For Immediate Release October 10, 2001
Successor Product from U.S. RE to Meet Looming Reinsurance Capacity Crunch
New York, NY - A new product offered by U.S. RE will meet the needs of reinsurance buyers faced with unprecedented challenges and price increases at year-end, reports Brian McGuire, Senior Vice President of the international reinsurance brokerage firm.
The catastrophe product provides Excess-of-Loss protection to insurers throughout the world who file U.S. GAAP financial statements. Known as U.S. RE's "Successor Product," the coverage is a form of Alternative Risk Transfer that grew out of the Company's original multi-year products that were developed in 1993 to meet the reinsurance capacity crunch that followed Hurricane Andrew. "
Our Successor Product meets the risk transfer standards of the Financial Accounting Standards Board and leading state regulatory authorities. Compliance can be demonstrated by U.S. RE's Dynamic Financial Analysis model - trademarked U.S. RE Assure TM. It also deals effectively with accrual accounting issues that have burdened buyers of finite products in the past and thus, provides true surplus relief. The product is available from reinsurers rated AAA and AA by Standard & Poor's," Mr. McGuire explains.
" The new product provides both a first-event limit and a separate reinstatement limit," he adds. Most Alternative Risk products offer only one limit and often require accrual of future years' premium. "Our product can be purchased in tandem with pre-existing catastrophe protections to fill gaps or to underlie or overlie traditional catastrophe protections or in place of same, entirely", says Mr. McGuire. U.S. RE's Successor Product eliminates the need for any accrual. "
The September 11th attack on the World Trade Center will create the biggest insured loss in history, much of it to fall on the reinsurance industry. Already, we see estimates of total insured losses from $35 billion up to $58 billion. Insurers facing year-end renewals will find it prohibitively expensive, if not impossible, to obtain the catastrophe coverage they need from traditional reinsurance," according to Mr. McGuire.
He encouraged reinsurance buyers "to act now because the supply is not unlimited and capacity available for U.S. RE's Successor Product will diminish as demand builds." He predicts that prices will rise as the renewal season approaches.
U.S. RE has established a Catastrophe Task Force to help companies find the best solutions in this unprecedented reinsurance market. Task force members are Mr. McGuire; Joe Fedor, Executive Vice President; Paul Dzielinski, Vice President; Susan Lubalin, Vice President; and Justin Duffy, Broker. They can be reached at 212-808-5500.
