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Munchener Ruckversicherungs-gesellschaft — Munich Re — Natural Catastrophe Review Webinar: First Half of 2015
59 slides from Munchener Ruckversicherungs-gesellschaft's conference presentation, Jul 14, 2015
Slide 1: Natural Catastrophe Review Webinar First Half of 2015
Natural Catastrophe Review Webinar First Half of 2015 July 14, 2015
Slide 2: Agenda
Agenda Introduction Sharon Cooper Press Spokesperson, Munich Re America US Natural Catastrophe Update Carl Hedde Head of Risk Accumulation, Munich Re America Update on El Niño & Global Natural Catastrophes Dr. Peter Höppe Head of Geo Risks Research, Munich Re Economic Implications of Natural Catastr
Slide 3: US Natural Catastrophes - First Half of 2015
US Natural Catastrophes - First Half of 2015 Carl Hedde, Head of Risk Accumulation Munich Reinsurance America, Inc. © 2015 Munich Re Source: FEMA
Slide 4: US Headlines – First Half 2015
US Natural Catastrophe Update US Headlines – First Half 2015 Insured losses in US totaled $8.2 billion – far below 2000 - 2014 average loss of $11.2 billion (Jan-June) Drought conditions in California continue to worsen, creating increased risk of wildfires. El Niño conditions may bring much nee
Slide 5: Natural disaster losses in the U.S. 2015
US Natural Catastrophe Update Natural disaster losses in the U.S. 2015 Based on perils (January – June only) Number of Estimated Overall Estimated Insured As of July 1, 2015 Events Fatalities Losses (US $m) Losses (US $m)* Severe Thunderstorm 38 66 7,000 5,100 Winter Storms & Cold Waves 11 80 3,800
Slide 6: Loss events in the U.S. 1980 – 2015
US Natural Catastrophe Update Loss events in the U.S. 1980 – 2015 Number of events (January – June only) Number Geophysical events First Six Months in 2015 (Earthquake, tsunami, volcanic activity) 80 Events Meteorological events (Tropical storm, extratropical storm, convective storm, local storm) 22
Slide 7: Loss events in the U.S. 1980 – 2015: Overall and insured losses
US Natural Catastrophe Update Loss events in the U.S. 1980 – 2015 Overall and insured losses (January – June only) Overall losses totaled US$ 12.6bn; Insured losses totaled US$ 8.2bn Overall losses bn US$ (in 2015 values)* Insured losses (in 2015 values)* *Losses adjusted to inflation based on count
Slide 8: Notable U.S. Events First Half of 2015
March 2010 March 2015 Notable U.S. Events First Half of 2015 © 2015 Munich Re Photos: NASA
Slide 9: Drought Conditions as of June 2015
US Natural Catastrophe Update Drought Conditions as of 30 June 2015 © 2015 Munich Re 9
Slide 10: Extreme Precipitation in Texas & Oklahoma
US Natural Catastrophe Update Extreme Precipitation in Texas & Oklahoma The United States saw its wettest month of May on record. May 2015 was also the wettest month in the history of Oklahoma and Texas, in terms of statewide average rainfall. OK: 14.18” (Previous 10.75”, October 1941) TX: 7
Slide 11: Winter storms
US Natural Catastrophe Update Winter storms First Half 2015 For second straight year, persistent ridge over western North America caused frigid air to stream southward into eastern US Record snowfalls across New England, caused numerous roof collapses, while frigid temperatures burst pipes Agg
Slide 12: Thunderstorms
US Natural Catastrophe Update Thunderstorms Tornado Count for First Half 2015 Preliminary tornado counts for first half of 2015 about 200 below the 2005-2014 average. Tornado counts in April (185) and May 2015 (414) were much higher than in 2014. Source: NOAA © 2015 Munich Re 12
Slide 13: Insured Losses Due to Convective Storms
