international economic outlook & the middle east region’s role in the world economy insurance...
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International Economic Outlook & the Middle East Region’s Role in
the World Economy Insurance & Reinsurance Market Implications
Multaqa Qatar 2012Doha, Qatar
13 March 2012Download at www.iii.org/presentationsRobert P. Hartwig, Ph.D., CPCU, President & Economist
Insurance Information Institute 110 William Street New York, NY 10038Tel: 212.346.5520 Cell: 917.453.1885 [email protected] www.iii.org
2
Presentation Outline
Global Economic Overview & Outlook International Overview Emerging vs. Developing Markets Middle East Focus (Re) Insurance Implications Implications of the Persistent Low Yield Environment for (Re)Insurers
Oil and Energy Market Overview Price Trends Long-Term Supply, Demand and Infrastructure Considerations Insurance Implications
The Unfortunate Nexus of Opportunity, Risk and Uncertainty The Fusion of Economic and (Geo)Political Risk Top 10 Risks for the Global Economy
Global Catastrophe Loss Trends and Threats Was 2011 an Aberration or a Foreshadowing of the Future
Global Economic Outlook: Regional and Major Economy
Perspectives
3
Strength of Economies Varies Greatly as Does Pace of Recovery from the
Challenges of 2011 Important Consequences for Insurer and
Reinsurer Growth Opportunities3
4
Real GDP Growth Forecasts: Major Economies: 2011 – 2013F
Sources: Blue Chip Economic Indicators (2/2012 issue); Insurance Information Institute.
1.7%
0.9% 1.
6%
3.0%
2.2%
0.4%
0.4%
8.2%
1.8%
2.6%
1.8%
1.0% 1.
5%
8.5%
1.8%
9.2%
-0.8%-0.4%
-2%
0%
2%
4%
6%
8%
10%
US UK Euro Area Germany China Japan
2011 2012F 2013F
Growth Prospects Vary Widely by Region: Brightening in the US, Mild Recession in the Eurozone, A “Soft Landing” in China, Strength in
India, Reconstruction Stimulus in Japan and Modest Growth in America’s Largest Trading Partners—Canada and Mexico.
The Eurozone and UK are in
recession. Both should
end in Q3:2012
China growth has slowed, but remains strong in an expected “soft landing”
scenario
US recovery
continues
Rebuilding acts as a
stimulus to Japanese economy
5
Real GDP Growth Forecasts: Emerging Market Regions: 2010 – 2013F
*Excludes Libya in 2011. **Indonesia, Malaysia, Thailand, Philippines and VietnamSources: IMF World Economic Outlook (Jan. 24, 2012 update); Insurance Information Institute.
5.2%
9.9%
4.3%
4.5%
4.0%
6.9%
5.3%
3.8%
7.0%
3.1%
5.1%
4.9%
3.3%
7.1%
1.1%
3.3%
5.2% 5.5%
3.9%
8.0%
3.6%
2.4% 3.
5%
5.6%
5.3%
4.1% 4.
8%
3.2%
0%
2%
4%
6%
8%
10%
12%
WorldOutput
India MiddleEast &NorthAfrica*
Central &EasternEurope
Russia ASEAN-5** Sub-Saharan
Africa
2010 2011 2012F 2013F
Growth Prospects Vary Widely by Region: All Regions Slowed in 2011 As Economic Recovery Encountered Many Challenges. IMF Outlook for
2012 Is Mixed With Broader, More Robust Growth in 2013 Predicted. Actual Growth in 2012 Could Surprise to the Upside.
Middle East Region has seen growth slow with political upheaval in
several nations
(4.0)
(2.0)
0.0
2.0
4.0
6.0
8.0
10.0
70
71
72
73
74
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
08
09
10
11
12
F1
3F
Advanced economies Emerging and developing economies World
Source: International Monetary Fund, World Economic Outlook Update, Jan. 2012; Ins. Info. Institute.
Emerging economies (led by China) are expected to grow by 5.4% in 2012 and
5.9% in 2013.
GDP Growth: Advanced & Emerging Economies vs. World, 1970-2013F
Advanced economies are expected to grow at a sluggish pace of 1.2% in
2012 and 1.9% in 2013.
