Guy Carpenter launches portfolio-based product

Guy Carpenter & Company has launched SelectCat, an index-based product designed to provide reinsurers with capacity, flexibility and rational pricing for managing their property catastrophe risks. SelectCats pricing and loss index is developed from a synthetic layer, structured for a basket of programs selected to act as a proxy for the portfolio that a reinsurer wants to protect, a Guy Carpenter release explains.This customized index approach adds value to the reinsurance supply chain by retaining the indemnity feature of insurance protection, engaging buyers in actively managing their portfolios and offering sellers more transparency of data and better control of exposures, says the Guy Carpenter statement.These key features are designed to allow additional capacity and effective hedge to issuers, while giving retrocessional reinsurers and other capital providers a higher degree of comfort in assuming risks from reinsurers.After Hurricane Katrina, we recognized the need for a more proactive approach to securing capacity in the property retro market and began to look at new, index-based approaches, David Priebe, head of Guy Carpenters specialty operations, said in a statement.By utilizing a portfolio approach that incorporates a number of programs, SelectCat was designed to reduce the concentration and operational risk associated with writing a single catastrophe program.