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Reinsurers “maintain presence & relevance” with alternative capital: Willis Re

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Traditional reinsurance firms continue to launch alternative capital management platforms, as one strategy to offset the challenges of a soft reinsurance market but also as a way to “maintain presence and relevance,” according to broker Willis Re.

Writing in its recent market report, Willis Re, the reinsurance broking arm of Willis Towers Watson, explains that reinsurers alternative capital and ILS management ambitions are more than just a reactive response to market conditions, rather they are becoming key to remaining an important player in the marketplace.

The broker highlights a “continued need for scale and breadth of service offering” in the current, challenging reinsurance market environment and expects that we will increasingly see a “divergence in results” as certain reinsurers that have achieved scale or diversity are able to outperform smaller players.

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Strong and transparent fair value accounting could grow ILS: WCMA

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Should more insurance-linked securities (ILS) funds adopt more transparent fair value accounting a more transparent and liquid market could develop, that would ultimately lead to further expansion of the sector, according to Bill Dubinsky, Head of ILS at Willis Capital Markets & Advisory (WCMA).

Dubinsky explains that fair value accounting “attempts to capture a market value at a point in time.”

“Conceptually, fair value accounting allows for the expected value of future cash flows, discounting, and adjustment for risk, counter-party credit risk and market conditions.”

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Property Claim Services (PCS) leadership changes announced

artemisORIGINAL PUBLICATION HERE

Leadership changes have been announced at Property Claim Services® (PCS), the division of Verisk Insurance Solutions that collects and aggregates insurance industry loss data which is widely used in reinsurance, industry loss warranty (ILW) and catastrophe bond transaction.

Tom Johansmeyer has been appointed assistant vice president of PCS Strategy and Development, and Ted Gregory has been appointed director of Operations for PCS. Joe Louwagie, who currently leads the PCS business, will be transitioning into a new, broader role within Verisk Insurance Solutions.

Johansmeyer will be tasked with leading global efforts to expand PCS into new regions and lines of business, as well as driving strategy and developing a roadmap for new solutions.

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PRA insurer stress tests show importance of reinsurance capital

artemisORIGINAL PUBLICATION HERE

Results from a series of stress tests set by a division of the Bank of England, the Prudential Regulation Authority (PRA), has underlined the importance of diversified reinsurance capital to the 26 largest UK general insurers.

During 2015 the PRA called on some of the UK’s largest general insurers to participate in stress tests that would test their capital adequacy, reserves, and reinsurance arrangements under worst-case scenario situations.

This included three major hurricanes within a year, a coordinated multi-city terror attack, a motor liability shock, European windstorms and floods, and a major economic shock scenario.

Russia pledges $10 million to help mitigate climate impact in Europe and CIS region and beyond

ORIGINAL PUBLICATION HERE

Moscow – The Government of Russia will be making a $10 million contribution towards UNDP programmes which support efforts to mitigate and prevent the negative effects of climate change in developing countries.

The announcement was made just a few days ahead of the signing of the Paris Climate Agreement and during the first annual Consultation Meeting on the partnership implementation between UNDP and the Russian Federation in Moscow this week.

Co-chaired by Cihan Sultanoğlu, UN Assistant Secretary-General and Director of UNDP’s Regional Bureau for Europe and the Commonwealth of Independent States (CIS), and Gennady Gatilov, Deputy Minister of Foreign Affairs, the meeting involved senior officials of Russian ministries, and representatives from business associations.

ILS: pricing, diversification premium

ORIGINAL PUBLICATION HERE

Roman Muraviev, head of cat bonds, and Sandro Kriesch, head of private ILS, at specialist insurance investment manager Twelve Capital, take a look at recent pricing developments.

Some 20 years ago, Morton Lane and John Finn depicted the right price for an insurance risk as one “where the perfume of the premium overcomes the pong of the peril”. While there are numerous fair valuation paradigms in the re/insurance sector, which can vary from option pricing techniques to actuarial loading principles, one aspect remains somewhat identical among all theories, namely that the ‘pong of the peril’ should be quantified by considering an appropriate capturing of the loss distribution of the respective risks.

BMA

Solvency II Equivalence FAQs – April 2016

BMA

ORIGINAL PUBLICATION BY BERMUDA MONETARY AUTHORITY CAN BE FOUND HERE

What is Solvency II?

The aim of any solvency regime or system is to ensure a company is able they fall due – essentially, to guarantee a company’s assets can provide for long-term financial stability.

The Solvency II Directive (Solvency II) is a harmonised framework aimed at ensuring there is a single market, utilising a single set of rules for insurance services. The requirements under Solvency II apply to (re)insurance companies and European Union (EU) insurance groups operating in the EU with the exception of those (re)insurers covered under Article 4 of the Directive. These (re)insurers and groups are now required to comply with requirements under Solvency II, effective 1st January 2016.

Solvency II aims to ensure (re)insurers including catastrophic events and adversely affect their books of business and claims-paying abilities. Solvency II encompasses requirements surrounding risk sensitive solvency, governance and risk management, and public disclosures.

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Survey Shows Impact of Warm Ocean Climate on Hurricane Risk Modeling

air_logoORIGINAL PUBLICATION HERE

As this year’s hurricane season approaches, many are wondering if the 10-year drought of major hurricane landfalls experienced by the U.S. will come to an end. Many factors influence hurricane dynamics, but one of the most important is sea surface temperature (SST). Warm water—SSTs of at least 26°C (78.8°F) to a depth of 50 m (164 feet) below the ocean surface—is one of the elements essential for tropical cyclone formation. Elevated SSTs, such as those experienced in recent years, provide even more heat energy to fuel storm development.