World output is forecast to grow by 3.3% in 2012 and 3.9% in 2013. The world economy shrank by 0.6% in
2009 amid the global financial crisis
GDP Growth (%)
7
Relative Shares of Global Output,Advanced vs. Developing Economies, 2009
Developing Economies
47.1%
Advanced Economies
52.9%
Source: EDC Economics, “The Moment of Truth: Global Export Forecast Fall 2010, at http://www.edc.ca/english/docs/gef_e.pdf
The gap is closing quickly. China became the world’s second largest economy in 2010 and before long
the developing world’s share of GDP will exceed that of advanced
economies.
8
Current Real GDP Growth vs. Pre-Crisis Average (2000-2007 vs. 2011F-2012F*)
*Percentage point difference between compound annual rates of change 2000-2007 vs. forecasts for 2011-2012.
Source: IMF, World Economic Outlook, September 2011; Insurance Information Institute.
Latin and South American markets are
in general growing more strongly than prior to the crisis
The US, Europe and Eurasia have seen
significant slowdowns
Parts of the Middle East and South Asia
have done well
9
Current Real GDP Growth vs. Pre-Crisis Average (2000-2007 vs. 2011F-2012F*)
*Percentage point difference between compound annual rates of change 2000-2007 vs. forecasts for 2011-2012.
Source: IMF, World Economic Outlook, September 2011; Insurance Information Institute.
Growth in much of Europe today is about 2 pts.
Lower than pre-crisis
INVESTMENTS: THE NEW REALITY
10
How Much of a Threat Are Persistently Low Interest Rates for (Re)Insurers?
10
Reinsurer Investments: Bonds Are Safe but Vulnerable to Low Yield Environment
Source: Guy Carpenter; Insurance Information Institute.
Asset Allocation of Reinsurer Investment Portfolio(As of September 30, 2011)
Reinsurer (and primary insurer) portfolios are
overwhelming weighted toward fixed income
securities
12
Treasury Yield Curves: Pre-Crisis (July 2007) vs. Feb. 2012
0.06% 0.09% 0.12% 0.16% 0.28%
1.37%
1.97%
4.82% 4.96% 5.04% 4.96% 4.82% 4.82% 4.88% 5.00% 4.93% 5.00%5.19%
0.83%
0.38%
3.11%2.75%
0%
1%
2%
3%
4%
5%
6%
1M 3M 6M 1Y 2Y 3Y 5Y 7Y 10Y 20Y 30Y
February 2012 Yield CurvePre-Crisis (July 2007)
Treasury yield curve remains near its most depressed level
in at least 45 years. Investment income will fall as
a result. Fed is unlikely to hike rates until well into 2014.
The Fed Is Actively Signaling that it Is Determined to Keep Rates Low Through Late 2014
Source: Federal Reserve Board of Governors; Insurance Information Institute.
3-Month Interest Rates forMajor Global Economies, 2008-2012F
0.7
%
0.3
% 0.7
%
2.0
% 2.5
%
1.4
%1.8
%
0.6
%
2.1
%
1.3
%
1.0
%
0.2
%
0.9
%
0.2
% 0.7
%
2.9
%
0.9
%
0.2
%
1.1
%
0.2
%
0.8
%
4.9
%
1.1
%
0.1
%
0.9
%
0.2
%
0.9
%
5.5
%
0.9
%
0.1
%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Euro Area Japan UK China Netherlands US
20082009201020112012F
Source: Blue Chip Economic Indicators, Feb. 2012 edition.
Interest rates remain generally low in much of the
world, depressing insurer investment earnings. Central banks in many
countries, including the US, are intentionally holding
rates low.
14
-1.8
%
-1.8
%
-2.0
%
-3.6
%
-3.3
%
-3.3
%
-3.7
%
-4.3
%
-5.2
%
-5.7
%
-7.3%
-1.9
%
-2.1
%
-3.1
%
-8%-7%-6%-5%-4%-3%-2%-1%0%
Perso
nal L
ines
Pvt Pass
Aut
o
Pers P
rop
Comm
ercia
l
Comm
l Auto
Credit
Comm
Pro
p
Comm
Cas
Fidelity
/Sure
ty
Warra
nty
Surplu
s Line
s
Med
Mal
WC
Reinsu
rance
**
Lower Investment Earnings Place a Greater Burden on Underwriting and Pricing Discipline
*Based on 2008 Invested Assets and Earned Premiums**US domestic reinsurance onlySource: A.M. Best; Insurance Information Institute.
