Catastrophe Losses, Credit Crisis Push Reinsurance Pricing Upwards, According to Guy Carpenter Review.Property Catastrophe Rates Increase by 8 Percent After Two Consecutive Years of Declines; Market Remains Highly Volatile NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- High catastrophe losses and the continuing international credit crisis pushed property catastrophe rates up by 8 percent at the January 1, 2009, reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. renewals period, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a briefing on global reinsurance market conditions published by Guy Carpenter Guy Carpenter was fictional character in the Australian soap opera Neighbours played by Andrew Williams from 1991 to 1992. Family Tree
LLC - Logical Link Control , the leading global risk and reinsurance specialist. Cats and Credit Push Prices Up: Global Reinsurance Review January 2009, available at www.GCCapitalIdeas.com, Guy Carpenter's new intellectual capital website, states that property catastrophe reinsurance rate increases were moderate on average, as the Guy Carpenter World Rate on Line (ROL ROL In currencies, this is the abbreviation for the Romanian Leu. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) Index rose 8 percent. "Price increases at the January 1, 2009, renewals have been tempered somewhat by large capital positions, which have enabled carriers to absorb the year's losses, but the marketplace remains highly volatile," said Chris Klein Chris Klein may refer to:
Among the major findings: * Property Catastrophe Rates Rise: Despite the magnitude of catastrophes and financial losses, the 8 percent increase in property pricing was substantially lower than the increases that followed disasters such as Hurricane Andrew in 1992, the terror attacks of September 11, 2001, and Hurricanes Katrina, Rita, and Wilma in 2005. For the United States, rates rose on average by 11 percent, but there were wide variations dependent upon loss experience and zone. Continental Europe remained relatively stable, with rates increasing between 0 percent and 10 percent on a risk-adjusted basis. Rate changes in the UK ranged from -2.5 to 5 percent. * Casualty Capacity Down: Casualty reinsurance pricing grew 5 percent on average at the January 2009 renewal, with a notable lack of capacity. A number of programs could not be placed at any reasonable rate. As a result of the financial catastrophe, new insurers had the opportunity to enter the market, but reinsurers generally were unwilling to support new capacity in order to keep reinsurance rates from dropping. The lines of business most directly impacted by the credit crisis - such as errors and omissions errors and omissions n. short-hand for malpractice insurance which gives physicians, attorneys, architects, accountants and other professionals coverage for claims by patients and clients for alleged professional errors and omissions which amount to negligence. (E&O) and directors and officers (D&O) insurance - experienced the greatest difficulties at renewal. * Effects of Financial Catastrophe: According to the Guy Carpenter Global Composite, carriers lost 15 percent of their implied aggregate book value in 2008, compared to 32 percent for the S&P Banks Index. The Guy Carpenter Reinsurance Composite, consisting of 16 leading firms, lost aggregate shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of $17 billion (16 percent) by the end of the third quarter of 2008. * Retrocession RETROCESSION, civil law. When the assignee of heritable rights conveys his rights back to the cedent, it is called a retrocession. Erskine, Prin. B. 3, t. 5, n. 1; Dict. do Jur. h.t. : 2008's later-than-usual treaty retrocession renewal saw reduced capacity and higher prices. The market was constrained by an inability to replenish balance sheets as a result of the financial catastrophe, as well as the withdrawal of major players from the market. As a result, the upward pricing reaction was more pronounced than in other sectors, and capacity for losses related to Hurricane Ike was scarce. * Buyers Turn to ILWs: A number of reinsurance buyers sought 2009 capacity in the form of Industry Loss Warranties Industry Loss Warranties, often referred to as ILWs, are a type of reinsurance or derivative contract through which one party will purchase protection based on the total loss arising from an event to the entire insurance industry rather than their own losses. (ILW ILW Intermediate Level Waste ILW Industry Loss Warranty ILW Immigration Lawyers on the Web ILW Institute for Land Warfare ILW International Low Water ILW Initial Weight ILW International Linz Weekend ILW Internet Learning Workshop ), as early as October 2008. Several major purchases led to higher prices, as carriers increasingly looked to replace catastrophe bond catastrophe bond A debt security with a payoff tied to the relative severity of a natural disaster such as a hurricane or earthquake. Bondholders are paid with insurance premiums but may have to accept reduced principal repayment in the event the specified capacity with ILW cover. Higher demand and a limited ILW capacity are likely to continue into 2009. * Marine, Energy, and Aviation: Marine rates rose 10-15 percent on average (risk-adjusted), while offshore energy pricing, particularly in the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east , was substantially higher. The aviation renewal showed little change, with pricing stabilizing. "Though the financial catastrophe has affected pricing, it has been less extreme than might have been expected," said Mr. Klein. "In the end, effective risk and capital management practices have enabled the industry to absorb the shocks of 2008 effectively." "Looking forward," added Mr. Klein, "there are a number of unknowns that could negatively impact rates, such as another above-average catastrophe year or a financial surprise. On the other hand, a resolution of the credit crisis could restore asset values and improve the financial conditions of insurers and reinsurers. The first half of 2009 will therefore be a waiting game, with dramatic events having the potential to either negatively or positively impact the market and pricing." Guy Carpenter will release more detailed reports on specific lines of business, regions, and market conditions in the reinsurance sector over the next two weeks. The forthcoming articles will be published on GCCapitalIdeas.com and will provide a more comprehensive review. Guy Carpenter's new intellectual capital website, www.GCCapitalIdeas.com, leverages blog technology, including Real Simple Syndication (RSS (Really Simple Syndication) A syndication format that was developed by Netscape in 1999 and became very popular for aggregating updates to blogs and the news sites. RSS has also stood for "Rich Site Summary" and "RDF Site Summary. ) feeds, as well as searchable category tags, to deliver Guy Carpenter's latest research as soon as it is available. In addition, articles can be delivered directly to BlackBerry[R] devices and other personal digital assistants (PDAs). About Guy Carpenter Guy Carpenter & Company, LLC is the world's leading risk and reinsurance specialist and a part of the Marsh & McLennan Companies. With 50 offices worldwide, Guy Carpenter creates and executes reinsurance solutions and delivers capital market solutions* for clients across the globe. The firm's full breadth of services includes line of business expertise in Agriculture; Aviation; Casualty Clash; Construction and Engineering; Excess and Umbrella; Life, Accident and Health; Marine; Medical; Political Risk and Trade Credit; Professional Liability; Property; Retrocessional Reinsurance; Surety; Terrorism and Workers Compensation. GCFac[R] is Guy Carpenter's dedicated global facultative reinsurance unit that provides placement strategies, timely market access and centralized management of facultative reinsurance solutions. In addition, Guy Carpenter's Instrat[R] unit utilizes industry-leading quantitative skills and modeling tools that optimize the reinsurance decision-making process and help make the firm's clients more successful. Guy Carpenter's website address is www.guycarp.com. * Advice on securities or investments in the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community is provided through GC Securities Ltd., authorized and regulated in the UK by the Financial Services Authority The Financial Services Authority ("FSA") is an independent non-departmental public body and quasi-judicial body that regulates the financial services industry in the United Kingdom. Its main office is based in Canary Wharf, London, with another office in Edinburgh. . Securities or investments, as applicable, are offered in the United States through GC Securities, which is a division of MMC See MultiMediaCard and Microsoft Management Console. Securities Corp., a US registered broker-dealer and member FINRA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., GC Securities Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product. |
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