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