| 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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| December 2007 |
| What's the State of Your State? E&O Risk Uneven Across the Country (Professional Liability Specialty Practice Briefing) |
| Where will lightning strike in the ongoing credit crisis? The collapse of the subprime market means that E&O litigation for real estate industry professionals is probably around the corner, with a wide range of potential victims. What will determine the risk of litigation? A familiar maxim: location, location, location. Where a mortgage industry professional practices can impact the likelihood of a lawsuit. There is no single indicator of E&O litigation risk, but the right combination of litigation attorney concentration, the frequency of Truth in Lending lawsuits, mortgage delinquencies and other factors can tell you where the lightning bolt may land.
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| November 2007 |
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| October 2007 |
Guy Carpenter Casualty Reserve Index
Managing the Unknown (Structured Risk Specialty Practice Briefing) |
| According to A.M. Best, the number one cause of financial impairment of insurance companies is
inadequate reserves. Under-reserving can arise from a number of causes including systemic risk.
Systemic risk includes new areas of toxic torts ("the next asbestos") and adverse judicial decisions
regarding insurance cover. While the industry continues to struggle with reserve adequacy against
unanticipated loss developments, Guy Carpenter has developed hedging tools built to address the
risk of reserve inadequacy arising from systemic risk.
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| October 2007 |
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| July 2007 |
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| June 2007 |
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| April 2007 |
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| February 2007 |
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| January 2007 |
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| January 2007 |
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| January 2007 |
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| January 2007 |
| Florida Legislative Update (Property Specialty Briefing) |
| On January 23rd, Guy Carpenter together with VJ Dowling held a teleconference to discuss Florida's legislative changes with regard to reducing insurance rates for consumers and the implications for the insurance and reinsurance industry. This report summarizes that call.
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| December 2006 |
| Lloyd's Update: A New Era Beckons (Market Information Briefing) |
| Developments at Lloyd's over the last six months point to a strengthening of the market's competitive position. The news is rightly dominated by the announcement that, subject to approvals, Berkshire Hathaway is to provide substantial extra reinsurance protection for Equitas in 2007, as a prelude to a planned assumption of liabilities in 2009. We also provide an overview of Lloyd's interim results, highlight recent corporate activity and assess the likely shape of the market in 2007.
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| November 2006 |
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| September 2006 |
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| April 2006 |
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| March 2006 |
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| February 2006 |
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| February 2006 |
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| January 2006 |
| RISK-i Review 2005 (Instrat® Briefing) |
| Guy Carpenter's Instrat® unit has compiled a summary of the major man-made or technological catastrophes that occurred in 2005. The briefing provides an overview of the main events, along with insured loss information. | |
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| January 2006 |
| Tropical Cyclone Review 2005 (Instrat Briefing) |
| This briefing provides a summary of events for the 2005 hurricane and typhoon season, with information on tropical cyclones and their associated losses in the North Atlantic, North East Pacific and North West Pacific basins. | |
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