investment loss of USD566.2 million, and the majority has been realized. Net ... Continue Reading »
Chart: Quoting Behavior at July 1, 2008 Renewals
In successive renewal anniversaries, catastrophe quote spreads have tightened as reinsurers have become more realistic about their abilities to maintain expiring prices. But, there was little change in overall terms and conditions. Retentions and limits are generally stable. In the United States, the memory of terror risk seems to be fading. Rates for this peril continue to ... Continue Reading »
Chart: Property & Casualty Renewals at July 1, 2008
Quotes and firm order terms (FOTs) were down relative to July 1, 2007 renewals. Both lower and higher layers sustained double-digit declines. FOTs for the former were down 15 percent to 20 percent year-over-year, while lower layers were off 10 percent to 15 percent. To download this chart, right-click on the image, and select "Save Picture As". If you have any trouble, please ... Continue Reading »
No Surprises, Rates Continue to Fall: P&C Reinsurance Renewals, July 1, 2008
Christopher Klein, Global Head of Business Intelligence Contact Excess capital caused soft market conditions persisted at July property and casualty renewals. For property-catastrophe covers, risk-adjusted pricing dropped 10 percent to 20 percent relative to July 1, 2007. Quote ranges narrowed, though, as reinsurers responded to the realities of the market. The weakening global ... Continue Reading »
Clashing Conventions: Measuring and Managing Exposure
Emil Metropoulos, Senior Vice President Contact Conventions are fertile ground for risk. With tens of thousands of people in one place, a single act of terror or a natural catastrophe could result in substantial insured losses for workers compensation carriers. But, it has been almost impossible to assign a number to this risk, let alone manage it effectively, since the data ... Continue Reading »
Chart: Florida – Risk-adjusted Pricing
The Floriday Hurricane Catastrophe Fund (FHCF) continues to play an important role in most companies’ overall reinsurance programs, and price decreases have been more dramatic for higher layers attaching above the FHCF. This results largely from reinsurers’ preference for more remote exposures. Firm order terms (FOTs) for lower layers (sitting below the FHCF) dropped 7 percent t ... Continue Reading »
Outlook for Florida Renewals on June 1, 2008
Kevin Stokes, Managing Director Contact Florida property-catastrophe risk-adjusted pricing is expected to decline by about 15 percent on average at June 1, 2008 renewals. A competitive reinsurance market and the absence of major insured losses are driving this trend. While disasters are not in short supply, none has had a market-changing impact. ... Continue Reading »
Manage Non-Life Catastrophe Risk with Internal Models: Custom Strategies for Solvency II Compliance
The Solvency II standard model is nearing completion. Quantitative Impact Study Draft 4 (QIS 4) was released on April 1, 2008 and will run through July 2008. In QIS 4, the non-life catastrophe risk capital component of the solvency capital requirement (SCR) calculation has been modified substantially from QIS 3 and has become more complex. In particular, QIS 4 includes a ... Continue Reading »
Understanding Unknown Convention Accumulations
Emil Metropoulos, Senior Vice President Contact The continued rise of the convention industry has created a unique clash exposure for workers compensation (re)insurers. Carriers are increasingly familiarizing themselves with “known” accumulations, the risks associated with the day-to-day workplace, since the terror attacks of September 11, 2001. “Unknown” accumulations, on the o ... Continue Reading »