US Natural Catastrophe Update Insured Loses Due to Convective Storms* January – June Only, 1980 - 2015 Overall losses totaled US$ 7.0bn; Insured losses totaled US$ 5.1bn Insured losses (in 2014 values)** US$m 5 year Mean *Convective storms include tornadoes, hail, and straight-line winds **Losses ad
Slide 14: Update on El Niño
Update on El Niño Dr. Peter Höppe, Head of Geo Risks Research Munich Re © 2015 Munich Re Source: NOAA
Slide 15: ENSO (El Niño/Southern Oscillation)
Update on El Niño ENSO (El Niño/Southern Oscillation) Definitions ENSO (El Niño/Southern Oscillation): natural climate oscillation in tropical Pacific Ocean, which affects both ocean and atmosphere. Anomaly of sea surface temperature in so called Niño3.4-Region (= Niño3.4-Index) is used to defin
Slide 16: The 2015-2016 El Niño
Update on El Niño The 2015-2016 El Niño Moderate El Niño conditions have developed over past 6 months over eastern equatorial Pacific Forecasts indicate this will likely be strongest El Niño event since 1997-1998 If strong El Niño develops, there is high probability for a La Niña next year C
Slide 17: The 2015-2016 El Niño: Expected U.S. Impacts
Update on El Niño The 2015-2016 El Niño Expected U.S. Impacts: Cooler and wetter than normal along southern third of nation Drier than normal in Pacific Northwest and Ohio River valley; warmer than normal from Alaska to Northern Plains Reduced tropical cyclone risk in Atlantic; increased risk
Slide 18: Global characteristic changes in El Niño phases
Update on El Niño Global characteristic changes in El Niño phases Lower TS activity in Atlantic ocean; higher in East-Pacific Increased flood risks in South America; Southeast China Increased drought risk in East and North Australia; Southeast and South Asia; Southern Africa; North/Northeast B
Slide 19: State of Climate (NOAA): 2014 warmest year on record
Update on El Niño State of Climate (NOAA): 2014 warmest year on record! 2015 starts with new record! 2014 was the warmest year across global land and ocean surfaces since records began in 1880 9 of 10 warmest years in 135-year period of record have occurred in 21st century 1998 currently ranks
Slide 20: G7 Climate Risk Insurance Initiative
Update on El Niño G7 Climate Risk Insurance Initiative G7 decided to support people in developing countries to protect themselves against economic consequences of more intense and frequent extreme weather events Target: extra 400 million people earning less than US$ 2 per day get access to direc
Slide 21: Global Natural Catastrophes - First Half of 2015
Global Natural Catastrophes - First Half of 2015 © 2015 Munich Re
Slide 22: Loss events worldwide Jan – June 2015
Global Natural Catastrophe Update Loss events worldwide Jan – June 2015 Geographical overview Avalanche, winter damage Geophysical events Afghanistan, (Earthquake, tsunami, February–March Winter Storm Niklas volcanic activity) Europe, 30 March–1 April Earthquake Meteorological events Nepal, China, I
Slide 23: Loss events worldwide 1980 – 2015
Global Natural Catastrophe Update Loss events worldwide 1980 – 2015 Number of events (January – June only) Number Geophysical events (Earthquake, tsunami, volcanic activity) Meteorological events (Tropical storm, extratropical storm, convective storm, local storm) Hydrological events (Flood, mass mo
Slide 24: Loss events worldwide 1980 – 2015: Overall and insured losses
Global Natural Catastrophe Update Loss events worldwide 1980 – 2015 Overall and insured losses (January – June only) US$ bn Overall losses (in 2015 values)* Insured losses (in 2015 values)* *Losses adjusted to inflation based on country CPI Source: Munich Re, NatCatSERVICE – As at July 2015 © 2015 M
