Artemis Blog – BMS planning capital markets broker-dealer, BMS Capital Advisory

BMS featured in the Artemis Blog discussing plans to launch a unit dedicated to taking advantage of the growing opportunities in the insurance-linked securities (ILS) space. The unit will be named BMS Capital Advisory and will offer a full range of capital market ILS products.

To read the full article, click here.

 

 

Kurt Johnson Joins BMS Intermediaries as Executive Vice President

BMS Intermediaries has hired Kurt Johnson as Executive Vice President. Johnson will be responsible for providing actuarial support and related services for BMS’ client base. Johnson brings more than 25 years of industry expertise, primarily in the area of reinsurance, to BMS. He has extensive experience in ratemaking, loss reserves, commutations, capital modeling and management reports.

Johnson joins BMS on the heels of a two-year stint at Christopher Gross Consulting, where he provided clients with a broad scope of actuarial consulting services. Prior to that, he spent 11 years at Guy Carpenter, as Managing Director and Regional Manager of the Minneapolis office. He was responsible for all analytical functions for the mid-American region, including actuarial, cat modeling, financial modeling and capital modeling. He was a member of Guy Carpenter’s Actuarial Best Practice committee, which was responsible for setting worldwide actuarial standards.

Before joining Guy Carpenter, Johnson served as a Senior Vice President at E.W. Blanch, where he provided analysis for reinsurance pricing, reinsurance structure analysis, and commutations. He spent the first 10 years of his career at General Reinsurance, attaining the title of Second Vice President. In this role he was responsible for a variety of functions, including loss reserving, IBNR reporting, financial reporting, commutations and reinsurance pricing.

Kurt brings tremendous experience and a well-deserved reputation for his expertise within both the reinsurance and the actuarial communities to BMS. With his background, we expect him to be able to hit the ground running in support of our existing clients and production efforts,”

said David Spiegler, Executive Vice President and Chief Actuary at BMS.

Johnson has a B.S. in Mathematics with a concentration in Statistics from St. Olaf College, and has completed the coursework for a Master’s in Statistics from the University of Minnesota. He is a Fellow of the Casualty Actuarial Society (FCAS) and a Member of the American Academy of Actuaries (MAAA).

Tropical Update: Approaching the Peak of the Hurricane Season

Historically, September 10 is the peak of the North Atlantic hurricane season, which typically sees 10 or 11 named tropical storms. This climatology number climatology number is usually represents the last 30 or 50 years, but the average since 1995 is higher – at 15 named storms, 8 hurricanes and 4 major hurricanes – and corresponds to the so-called active era in the North Atlantic, caused by warm Atlantic Multidecadal Oscillation. With the storm Erin just being named in the eastern Atlantic Main Development Region (MDR), the storm total for this year (through the second week of August) sits at 5. This is about two weeks ahead of climatology, which suggests the fifth named storm is often observed around August 31. The first hurricane is climatology-observed on August 10, so unless the current activity develops into a hurricane, the Accumulated Cyclone Energy will continue to fall behind the climatological norm.

In August, Sea Surface Temperatures (SST) in the MDR extending from the Lesser Antilles to the Cape Verdes Islands warm significantly, which is one reason why three storms have formed in the MDR so far this year. It’s also part of the reason seasonal forecasts are calling for a more active than normal hurricane season.

Figure 1 shows the SST in the MDR. Image Credit: www.weatherbell.com

SSTs are solidly 27°C off the African coast and rise slowly to 28°-29° as tropical waves approach the Caribbean islands.  But lately the main issue is the presence of Saharan dust in the MDR.

Figure 2 is a look at the graphics from the NASA GEOS-5 model, which shows the dust that continues to occur over the MDR. Image Credit: www.weatherbell.com

I am not quite sure what is considered to be normal in terms of dust occurrence. But as a proxy in lieu of actual dust measurements over the MDR, we can look at the at the 400-mb- specific humidity over the last dozen years to demonstrate how dry the MDR has been (Figure 3). This dry, dusty air is not conducive to tropical development and has been the main reason why Chantal, Dorian, and most likely Erin have stayed below hurricane status and could result in less overall named storm active compared to what has been forecasted.

Figure 3 is the 400 mb Specific Humidity since June 1, 2013 over the MDR. Image Credit: NOAA / Earth System Research Laboratory

Over the past week many media outlets have been hyping the upcoming few weeks of the hurricane season.  This is because the strong, opposing wind shear has weakened across the MDR. Furthermore, the dry, Saharan air off the African coast has begun to dissipate, compared to earlier this season. Thus, conditions in the Atlantic are quickly becoming more favorable  for hurricane development, which should come as no surprise since about 80% of the season’s hurricane activity is produced in mid- to late August and  September.

Updated Seasonal Impact Forecast:

A high impact for the U.S. is still expected, but the newest weather pattern forecasted for the next month suggests a shift centered at a corridor near Florida rather than in eastern Florida and up the east coast. The European Center for Medium Range Weather Forecasting (ECMWF) model September forecast appears to be much wetter in the Caribbean and eastern Gulf, which supports the idea of seeing storms track in that area at this time of year.

