Third-quarter 2013 earnings for the property/casualty insurance industry should benefit from consistent pricing power, low U.S. catastrophe losses and continued reserve releases, according to an analysis released by Barclays Capital Inc.
The analysis, released Thursday, was based on comments made during Barclays Global Financial Services conference held this week in New York.
Barclays noted, however that its third-quarter estimate of U.S. cat losses is still under review.
In addition, Barclays said that “firm (although peaking) property/casualty insurance pricing is translating into improved underwriting results.”
It added that property catastrophe reinsurance rates are poised to weaken further in January 2014. In fact, Barclays said that catastrophe reinsurance rates could be down roughly 10% at January 2014 renewals vs. declines of 10% to 15% or more at midyear 2013, “although this business still offers somewhat attractive returns.” Barclays said that new alternative capacity entering the markets is driving downward pressure on property catastrophe reinsurance pricing.
“Traditional reinsurers are attempting to get deals done early and offering multiyear deals as well as aggregate coverage, which suggests property catastrophe reinsurance pricing could continue to deteriorate,” said Barclays.