Industry Overview: Check-Up, Check-Mate, Or Check-Out? MODERATOR: Paul F. McKeon, MBA, Senior Vice President, Transatlantic Reinsurance Company PANELISTS:

Slides:



Advertisements
Similar presentations
2011 Medical Professional Liability Symposium Chicago, IL ~ March 24 & 25, 2011 IS HINDSIGHT IN HEALTHCARE REALLY 20/20?
Advertisements

Insurance Fraud: Are Policyholders the Only Victims? Conference of State Governments, Eastern Region Annual Meeting Atlantic City, NJ July 21, 2012 Steven.
FIBI FIRST INTERNATIONAL BANK OF ISRAEL O verview
FIBI FIRST INTERNATIONAL BANK OF ISRAEL O verview
FIBI FIRST INTERNATIONAL BANK OF ISRAEL O verview
Copyright © 2009 Pearson Prentice Hall. All rights reserved General Principles of Bank Management Now let’s look at how a bank manages its assets.
Homeowners Insurance Rates Are Rising In Some Places: Here’s Why Spring 2012 Steven N. Weisbart, Ph.D., CLU, Senior Vice President & Chief Economist Insurance.
Gateway Strategy: Equity — Why Not?
1 FINANCE 7311 CORPORATE FINANCIAL PLANNING. 2 FINANCIAL PLANNING l Long-Run CORPORATE OBJECTIVES Maximize the Value of the Firm Sub -objectives (INCREASE.
State of the P&C Market. State of the P&C Market P&C Market Presenters : Jim Dwane, Chartis Insurance Jim O’Connor, Willis Jim O’Connor, Willis.
1 CINCINNATI FINANCIAL CORPORATION Credit Suisse First Boston 2005 Annual Insurance Conference November 2005.
1 The Navigators Group, Inc. “Insuring a World in Motion” New York Society of Security Analysts, Inc. Insurance Industry Conference January 26, 2004 Stanley.
FIBI FIRST INTERNATIONAL BANK OF ISRAEL O verview
Financial Plan Overview Andrew M. Cuomo, Governor Robert L. Megna, Director of the Budget July 2011 New York State Division of the Budget.
ERM 1 Creating Value through ERM ERM Symposium – April 26, 2004 Session: CS 6A Donald Watson Vice President of Enterprise Risk ACE Group.
Wells Fargo Insurance Services © 2006 Wells Fargo Bank, N.A. All rights reserved. The entire presentation is confidential. Distributing or sharing this.
© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Short-Term Finance and Planning Chapter Nineteen.
1 Outline  Historical Results and Baseline  2005 and 2007 – A period of change  2007 and beyond – Insight and Perspective  Industry Issues  TRIA,
1 Note: Shaded areas denote hard market periods. Source: A.M. Best, Insurance Information Institute PREMIUMS Growth in P/C NPW Highly Cyclical Real NWP.
Hospital Corporation of America Rovi Das ACG
Essentials of Financial Statement Analysis Revsine/Collins/Johnson/Mittelstaedt: Chapter 5 Copyright © 2009 by The McGraw-Hill Companies, All Rights Reserved.
McDonald’s Corporation
© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Short-Term Finance and Planning Chapter Eighteen Prepared by Anne Inglis, Ryerson University.
1-1 What is Finance? The study of how people allocate scarce resources over time The study of how people allocate scarce resources over time Costs and.
Measuring Profitability James Dow For GBUS 600 Spring 2004.
Capital Punishment: Why Earning a Fair Rate of Return is Tougher than Ever in the P/C Insurance Business International Union of Marine Insurers New York,
National Council of Self-Insurers 2014 Meeting Presented by Tom Hebson Vice President June 2, 2014.
08 Dec Accountant Perspective On Appraisal Value Derivation Conference: Dynamic Solvency Testing & Appraisal Value Thursday, 8 December 2005 Ballroom.
1- 1 Corporate Finance and Applications – Review of Financial Topics for Case Studies Fall 2015 Dr. Richard Michelfelder.
R L Captive Solutions Cost Control Presentation by Travis Lantis R L Consulting, LLC.
1 AC116 Accounting II Seminar 6 Jim Eads, CPA, MST, MSF Corporations: Organizations, Stock Transactions, and Dividends Part I.
© 2004 Towers Perrin September 23, 2004 James D. Hurley, ACAS, MAAA Medical Malpractice Update CASE 2004 Fall Meeting.
September 24, 2015 Alabama Association of Financial Professionals Edward L. Rand, Jr. Executive Vice President & Chief Financial Officer.
