No 1 2012 2 Figures & Facts 3 Windstorm Events 7 Business Update 10 North Atlantic Oscillation 12 Outlook INSIDE Dear Reader, It is a pleasure to present to you the first PERILS News- PERILS’ market data continues to be used for port- letter of 2012. In this issue, we report on the European folio benchmarking where an existing insurance windstorm season 2011/12, the update of our industry portfolio is measured against the market. Equally, exposure database and the usage of our industry data in the data are increasingly being used in Cat model insurance risk transfer products. validations helping to make models more realistic and robust over time. In addition, their use in the In contrast to an unusually quiet European windstorm risk assessment and trigger design of industry-loss season in 2010/11, the 2011/12 season was very active. based risk transfer products continues to grow. PERILS investigated no less than six events with the Further information on this latter point is provided potential to exceed our event capture threshold of a in the Business Update section of this issue. EUR 200m market loss. In the end, two events exceeded this threshold in the markets we cover, namely Joachim The use of PERILS data is driven by the need for (15 - 17 December 2011) and Andrea (4 - 5 January 2012). the insurance industry to better understand natu- PERILS has reported the first two scheduled event loss ral catastrophe risk. We at PERILS are happy to reports for both of these events. The third event loss contribute to this goal by increasing the availabil- reports will be made available during the summer months ity and transparency of Cat insurance market data. of this year. Furthermore, we remain fully committed to enhanc- ing and expanding our range of services, and to con- An interesting feature of the past winter was the high cor- tinuing to deliver data, all of which supports the relation of windstorm activity with the North Atlantic efforts of the insurance industry as a whole. Oscillation (NAO) Index. We have included a special section focusing on this phenomenon on pages 10-11 of With kind regards, this newsletter. Luzi Hitz CEO PERILS AG 1 PERILS INSIDE No 1 2012 Figures & Facts 32’136 32’136 number of numberdata entries of data in PERILS entries Industry in PERILS Exposure Industry Database Exposure 2012 Database 2012 11 11 number of numbercountries of covered countries by covered PERILS by PERILS 2 2 number of numberperils covered: of perils Europe covered: Wind, Europe UK Flood Wind, UK Flood EUR 200mEUR 200m market lossmarket threshold loss for threshold capturing for Europe capturing Wind Europe and UK Wind Flood and events UK Flood events 9 9 number of numbercaptured of events captured events 4 4 minimum numberminimum of numberPERILS lossof PERILS reports loss for reportsqualifying for eventsqualifying events > 80 > 80 number of numberdata providing of data national providing insurance national companiesinsurance companies USD 3.2bnUSD 3.2bn total of PERILS-basedtotal of PERILS-based capacity at capacityrisk per 31at Marrisk per2012 31 Mar 2012 USD 4.0bnUSD 4.0bn total of PERILS-basedtotal of PERILS-based capacity placed capacity 1 Jan placed 2010 1to Jan 31 2010Mar 2012 to 31 Mar 2012 57% 57% share of PERILS-basedshare of PERILS-based capacity which capacity uses which structured uses structuredtriggers triggers 61 61 number of numberPERILS-based of PERILS-based insurance riskinsurance transactions risk transactions 1 Jan 2010 1to Jan 31 2010Mar 2012 to 31 Mar 2012 2 PERILS INSIDE No 1 2012 Windstorm Events An active 2011/2012 windstorm season with more than EUR 1 bn of cumulated industry losses but no major single event. In contrast to the 2010/2011 Europe wind- a market-wide insured property loss of more storm season, the period from late Novem- than EUR 200m (Table 1). Sources used ber 2011 through to mid January 2012 included data from insurance companies, showed a high intensity of extra-tropical wind speed data (see inset) and scenario loss cyclone activity. A key factor in this was a considerations using the PERILS vulnerabil- pronounced west wind drift with an above ity data. As a result of these investigations, average pressure difference between sub-polar events Berit, Friedhelm, Dagmar, and Ulli and sub-tropical zones over the Northeastern were deemed to have not exceeded the EUR Atlantic (see also section on North Atlantic 200m threshold in the markets covered by Oscillation). PERILS (see Figure 1 on page 6) and as a consequence were classified as “non-qualify- PERILS investigated no less than six wind- ing” events which did not require any further storm events for their potential to result in investigation. Table 1: Major Event Name Event Date Markets Mainly Affected windstorm events of the Europe windstorm