| May 2013 |
| Catastrophe Bond Update: First Quarter 2013 |
| GC Securities released an analysis of first quarter activity and trends within the catastrophe risk market for 2013. Two natural peril-exposed catastrophe bond transactions closed during the first quarter of 2013, for a total of USD520 million of issuance. This seemingly low level of primary issuance activity is deceiving, however, as activity in the capital markets and the influence of "non-traditional" capacity – a term that is rapidly approaching obsolescence – has never been higher. In the first quarter of 2013, USD520 million of issuance was offset by USD352.5 million of maturities, driving an increase of risk capital outstanding of USD167.5 million. When looking to the remainder of 2013, GC Securities expects the market to approach, if not exceed, the record for annual issuance of USD7.0 billion set in 2007. | |
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| April 2013 |
| 2013 April Hurricane Predictability and Model Representation Challenges |
| The purpose of this briefing is to inform Guy Carpenter?s approach to hurricane risk in the context of new scientific findings. It is well known that this is a period of elevated hurricane counts in the Atlantic basin. This period should continue, as favored by the Atlantic Multidecadal Oscillation (AMO) and the Pacific Decadal Oscillation (PDO). | |
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| February 2013 |
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| January 2013 |
| January 2013 Renewal Report; Executive Summary |
| The reinsurance market at January 1, 2013, was characterized by ample dedicated capital and stable pricing with only loss-affected lines and regions experiencing price volatility. Figure 1 shows the Guy Carpenter Global Property Catastrophe Reinsurance Rate on Line (ROL) index fell marginally at the 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. Over this period the reinsurance market has responded well to financial crises, increasing international losses and numerous Atlantic Basin and European wind events. | |
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| November 2012 |
| 2012 Sandy Impact |
| As documented by the National Hurricane Center (NHC), Superstorm Sandy made landfall as a post-tropical cyclone at 8PM EDT, Monday Oct 29, 2012, with maximum sustained winds of 80 miles per hour. Frequently, major events in our industry display unique characteristics that lead to further examination of how insurance and reinsurance coverage responds in unanticipated circumstances. Sandy displayed several unique characteristics, highlighting areas that will likely take months to fully sort through. Outlined below is a review of the components of the event and issues that have begun to arise in part due to the unique nature of Sandy. | |
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| November 2012 |
| Taking Control of Quantifying Your Natural Catastrophe Risk |
| It is Guy Carpenter?s responsibility as a reinsurance broker to lead the industry in probing all components of each model through direct questioning of modeling vendors, model testing and independent third-party validation of model components. While much of Guy Carpenter?s model validation work in 2011 centered around some specific observations related to the U.S. hurricane hazard, namely landfall frequency and storm surge, that work simply scratched the surface. Of the three building blocks in a catastrophe model ? hazard, vulnerability and the financial module ? most model investigation work has historically centered on frequency and vulnerability ? but not so anymore. While the full range of model validation work from last year is too large to document in a single paper, there are several analyses that provide helpful examples to a wide range of insurers, some of which are detailed below and framed in terms of the client questions which prompted them.