1 The Navigators Group, Inc. “Insuring a World in Motion” CSFB Insurance Conference March 25, 2004 Stanley A. Galanski, President & Chief Executive Officer.
Copyright © 2004 by Thomson Southwestern All rights reserved Insurance Company Financial Management Issues Chapter 16.
October 4, 2007 Proprietary & Confidential Overview of Professional Liability PLUS – Southwest Chapter Meeting.
Market Cycle Update Personal Lines Greg Ciezadlo, FCAS, MAAA Farmers Insurance Group Casualty Actuarial Society Spring Meeting 2002 – San Diego, California.
Western Financial Group Q Financial Results Conference Call November 16, 2009.
Spring 2002 CAS Meeting Modeling Capital Adequacy Matthew C. Mosher, FCAS Group Vice President Property/Casualty Ratings May 21, 2002.
2006 D&O Symposium The Dilemmas in the D&O Market Where do We Go From Here?
1 Economic Benefits of Integrated Risk Products Lawrence A. Berger Swiss Re New Markets CAS Financial Risk Management Seminar Denver, CO, April 12, 1999.
Smith Barney Citigroup Small & Mid-Cap Conference May 6, 2004 Allmerica Financial Corporation Ed Parry Executive Vice President Chief Financial Officer.
Casualty Actuarial Society Spring Meeting May 15 – 18, 2005.
1 © כל הזכויות שמורות Summary of Nine-Month Financial Results 2010 Conference Call with Analysts November 28, 2010 The Phoenix © All rights reserved.
Stock Trading 102 Seminar Arlen Novelli, Sesame Chen, Stefan Filipovic and Abby Holtan.
Merrill Lynch Matt Western ACG2021 Section 002. Executive Summary Overall Merrill Lynch had a great year in They increased their revenues 11% from.
2003 FINANCIAL REVIEW Samuel M. Garvin, Jr. Vice President and Chief Financial Officer.
Spring 2004 CAGNY Meeting How do Rating Agencies Determine Insurance Company Ratings John Andre Vice President Property/Casualty Ratings June 3, 2004.
 2005 NCCI Holdings, Inc. Workers Compensation State of the Line 2006 CAS Ratemaking Seminar Jeff Eddinger, FCAS, MAAA Practice Leader & Senior Actuary.
The Insurance Industry Outlook Presented By Frederick Eppinger Frederick Eppinger, Executive Vice President, Field & Service Operations The Hartford To.
Essentials of Financial Statement Analysis Revsine/Collins/Johnson/Mittelstaedt: Chapter 5 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies,
CAS Annual Meeting EMERGING ISSUES IN MEDICAL MALPRACTICE THE ROLE OF THE ACTUARY IN ALTERNATIVE INSURANCE MARKETS November 16, 2004 Richard B. Lord, FCAS.
0 State Of The Market March 7, 2008 Carol L. Murphy Managing Director Aon Risk Services.
Pozavarovalnica Sava, d. d. Financial Report Three Months to 31 March 2012 ( ) May 2012.
1 Northeast Ohio RIMS Market Update Carol Murphy, Managing Director, Aon Risk Services, Inc. October 6, 2009.
C O R P O R A T I O N Cincinnati Financial Credit Suisse Insurance Conference November 16, 2006 C O R P O R A T I O N.
1 The Navigators Group, Inc. “Insuring a World in Motion” Cochran, Coronia & Co. Investor Meetings June 22, 2004 New York City Stanley A. Galanski, President.
2002 CAS Reinsurance Seminar Economic Forces Driving the Property/Casualty Industry May 2002.
1 St. Louis RIMS Casualty Market Update Jim Gloriod Resident Managing Director Aon Risk Services, Inc. February 10, 2010.
CONTROLLING COSTS Choosing the Right Insurance Program Kevin D. Smith, CPCU, ARM Vice President Workers’ Compensation.
Proceedings Paper Value Creation in Insurance – A Finance Perspective Russ Bingham CAS Annual Meeting Vice President andNov , 2004 Director.
Insurance Accounting Overview
REIT Performance Evaluation: A Case Study of Washington Real Estate Investment Trust (WRIT) Thanks to Jay Sa-Aadu (University of Iowa) for providing this.
First Quarter Fiscal Year 2009 Financial Results December 19, 2008
Insurance Profitability
Property/Casualty Insurance
Western Financial Group Q Financial Results Conference Call
Banking and the Management of Financial Institutions
Financial & Business Planning
Data as of September 30, 2019 unless otherwise noted
Presentation transcript:

