Math -- Giving It the Business

The December 18 issue of Business Week has a long section on the "Best of 2006" -- best with respect to leaders, products and ideas. One of the Best Ideas of 2006 is... MATH! Here's a link to the list of BW's best ideas (go to slide 12, or click on the little yellow "smiley-face" with the math symbols at the bottom).

- Rick

2006 Insured Catastrophe Losses

Swiss Re has posted their preliminary evaluation of worldwide catastrophe losses (go to their website, and click on the December 20 news release link). Based on their calculations, 2006 insured worldwide catastrophe losses are around $15 billion -- as opposed to 2005's $100+ billion figure. The 2006 figure, assuming it holds for the next ten days of the year, is the third lowest in the last 20 years.

Looking forward, we have already begun to see and hear some predictions that 2007's hurricane season will be worse. There's a very interesting dynamic in the catastrophe insurance / reinsurance market going on right now!

- Rick

Catastrophe Bond Sales are Anything But (a catastrophe)

Today's Wall Street Journal (page C1) has an article describing the active 2006 market in catastrophe bonds. According to data compiled by Goldman Sachs, investments in cat bonds and similar instruments have totalled over $9.2 billion this year (well more than twice 2005's total).

In addition to this recent activity, I think there may be some "unexplored" types of securitized insurance instruments whose markets will develop in the future -- e.g., contingent equity puts based upon the occurrence or non-occurrence of a specified catastrophe.

- Rick