Reduction in Combined Ratio Necessary to Offset 1% Decline in Investment Yield to Maintain Constant ROE, by Line*
14
Suggests that reinsurers need to reduce their combined ratio by more
than 7 points to offset a 1% decline in yield to maintain the same ROE
15
Focus on Middle East Economies
Economic Experiences of Middle East Countries Varies Widely
16
Real GDP Growth: World vs. Middle East, Region, 1980-2016F
Source: IMF; Insurance Information Institute.
GDP growth in the Middle East has
generally outperformed the world as a whole for the past 20 years
First Gulf War—Record oil prices
caused Middle East GDP to surge
IMF expects Middle East growth to normalize 2012-2016
17
Real GDP Growth: Key Middle Eastern States, Including Qatar, 1980-2016F
Source: IMF; Insurance Information Institute.
IMF expects Iraq to be the regions growth leader through 2016
(effect of starting from a small base GDP)
Qatar GDP growth has generally outperformed the Middle East region over the past 15 years
(since 1996)
Kuwait during first Gulf War
18
Real GDP Growth Forecasts: Emerging Market Regions: 2010 – 2013F
Sources: IMF World Economic Outlook (Jan. 24, 2012 update); Insurance Information Institute.
12.6%
6.0%
3.8% 3.6% 3.6% 3.4%
1.4%
9.8%
4.9% 4.9%4.2% 4.2% 3.8%
4.6% 5.0%4.0%
0%
2%
4%
6%
8%
10%
12%
14%
Iraq Qatar World UAE Bahrain Oman Iran Syria
2012F 2016F
Growth Prospects Vary Widely Throughout the Middle East.
Qatar is the true growth leader in 2012 as Iraq starts from a
very low base
19
Oil Demand Will Rise, Oil Prices Will Rise Still Faster
Long-Run Demand and Price Dynamics Remain Strong for Oil and
Associated Insurance Markets
20
Commodity Price Changes Including Oil, Jan. 2010- Jan. 2012*
50
100
150
200
250
300
1-Ja
n-10
15-J
an-1
029
-Jan
-10
12-F
eb-1
026
-Feb
-10
12-M
ar-1
026
-Mar
-10
9-A
pr-1
023
-Apr
-10
7-M
ay-1
021
-May
-10
4-Ju
n-10
18-J
un-1
02-
Jul-1
016
-Jul
-10
30-J
ul-1
013
-Aug
-10
27-A
ug-1
010
-Sep
-10
24-S
ep-1
08-
Oct
-10
22-O
ct-1
05-
Nov
-10
19-N
ov-1
03-
Dec
-10
17-D
ec-1
031
-Dec
-10
14-J
an-1
128
-Jan
-11
11-F
eb-1
125
-Feb
-11
11-M
ar-1
125
-Mar
-11
8-A
pr-1
122
-Apr
-11
6-M
ay-1
120
-May
-11
3-Ju
n-11
17-J
un-1
11-
Jul-1
115
-Jul
-11
29-J
ul-1
112
-Aug
-11
26-A
ug-1
19-
Sep
-11
23-S
ep-1
17-
Oct
-11
21-O
ct-1
14-
Nov
-11
18-N
ov-1
12-
Dec
-11
16-D
ec-1
130
-Dec
-11
13-J
an-1
2
Metals Food Raw Materials Crude Oil (APSP) Gold
*Data are through January13, 2012Source: International Monetary Fund World Economic Outlook January 2012 update at http://www.imf.org/external/pubs/ft/weo/2012/update/01/index.htm ; Insurance Information Institute.
Index (Jan 3, 2006 = 100)
Raw materials prices more than doubled over the course of
2010-2011.
