Forecasting expectations of insured depository default and catastrophic losses

Examines the historical data on US annual aggregate losses of both the insured bank deposits and the property and casualty (P&C) insurers due to catastrophic occurrences. These two topics are considered separately and also in tandem, since the high-end, final guarantor on these losses has become the American tax-paying public, through the auspices of the Federal Government and the Federal Deposit Insurance Corporation (FDIC). The paper develops a macro-economic assessment of both the depository banking industry and the P&C insurance industry. The paper continues by examining the empirical data, identifying structural concerns. A few mathematical approaches are outlined, useful to value or craft securities or transactions designed on the underlying variables of deposit closings and catastrophe losses. The paper shows statistics on the variables. The paper concludes by suggesting approaches, some utilizing a portion of the existing public funds in the FDIC´s Bank Insurance Fund, that reduce the residual net exposure to the general public guarantor, while also enhancing the solvency, cost and capital basis of the two industries. Further considerations as towards regulatory, functional and structural impact are briefly commented on for each of the methods included