Florida, which just had its wettest July on record (with 12.38 inches of rainfall – 4.91 inches above average), is an example of the large amount of moisture that has been observed along the east coast this hurricane season.  Because wet soil can increase basement leakage and tree fall, these wet soil conditions should lead to increased losses if the area is impacted by a named storm.

Approaching the Peak of the Hurricane Season

Historically, September 10 is the peak of the North Atlantic hurricane season, which typically sees 10 or 11 named tropical storms. This climatology number  usually represents the last 30 or 50 years, but the average since 1995 is higher – at 15 named storms, 8 hurricanes and 4 major hurricanes – and corresponds to the so-called active era in the North Atlantic, caused by warm Atlantic Multidecadal Oscillation. With the storm Erin just being named in the eastern Atlantic Main Development Region (MDR), the storm total for this year (through to the second week of August) sits at 5. This is about two weeks ahead of climatology, which suggests the fifth named storm is often observed around August 31. The first hurricane is climatology-observed on August 10, so in terms of hurricane activity and the Accumulated Cyclone Energy will continue to fall behind the climatological norm.

In August, Sea Surface Temperatures (SST) in the MDR extending from the Lesser Antilles to the Cape Verde Islands warm significantly, which is one reason why three storms have formed in the MDR so far this year. It is also part of the reason seasonal forecasts are calling for a more active than normal hurricane season.

Figure 1 shows the SST in the MDR. Image Credit: www.weatherbell.com

SSTs are solidly 81°F off the African coast and rise slowly to 83°-84°F as tropical waves approach the Caribbean islands. However, lately the main issue is the presence of Saharan dust in the MDR.

Figure 2 is a look at the graphics from the NASA GEOS-5 model, which shows the dust that continues to occur over the MDR. Image Credit: www.weatherbell.com

I am not quite sure what is considered to be normal in terms of dust occurrence. But as a proxy in lieu of actual dust measurements over the MDR, we can look at the 400-mb- specific humidity over the last dozen years to demonstrate how dry the MDR has been (Figure 3). This dry, dusty air is not conducive to tropical development and has been the main reason why Chantal, Dorian, and most likely Erin have stayed below hurricane status and could result in less overall named storm active compared to what has been forecast for the season.

Figure 3 is the 400 mb Specific Humidity since June 1, 2013 over the MDR. Image Credit: NOAA / Earth System Research Laboratory

Over the past week many media outlets have been hyping the upcoming few weeks of the hurricane season. This is because the strong, opposing wind shear has weakened across the MDR. Furthermore, the dry, Saharan air off the African coast has begun to dissipate, compared to earlier this season. Thus, conditions in the Atlantic seem like they are quickly becoming more favorable for hurricane development, which should come as no surprise since about 80% of the season’s hurricane activity is produced in mid-to-late August and September.

Updated Seasonal Impact Forecast

A high impact for the U.S. is still expected with fewer named storms, but the newest weather pattern forecasted for the next month suggests a shift centered at a corridor near Florida rather than in eastern Florida and up the east coast. The European Center for Medium Range Weather Forecasting (ECMWF) model September forecast appears to be much wetter in the Caribbean and eastern Gulf, which supports the idea of seeing storms track in that area at this time of year.

Florida, which just had its wettest July on record (with 12.38 inches of rainfall – 4.91 inches above average), is an example of the large amount of moisture that has been observed along the east coast this hurricane season. Because wet soil can increase basement leakage and tree fall, these wet soil conditions should lead to increased losses if the area is impacted by a named storm.

BMS appoints Dane Douetil as new Group Chief Executive Officer

BMS Associates, the specialist independent broking and underwriting group, has appointed Dane Douetil as its new Group Chief Executive Officer.

BMS Associates is the parent company of BMS Group Limited, its UK broking entity; of BMS Intermediaries Inc., its US broking arm; and of Pioneer Underwriting Limited, its underwriting platform.

Mr Douetil, who is expected to commence his role in early September, will lead the company in the second phase of its development strategy, which has seen BMS revenues grow by 27% since 2010 as it has taken advantage of global opportunities and established its fast-growing Pioneer Underwriting platform.

Mr Douetil, previously Chief Executive Officer of Brit Insurance Holdings NV, has more than 30 years of industry experience, covering broking and underwriting in insurance and reinsurance as well as in retail and wholesale environments. Prior to restructuring Benfield Re, which became Brit Insurance, Mr Douetil was a founding shareholder and director of specialist insurance broker Special Risk Services Limited, a business which was successfully transformed from a start-up to a highly profitable enterprise and sold to Minets (now AON).

Mr Douetil, who began his career at Willis, has deep roots in Lloyd’s and the London markets, having previously been Chairman of the Lloyd’s Market Association and of the London Market Reform Group. In 2007, Mr Douetil was made a Commander of the British Empire (CBE) in recognition of the reform work undertaken in the UK insurance market.