Crude peaked in Q2:2011, fell
significantly in late 2011 but has since
risen again
21
Crude Oil Price Changes,Jan. 2010- 6 Mar. 2012*
$50
$60
$70
$80
$90
$100
$110
$120
$130
$140
4-Ja
n-10
18-J
an-1
01-
Feb
-10
15-F
eb-1
01-
Mar
-10
15-M
ar-1
029
-Mar
-10
12-A
pr-1
026
-Apr
-10
10-M
ay-1
024
-May
-10
7-Ju
n-10
21-J
un-1
05-
Jul-1
019
-Jul
-10
2-A
ug-1
016
-Aug
-10
30-A
ug-1
013
-Sep
-10
27-S
ep-1
011
-Oct
-10
25-O
ct-1
08-
Nov
-10
22-N
ov-1
06-
Dec
-10
20-D
ec-1
03-
Jan-
1117
-Jan
-11
31-J
an-1
114
-Feb
-11
28-F
eb-1
114
-Mar
-11
28-M
ar-1
111
-Apr
-11
25-A
pr-1
19-
May
-11
23-M
ay-1
16-
Jun-
1120
-Jun
-11
4-Ju
l-11
18-J
ul-1
11-
Aug
-11
15-A
ug-1
129
-Aug
-11
12-S
ep-1
126
-Sep
-11
10-O
ct-1
124
-Oct
-11
7-N
ov-1
121
-Nov
-11
5-D
ec-1
119
-Dec
-11
2-Ja
n-12
16-J
an-1
230
-Jan
-12
13-F
eb-1
227
-Feb
-12
A sustained $10 rise in the price of oil reduces global GDP by approximately 0.2% in Year 1
and 0.5% in Year 2.
*Europe Brent Spot FOB price.Source: US Energy Information Administration update at http://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm ; Insurance Information Inst.
2012 Peak = $126.68 on
5 March
$ Price per Barrel
2011 Peak = $126.46 on
11 April
Global Oil Consumption and Price, 2008 – 2035F
Millions of Barrels per Day Nominal Price/BBL
*Source: US Energy Information Administration; Insurance Information Institute
85
.5
83
.7 86
.0 87
.4 88
.9 90
.3
90
.4
91
.1 92
.5
92
.9
93
.5
94
.3
95
.1 96
.1
97
.1
98
.2 99
.3
10
0.5
10
1.8
10
3.2
10
4.5
10
6.1
10
7.6
10
9.1
11
0.8
92
.0
91
.5
89
.6
$108
.10
$112
.36
$114
.21
$115
.96
$117
.54
$118
.99
$120
.25
$121
.34
$122
.30
$123
.09
$123
.71
$124
.20
$124
.53
$124
.68
$124
.94
$110
.30
$105
.71
$103
.15
$100
.50
$97.
62
$94.
58
$91.
38
$83.
21
$61.
66
$100
.51
$85.
73
$88.
03
$78.
03
80
85
90
95
100
105
110
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
0
20
40
60
80
100
120
140
Total Consumption Nominal Price (Light, Low Sulfur Crude)
Oil Will Become Relatively More Expensive Over Time, With Price Increases Outstripping Income Growth in Many Parts of the World
The nominal price of oil is expected to rise by 2.8% per year
on average through 2035
Global oil consumption is expected to rise by 1.1% per
year on average through 2035
23
Much Uncertainty Exists in the World, But Energy Demand Grows Under All Scenarios
Energy is One of the Few Major Markets/Industries With Clear
Growth Long-Term Trends
347.7
472.4508.3
551.5595.7
637.3678.3
462.1
0
100
200
300
400
500
600
700
800
1990 2005 2006 2010P 2015P 2020P 2025P 2030P
World Primary Energy Consumption, 1990-2030P
Source: Energy Information Administration, 2009 International Energy Outlook, Insurance Information Institute.
Between 2006 and 2030, energy consumption in projected to increase
annually by 1.5% worldwide but only 0.5% in the US
Quadrillion BTUs
Global energy consumption is
expected to increase by 33.4% between 2010 and 2030 but by only 12% in
the US
Avg. Annual Change in Total Energy Consumption by Country/Region:2006-2030P
Average Annual Change in Consumption (Quadrillion BTUs)
3.2%
2.6% 2.5%
1.5%
0.9%0.5% 0.5%
1.1%1.2%1.4%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Ch
ina
Bra
zil
Ind
ia
Can
ada
S.
