Customizing Reinsurance and Cat Bonds for Natural Hazard Risks

This paper has the following two objectives: to examine how reinsurance coupled with new financial instruments can expand coverage to those residing in areas subject to catastrophic losses from natural disasters, and to show how reinsurance and the catastrophe-linked financial instruments can be combined so that the price of protection can be lowered from its current level. To address these two questions we define the key stakeholders and their concerns with respect to catastrophic risks. We then construct a simple example to illustrate the relative advantages and disadvantages of catastrophe bonds and reinsurance in supporting a structure of payments contingent on certain events occurring (e.g. a severe flood in Poland or a major hurricane in Florida). On the basis of this comparison we suggest ways to combine these two instruments to expand coverage to those at risk and reduce the cost of protection. We suggest six principles for designing catastrophic risk transfer systems, and describe how they may be put into practice. The paper concludes by raising a set of questions for future research. The unexpectedly large insured losses from Hurricane Andrew in the Miami, Florida area in 1992 ($15.5 billion) and the Northridge earthquake in California in 1994 ($13.5 billion) has forced the insurance industry to reevaluate whether it can provide coverage to all property in hazard-prone areas against catastrophic losses in the future. New institutions have been created such as windstorm pools in Florida and the California Earthquake Authority (CEA) to supplement or replace traditional reinsurance. At the same time the capital markets have developed new financial instruments such as Act-of God bonds to provide protection against these large losses from natural disasters. To date, these new instruments have only made a small dent in the market for protection against the financial consequences of catastrophic events, although there is the expectation by many that they will play a larger role in the future. Our approach is to examine whether the private market can offer ways to provide financial backing to deal with these risks. More specifically, the private market can provide hedges against catastrophic risks through catastrophe-linked securities, traditional excess-of-loss reinsurance and certain customized reinsurance coverage schemes. This paper has the following two objectives: (1) to examine how reinsurance coupled with new financial instruments can expand coverage to those residing in areas subject to catastrophic losses from natural disasters, and (2) to show how reinsurance and the new financial instruments can be combined so that the price of protection can be lowered from its current level. To address these two questions we begin our analysis by defining the key stakeholders and their concerns with respect to catastrophic risks. We then construct a simple example to illustrate the relative advantages and disadvantages of catastrophe-linked securities and reinsurance in supporting a structure of payments contingent on certain events occurring (e.g. a severe flood in Poland or a major hurricane in Florida). On the basis of this comparison we suggest ways to combine these two instruments to expand coverage to those at risk and reduce the cost of protection. We suggest six principles for designing catastrophic risk transfer systems, and describe how they may be put into practice. The paper concludes by raising a set of questions for future research.

A preconditioner for the 3D Oseen equations

We describe a preconditioner for the linearised incompressible Navier-Stokes equations (the Oseen equations) which requires as components only a preconditioner/solver for each of a discrete Laplacian and a discrete advection-diffusion operator. With this preconditioner, convergence of an iterative method such as GMRES is independent of the mesh size and depends only mildly on the viscosity parameter (the inverse Reynolds number). Thus when the component preconditioner/solvers are effective on their respective subproblems (as one expects with an appropriate multigrid cycle for instance) a fast Oseen solver results

Patient-oriented and performance-based outcomes after knee autologous chondrocyte implantation: a timeline for the first year of recovery