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| November 2012 |
| Industrial Parks of Asia |
| In 2011, Thailand experienced its worst flooding in years, which severely damaged and disrupted manufacturing operations in seven large industrial parks. Due in large part to the significant concentration of insured values in these parks, the total insured loss from the 2011 flood is estimated to be in the range of USD15 to USD20 billion. As Thailand plays a critical role in the global supply chain, the flooding forced many companies to organise alternative production facilities or supply routes for parts. In light of the disproportionate contribution of losses from industrial parks to the overall insured loss, Guy Carpenter has identified the industrial parks in China, Taiwan, Thailand and Indonesia. The actual boundaries of the industrial parks have been digitised and will be accessible to clients using i-aXs?, Guy Carpenter´s proprietary and award winning web-enabled exposure visualisation and portfolio management platform. Using i-aXs?, Guy Carpenter clients will be better able to evaluate concentration risk arising from having multiple insured risks within an industrial park. | |
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| October 2012 |
| GC Adjustments of the RMS v11 Model |
| Guy Carpenter has performed multiple exercises to assess the performance of the RMS v11 European Windstorm model. These efforts are part of Guy Carpenter´s Model Suitability Analysis (MSA)sm initiative, which supports (re)insurers in the development of their own view of risk for internal risk management and reinsurance structuring and pricing. MSA evaluation tests focus on particular portfolios and are organized across three components: sensitivity testing, loss validation and scientific appraisal. The results obtained have led Guy Carpenter to suggest a model adjustment strategy. | |
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| October 2012 |
| Comparing Solvency II Standard Scenarios for Windstorms |
| With the generalized use of catastrophe models to measure the natural catastrophe exposure of insurance portfolios, the outcomes of these models have more and more influence in the determination of reinsurance needs. With the introduction of the Solvency II regime, the decision on reinsurance purchase should also be an integral part of a company?s risk management process. Specifically, an important consideration is the impact of reinsurance contracts on the Solvency Capital Ratio, a key decision metric of the risk management process. This process is not always easy when the probable maximum losses (PMLs) derived by the cat models differ from the standard European scenarios under Solvency II for calculation of the Solvency Capital Requirement for cat risk (SCRCat). | |
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| August 2012 |
| 2012 Atlantic Hurricane Season |
| Indicators suggest reduced hurricane activity for the peak of the 2012 Atlantic Hurricane Season. However, storms are more likely to develop in the West Atlantic and Gulf of Mexico with a higher threat to land. Since 1950, 100 percent of years saw the occurrence of a September tropical storm, a hurricane in 98 percent of years and a major hurricane in 74 percent of years. A major landfalling U.S. hurricane cannot be ruled out, despite the quiet period of recent weeks. | |
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| July 2012 |
| July 2012 Standard & Poors Proposed Insurance Rating Criteria Update |
| On July 9, 2012, Standard & Poor's (S&P) issued a Request for Comment on proposed changes to its criteria for rating insurance companies globally. Although S&P expects the overall impact on global ratings to be modest, the proposed changes are significant and may adversely affect individual rated (re)insurers. The new criteria are expected to be published in late 2012 or early 2013.
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| July 2012 |
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| June 2012 |
| Plentiful Capacity Sets The Stage At June 1 |
| More moderate pricing trends were evident at the June 1, 2012, renewal as relatively light catastrophe losses during the first five months of the year contributed to positive reinsurer results and plentiful capacity. These trends and a year to implement catastrophe model version changes resulted in reduced quoting volatility for Florida renewals. Even as quoting volatility declined there was once again evidence of reinsurers taking a more tailored approach to each individual renewal. As also observed during the January and April renewals, reinsurers are implementing more sophisticated approaches using custom risk measures based on their own research and experience. Through this process, pricing and capacity outcomes reflect more specifically each company's circumstances.
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| May 2012 |
| Catastrophe Bond Update: First Quarter 2012 |
| The first quarter of 2012 was the most active first quarter on record in the catastrophe bond market. Sponsors sought to lock in capital markets capacity for a diverse array of perils and structures in a somewhat uncertain traditional market environment. Capital providers proved up to the task, albeit at slightly increased pricing relative to market levels in late 2011.
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| April 2012 |
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| April 2012 |
| Texas Tornadoes & 2012 Storms In Context |
| The National Weather Service confirmed that 13 tornadoes touched down in northeast Texas on the afternoon and evening of April 3, 2012, with several impacting the densely populated Dallas-Fort Worth metropolitan area. This briefing provides insight on the day's events and looks at the tornado season in context.
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| April 2012 |
| April 1 Reinsurance Renewals |
| The April 1 renewal has provided a clear indication of how the near record catastrophe losses in 2011 – two-thirds of which occurred in Asia – have affected (re)insurance rates in Japan. April 1 is a significant renewal date for Asia-Pacific markets and for Japan in particular.
