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Member, Beacon International Group, Ltd.
Catastrophe losses and a revised hurricane model have led to a moderate increase in U.S. property catastrophe pricing, but the outlook for reinsurance rates depends on the outcome of the hurricane season, Guy Carpenter & Co. L.L.C. said in an analysis Friday.
The reinsurance market overall is in transition, said the New York-based reinsurance intermediary unit of Marsh & McLennan Cos. Inc.
In the first three months of the year, the reinsurance sector’s capital fell 4.4% to about $165 billion. In the second quarter, reinsurance capital levels were largely unchanged, Guy Carpenter said in its analysis, Market in Transition at July 1, 2011, Reinsurance Renewals.
Risk perception
There have been major insured losses so far this year due to catastrophes in Japan, Australia, New Zealand, the United States and elsewhere. In addition, Risk Management Solutions Inc.’s updated Atlantic hurricane model also affected “reinsurers’ view of risk,” Guy Carpenter said.
The catastrophe losses and the revamped model have resulted in a “directional shift” in U.S. property catastrophe prices since the start of the year, triggering a “slow trend of increased pricing,” Guy Carpenter said.
Still, the ultimate reinsurance outlook depends on the outcome of the hurricane season, the reinsurance intermediary said in the analysis.
One significant landfall
“A light hurricane season with no significant landfalls could enable reinsurance capital to resume growth, while a heavy season with at least one significant landfall could mitigate growth or potentially result in an impairment of capital for 2011,” David Flandro, global head of business intelligence at Guy Carpenter, said in the analysis.
While catastrophe-exposed U.S. property risks have seen higher prices, Guy Carpenter said U.S. commercial primary casualty pricing continued to decline during the first half of the year, but at a slower pace than last year.
HAMILTON, Bermuda—Hiscox Ltd. said Tuesday that its losses from U.S. tornadoes and storms during April and May are expected to be about £35 million ($55.9 million).