Slide 25: Loss events worldwide 2015: Overview and comparison
Global Natural Catastrophe Update Loss events worldwide 2015 Overview and comparison with previous years 2015 2014 Average of the Average of the Top Year (Jan – June) (Jan – June) last 10 years last 30 years 1985 -2014 2005-2014 1985-2014 (Jan – June) (Jan – June) (Jan – June) Number of events 510 5
Slide 26: The five costliest natural catastrophes for the insurance industry
Global Natural Catastrophe Update Loss events worldwide 2015 The five costliest natural catastrophes for the insurance industry Overall Insured losses losses Date Region Event Fatalities US$ m US$ m 16-25.2.2015 United States, Winter storm 39 2,400 1,800* Canada 30.3-1.4.2015 Europe Winter Storm Nik
Slide 27: Costliest natural catastrophes since 1980
Global Natural Catastrophe Update Costliest natural catastrophes since 1980 Ranked by insured losses Year Event Region Insured loss US$m (in original values) 2005 Hurricane Katrina USA 60,500 2011 EQ, tsunami Japan 40,000 2012 Hurricane Sandy USA, Caribbean 29,500 2008 Hurricane Ike USA, Caribbean 1
Slide 28: Market & Financial Impact of Catastrophe Losses: First Half 2015 Summary
Market & Financial Impact of Catastrophe Losses: First Half 2015 Summary Insurance Information Institute July 14, 2015 Robert P. Hartwig, Ph.D., CPCU, President & Economist Insurance Information Institute ♦ 110 William Street ♦ New York, NY 10038 Tel: 212.346.5520 ♦ Cell: 917.453.1885 ♦ bobh@iii.org
Slide 29: Winter Storm Losses: Significant Economic Impact—Again
WINTER STORM LOSSES: Significant Economic Impact—Again! Losses from Snow, Ice, Freezing and Related Causes Typical Cost Insurers Between $1 Billion and $2 Billion Annually ($2.3B+ in 2014/15) 29
Slide 30: US Real GDP Growth
US Real GDP Growth* Real GDP Growth (%) The Q4:2008 decline was the steepest since the Q1:1982 drop of 6.8% 5.0% 5.0% 7% 4.5% 4.6% 4.1% 4.1% 3.6% 3.5% 3.2% 3.1% 3.1% 3.0% 2.9% 5% 2.8% 2.7% 2.7% 2.7% 2.7% 2.6% 2.6% 2.5% 2.5% 2.4% 2.3% 2.2% 2.2% 2.0% 1.8% 1.8% 1.8% 1.3% 1.3% 1.3% 1.1% 3% 0.4% 1.4% 0.1
Slide 31: Inflation Adjusted U.S. Catastrophe Losses by Cause of Loss, 1995–2014
Inflation Adjusted U.S. Catastrophe Losses by Cause of Loss, 1995–20141 Wind/Hail/Flood (3), $21.4 Fires (4), $6.0 Winter storm Insured cat losses Other (5), $0.2 losses were much above Geological Events, $0.5 1.5% from 1995-2014 5.4% average in Terrorism, 0.1% 0.1% totaled $395.6B, an 2014/15 are $
Slide 32: Top 16 Most Costly Disasters in U.S. History
Top 16 Most Costly Disasters in U.S. History—Katrina Still Ranks #1 (Insured Losses, 2014 Dollars, $ Storm Sandy in 2012 Billions) was the last mega-CAT to hit the US $60 12 of the 16 Most $50.2 Expensive Events $50 Includes in US History Includes Joplin, MO, $40 Tuscaloosa, tornado Have Occurred $3
Slide 33: I.I.I. Poll: 10 Years After Katrina, Flood Coverage Understanding
I.I.I. Poll: 10 Years After Katrina, Most Understand Flood Is Not Covered Under Standard HO Policies Q. Does your homeowners policy cover damage from flooding during a hurricane?1 Don’t know 19% 24% Yes 56% No More Than Half of Homeowners Know Their HO Insurance Does Not Cover Flood From a Hurricane
Slide 34: I.I.I. Poll: Flooding from Hurricanes
I.I.I. Poll: Flooding from Hurricanes Q. Does your homeowners policy cover damage from flooding during a hurricane?1 Respondents answering “yes”. 40% 34% 30% 30% 24% 20% 14% 14% 10% 0% South Northeast Midwest West Total U.S. Homeowners in the South and Northeast Were Most Likely to Think Home Insura