Ko
rea
Mex
ico
Au
st/N
Z
Ru
ssia US
Eu
rop
e(O
EC
D)
Source: Energy Information Administration, 2009 International Energy Outlook, Ins. Info. Institute
US/Europe have the slowest growth rates for energy
consumption through 2030, growing at less than 1/6 the rate
in China and 1/5 that of India
25
26
Global Oil Demand and Production,by Region
Source: IMF, World Economic Outlook, Sept. 2011; Insurance Information Institute.
Oil Demand in Advanced Economies is Weak but Production Gains Continue to Satisfy Demand in Emerging Countries
Percentage Change (%)-3
.5%
2.9
%
3.3
%
-0.3
%
-4.0
%
2.2
%
-5.8
%
1.9
%
1.5
%
5.1
%
2.2
%
2.0
%
-0.6
%
3.5
%
4.8
%
0.8
%
-0.2
%
4.4
%
-0.4
%
0.7
%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
AdvancedEconomies
EmergingEconomies
OPEC Non-OPEC
2007 2008 2009 2010 2011P
OIL DEMAND OIL PRODUCTION
27
US Natural Gas Production and Non-Hydro Renewable Electricity Generation, 1990-2035P
Source: US Energy Information Administration, Annual Energy Outlook 2011; Insurance Information Institute.
Shale gas production is expected to grow rapidly in the US
Wind is expected to account for the majority of renewable
electricity generation
Tight gas production involves controversial
hydraulic fracturing (fracking) techniques
11.3
14.6
18.0
20.6
23.2
26.0
28.9
31.8
12.6
0
5
10
15
20
25
30
35
1990 1995 2000 2006 2010 2015 2020 2025 2030
World Net Effective Electric Power Generation, 1990-2030P
Source: Energy Information Administration, 2009 International Energy Outlook, Insurance Information Institute.
Global electric power generation was dampened about 3% by the
global financial crisis, but will still grow at 2.9% per year through 2030 compared to 1.9% for total energy
consumption
Trillions of Kilowatt Hours
29
Massive Investments in Global Energy
Infrastructure Are Needed
Upgrading the World’s Antiquated Energy Infrastructure is Also
Critical for Future Energy Security
Biofuels, $0.3 , 1%
Oil, $10.1 , 27%
Natural Gas, $9.5 ,
25%
Power, $16.9 , 44%
Coal, $1.1 , 3%
Projected energy infrastructure investment
through 2035 total $38 trillion; Implies substantial
incurrence of risk.
Cumulative Projected Investment in Global Energy Infrastructure, 2011-2035 ($ Trill.)
Source: International Energy Agency, World Energy Outlook 2011.
31
The Unfortunate Nexus: Opportunity, Risk & Instability
Most of the Global Economy’s Future Gains Will be Fraught with Much
Greater Risk and Uncertainty than in the Past
32
Global Real (Inflation Adjusted) NonlifePremium Growth: 1980-2010
Source: Swiss Re, sigma, No. 2/2010.
Nonlife premium growth in emerging markets has
exceeded that of industrialized countries in
27 of the past 31 years, including the entirety of the
global financial crisis..
Real nonlife premium growth is very erratic in part to inflation volatility in emerging markets as
well as a lack of consistent cyclicality
Average: 1980-2010
Industrialized Countries: 3.8%
Emerging Markets: 9.2%
Overall Total: 4.2%
33
Nonlife Real Premium Growth in 2010
Source: Swiss Re, sigma, No. 2/2011.
Latin and South American markets performed
relatively well during and after the global financial crisis in terms of growth
There was also growth in the Middle East, East and South Asia as well as Australia and New
Zealand
34
Nonlife Real Premium Growth Ratesby Region: 2000-2009 and 2010
Source: Swiss Re, sigma, No. 2/2011.
Every emerging
market region except Central
and Eastern Europe
experienced growth during the financial
crisis and into 2010
The Middle East and many emerging market economies continued to grow during the global financial crisis and
continued to benefit from foreign direct investment
35
Distribution of Nonlife Premium: Industrialized vs. Emerging Markets, 2009
Sources: Swiss Re; Insurance Information Institute research.
Although premium growth throughout the industrialized world was negative in 2009, its share of global nonlife premiums remained very high at nearly 86%--accounting for nearly $1.5 trillion in premiums.
