Tag Archives: Aon Benfield

Exceedance 2015: In the Books

It’s been quite a week here in Miami – full of palm trees, ocean views…and catastrophe risk management.

Throughout the week, our keynote speakers discussed hot topics in science, catastrophe modeling, and risk management:

  • We kicked off the week with keynotes from Hemant Shah, Paul Wilson, Ben Brookes, and Daniel Stander discussing RMS’ vision for the future and how catastrophe modeling can enable innovation and growth within the (re)insurance industry and beyond.
  • Patricia Grossi shed light on earthquake risk in Latin America, and there were more than a few misty eyes as Laurence Golborne regaled us with tales of risk management from his time as minister of mines and energy in Chile, where he led the rescue of the “Los 33” miners trapped underground for more than two months.
  • Rick Knabb, director of the National Hurricane Center, explained why awareness is central to the mission of the NHC; educating the public about the need to prepare increases the ability to recover.
  • Robert Muir-Wood explained that the biggest concentrations of risk and gradients of risk are coastal, necessitating state-of-the-art modeling of storm surge, tsunami, and liquefaction in order to mitigate this risk.

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Hemant and other members of the RMS leadership team answered questions on-stage during an “Ask Us Anything” session. Here are a few highlights:

  • What’s your vision beyond 2020?
    • Eric Yau: We want to create an open platform that unlocks innovation potential for our clients and partners.
    • Matthew Grant: Our goal is to allow clients to underwrite business that isn’t possible today. We will work together to grow the broader (re)insurance market.
  • What can I do to help Nepal? 
    • Paul VanderMarck: We work with Build Change, an organization aligned with our mission of mitigating risk. We recommend them as an organization and are matching employee contributions. Build Change is starting a program in Nepal using the same playbook that has already been successful in areas such as Haiti and Japan.
  • Suppose you were to start from scratch today – would you do anything differently? 
    • Mohsen Rahnama: When we started, we didn’t have any of the tools we have today. We take advantage of and implement technology to approach problems in a systematic way. Technology allows us to build better models.

In addition, we were thankful to have many of our clients and partners not just attend, but present at Exceedance. BMS, JLT RE, Munich Re, Aon Benfield, Risk Frontiers, Holborn Corp, ARA, Willis Re, Guy Carpenter, TigerRisk, SCOR, and Price Forbes all presented during the “Alternative Views of the Market” track which provided insight from across the industry.

  • Munich Re showed impactful videos of homes under 100 mph winds, emphasizing the difference in performance of structures built to various standards.
  • Willis Re advocated for deterministic modeling and developing alternative views of risk by considering different sizes of events and “what if” analyses.
  • Guy Carpenter explained how to define critical events by aligning the level of loss to specific outcomes such as lost earnings, ratings watches, and ratings downgrades.

And finally, we salsa-ed the night away to the sweet tunes of two-time Grammy-nominated Latin band Palo during EP, the Exceedance Party, at LIV nightclub.

I hope you enjoyed the week and found it insightful and thought-provoking. We hope to see you all back at the Fontainebleau Miami Beach Hotel next year, where Exceedance 2016 will take place from May 16 to 19.

Trading Risk Awards: ILS Innovation Recognized

In June, RMS had the pleasure of hosting a table at the Trading Risk Awards in London. These annual awards aim to recognize the best of the (re)insurance convergence market: individuals and companies contributing to the advancement of the insurance-linked securities (ILS) industry.

That night three RMS-modeled transactions that came to market in 2013 were given special recognition: Tradewynd Series 2013-2, MetroCat Re Ltd., and Atlas IX Capital Ltd. These three transactions incorporate several noteworthy innovations that promise to shape the future of ILS.

Initiative of the year – A Multi-Model Approach to Catastrophe Bond Risk Analysis

AIG and Swiss Re Capital Markets were awarded “Initiative of the Year” for their multi-model approach to Tradewynd Series 2013-2. This transaction provided a first for the industry by introducing transparency to a typically opaque and restricted risk management process.

Typically, data is only privy to the modeling firm retained to produce the risk analysis included in the offering documentation. On this occasion, while RMS was the main modeling agent for the deal, AIG’s exposure data was supplied to all three modeling firms so that investors had a more accurate representation of the risk of the bond under multiple views.

Not only did investors get the RMS view of commercial and high-end residential risk on this bond, they also got unprecedented insights into the exposures driving the risk. The market reacted favorably to the approach with markedly tighter spreads and larger issuance than the prior Tradewynd bond with a nearly identical risk profile.

Non-Life Transaction of the Year – MetroCat Re Ltd

This groundbreaking surge-parametric transaction received two accolades: the Metropolitan Transportation Authority (MTA) was awarded “Sponsor of the Year,” and the deal itself was proclaimed “Non-Life Transaction of the Year,” recognizing the MTA, GC Securities, and Goldman Sachs for their roles in the transaction.

The MetroCat bond addressed the need for surge-insurance capacity after Superstorm Sandy by providing the MTA with insurance cover based on water levels exceeding certain heights at tide gauges in the New York area. The RMS® North Atlantic Hurricane Model, with its full-lifecycle hydrodynamic modeling capability, was critical in understanding the risk to the transaction. The success of MetroCat Re proves that corporates and municipalities can access capital through ILS, as well as produce transactions that provide much needed surge cover.

Life Transaction of the Year – Atlas IX Capital Ltd.

Aon Benfield Securities, BNP Paribas, Natixis, and SCOR won “Life Transaction of the Year” for Atlas IX Capital Ltd., the highest risk bond of its kind to come to market. For this watershed deal, RMS used its suite of LifeRisks models to provide scenario-based modeling results. This allowed investors to gain greater insight into the risk to the transaction from changing trends in baseline mortality in addition to excess mortality from infectious disease, terrorism, earthquakes, and residual risks.

Congratulations to all the winners. We are delighted to see continued innovation in the market.