Transcript Document

THE P/C (RE)INSURANCE
VALUE CHAIN IS “IN PLAY”
June 10th 2015
Young Professionals' Global Forum
Vincent J. Dowling, Jr.
THE PENSION FUND “MARTINI”
Pension Fund Capital Under
Management
$30 trillion
Global insurance sector capital
(including life) $2.5 - $3 trillion
Global property cat limit
$341 billion
Global retro capital
<$30 billion
Source: Guy Carpenter
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“ALTERNATIVE CAPACITY” GAINS MARKET SHARE
ALTERNATIVE CAPACITY AS A % OF
GLOBAL PROPERTY CAT REINS. LIMIT
20%
Guy Carpenter estimates nontraditional capacity at ~18% of
total world wide cat limits.
Ultimately, GC predicts
alternative capacity could
reach $115-150 by 2018.
Doubles In 5
Years
18%
16%
14%
12%
10%
18%
8%
6%
4%
8%
9%
11% 12%
14% 15%
2014 GLOBAL P/CAT REINSURANCE
CAPACITY BY SOURCE
TOTAL = $60B Industry
Cat Bonds,
$23
2%
0%
Side-cars,
$7
2008 2009 2010 2011 2012 2013 2014
As of Year-End
Loss
Warranties,
$3
Collateralized
Re, $27
Source: Guy Carpenter; *As Of Jan-2015
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PROPERTY CAT PREMIUMS =
~ 10% OF GLOBAL NON-LIFE REINSURANCE
$144.9B
$12.3B
~$25B+
~$4B+
$21.5B
$0.8B
$84.4B
$3.5B
$47.1B
$2.0B
Florida Remains The Global
Cat Market “Peak Zone”
$28.3B
$1.9B
2015 Global Cat Market:
$341B Limit; $21B Premium
Source: Guy Carpenter estimates (as of 3/1/15)
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JUNE 1ST 2012: PRICE TAKER BECOMES
PRICE MAKER = 3 RENEWALS IN FLORIDA
Florida Property Cat Pricing
Florida ROL Index (Base = June 2011)
120
100
100
103
Impact of FL P/Cat Rate On "Expected" C. Ratio
Expected Rate
Increases Muted
87
80
90%
90%
82%
85%
70
80%
65
60
40
95%
75%
70%
60%
59%
65%
67%
60%
20
Assumes Rates Off
5-10% At Jun-15 55%
0
50%
June 2011
June 2012
June 2013
June 2014
June 2015
Note: “Expected” c. ratio assumes a loss and G&A expenses are held constant. 2011 base c. ratio considers a 45% loss ratio, 10%
commission ratio and 5% G&A. ratio. Source: D&P Analysis
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THE P/C (RE)INSURANCE VALUE CHAIN IS IN PLAY
The (Re)Insurance Value Chain
Moving Further From The “Customer”
= More Pressure On Returns
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HEDGE FUND REINSURANCE MODELS
“Hedge Fund 1.0”
$1.2B
(David Einhorn)
“Hedge Fund 2.0”
Capital ($,B)
$0.5B
(John Paulson)
$1.5B
(Dan Loeb)
$1.1B
(Highbridge Capital)
$1.2B
“Content” Is King Model
(Two Sigma)
$0.8B*
(Pine River Capital)
$1.0B
Potential New Sponsors ?
(Golub Capital)
Pine River Re
(BlackRock)
$0.8B*
Where Will The Premium Come From ?
* Press reports suggested target capital of $750M for Golub Capital and Pine River Re
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