Industry Overview: Check-Up, Check-Mate, Or Check-Out? MODERATOR: Paul F. McKeon, MBA, Senior Vice President, Transatlantic Reinsurance Company PANELISTS: Ross Bertossi, CPCU, President, ACE Medical Risk Bonnie Boone, Senior Vice President & Practice Leader, Alliant Healthcare Solutions, Alliant Insurance Services, Inc. Nicholas Gralton, Managing Director, North American Casualty-London, Guy Carpenter John H. Mize, FCAS, MAAA, Principal, Tillinghast Business of Towers Perrin Stan Starnes, Chairman & Chief Executive Officer, ProAssurance Corporation

P/C Insurance Industry Combined Ratio, E *Includes Mortgage & Financial Guarantee insurers. Sources: A.M. Best; Insurance Information Institute Best combined ratio since 1949 (87.6) As recently as 2001, insurers paid out nearly $1.16 for every $1 in earned premiums *2009F

P/C Net Income After Taxes F ($ Millions)* *ROE figures are GAAP; 1 Return on avg. surplus numbers are annualized based on 9-mos. Actual of $4.066 billion. Sources: A.M. Best, ISO, Insurance Information Institute 2001 ROE = -1.2% 2002 ROE = 2.2% 2003 ROE = 8.9% 2004 ROE = 9.4% 2005 ROE= 9.4% 2006 ROE = 12.2% 2007 ROAS 1 = 12.3% 2008 ROAS = 1.1%* Insurer profits peaked in $14,178 $5,840 $19,316 $10,870 $20,598 $24,404 $36,819 $30,773 $21,865 $3,046 $30,029 $61,940 $5,421 -$6,970 $65,777 $44,155 $20,559 $38,501 -$10,000 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70, F

Year-to-Year Change in Net Written Premium, F* *2008 figure is 9-month actual result from ISO. Source: A.M. Best (historical and forecast), Insurance Information Institute P/C insurers are experiencing their slowest growth rates since % 8.4% 15.3% 10.0% 3.9% 0.5% 4.2% -1.0% -0.4% 0.9% F2009F

Policyholder Surplus, 2006 – 2008 (Est.) Source: Insurance Information Institute; ISO (historical); Towers Perrin (Oct. 21) estimates for Q Q4 assumes no major investment market recovery before year-end Declines Since 2007:Q3 Peak Q4E: -$84B (-16.1%) Capacity peaked at $521.8 as of 9/30/07 5 $ Billions $487.1 $496.6 $512.8 $521.8 $478.5 $438.0 $505.0 $515.6 $517.9 $380 $400 $420 $440 $460 $480 $500 $520 $540 06:Q407:Q107:Q207:Q307:Q408:Q108:Q208:Q308:Q4

Cumulative Rate Decreases A Small Sample -80% -70% -60% -50% -40% -30% -20% -10% 0% ABCD 4 separate multi-facility healthcare systems Policy Year Average Rate Change

Rate Decrease and Syndication -16% -37% -32% -40% -43% % -45% -40% -35% -30% -25% -20% -15% -10% -5% 0% Policy Year # Carriers Average Rate Change

ROE vs. Equity Cost of Capital: US P/C Insurance: :Q3 *Excludes mortgage and financial guarantee insurers Source: The Geneva Association, Insurance Information Institute pts -9.7 pts 8 -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% * ROECost of Capital The cost of capital is the rate of return insurers need to attract and retain capital to the business

1975: 2.4% 1977:19.0% 1987:17.3% 1997:11.6% 2006:12.2% 1984: 1.8% 1992: 4.5% 2001: -1.2% Note: 2009 figure is actual 9-month result Sources: ISO; Insurance Information Institute P/C Insurance Industry ROEs, 1975 – 2010F* 9 -5% 0% 5% 10% 15% 20% 25% F

What affects the financial crisis has on Healthcare clients? Issues that Health Care providers are concerned with: Expenses are reduced, however, all of our clients have stressed that their Patient Safety efforts will not be comprised. Medicare and Medicaid reimbursement and bad debt Balance sheet and asset issues - no more investment income Difficulty in acquiring capital or credit Bond issues to support capital growth There are less elective surgeries More strain on Emergency Rooms as the public losses their jobs - the strain of the uninsured. Construction Operations have been halted Personnel shortages as a result of lay-offs

From a risk transfer perspective here are some of the issues that can be addressed to combat the financial crisis: Make sure all of the carriers are AM Best rated. Also, provide S&P and Moody’s information to your clients. Arrange meetings to develop a strategy. How much risk can they assume? Will they need to reduce limits? If they have a captive, discuss the financials of the captive. When the market begins to turn or stabilize insured's/clients will be concerned about the stability of carriers. One way to address this is to syndicate your placements. Don’t put all of your eggs in one basket, with regards to limits of liability. Combat the financial crisis from a risk transfer perspective