Christopher Hopton, Chairman of BMS Associates, said:

We are delighted to welcome Dane into his leadership role with us. He will build on the strong foundations already in place at BMS, leading the growth of our broking platform and the further development of Pioneer Underwriting. Dane’s experience as a leader in both broking and underwriting will be great assets for BMS. With his entrepreneurial track record of building successful businesses and his reputation, particularly in Lloyd’s and internationally, Dane’s appointment shows that we are determined to carry through our growth plans to success, and continue to deliver outstanding service to our clients.”

Mr Douetil said:

Leading a company of the calibre and scope of BMS is a very exciting prospect. BMS is an intriguing and compelling proposition with significant growth potential. It will be refreshing to return to my roots as a broker and combine this with my underwriting experience in a leadership role here at BMS. This is a rare opportunity in the market and one that is a great marriage of my experience and BMS’s strategy of developing both its broking and underwriting platforms.”

Mr Hopton added:

BMS is building an exciting market proposition and Dane’s track record of innovation in transforming businesses will be of enormous value.”

BMS also announced that Nick Cook has been confirmed as Chief Executive Officer of BMS Group Limited, its regulated UK broking entity, having successfully fulfilled the role on an interim basis since April this year. Mr Cook has been with BMS since 2010, and was previously Chief Executive Officer of Glencairn Group Limited. He is an executive director on the board of BMS Group Limited and BMS Associates Limited.

Commenting on the appointment of Nick Cook, Christopher Hopton said:

Nick has built-out the wholesale platform at BMS, posting encouraging growth and winning new business. He has increasingly taken on additional responsibilities, including our UK reinsurance strategy. With his experience in building successful businesses and his strong network in the markets, he is very well positioned to lead our UK broking activities.”

Mr Cook said:

I am proud to lead our broking business in the second phase of our strategic plan. I look forward to working closely with Dane in continuing to build our business and drive our international development. These are very exciting times for BMS and our clients.”

Nick Cook and Darren Doherty, Chief Executive Officer of Pioneer Underwriting, along with other members of the company’s Executive Committee, will report to Mr Douetil. The search for a CEO of BMS Intermediaries, its US broking arm, continues, and the successful candidate will also report to Mr Douetil.

Mr Douetil’s and Mr Cook’s appointments are subject to approval by the UK regulator, the Financial Conduct Authority.

Incorrect cargo reporting – Tim Paske, Reactions Magazine

BMS’ Marine and Energy expert Tim Paske was quoted in a recent Reactions Magazine article discussing  Insurers worries over incorrect cargo reporting.

Reinsurance Property and Casualty Director, Paske commented on the difficulty in quantifying aggregate dollar cargo exposures per vessel due to the reporting process.

To read the full article, please click here (registration needed)

 

Wet East Coast Increases Loss Concern this Hurricane Season

As we approach the peak of the 2013 Atlantic hurricane season (which peaks around September 10), the forecasts (for an active season) made back in April have partially panned out – if you consider the total number of named storms. Looking at the last 50 years (1976-2012), the average formation dates of the fourth named storm and first hurricane are August 19 and August 3. So in terms named tropical storms, the season is ahead of par with climatology, but slipping behind on the occurrence of the first hurricane for 2013. In terms of Accumulated Cyclone Energy (ACE), 2013 is essentially average for this date. We’re at 6.6 compared to the 1981-2010 average of 9 for this date.

With August being the month where typically the number of tropical systems ramps up and Colorado State University’s August forecast calling for an active landfalling season, the likelihood of the season’s wet soil conditions leading to increased losses from a landfalling named storm must be considered.

The Ohio Valley and East Coast were much wetter than average. June precipitation totals for 18 states – from Georgia to Maine – ranked among their 10 wettest in the historical record. The fact that this weather continued into July undoubtedly creates concern over a named stormed impacting these rain-soaked areas.

 

 

NOAA Advanced Hydrologic Prediction Service view of the past 60-day Percent of Normal Precipitation. Over the past 60 days, much of the East Coast has seen 150% – 350% of normal precipitation.

Research shows that past hurricanes have demonstrated the combined effects of subsequent excessive rainfall and a named-storm wind speed that can have a major impact on insured losses. These losses might not otherwise be represented if the subsequent seasonal rainfall was normal or below normal. This loss increase is primarily associated with increased basement leakage and tree fall. (When soil is saturated, the connection between the root plate of a tree and the soil is lessened, which can increase tree fall.) Research also shows that the average wind speed expected to snap a hard- or softwood tree trunk is a 90 mph gust. Therefore, while more intense winds wouldn’t necessarily increase the loss, lower wind speeds might – given the weakened condition of saturated soil.

Recent examples of events that might have seen increased losses due to higher soil moisture are hurricane Isabel 2003 and Irene 2011. With New Jersey and Delaware having had their wettest June on record and 18 other eastern states having had Junes ranking in their top 10 wettest, this August has seen some of the highest soil moisture levels ever recorded. And this could increase the risk of river and basement flooding as well as tree fall if a named storm were to impact the area.