Into the tempest

Natural catastrophe risk models suggest that insurers are significantly under-capitalised. Firms are tapping the capital markets for billions of dollars in additional reinsurance capacity, but it may not be enough to avoid damaging rating downgrades. Meanwhile, increasing use of so-called side cars is prompting concern that some firms may be self-insuring. By Navroz Patel

Was last year's US hurricane season the worst-case scenario or a sign that weather systems are changing and that states on the Atlantic coast can expect similar, or even more severe, storms in the future? This, says John Brynjolfsson, a portfolio manager at California-based asset manager Pimco, is the question nagging away at all participants involved in natural catastrophe risk markets. Although