Typhoon Mireille— shown here at peak intensity on September 22, 1991— caused $ 10 billion in damage in Japan and Korea.
National Oceanic and Atmospheric Administration comprises private transactions, swaps and collateralized structures, as well as peerto-peer arrangements. Lohmann’ s firm, Secquaero, handles about $ 2 billion a year in insurance-linked securities.
Lohmann began his career with Hannover Re in 1980. He spent a total of 17 years in various capacities up through member of the executive board. During his time with Hannover, Lohmann played a large role in the company’ s growth from that of a following reinsurer— one that does not quote the original business but takes a minority position in club deals and syndications— into the world’ s fifth largest reinsurer. He then held leadership positions at various firms in the industry until forming Secquaero Advisors in 2007.
Lohmann was an early pioneer in the field of insurance securitization, having personally negotiated and placed the world’ s first non-life insurance securitizations, called Kover, in 1993 – 94. Each of the transactions he was involved in included several firsts in that emerging field. In 1996, the K2 Portfolio Swap saw the first use of a standard master swap agreement certified by the International Swaps and Derivatives Association to transfer the risk and performance of an underlying defined portfolio to investors rather than relying upon a special-purpose vehicle structure.
On its own, Hurricane Andrew was the largest single insured loss in history to that time, with totals estimated between $ 18 and $ 25 billion. But Lohmann said that Andrew came after several other globalscale losses: severe winter storms across Europe in 1990 and Typhoon Mireille, which hit Japan and South Korea in September 1991, causing $ 10 billion in damage. It remains one of the worst non-Atlantic storms in terms of damage. For reference, Hurricane Katrina caused an estimated $ 45 billion in insured losses in 2005.
So many massive losses overwhelmed the insurance and reinsurance business, and some underwriters were left insolvent. For the survivors, capital was scarce. Premiums and fees shot up, while capacity to underwrite further risks tumbled. But nature abhors a vacuum, and that led to new insurance markets being developed, such as the one that thrives today in Bermuda.
“ At that time we were already in the top six or seven reinsurance firms in the world,” Lohmann said,“ and even we were capital constrained. We were 100 % owned at the time by a German mutual, and we were actually larger than our parent. So we started exploring alternative sources of capital. We started discussions with banks and developed an insurance-linked note
18 FINANCIAL HISTORY | Spring 2016 | www. MoAF. org