Slide 35: P/C Insurance Industry: Financial Update
P/C Insurance Industry: Financial Update 2015 Is Likely to Be One of the Strongest Years in the Post-Recession Era (2013 Was Best) 35
Slide 36: P/C Industry Net Income After Taxes 1991–2015:Q1
P/C Industry Net Income After Taxes 1991–2015:Q1 $ Millions 2005 ROE*= 9.6% 2006 ROE = 12.7% 2007 ROE = 10.9% Net income $65,777 $80,000 2008 ROE = 0.1% fell modestly $63,784 $62,496 2009 ROE = 5.0% (-12.5%) in 2014 vs. 2013 $55,501 $70,000 2010 ROE = 6.6% 2011 ROAS1 = 3.5% $60,000 $
Slide 37: ROE: Property/Casualty Insurance by Major Event, 1987–2015:Q1
ROE: Property/Casualty Insurance by Major Event, 1987–2015:Q1 (Percent) P/C Profitability Is Subject to Cyclicality and Ordinary 20% Volatility, Typically Due to CAT Katrina, Rita, Wilma Activity 15% Low CATs 2015 similar to 2013-14 10% Sept. 11 Somewhat higher CAT activity in 5% Hugo 2014 had a Low
Slide 38: A 100 Combined Ratio Isn’t What It Once Was: Investment Impact on ROEs
A 100 Combined Ratio Isn’t What It Once Was: Investment Impact on ROEs Combined Ratio / ROE Lower CATs (relative to 2011/12) helped ROEs in 2013/14/15 18% 110 15.9% A combined ratio of 14.3% 106.5 15% about 100 generates 105 12.7% 100.6 100.1 100.8 101.2 101.0 102.4 an ROE of ~7.0% in 10.9% 99.5 10.
Slide 39: Surplus/Capital/Capacity
SURPLUS/CAPITAL/CAPACITY Industry Claims Paying Capital Stands at Near Record High as of mid-2015 (Re)Insurance Industry is Well Positioned to Manage Large Scale Catastrophe Losses 39
Slide 40: Policyholder Surplus, 2006:Q4–2015:Q1E
Policyholder Surplus, 2006:Q4–2015:Q1E ($ Billions) Drop due to near-record $674.7 $673.9 $671.6 $671.0 $662.0 $700 2011 CAT losses $653.4 2007:Q3 $624.4 $650 $614.0 $607.7 Pre-Crisis Peak The P/C insurance $586.9 $583.5 $566.5 $570.7 industry entered 2015 $567.8 $600 $559.2 $559.1 $550.3 $544.8 $54
Slide 41: Investments: The New Reality
Investments: The New Reality Investment Income Offsets Less Loss than in the Past, Including Losses from Catastrophes 41
Slide 42: P/C Insurance Industry Investment Income: 2000–2015E
Property/Casualty Insurance Industry Investment Income: 2000–2015E1 ($ Billions) Investment earnings $60 are still below their $54.6 2007 pre-crisis peak $52.3 $51.2 $49.5 $49.2 $50 $48.0 $47.3 $47.1 $47.6 $46.2 $46.7 $38.9 $39.6 $40 $38.7 $37.1 $36.7 $30 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Slide 43: Book Yield on P/C Insurance Invested Assets, 2007–2015
Book Yield on Property/Casualty Insurance Invested Assets, 2007–2015* (Percent) 4.6 4.38 4.4 4.17 Book yield in 2015 is 4.2 4.02 down 74 BP from pre- 4.0 3.87 crisis levels 3.82 3.8 3.74 3.63 3.64 3.6 3.44 3.4 3.2 3.0 07 08 09 10 11 12 13 14 15* The yield on invested assets remains low relative to p
Slide 44: Underwriting
UNDERWRITING Underwriting Results in 2015 (and 2013-14) Were Helped by Generally Modest Catastrophe Losses Welcome Respites from 2011/2012 44
Slide 45: P/C Insurance Industry Combined Ratio, 2001–2015:H1
P/C Insurance Industry Combined Ratio, 2001–2015:H1* Heavy Use of Reinsurance Relatively Higher CAT As Recently as 2001, Lowered Net Low CAT Losses, Insurers Paid Out Losses Losses, Shrinking Nearly $1.16 for Reserve Reserve Every $1 in Earned Releases Releases, Toll Premiums Relatively Low CAT of S
Slide 46: Underwriting Gain (Loss) All Lines Combined, 1975–2015
Underwriting Gain (Loss) All Lines Combined, 1975–2015* ($ Billions) 2014 $30 underwriting profit totaled $20 $12.3B $10 $0 Underwriting profit in 2014 -$10 estimated at $14B -$20 -$30 -$40 -$50 -$60 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 0
