Hard Markets - And What Caused Them

1
Hard Markets - And What Caused Them

• Mid - 70s - Stock Market Decline
• Mid - 80s - Liability Crisis, EA issues emerge,
  leads to a capacity crisis
• Early 90s - Hurricane Andrew, Property Capacity
  Crisis
• 2000 - The Perfect Storm

2
Hard Market - How Long and Why?

• Balance Sheet Shortfalls
• EA Reserve Shortfall
• Non-EA Reserve Shortfall
• 9/11 Disclosure and Subsequent Development
• Potential Reinsurance Insolvencies
• Aggregate Excess of Loss Hangover

3
Hard Market - How Long Why(Continued)

• Income Statement Issues
• Realized Gains
• Fixed Income Yields
• Terrorism Exposure
• Underwriting Results

4
Hard Market - What Could Shorten the Duration?

• New Capital to Industry
• Premium/Surplus Ratios still OK
• Undisciplined Industry with Consistent Financial
  Underperformance