By David Priebe, Chairman, Global Client Development Contact The capital models for (re)insurance risks are evolving. Over the past 15 years, alternative sources of capital have become increasingly important, particularly in the capital-constrained environments that follow major catastrophe events. As expected, capital market vehicles such as catastrophe bonds and sidecars have ... Continue Reading »
Push Pandemic out of Insurance
Capital Markets Provide Necessary Depth David Rains, Managing Director Contact Life carriers struggle with the notion of hedging pandemic risk. The probability of an event occurring in any particular year is low. Even if an outbreak does occur, the process for estimating losses and determining reserves is unclear. Capital approaches do not consider probabilistic tail scenario ... Continue Reading »
Chart: Extreme Mortality Bond Issuance
Mortality bonds may be increasing in popularity, but the market is still in its infancy. Six mortality bonds in 20 tranches have been issued over the past four and a half years. Currently, there is USD1.8 billion in total limits outstanding. One mortality bond (Vita III Ltd.) was sponsored in 2007, generating more than USD500 million of risk capital. While it is clear that the ... Continue Reading »
Don’t Step on Your Long Tail
Eddy Vanbeneden, Managing Direcor Contact With casualty reserves, it can be difficult to determine how much is too much. Unlike property reserves, which are mostly for specific known events, casualty reserves have to be sufficient to cover events that may unfold well into the future. A lot can happen in 15 or 20 years, which only serves to compound the uncertainty that casualty ... Continue Reading »
The Casualty Catastrophe Domino Effect
David Lewin, Head of International Casualty Contact Sometimes, a single incident can trigger a chain reaction. Before you realize what has happened, economic damage has mounted, and claims are being filed. Particularly surprising is that the companies being affected were not really involved in the initial event. This risk, “casualty catastrophe,” has become increasingly ... Continue Reading »
The Advantage of Custom Scenarios for Solvency II Compliance
Frank Achtert, Managing Director Contact The objective of Solvency II—expected to take effect in 2012—is simple. The regulation seeks to protect policyholders and the global insurance system through adequate, risk-based capital (RBC) requirements. Carriers will have to demonstrate a 99.5 percent likelihood of solvency for the coming 12 months, based on the risks they hold in ... Continue Reading »
Chart: Effects of Different Types of Indexation Clause
The amount of the expected recovery from long-tail XL reinsurance treaties of course will vary in line with the differing provisions of these clauses. To download this chart, right-click on the image, and select "Save Picture As". If you have any trouble, please e-mail us. ... Continue Reading »
Chart: Illustrated Effects of Indexation Clauses
The amount of the expected recovery from long-tail XL reinsurance treaties of course will vary in line with the differing provisions of these clauses. To download this chart, right-click on the image, and select "Save Picture As". If you have any trouble, please e-mail us. ... Continue Reading »
Chart Room: Comparison of Indexation Clauses by Country
To download this chart, right-click on the image, and select "Save Picture As". If you have any trouble, please e-mail us. ... Continue Reading »
Chart: Evolving Capital Model for Insurance Risks
The amount coming into the market has increased after each mega-catastrophe. This probably reflects the increased knowledge of insurance markets by the investment community, the increased liquidity and depth of capital markets overall, and the growing size of the losses and concomitant opportunity. To download this chart, right-click on the image, and select "Save Picture As". ... Continue Reading »