The financial crisis and sluggish recovery in the major insurance markets will accelerate the expansion of the emerging market sector
Premium Growth Facts
14.3%85.7%
Industrialized Economies
$1, 485.8
Emerging Markets$248.8
2009, $Billions
Developing markets now account for 47% of global
GDP but just 14% of nonlife premiums
36
Political Risk in 2011/12: Greatest Business Opportunities Are Often in Risky Nations
Source: Maplecroft
The fastest growing markets are generally
also among the politically riskiest,
including East and South Asia
Heightened risk has economic and insurance implications
Much of the middle East and North Africa have
experienced and continue to experience
political turmoil
37
The “Arab Spring” Has Increased Uncertainty in an Already Volatile Part of the World
Source: Wikipedia as of Nov. 7, 2011; Insurance Information Institute research.
Some energy-rich nations have been among the most
unstable in 2011/12
Longer-run, significant
investment and insurance
opportunities exist throughout
the region
Government overthrown Sustained civil disorder and governmental changes Protests and governmental changes Major protests Minor protests Protests outside the Arab world
Arab Springالربيع العربي
38
Summary of 10 Greatest Potential Threats to Global Economy as of March 2012
1. Armed Conflict in the Middle East, Disrupting Oil Markets A conflict between Iran and Israel viewed by some as imminent $200/bbl oil is possible; Severe supply disruptions Resultserious damage to the global economy, killing fragile recovery
2. Rising Oil Prices Even in the absence of armed conflict, oil prices slowing growth Sustained $10/bbl increase -0.2% on global GDP
3. Sovereign Debt Concerns in Europe (was #1 threat in 2011) Contagion spreads beyond GreeceItaly, Spain, Portugal, etc. Greek/EU political/economic solution fails resulting in disorderly default
4. “Hard Landing” of Chinese Economy A sharp decline in China’s GDP would damage global economies
5. Mega-Catastrophe Trends Continue at Record Pace Catastrophes trimmed 0.5% off global GDP in 2011 Massive disruptions to fragile global supply chains
6. Sudden Weakening of US Economy7. Intensification of Geopolitical Instability (esp. in Middle East)8. Disintegration of Eurozone (Political Failure)9. Commodity Price Inflation (apart from oil)10. Large-Scale Cyber Attack/Terrorism Attack (including cyberterror)
Global Catastrophe Loss Developments and Trends
39
2011 Rewrote Catastrophe Loss and Insurance History
But Will Losses Turn the Market?
39
40
Global Catastrophe Loss Summary: 2011
2011 Was the Highest Loss Year on Record for Economic Losses Globally
Extraordinary accumulation of severe natural catastrophe: Earthquakes, tsunami, floods and tornadoes are the primary causes of loss
$380 Billion in Economic Losses Globally (New Record)
New record, exceeding the previous record of $270B in 2005
$105 Billion in Insured Losses Globally
2011 losses were 2.5 times 2010 insured losses of $42B
Second only to 2005 on an inflation adjusted basis (new record on a unadjusted basis)
Over 5 times the 30-year average of $19B
$72.8 Billion in Economic Losses in the US
Represents a 129% increase over the $11.8 billion amount through the first half of 2010
$35.9 Billion in Insured Losses in the US Arising from 171 CAT Events
Fifth highest year on record
Represents 51% increase over the $23.8 billion total in 2010
Source: Munich Re; Insurance Information Institute.
Geophysical events(earthquake, tsunami, volcanic activity)
Meteorological events (storm)
Hydrological events(flood, mass movement)
Selection of significant loss events (see table)
Natural catastrophes
Earthquake, tsunami Japan, 11 March
EarthquakeNew Zealand, 22 Feb.
Cyclone Yasi Australia, 2–7 Feb.
Landslides, flash floodsBrazil, 12/16 Jan.
Floods, flash floods Australia, Dec. 2010–Jan. 2011
Severe storms, tornadoesUSA, 22–28 April
Severe storms, tornadoesUSA, 20–27 May
WildfiresUSA, April/Sept.
EarthquakeNew Zealand, 13 June
FloodsUSA, April–May
Climatological events(extreme temperature, drought, wildfire)
Number of Events: 820Number of Events: 820
DroughtUSA, Oct. 2010– ongoing
Hurricane IreneUSA, Caribbean22 Aug.–2 Sept.