sea- son 2011/2012. A total of Berit (Xaver, Yoda) 25 to 27 Nov 2011 DK, N, S six events were investigated by PERILS. Friedhelm 8 to 10 Dec 2011 DK, UK Joachim 15 to 17 Dec 2011 F, D, CH Dagmar (Patrick) 25 to 26 Dec 2011 N, S, FIN* Ulli (Emil) 3 to 4 Jan 2012 DK, D, NL, UK Andrea 4 to 5 Jan 2012 B, F, D, NL, UK, CH * Finland is not included in PERILS industry loss data. 3 PERILS INSIDE PERILS INSIDE 2011/2012 Europe No 1 2012 < 80 km/h (<22m/s; <50mph) 80-100 km/h (<22-28m/s; 50-62mph) 100-120 km/h (28-33m/s; 62-75mph) 120-140 km/h (33-39m/s; 75-87mph) 140-160 km/h (39-44m/s; 87-99mph) 160-180 km/h (44-50m/s; 99-112mph) > 180 km/h (>50m/s; >112mph) Maximum gust speeds in km/h WindstormSeason Source: COSMO-EU, DWD 25 to 27 Nov 2011 BERIT (Xaver, Yoda) DAGMAR (Patrick) 25 to 26 Dec 2011 Windstorm Berit mainly caused damage in Denmark, Norway and Windstorm Dagmar mainly caused damage in Norway, Sweden Sweden. In Denmark, the storm caused disruption to public transport. and Finland (the latter not covered by PERILS). In Norway, the The bridges linking the Danish islands of Zealand and Funen (Great Belt storm caused widespread power supply and transportation disrup- Bridge) and Denmark and Sweden (Oresund Bridge) had to be tem- tion. The main road between Oslo and Bergen was temporarily porarily closed. In Norway, the Lofoten Archipelago was particularly closed, and train services between the two cities were temporarily badly affected. In northern Poland (not covered by PERILS), power was suspended. In Sweden, the storm disrupted traffic and caused disrupted to approximately 150’000 homes. power outages. FRIEDHELM 8 to 10 Dec 2011 3 to 4 Jan 2012 ULLI (Emil) Windstorm Friedhelm mainly caused damage in Great Britain and Den- Windstorm Ulli caused damage across Great Britain, Denmark, Germany mark. In Scotland, the storm caused disruption to public transport and and the Netherlands. In Great Britain, particularly in Northern Ireland power supplies with approximately 150’000 homes experiencing tempo- and Scotland, up to 150’000 households were left without power as a rary power cuts on Thursday 8 December. The storm also had a sig- result of the storm. In northern Germany, heavy waves along the coast nificant impact on parts of northern England where heavy winds were and strong winds disrupted traffic. Likewise, Ulli caused traffic disrup- followed by local flooding in Cumbria, North Yorkshire and Swaledale. tion in Denmark. The ferry links between Denmark and Norway were temporarily cancelled. 15 to 17 Dec 2011 JOACHIM ANDREA 4 to 5 Jan 2012 Windstorm Joachim caused damage across France and Germany, Windstorm Andrea caused damage across Great Britain, Germany, and to a lesser extent Switzerland. In France, the storm caused dis- France, the Benelux States and Switzerland. In the UK, winds ruption to public transport and power supplies, with up to 600’000 caused transport disruption and temporary power outages to some French homes experiencing temporary power cuts. The Pays de la 100’000 homes. Central England was particularly badly affected. In Loire and the Brittany regions were particularly affected. The ef- Germany and in the Netherlands, local storm surge-induced flooding fects on Germany were less extensive. The storm affected mainly occurred along the northern coastline as Andrea approached from the southern states of Baden Württemberg and Bavaria, and to a the North Sea and pushed the water against the coast. This was lesser extent the states of central Germany. accompanied by heavy rainfall aggravating the situation. 04 5 PERILS INSIDE No 1 2012 EUR m 400 Figure 1: Industry event loss estimates for the Europe windstorm season 2011/12. Storms 300 Joachim and Andrea were captured by PERILS. All other events were classified 200 as non-qualifying because industry losses remain below PERILS’ EUR 200m capturing threshold 100 in the markets covered by PERILS. Note that wind- storm Dagmar produced 0 significant losses in Finland 25 Nov 2011 8 Dec 2011 15 Dec 2011 25 Dec 2011 3 Jan 2012 4 Jan 2012 which are however not Berit Friedhelm Joachim Dagmar (Patrick) Ulli (Emil) Andrea captured by PERILS. Storms Joachim and Andrea, however, ex- in line with the standard loss reporting ceeded the EUR 200m capturing threshold. schedule (Figure 2). Subsequent loss reports PERILS therefore fully captured the loss data for Andrea and Joachim will be made avail- from the affected insurance companies and able six and twelve months after the respec- has produced two loss reports for each event, tive occurrence dates. EUR m Joachim · 15 Dec 2011 Event Date Figure 2: On the left: PERILS’ first two loss 500 1st · 6 weeks estimates for storms Joachim 300 289 and Andrea, each released six and twelve weeks after the 250 2nd · 3 months respective occurrence dates.