Cyber-attacks and Terrorism Revealed as Top Emerging Risks for 2015

New products and geographic expansion to drive growth in the year ahead

New York, NY (Nov. 13, 2014) – Cyber-attacks and terrorism are ranked among the top emerging risks concerning the (re)insurance industry in the year ahead, according to a new survey released by Guy Carpenter. According to the findings, new products, expansion into new geographic markets and access to new distribution channels will be the primary drivers of profitable growth in 2015.

The third annual survey polled insurance and reinsurance executives at the 2014 Property Casualty Insurers Association of America (PCI) Annual Meeting, held in Scottsdale, AZ. Designed to identify what (re)insurance professionals believe are the key drivers and threats to profitable growth in the industry, this year’s survey examines which emerging risk respondents felt to be most threatening to the industry in the year ahead. Forty percent of professionals polled ranked cyber-attacks as the most threatening emerging risk, while 31% ranked terrorism and 29% ranked climate change as the most threatening emerging risk to the industry in 2015. In comparison, 82% of respondents felt that space risk was the least threatening to the industry.

“Cyber-attacks are one of the most serious economic and national security challenges facing not only the insurance industry, but governments and businesses around the world,” said Andrew Marcell, Managing Director and Chief Executive Officer of US operations at Guy Carpenter. “The challenge in facing emerging risks such as cyber-attacks or terrorism, where there is less of a historical precedence and data available, rests in modeling and quantifying the potential impacts. Assessing and managing current and future risks will continue to be critically important for the industry to realize its growth objectives.”

Looking at the route to profitable growth in the year ahead, 40% of respondents believe the biggest opportunity to expand their business in 2015 will be through new products, an increase from 24% in 2013. This is followed by new geographic markets (23%), which last year was ranked as the top response, new distribution channels (17%) and mergers and acquisitions (14%).

The findings of this year’s survey once again cite undisciplined and unprofitable underwriting as the leading threat to plans for growth in the year ahead (30%). Concerns around economic stagnation in the United States and abroad, as well as regulatory changes, are also on the rise. Twenty-two percent of respondents cited regulatory and rating agency changes as the biggest threat to their plans for growth, while 19% are most concerned about global economic uncertainty, up from 12% in 2013. As seen last year, with relatively low insured catastrophe losses coming at the end of the Atlantic Hurricane season, only 19% of respondents cited catastrophe/non-cat losses as the leading threat to their plans for growth. Eleven percent of respondents believe operational inefficiencies are the leading threat to their business, down from 15% in 2013.

Improvements to technology and a focus on identifying and retaining top talent continue to be a top priority for (re)insurance professionals. More than one-in-three (38%) respondents said that if given a blank check to invest in their firm, they would spend the additional resources on talent and retention. Bolstering information technology also remains a top priority for the industry with 37% of respondents commenting that they would allocate a blank check to this area of their business, down slightly from 39% in 2013.

“The insurance industry continues to see significant opportunities to aggregate and analyze massive amounts of data and harness this information quickly to respond to changes in the market and gain a competitive advantage. Big data without analysis and interpretation, however, is just noise. This is where having strong talent and strategic partners becomes critically important,” Marcell said. “At Guy Carpenter, we will continue to invest in our industry-leading analytics, strategic advisory services and specialized reinsurance broking expertise to help our clients realize the enormous potential of big data that will, in turn, enable them to grow profitably.”

About the Survey

The survey of 111 insurance and reinsurance professionals was conducted by Guy Carpenter at the 2014 PCI Annual Meeting held in Scottsdale, AZ, on October 26-29, 2014. The 2013 survey polled 115 professionals.

About Guy Carpenter

Guy Carpenter & Company, LLC is a global leader in providing risk and reinsurance intermediary services.
With over 50 offices worldwide, Guy Carpenter creates and executes reinsurance solutions and delivers
capital market solutions* for clients across the globe. The firm’s full breadth of services includes line-ofbusiness
expertise in agriculture; aviation; casualty clash; construction and engineering; cyber solutions;
excess and umbrella; excess and surplus lines; healthcare & life; marine and energy; mutual insurance
companies; political risk and trade credit; professional liability; property; retrocessional reinsurance; surety;
terrorism and workers compensation. GC Fac® is Guy Carpenter’s dedicated global facultative reinsurance
unit that provides placement strategies, timely market access and centralized management of facultative
reinsurance solutions. In addition, GC Analytics®** utilizes industry-leading quantitative skills and modeling
tools that optimize the reinsurance decision-making process and help make the firm’s clients more
successful. For more information, visit www.guycarp.com.

Guy Carpenter is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global
professional services firm offering clients advice and solutions in the areas of risk, strategy and human capital.
Marsh is a global leader in insurance broking and risk management; Mercer is a global leader in talent, health,
retirement, and investment consulting; and Oliver Wyman is a global leader in management consulting. With
annual revenue exceeding $12 billion, Marsh & McLennan Companies’ 55,000 colleagues worldwide provide
analysis, advice, and transactional capabilities to clients in more than 130 countries. The Company prides itself
on being a responsible corporate citizen and making a positive impact in the communities in which it operates.
Visit www.mmc.com for more information.

*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US
registered broker-dealer and member FINRA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000.
Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities
(Europe) Ltd. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade,
Canary Wharf, London E14 5HS. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC
Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan
Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument,
reinsurance or insurance product. **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.

**GC Analytics is a registered mark with the U.S. Patent and Trademark Office.

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