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| February 2012 |
| Eurozone - Reinsurance Contract Issues |
| The implications of the many possible outcomes of the current "Eurozone Crisis" are profound and unpredictable and in some cases, unprecedented. The implications are also wide-ranging, embracing political, economic and legal dimensions. Such complexity gives rise to different, not to say contradictory, interpretations and predictions. However, we can only be certain that actual events, when they happen, will follow their own unique trajectory. | |
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| February 2012 |
| Poised for Growth: Guy Carpenter's Seventh Annual Specialty Insurance Program Issuing Carrier Survey |
| Specialty program insurance providers predict that the Program Administrators and Managing General Agents (PA/MGA) market will grow in 2012 as a result of changes taking place in program business, according to a survey conducted by Guy Carpenter. In its annual study of the PA/MGA marketplace, Guy Carpenter surveyed both traditional insurance companies with specialty program operations and specialty insurance carriers about their program business and the direction of the PA/MGA marketplace. Now in its seventh year, the study found that while the majority of respondents perceive the PA/MGA marketplace today to be smaller than it has been in previous years, many (51 percent) see it growing in 2012. Overall survey results suggest that the willingness of program carriers to adopt a more flexible approach to building the business will become a key driver of growth. Survey respondents report that they are now considering smaller programs, larger territorial scope and start-up programs as well as fronting opportunities in order to grow, or at least to maintain, a reasonable market share. | |
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| December 2011 |
| Industry Good Practice for Catastrophe Modeling & Solvency II - A Perfect Opportunity for Review |
| The UK insurance industry, supported by the Association of British Insurers (ABI), has developed a report "Industry Good Practice for Catastrophe Modeling & Solvency II" to guide companies' use of catastrophe modeling under Solvency II. Guy Carpenter is ready to help with education and training, catastrophe modeling documentation (including extraction of documentation from model vendors) and data assessment. Key amongst our services will be our expertise in providing model suitability assessments (MSAs) with which we can guide clients in selecting and using catastrophe models. | |
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| November 2011 |
| GC Securities Catastrophe Bond Market Update: Third Quarter 2011 |
| The third quarter 2011 was one of the most active on record, as the catastrophe bond market responded to investor demand for additional investment opportunities, particularly for diversifying peril transactions. Three transactions totaling USD512 million were completed during the third quarter 2011, making it the third most active third quarter on record. Completed issuance contained no exposure to U.S. hurricane peril. Excluding quarters in which no cat bond issuance overall occurred, this is the first quarter since the third quarter 2002 in which there was no transfer of U.S. hurricane risk.
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| November 2011 |
| Spatial and Temporal Earthquake Clustering: An Overview Of EQECAT'S Perspective |
| The recent major earthquakes that have occurred in Chile (February 2010), New Zealand - Canterbury (September 2010), New Zealand - Christchurch (June 2011) and Tohoku (March 2011) have raised questions such as: Do earthquakes of major intensity cluster around the world? Have there been other, previous series of major earthquakes around the world? Are other major earthquakes more likely to occur in the very near future, if so where? These are all very challenging questions. This briefing begins to answer some of them. This briefing presents a summary of the white paper recently released by EQECAT, Spatial and Temporal Earthquake Clustering: Part 1 - Global Earthquake Clustering. It is EQECAT's first paper about both spatial and temporal clustering of mega-thrust earthquakes.
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| September 2011 |
| Casualty Advisory Update |
| The uncertainty regarding the ultimate loss cost of long-tail liability exposures has led insurance regulators to insist on a very high capital allocation requirement for liability
classes within the Solvency II guidelines. These will apply to all insurance and
reinsurance companies with operations, subsidiaries and affiliates in the European
Union (EU) that are licensed to write (re)insurance business within the EU. There are
two aspects to the perceived catastrophe exposure in casualty insurance: 1) reserving
risk and 2) man-made catastrophe risk.
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| August 2011 |
| Update: Downgrade Implications |
| Standard & Poor's has downgraded the U.S. sovereign debt rating to AA+ from AAA. Implications for (re)insurers worldwide are mixed. Although there are broad economic implications, markets appear to have anticipated at least some of these, which could forestall rash or catastrophic outcomes. The long-term effects, however, could be profound.
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| July 2011 |
| Focus on Hurricane Season at July 1, 2011 Reinsurance Renewal |
| July 1 represents the last major renewal period of the year. As we wrap up the majority of placements for 2011, there are several occurrences that have played a key role in the positioning of the market. Chief among the critical 2011 events are the global catastrophe losses and the release of RMS v11, both of which had an impact on reinsurers' capital positions and views of risk. The longer term impact of both of these factors remains somewhat unclear as losses from recent events are not fully developed and there is not a consensus position on the integration of RMS v11.
