National Underwriter - December 5, 2011

Insurance (Property) Property Catastrophe Domestic International
TRANSATLANTIC AND ALLEGHANY: COMBINED COVERAGE
Insurance
(Casualty)

Traditional Casualty

10%6%
40%

Reinsurance (Short-Tail Casualty)

20%

Reinsurance (Long-Tail Casualty)

13%
9%
40%

Specialty Reinsurance

42%
58%
17%
25%
21%

Property
Non-Catastrophe
Reinsurance (Property)

Specialty Insurance

Sources: Company filings, SNL Financial

E TRANSATLANTIC HOLDINGS is to become an independent subsidiary of property and liability insurer Alleghany Corp. under the terms of an agreement valuing Transatlantic at about $3.4 billion. Transatlantic has been courted by several companies and had an agreement in place with Allied World Assurance until the two mutually agreed to terminate the deal. Most recently the New York-based reinsurer was in talks with Validus Holdings, which made an unsolicited offer for Transatlantic as it tried to close the Allied World deal. The Alleghany-Transatlantic transaction is expected to close during 2012’s first quarter.

COSTLIEST U.S. DISASTERS Florida Bears Brunt

$50 $45.8

$40

Red = Impacted Florida *2010 Dollars in Billions

$30

$23.1 $22.6

$20

$10

$17.5

$12.8 $11.5

$8.6 $8.2 $6.7 $6.3 $5.3 $4.3

Sept. 11th Attacks (2001)

Hurricane Andrew (1992)

Northridge Earthquake (1994

Hurricane Ike (2008)

Hurricane Wilma (2005)

Hurricane Charley (2004)

Hurricane Ivan (2004)

Hurricane Hugo (1989)

Hurricane Rita (2005)

Hurricane Frances (2004)

Hurricane Jeanne (2004)

Hurricane Katrina (2005)

Source: PCS, Insurance Information Institute

E FLORIDA HAS BEEN impacted by the bulk of the country’s costliest disasters over the last two decades, and the state’s response from an insurance standpoint has drawn criticism over the years—with the state-entity Citizens Property Insurance Corp. becoming Florida’s largest property insurer. But Robert Hartwig, president of the Insurance Information Institute, says leadership in Florida now seems committed to shrinking the size of the state’s exposures to a major hurricane. “It appears they understand prices need to increase at Citizens Property Insurance Corp.,” Hartwig says. “They should also be encouraging greater private-sector involvement.”

POLICY ADMINISTRATION SOLUTION DEPLOYMENTS BY INSURER SIZE

Insurers with
$500 million to
$999 million in
premium
Insurers with
$1 billion to
$4.9 billion in
premium

3%
Insurers
with
$5 billion
or more
in premium
Insurers with
$100 million
to $499
million in
premium
Insurers
under $100
million in
premium

Source: Celent

E THE MAJORITY OF 2010 DEALS for policy-administration systems involved small carriers, with under $100 million in premium. A new Celent study shows 45 percent of purchasers were carriers of this size, and another 30 percent were insurers with $100 million to $499 million in premiums. Conversely, only 3 percent of purchasers were the largest carriers with $5 billion or more in premium. Celent says competition among policy-administration vendors is expected to remain strong, as many vendors provide services in this space.