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U.S. property catastrophe reinsurance to decline -25 Percent at renewal

19.12.2013 – meer-wolkenAs reinsurance pricing pressure builds, due to surplus traditional reinsurance capital, the influx of alternative capital and higher risk retention rates at primary insurers, Nomura analysts suggest U.S. property catastrophe reinsurance pricing could slip by 15 Percent to 25 Percent at renewals.

With just two weeks to go until the key January reinsurance renewals, where many of the world’s largest reinsurance programs are up for renewal, sentiment regarding the prospects for pricing expectations keep worsening. Expectations are that the reinsurance market will generally see very little in the way of substantial price rises this year, apart from perhaps a few loss affected lines and regions.

As ever the focus is on the expectation for pricing in the U.S. property catastrophe reinsurance market, the scene of the highest levels of competition seen in many years thanks to high levels of capital, both traditional and non-traditional, as well as an appetite among primary insurers to retain more risk.

A ‘perfect storm’ is closing in on property catastrophe focused reinsurers, as declining rates, increased competition from ILS and alternative sources, increased capacity available from the traditional side, higher retentions at primary insurers and further relaxed terms and conditions, all converge to apply more pressure.

Discussions that the Nomura analysts have had with reinsurance brokers and underwriters recently suggest to them that reinsurance prices are falling faster than had been expected. For U.S. property catastrophe risk it is suggested that price declines on reinsurance renewals will be in the range of 15 Percent to 25 Percent, significant after the falls earlier this year. For Europe and the UK the analysts expect more stable pricing, of flat to down 5 Percent. Global casualty reinsurance renewal pricing is expected to be largely flat.

Foto: Das Ausbleiben von Hurrikanen und zunehmendes Alternativkapital drücken in den USA auf die Preise der Rückversicherungsbranche (Quelle: ak)

Link: U.S. property catastrophe reinsurance to decline

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