DOWNSTREAM INSURANCE MARKET UPDATE
Justin BlackmoreManaging Director, Global Downstreamand Chemicals, Willis Natural Resources
CAPACITY (USDM)
0
1,000
2,000
3,000
4,000
5,000
6,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
International
North America Estimated “realistic” market capacities
?
?
2014 DOWNSTREAM LOSSES (EXCESS OF USD10M)
Source: Willis/Willis Energy Loss Database as at January 6 2015 (figures include both insured and uninsured losses)
A PROFITABLE PORTFOLIO?
Source: Willis/Willis Energy Loss Database as at January 6 2015 (figures include both insured and uninsured losses)
ARE THE MAJOR COMPOSITES STILL MAKING MONEY?
Company Combined Ratio on Property/Casualty business 2013:
AIG 98.4%
Swiss Re 83.3%
Munich Re 92.1%
Zurich 95.5%
Liberty Global Specs 95.5%
Source: Company websites
THE OUTLOOK FOR 2015
0
1,000
2,000
3,000
4,000
5,000
6,000
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
0
20
40
60
80
100
120
Onshore Capacities Average Composite Percentage of 1992 rates
USDmEstimated Average Rate Index
(1992=100)
Is there any escape from the laws of supply and demand?
Downstream Capacity versus Rating Levels, 1993 – 2014(Excluding Gulf of Mexico Windstorm)
?
Source: Willis
ISSUES FACING THE MARKET TODAY
n Regional v Global Competition
n Resolution of Complex Claims
n Value of Risk Knowledge/Understanding
n Value of Relationships
AND..
n Continuation of Softening Market Trend:
• Fresh leadership options
• Need for Differentiation
• Consideration of Fresh Risk Transfer Products