Bermuda reinsurer property catastrophe rates on the rise: Analysis
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Global property catastrophe reinsurance rates during midyear contract renewals for Bermuda reinsurers have risen an average of 8% to 12%, Keefe, Bruyette & Woods Inc. said in an analysis released Thursday.
“The outlook is for ongoing improvement,” the New York investment bank said in a property/casualty reinsurance research note, “KBW Bermuda Field Trip: Slow Firming.”
KBW met with the senior executives at many insurers and reinsurers in Bermuda, saying management teams were confident that higher property catastrophe reinsurance rates likely would continue through January even without additional catastrophes to bolster them.
Due to a series of catastrophes affecting Japan, Australia and New Zealand last year and this year, those markets likely will see rate hikes of more than 50%, KBW said in the analysis.
Catastrophe-related insured losses during the first quarter of this year have hit profits of the largest U.S. property/casualty insurers.
In its Bermuda analysis, KBW said insurer and reinsurer management teams were “generally pessimistic” about overall price increases for the broader market, particularly in casualty lines such as workers compensation.
KBW said it remains cautious on the Bermuda property/casualty reinsurance sector. It noted that company financial results during the second quarter will “likely be ugly, marred by tornado losses, potential adverse development” on recent catastrophes and other large events.
It also sees the sector “teetering, potentially at a point of strong inflection, and warrants close watching as the storm season develops.”
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