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| June 2011 |
| Wide Range of Outcomes Seen in June 1, 2011, Florida Reinsurance Renewal |
| The June 1, 2011, renewals took place against the backdrop of record first-half
catastrophe losses and uncertainty surrounding the release of version 11 of Risk
Management Solutions' (RMS) U.S. hurricane model. The heavy international natural
catastrophe-related losses that occurred during the first quarter of 2011 - combined with
the multi-billion dollar losses from tornadoes in the United States in April and May -
have added to significant loss activity over the past 16 months, culminating in insured
losses of close to USD100 billion.
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| May 2011 |
| The Most Active First Quarter on Record, Global Catastrophe Activity Highlights Value of Catastrophe Bond Market |
| The first quarter of 2011 was the most active first quarter in the history of the catastrophe bond market in terms of new issuance. All told, four transactions came to market securing USD1.02 billion of new and renewal risk transfer capacity. This is a significant increase over the USD300 million issued during the first quarter of 2010 and previous first quarter high-water mark of USD615 million posted during the first quarter of 2008. Issuance was diverse in terms of risk profile and structure, although U.S. hurricane risk was a common theme in all four transactions. All transactions marketed during the first quarter of 2011 priced within or inside of their initial spread guidance.
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| May 2011 |
| Succeeding Under Solvency II - Reinsurance and Counterparty Risk |
| Previous reports in our Succeeding Under Solvency II series focused on the capital requirements associated with Pillar I, corporate governance (Pillar II) and disclosure (Pillar III). In this briefing, the third in the series, we concentrate on special considerations for reinsurance and counterparty risk.
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| April 2011 |
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| March 2011 |
| April 1 Reinsurance Renewals |
| The April 1, 2011 renewal once again demonstrated the reinsurance industry's ability to operate during trying times. The renewal, which is dominated by business in the Asia-Pacific region, followed just a few weeks after the devastating 9.0Mw Tohoku earthquake struck off Japan on March 11.
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| March 2011 |
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| November 2010 |
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| September 2010 |
| Casualty Advisory Update |
| The briefing examines emerging issues in the global casualty reinsurance marketplace. Key issues highlighted in the report include the changing role of annuities used in third-party bodily injury claims settlements in Europe, the growing trend of UK courts to award rest-of-life structured settlements and the emerging market for intellectual property (re)insurance in Asia.
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| July 2010 |
| Initial Reactions to Health Care Reform: An Insurer and Reinsurer Perspective |
| With the passing of the Patient Protection and Affordable Care Act, the environment for health insurers has drastically changed. Undoubtedly, the wheels of progress move slowly and we have only begun to understand the full impact that the reforms will have on our industry. What we do know is that these changes will have a significant and immediate impact on every organization conducting business in the health care arena.
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| June 2010 |
| July 1 Renewal Briefing |
| Further erosion of rates was evident at the July 1, 2010 reinsurance renewal. Property rates were down by as much 15 percent despite substantial catastrophe loss activity in the first half of 2010.
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| June 2010 |
| 2010 Hurricane Season Begins |
| The 2010 hurricane season kicked-off on June 1 and the meteorological forces wasted no time in getting down to business. Tropical storm Agatha slammed into Central America, killing at least 101 people.
The hurricane season kick-off and the storm occurred as backdrops to the wrap up of the June 1, 2010 reinsurance renewals, traditionally centered on the Florida property marketplace.
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| June 2010 |
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| June 2010 |
| June 1 Reinsurance Rate Decreases are one Positive Development for Florida Companies |
| While companies deal with navigating the
challenges of the Florida Hurricane Catastrophe Fund (FHCF) integration each year, 2010 also included
heightened commentary by rating agencies regarding acceptable risk transfer approaches, the Florida
Office of Insurance Regulation's own views on risk transfer and an environment of continuing
economic turmoil specific to the Florida insurance environment. In a positive development for these companies, reinsurance pricing continued its 2010 trend of price declines and dropped year over year on a risk adjusted basis by 10 percent to 12 percent on average.
This drop returns pricing to a level close to that seen in 2008, particularly in upper layers.