WildfiresCanada, 14–22 May
DroughtSomaliaOct. 2010–Sept. 2011
FloodsPakistanAug.–Sept.
FloodsThailandAug.–Nov.
Earthquake Turkey23 Oct.
Flash floods, floodsItaly, France, Spain4–9 Nov.
Floods, landslidesGuatemala, El Salvador11–19 Oct.
Tropical Storm WashiPhilippines, 16–18 Dec.
Winter Storm JoachimFrance, Switzerland, Germany, 15–17 Dec.
41Source: MR NatCatSERVICE
Natural Loss Events, 2011
World Map
Natural Catastrophes Worldwide 2011Insured losses US$ 105bn - Percentage distribution per continent
Continent Insured losses US$ m
America (North and South
America)40,000
Europe 2,000
Africa Minor damages
Asia 45,000
Australia/Oceania 18,000
37%
2%
44%
17%
<1%
42Source: MR NatCatSERVICE
In 2011, 61% of insured natural catastrophe losses
were in the Asia/Pacific region, nearly 3.5 times the
average of 13% over the prior 30 years (1981-2010)
In 2011, just 37% of insured natural
catastrophe losses were in the
Americas, barely half the average of 66%
over the prior 30 years (1981-2010)
42
Natural Catastrophes Worldwide 1980 – 2011 Insured losses US$ 870bn - Percentage distribution per continent
Continent Insured losses US$ m
America (North and South
America)566,000
Europe 146,000
Africa 2,000
Asia 115,000
Australia/Oceania 41,000
66%
16%
<1%
13%
5%
43Source: MR NatCatSERVICE
In 2011, 61% of natural catastrophe losses were
in the Asia/Pacific region, nearly 3.5 times the
average of 13% over the prior 30 years (1981-2010)
43
Worldwide Natural Disasters 1980–2011,Overall and Insured Losses
44
Overall losses (in 2011 values) Insured losses (in 2011 values)
Source: MR NatCatSERVICE © 2011 Munich Re
50
100
150
200
250
300
350
400
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
2011
Overall Losses: $380 Bill
Insured Losses: $105 Bill
(Insured Losses, 2011 Dollars, $ Billions)
45
Top 16 Most Costly World Insurance Losses, 1970-2011**
(Insured Losses, 2011 Dollars, $ Billions)
*Average of range estimates of $35B - $40B as of 1/4/12; Privately insured losses only.**Figures do not include federally insured flood losses.Sources: Swiss Re sigma 1/2011; Munich Re; Insurance Information Institute research.
$11.9$13.0 $13.0$13.1
$19.1$21.3
$24.0$25.0
$37.5
$47.6
$7.7 $8.1 $8.3 $8.5 $9.3 $9.7
$0$5
$10$15$20$25$30$35$40$45$50
Hugo (1989)
WinterStormDaria(1991)
ChileQuake(2010)
Ivan (2004)
TyphoonMirielle(1991)
Charley(2004)
Wilma(2005)
ThailandFloods(2011)
NewZealandQuake(2011)
Ike (2008)
Northridge(1994)
SpringTornadoes/
Storms(2011)
WTC TerrorAttack(2001)
Andrew(1992)
JapanQuake,
Tsunami(2011)*
Katrina(2005)
Large catastrophes in Asia/Pacific and South
America Have dominated mega-losses since 2010
5 of the top 14 most expensive
catastrophes in world history have occurred within the past 2 years
Worldwide Natural Disasters,1980 – 2011
Number of Events
Source: MR NatCatSERVICE 46
Meteorological events(Storm)
Hydrological events(Flood, mass movement)
Climatological events(Extreme temperature, drought, forest fire)
Geophysical events(Earthquake, tsunami, volcanic eruption)
200
400
600
800
1 000
1 200
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
There were 820 events in 2011
20
40
60
80
100
120
140
160
180
200
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Natural Catastrophes in Asia 1980 – 2011Overall and insured losses in 2011 Dollars
Overall losses (in 2011 values) Insured losses (in 2011 values)
© 2011 Munich Re 47Source: MR NatCatSERVICE
($ Billions) 2011 set a record for both overall economic losses
in Asia ($266B) and insured losses ($45B).
The rapid economic development of Asia and
increased insurance penetration guarantee that losses will trend higher in the future.
47
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