It is well established that autologous chondrocyte implantation (ACI) can require extended recovery postoperatively; however, little information exists to provide clinicians and patients with a timeline for anticipated function during the first year after ACI. Objective: To document the recovery of functional performance of activities of daily living after ACI. Patients: ACI patients (n = 48, 29 male 35.1 ± 8.0 y). Intervention: All patients completed functional tests (weight-bearing squat, walk-across, sit-to-stand, step-up/over, and forward lunge) using the NeuroCom long force plate (Clackamas, OR) and completed patient-reported outcome measures (International Knee Documentation Committee Subjective Knee Evaluation Form, Lysholm, Western Ontario and McMaster Osteoarthritis Index WOMAC, and 36-Item Short-Form Health Survey) preoperatively and 3, 6, and 12 mo postoperatively. Main Outcome Measures: A covariance pattern model was used to compare performance and self-reported outcome across time and provide a timeline for functional recovery after ACI. Results: Participants demonstrated significant improvement in walk-across stride length from baseline (42.0% ± 8.9% height) at 6 (46.8% ± 8.1%) and 12 mo (46.6% ± 7.6%). Weight bearing on the involved limb during squatting at 30°, 60°, and 90° was significantly less at 3 mo than presurgery. Step-up/over time was significantly slower at 3 mo (1.67 ± 0.69 s) than at baseline (1.49 ± 0.33 s), 6 mo (1.51 ± 0.36 s), and 12 mo (1.40 ± 0.26 s). Step-up/over lift-up index was increased from baseline (41.0% ± 11.3% body weight BW) at 3 (45.0% ± 11.7% BW), 6 (47.0% ± 11.3% BW), and 12 mo (47.3% ± 11.6% BW). Forward-lunge time was decreased at 3 mo (1.51 ± 0.44 s) compared with baseline (1.39 ± 0.43 s), 6 mo (1.32 ± 0.05 s), and 12 mo (1.27 ± 0.06). Similarly, forward-lunge impact force was decreased at 3 mo (22.2% ± 1.4% BW) compared with baseline (25.4% ± 1.5% BW). The WOMAC demonstrated significant improvements at 3 mo. All patient-reported outcomes were improved from baseline at 6 and 12 mo postsurgery. Conclusions: Patients' perceptions of improvements may outpace physical changes in function. Decreased function for at least the first 3 mo after ACI should be anticipated, and improvement in performance of tasks requiring weight-bearing knee flexion, such as squatting, going down stairs, or lunging, may not occur for a year or more after surgery

Binary Central Stars of Planetary Nebulae Discovered Through Photometric Variability III: The Central Star of Abell 65

A growing number of close binary stars are being discovered among central stars of planetary nebulae. Recent and ongoing surveys are finding new systems and contributing to our knowledge of the evolution of close binary systems. The push to find more systems was largely based on early discoveries which suggested that 10 to 15% of all central stars are close binaries. One goal of this series of papers is confirmation and classification of these systems as close binaries and determination of binary system parameters. Here we provide time-resolved multi-wavelength photometry of the central star of Abell 65 as well as further analysis of the nebula and discussion of possible binary--nebula connections. Our results for Abell 65 confirm recent work showing that it has a close, cool binary companion, though several of our model parameters disagree with the recently published values. With our longer time baseline of photometric observations from 1989--2009 we also provide a more precise orbital period of 1.0037577 days.Comment: Accepted for publication in the Astronomical Journa

Adjustable mount for electro-optic transducers in an evacuated cryogenic system

The invention is an adjustable mount for positioning an electro-optic transducer in an evacuated cryogenic environment. Electro-optic transducers are used in this manner as high sensitivity detectors of gas emission lines of spectroscopic analysis. The mount is made up of an adjusting mechanism and a transducer mount. The adjusting mechanism provided five degrees of freedom, linear adjustments and angular adjustments. The mount allows the use of an internal lens to focus energy on the transducer element thereby improving the efficiency of the detection device. Further, the transducer mount, although attached to the adjusting mechanism, is isolated thermally such that a cryogenic environment can be maintained at the transducer while the adjusting mechanism remains at room temperature. Radiation shields also are incorporated to further reduce heat flow to the transducer location

Whales, dolphins, and porpoises of the western North Atlantic: a guide to their identification

This is an identification guide for cetaceans (whales, dolphins, and porpoises). It was designed to assist laypersons in identifying cetaceans encountered in the western North Atlantic Ocean and was intended for use by ongoing cetacean observer programs. This publication includes sections on identifying cetaceans at sea as well as stranded animals on shore. Species accounts are divided by body size and presence or lack of a dorsal fin. Appendices cover tags used on cetacean species; how to record and report cetacean observations at see and for stranded cetaceans; and a list of contacts for reporting cetacean strandings. (Document pdf contains 183 pages - file takes considerable time to open

Local Control of the Bureaucracy: Federal Appeals Courts, Ideology, and the Internal Revenue Service

Recent studies show that the IRS is subject to some political control in shifting its policy between competing ideological or partisan concerns. We extend these studies to examine regional court influence over IRS audit policy within the separation of powers (“SOP”) framework. Examining cross-sectional time series data from 1960 until 1988, we found that the IRS shifts the number of audits it conducts of businesses versus individuals in response to the prevailing median ideology of the federal courts of appeals, and in response to the prevailing ideological framework of the President and Congress. As the median federal court of appeals judge in a circuit becomes more liberal, the IRS conducts more audits of businesses located in that region. As the median federal court of appeals judge in a circuit becomes more conservative, the IRS conducts more audits of individuals living in that region. Courts, therefore, provide an additional measure of control over bureaucratic behavior. The different ideologies of the various courts of appeals provide an explanation for regional variation in IRS policy