New reinsurance-related and arbitration developments from Carlton Fields
Guy Carpenter has published a report on the cat bond market for the third quarter of 2009 on its GC Capital Ideas website. While the third quarter is “traditionally quiet,” there were two significant issues coming to market this year, which is a significant expansion over the same quarter of 2008.
This post written by Rollie Goss.
Observant readers will have noticed a new addition to the right sidebar of Reinsurance Focus titled Reinsurance Market. In discussions with our clients, many have mentioned the higher reinsurance rates this season, and the particular difficulty in obtaining acceptably priced reinsurance for cat risks. Although the cat bond market basically dried up during the second half of 2008, early 2009 has seen a number of cat bonds successfully issued and sold, using a somewhat different model and cost structure than before. Since our tracking of how many readers view each of our posts reveals that a large number of our readers are interested in such topics, we have added this new area to provide links to publicly available studies and analysis of the reinsurance market and cat risk bond market. It is not our intention to provide “newsy” items in this area, but rather to bring to the attention of our readers particularly thoughtful reports and studies which might provide a basis for creative thinking to help get your company or clients through difficult times. Let us know what additional types of information might be useful to you.
This post written by Rollie Goss.
Readers may obtain a fairly comprehensive view of the global reinsurance industry from reading three reports:
This post written by Rollie Goss.
With the adoption of the Insurance Investment Act of 2008, Bermuda has adopted risk-based capital adequacy standards for “high impact insurers” and instituted a structure which will be equivalent to those in Europe's Solvency II Directive. The requirements include enhanced financial statement disclosures for Bermuda's Class 4 insurers which comply with Generally Accepted Accounting Principles (GAAP), re-classification of the Class 3 insurance sector, with sub-categories based upon risk profiles, and a new category of Special Purpose Insurer, which is focused on fully collateralized special purpose vehicles that are established to conduct certain transactions, especially those related to asset-backed securitizations. One goal of this new classification is to make it less costly for SPVs to be established in Bermuda. A press release issued by the Bermuda Monetary Authority briefly summarizes the Act.
This post written by Rollie Goss.
The Florida Hurricane Catastrophe Fund has agreed to a creative way to fund potential hurricane losses, and create liquidity, agreeing to pay Berkshire Hathaway $244 million for its agreement to buy $4 billion in 30-year tax-exempt bonds if the Cat Fund suffers insured hurricane losses in excess of $25 billion this year. Press reports state that the Cat Fund is looking to this mechanism to enable it to act quickly to reimburse insurers for incurred losses.
This post written by Rollie Goss.