Guy Carpenter & Co. L.L.C. on Tuesday said downward pressure on reinsurance rates has increased since the June 1 renewal.
Continued pressure from alternative sources of capital, strong reinsurer balance sheets and low loss levels had served to push prices downward and resulted in widening of terms and conditions, the reinsurance brokerage said in a statement.
“Assessing the outcome of the June 1, 2014, renewal, it is clear that the pace of the pricing decline observed in 2013 has not relented,” said Lara Mowery, global head of property specialty at Guy Carpenter, in the statement.
“Reinsurance buyers received significant rate decreases for both Florida and non-Florida renewals, compounding 2013 decreases,” she said.
Risk-adjusted pricing was down on average by 12.5% to 20% for June 1 renewals, with certain placements seeing even greater decreases, according to Guy Carpenter.
“As catastrophe bond pricing continues to fall, reinsurers are continuing to find ways to compete,” she added. New product offerings are abundant, as flexibility and tailored coverage are becoming trademarks of this rapidly evolving market.”
Guy Carpenter said investor demand for insurance-linked securities “continues to be robust despite the significant decrease in (insurance-linked securities) pricing that occurred over the past 18 months.”
Capacity from alternative markets now accounts for about $50 billion, or 15%, of the global property catastrophe reinsurance limit, it said.
Retrocession rates also fell significantly in June, although the midyear is not a core date for retrocession renewals, Guy Carpenter said.