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| January 2010 |
| Rates Retreat as Capital Rebounds: Global Reinsurance Renewals at January 1, 2010 |
| Reinsurance rates for most lines of business decreased at the January 1, 2010 renewal. The
Guy Carpenter World Catastrophe Rate on Line (ROL) Index decreased by 6 percent in response
to a swift and substantial recovery in the capitalization of the reinsurance sector. The combination
of the rally in investment markets, much reduced catastrophe loss activity and recessionary effects
on demand resulted in an excess of supply and increased competition. This was reflected in a slow
renewal in which many contracts closed very late in the season as buyers sought to gain maximum
advantage. The overall movements in pricing have also occurred against a complicated background
of exposure adjustments, model revisions, program changes and other market noise.
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| October 2009 |
| Update: Risk Profile, Appetite and Tolerance: Fundamental Concepts in Risk Management |
| In April 2009, Guy Carpenter's Financial Intelligence Team published a briefing entitled Risk Profile, Appetite and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness. That briefing included definitions of Risk Profile, Appetite and Tolerance and how these concepts fit into an Enterprise Risk Management (ERM) framework. It also presented the results of our initial Risk Tolerance Benchmarking study, which summarized the information publicly disclosed in this area.
Our update to that study reinforces the conclusion drawn six months ago that (re)insurers increasingly recognize the value of metric-based frameworks and capital models in evaluating their portfolios. Further, as this trend of recognition gains momentum, so does the importance of being able to understand one's place in the rapidly changing risk management space. Accordingly, this briefing revisits the terminology definitions and updates our survey of companies' disclosures in this area.
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| October 2009 |
| Guy Carpenter Fifth Annual Specialty Insurance Program Issuing Carrier Marketplace |
| Guy Carpenter's Fifth Annual Specialty Program Issuing Carrier Survey finds the Program Administrators and Managing General Agents (PA/MGA) market has remained remarkably consistent from 2008 to 2009, despite the outbreak of the worst financial crisis in more than 70 years. While the number of respondents perceiving market growth has declined since last year, the outlook remains quite upbeat, especially given the year's tumultuous market conditions.
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| September 2009 |
| Impact and Implications of Swiss Hailstorms |
| Severe hailstorms caused widespread property, motor and crop damage in Switzerland on 23 July 2009. Although hail losses only make up an average of 9% of all claims in Switzerland every year, the peril has the potential to cause severe localised damage in the country. Hailstorms can trigger insurance claims totalling hundreds of millions of euros if they hit Swiss urban areas, and this scenario was realised on 23 July when hail measuring up to 50 mm in diameter badly battered central and northern cantons and caused the biggest Swiss hail loss in recent memory.
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| April 2009 |
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| October 2008 |
| FHCF Bonding Capacity Update (Property Specialty Briefing) |
| The Florida Hurricane Catastrophe Fund (FHCF) has announced changes in bonding capacity. The new estimates, voted on and approved by the Advisory Council, reflect the changes in the economic climate and emphasize the heavy dependence of the FHCF on
post-event financing to meet its obligations.
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| September 2008 |
| Casualty Cat Unveils Hidden Risks in Your Portfolio (Casualty Specialty Briefing) |
| Casualty risk is rarely linear. A single event could affect many insureds across several lines of business, triggering disproportionate payouts, depleting balance sheets, and possibly threatening solvency. While carriers have been aware of the domino effect that could follow a casualty event, a realistic approach to risk mitigation has been elusive. Sufficient data and modeling capabilities traditionally have been in short supply. Fortunately, there is a new way to manage this threat. Guy Carpenter's Casualty Cat Model, developed jointly with Arium, Ltd., makes it possible to track "hidden" exposures throughout your portfolio and develop a plan for protecting your capital.
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| August 2008 |
| Approaching a Natural Floor – Life, Accident and Health Renewals at July 1, 2008 (Life Accident and Health Specialty Practice Briefing) |
| Life, Accident and Health cedent behavior was relatively unchanged at July 1, 2008 renewals. Prices have continued to come down, thanks to several consecutive benign loss years. Rates are beginning to stabilize for some product lines, including medical stop-loss and long-term disability, though the underlying reasons varied with the types of coverage sought. Insurers also are starting to investigate multi-year coverage to protect against volatility and maintain coverage in the event of market discontinuity, and reinsurers have begun to respond.
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| July 2008 |
| Bag Profits Early – Investment Gains Under Pressure (Business Intelligence Unit Briefing) |
| Asset-driven losses have put pressure on earnings. Investment gains comprise an important part of carriers' long-term profits, and financial markets have shown just how volatile this source can be. With net income off 60 percent from the first half of 2007 to the first half of 2008, carrier profitability will become increasingly reliant on technical earnings.
