The PC Industry Post-KRW - PowerPoint PPT Presentation

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The PC Industry Post-KRW

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    1. The P/C Industry Post-KRW Vincent J. Dowling, Jr. Dowling & Partners Securities TMPAA Mid Year Meeting April 2006

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    7. 6 New RMS Model (6.0) = Significant Event Increased Hurricane Activity Assumed for Next 5 Years (e.g. 30% Increase in Landfalls of Cat 3- 5 Hurricanes = 40% increase in Annualized Losses in Gulf, Florida and Southeast) Increased Vulnerability, Especially Commercial Risks (30-40%) Increases In Modeled Uncertainty Broader Modeling Of Loss Amplification Frequency Alone = 10-30% Increase in Portfolio Loss Estimates Increases in Severity, Demand Surge, Vulnerabilities, etc. = Further Increase = More Capital Needed (Rating Agencies) = Lower Returns = + Exposures Need to Be Cut Back Significantly = + More Reinsurance Buying Example: We See 50%+ More Capital Needed to Maintain Existing Aggregates in Peak Zones

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    25. 24 \\dowling\data\speech\spreadsheets\Other Finl Sector's ROE.xls\\dowling\data\speech\spreadsheets\Other Finl Sector's ROE.xls

    26. 25 update \\dowling\data\Models\Industry.xls1update \\dowling\data\Models\Industry.xls1

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    29. 28 Dont Know Cost Of Goods Sold = Carriers Assume Pricing & Inventory Risk For P/C Industry (Surprises Usually Negative) 1/3+ of Industry Doesnt Care About Profit (Mutuals) Heavily Regulated. Everyone Hates The Industry Capital - Ease of Entry But Difficult Exit Buyers Knowledge > Sellers Knowledge Inability/Lack of Effort to Attract Top Talent Large & Powerful Intermediaries NewNew