1、|2023 Conning,Inc.Macroeconomic Impact on ReinsurancePresentation to the Casualty Actuarial SocietyJune 20231Agenda1.New Market Realities!2.First It Was Inflation3.Reinsurance Market Reset4.What Happened to the Capital Account?5.Implications for Primary InsurersNEW MARKET REALITIES3Insurers Are Adap

2、ting to a New World!Implications for Primary InsurersInvestment ValuesReinsurance CapacityCapitalReserve AdequacyNegative FactorsUpward ForcesInflationReinsurance PricesInsured ValuesInterest RatesHigher growthHigher riskPremium on capital managementEconomic,social+15%,MINIMUMHigher premiums,higher

3、severityHigher NII,higher cost of capitalDislocation of deployable capitalRealized and unrealized lossesDown 14%since YE 21Pressured by inflation2023 Conning,Inc4Risk Transfer Challenged with Capacity ConstraintsRisk TransferFunctioning MarketDislocated MarketRetroILWILSRe/insurerReinsurersU.S.Europ

4、eBermudaLloydsILSPrimary InsurersRegionalSpecialistNationalStocksMutuals/ReciprocalsConsumers and Businesses20 Markets book value?4Hard Markets Too ShortShort-lived hard markets with new capital and competition driving rates down5New vs.ExistingMore attractive to invest in existing companies and sid

5、ecar vehicles6Recent Track RecordInvestors stung by above-average losses in 5 of last 6 years7Rise of Secondary PerilsDiversifying perils become peak exposures8Inflation and Loss CreepAccelerating severity with both economic and social inflation9Model ReliabilityToo much reliance on models with inhe

6、rent limitations10Management ExpertiseIs there sufficient pool of bankable management talent?A.Over the next 3-5 years the insurance markets will adapt and become less dependent on reinsurance and related capital market instruments.B.The next 3-5 years will see a(near)continuation of current conditi

7、ons and represent a golden-era for reinsurers.You can only choose one!Polling Question23About ConningConning()is a leading investment management firm with a long history of serving the insurance industry.Conning supports institutional investors,including insurers and pension plans,with investment so

8、lutions,risk modeling software,and industry research.Founded in 1912,Conning has investment centers in Asia,Europe and North America.Insurance ResearchConning publishes over 100 unique insurance industry research reports annually,including its Insurance Segment Reports with periodic line-of-business

9、 reviews;its Forecast&Analysis service,which offers a forward look at the industry;the Focus Series which offers a concise analysis of strategic issues,and its well-known Strategic Study series offering an in-depth view of key products and trends and issues of critical industry importance.All are av

10、ailable for individual or enterprise-wide subscription through our web-based insurance research portal Conning Library(https:/).In addition to its published research,Conning offers proprietary research and consulting focused on the insurance industry.For more information on our insurance research se

11、rvices,please call 888-707-1177 or visit addition to its published research,Conning offers proprietary research services to the insurance industry.For more information on our insurance research services,please call 888-707-1177 or visit presentation has been prepared for and distributed exclusively

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