Slide 47: Severe Weather Reports: Jan. 1 – July 13, 2015
Severe Weather Reports: Jan. 1 – July 13, 2015 Severe weather reports are concentrated east of the Rockies There were 12,360 severe weather reports through July 13, 2015; including 874 tornadoes; 3,921 “Large Hail” reports and 7,564 high wind events Source: NOAA Storm Prediction Center; http://www.s
Slide 48: Number of Federal Major Disaster Declarations, 1953-2015
Number of Federal Major Disaster Declarations, 1953-2015* There have been 2,228 120 federal disaster The number of declarations since 1953. federal disaster 99 100 The average number of declarations set a declarations per year is new record in 2011, 35 from 1953-2014, with 99, shattering 81 though t
Slide 49: Combined Ratio Points Associated with Catastrophe Losses
Combined Ratio Points Associated with Catastrophe Losses: 1960 – 2015E Combined Ratio Avg. CAT Loss Points Component of the Combined Ratio Catastrophe losses as a 10 9.1 share of all losses reached 8.8 by Decade 9 a record high in 2011 8.1 8.0 8 1960s: 1.04 7 1970s: 0.85 5.9 1980s: 1.31 5.4 6 1990s:
Slide 50: Premium Growth
Premium Growth Catastrophe Losses Impact Trajectory of Premium Growth 50
Slide 51: Net Premium Growth: Annual Change, 1971—2015E
Net Premium Growth: Annual Change, 1971—2015E (Percent) 1975-78 1984-87 2000-03 25% Net Written Premiums Fell 0.7% in 2007 (First Decline Since 1943) by 2.0% in 2008, and 4.2% in 2009, the 20% First 3-Year Decline Since 1930-33. Post- 15% Andrew spike 2015E: 3.9% 10% 2014: 4.1% 2013: 4.4% 5% 2012: +
Slide 52: Insurance Information Institute Online: www.iii.org
Insurance Information Institute Online: www.iii.org Thank you for your time and your attention! Twitter: twitter.com/bob_hartwig 52
Slide 53: Follow-up Information
Follow-up Information Sharon Cooper – Media Spokesperson Munich Reinsurance America, Inc. © 2015 Munich Re Source: FEMA
Slide 54: Weather Resilience and Protection (WRAP)
Weather Resilience and Protection (WRAP) Website Describe the impact of severe weather and how individuals, businesses, government, and insurers can work together to prepare for and mitigate weather risks. Includes data, publications, preparation tips and other useful information for the press. www.
Slide 55: MR NatCatSERVICE: The world's largest database on natural catastrophes
MR NatCatSERVICE The world‘s largest database on natural catastrophes 1 200 1 000 NatCatSERVICE Downloadcenter 800 600 400 Annual statistics 200 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Long-term statistics Information on significant natural disasters F
Slide 56: More Information
More Information Connect with Munich Re Connect with I.I.I. Twitter @Munichre_US @iiiorg @MunichRe_In LinkedIn munich-reinsurance-america-inc. Insurance Information Institute Google+ Munich Re (US) Insurance Information Institute Munich Re YouTube MunichReUs iiivideo MunichReVideo Facebook Munichreu
Slide 57: Press Inquiries
Press Inquiries Sharon Cooper Phone: +1 (609) 243-8821 scooper@munichreamerica.com © 2015 Munich Re 57
Slide 58: Natural Catastrophe Review Webinar First Half of 2015
Natural Catastrophe Review Webinar First Half of 2015 July 14, 2015
Slide 59: Copyright notice
© Copyright 2015 Munich Reinsurance America, Inc. All rights reserved. "Munich RE" and the Munich Re logo are internationally protected registered trademarks. The material in this presentation is provided for your information only, and is not permitted to be further distributed without the express w
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