Homeowners Insurance Line Three Times More Volatile Than Private Passenger Auto: Aon Re Study
21 Marzo 2007 - 6:00PM
PR Newswire (US)
CHICAGO, March 21 /PRNewswire-FirstCall/ -- The Homeowners
insurance line was the most volatile major insurance line in the
14-year period 1992-2005, due in large part to the active 2004 and
2005 Atlantic hurricane seasons. Homeowners was three times more
volatile than the Private Passenger Auto line, according to an Aon
Re Global study. (Logo:
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO ) The study
shows that the Private Passenger Auto line experienced the lowest
volatility during that period, followed by the Auto Physical
Damage, Commercial Auto and Workers Compensation lines. Excluding
catastrophe losses, the Homeowners line has a risk level comparable
to the Commercial Auto line. Liability lines and Medical
Malpractice also have significantly above average volatility. Aon
Re's Insurance Risk Study quantifies the systemic risk for each
line of business, representing the risk to a large portfolio from
non-diversifiable risk sources such as: -- changes to market rate
adequacy and underwriting terms and conditions; -- misestimating
plan loss ratios; -- frequency and severity trends; --
weather-related losses; -- legal reforms and court decisions; --
level of economic activity and macroeconomic factors. For large
books of non-cat-exposed business, systemic risk is the major
component of underwriting volatility. The report examined
volatility in nearly two dozen lines including Commercial Multi
Peril, Other Liability (Occurrence and Claims Made), Fidelity and
Surety, and Medical Malpractice. "The study provides objective,
data-driven underwriting volatility benchmarks by line of business
to help insurers provide detailed assessments of their risk profile
and quantification of the adequacy of their economic capital," said
Stephen Mildenhall, Aon Re Services executive vice president and
chief actuary. "Insurers can use the factors as a basis for their
internal capital modeling to ensure that simulation modeling tools
produce credible results. The factors also will help insurers
address recent rating agency requirements for robust underwriting
risk modeling." The Insurance Risk Study applies sophisticated
techniques from risk theory to a database of NAIC Annual Statement
data from accounting years 2001-2005 for 1875 individual U.S.
groups and companies. The database, covering all 21 Schedule P
lines of business, contains more than 800,000 observations. Aon Re
introduced the Insurance Risk Study in 2003 to help parameterize
its Prime/Re insurance simulation software, and has updated it each
year since. The next update, including data from 2006 annual
statements, will be made available in August 2007. About Aon Re
Global Aon Re Global provides its clients with a full range of
services in the design, structure and implementation of their
risk-transfer programs through a network of offices in more than 40
countries. In addition to traditional treaty and facultative
placement services, Aon Re Global offers clients a range of
advisory and consulting services -- such as catastrophe information
forecasting and financial analysis. Aon Re Global, a subsidiary of
Aon Corporation, was named best reinsurance broker in 2006 by
readers of Business Insurance and Reinsurance. About Aon Aon
Corporation (NYSE:AOC) ( http://www.aon.com/ ) is a leading
provider of risk management services, insurance and reinsurance
brokerage, human capital and management consulting, and specialty
insurance underwriting. There are 43,000 employees working in Aon's
500 offices in more than 120 countries. Backed by broad resources,
industry knowledge and technical expertise, Aon professionals help
a wide range of clients develop effective risk management and
workforce productivity solutions. This press release contains
certain statements related to future results, or states our
intentions, beliefs and expectations or predictions for the future
which are forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from either historical or anticipated results depending on a
variety of factors. Potential factors that could impact results
include: general economic conditions in different countries in
which we do business around the world, changes in global equity and
fixed income markets that could affect the return on invested
assets, fluctuations in exchange and interest rates that could
influence revenue and expense, rating agency actions that could
affect our ability to borrow funds, funding of our various pension
plans, changes in the competitive environment, our ability to
implement restructuring initiatives and other initiatives intended
to yield cost savings, our ability to execute the stock repurchase
program, our ability to obtain regulatory or legislative changes to
permit continuous sales of our supplemental Medicare health
product, changes in commercial property and casualty markets and
commercial premium rates that could impact revenues, changes in
revenues and earnings due to the elimination of contingent
commissions, other uncertainties surrounding a new compensation
model, the impact of investigations brought by state attorneys
general, state insurance regulators, federal prosecutors, and
federal regulators, the impact of class actions and individual
lawsuits including client class actions, securities class actions,
derivative actions, ERISA class actions, the impact of the analysis
of practices relating to stock options, the cost of resolution of
other contingent liabilities and loss contingencies, and the
difference in ultimate paid claims in our underwriting companies
from actuarial estimates. Further information concerning the
Company and its business, including factors that potentially could
materially affect the Company's financial results, is contained in
the Company's filings with the Securities and Exchange Commission.
Media Contact: Rahsaan Johnson 312.381.2684
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO
http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT:
Rahsaan Johnson of Aon, +1-312-381-2684, Web site:
http://www.aon.com/
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