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| July 2008 |
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| July 2008 |
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| June 2008 |
| Push Pandemic Out of Insurance - Capital Markets Provide Necessary Depth (GC Securities Briefing) |
| Life carriers struggle with the notion of hedging pandemic risk. If an outbreak does occur, the process for estimating losses and determining reserves is unclear. Capital approaches do not consider probabilistic tail scenario risks. Quite simply, managing pandemic risk is an effort mired in doubt, though the potential for a devastating, multibillion dollar, worldwide outbreak is real. Traditional risk transfer tools have only limited utility in covering pandemic exposure. However, the depth and flexibility of capital markets may provide a robust alternative to traditional reinsurance.
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| May 2008 |
| Outlook for Florida Renewals on June 1, 2008 (Property Specialty Briefing) |
| Florida property-catastrophe risk-adjusted pricing is expected to decline by about 15 percent on average at June 1 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.
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| May 2008 |
| 2008 Global Terror Update (Business Intelligence Unit Briefing) |
| The global terror insurance market is constantly reshaped by new governmental and regulatory developments. Several measures were introduced in the past year, including Belgium's establishment of a terror pool, the extension of the terrorism insurance legislation in the United States and changes to terror programs in France and the Netherlands. Peru has
implemented insurance measures related to terrorism coverage, as well. Market capacity for Aviation has grown significantly, and prices have fallen.
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| May 2008 |
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| May 2008 |
| Manage Non-Life Catastrophe Risk with
Custom Scenarios for Solvency II Compliance (Financial and Capital Advisory Practice Briefing) |
| The Solvency II standard model is nearing completion. Quantitative Impact Study 4 (QIS4) was released on 1 April 2008 and will run through July 2008. In QIS4, the non-life catastrophe risk capital component of the solvency capital requirement (SCR) calculation has been modified substantially from QIS3 and has become more complex. In particular, QIS4
includes a personalized catastrophe scenario capital calculation option, improving the risk sensitivity of the standard model relative to a specific carrier. This approach can provide a competitive advantage through the use of model results for internal management purposes and the compliance process.
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| April 2008 |
| The Market's Mixed Signals: Reinsurance Renewals at April 1, 2008 |
| Reinsurance renewals at April 1, 2008 sent mixed signals to the global market. Cedents pushed hard for rate reductions in Asia. Reinsurers stood firm, though, as rates in general may already be close to technical levels. The majority of rate decreases, therefore, were single-digit. U.S. cedents pushed as well. While reinsurers resisted, competitive forces prevailed, and rate reductions were substantial. Decreases can be achieved, it seems, if rates are above technical levels. Insufficient rate levels and poor loss histories lead to reinsurer discipline.
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| March 2008 |
| MetaRisk® and QIS 4 Draft: Calculating Market Risk |
| Solvency II will allow insurers to use approved internal models instead of the standard formula to evaluate market risk and determine solvency capital requirements. With an approach that includes the use of dividends and coupons, MetaRisk® offers a more realistic assessment than the standard formula, enabling more effective decision-making.
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| March 2008 |
| Optimize in a Soft Market, Succeed in any Market — Five Strategies for MGAs and MGUs |
| Soft markets can yield significant opportunities. While many in the marketplace relax underwriting standards and jeopardize future profitability, the next generation of successful firms will focus on optimizing operations and positioning themselves to pounce on the next hard market. For wholesalers, Managing General Agents (MGAs) and Managing General Underwriters (MGUs), achieving sustainable growth now not only leads to outsized profitability when the market hardens, it provides a platform from which to generate future returns – regardless of market conditions. The key may be to seek operational efficiency rather than short-term profits.
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| January 2008 |
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| January 2008 |
| Near Misses, Plentiful Reminders – Global Reinsurance Review (Business Intelligence Briefing) |
| Cedents took advantage of a buyer's market. Many 2008 renewals closed late as cedents held out
for lower rates in the continuing soft market. Reinsurers were rewarded not only with lower rates,
but often smaller lines. The absence of large catastrophe losses was a key factor in the softening
of reinsurance markets. Barring large catastrophe losses in 2008, the downward drift in rates is
expected to continue through 2008 and into 2009.
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