Reinsurance rates continued to fall on average at the July 1 renewals across most territories with double-digit reductions in some cases, according to a report released Tuesday by Guy Carpenter & Co. L.L.C.
Surplus capacity and minimal losses added to downward pressure on rates at July 1, Guy Carpenter said in a statement.
U.S. property reinsurance rates saw percentage decreases in the mid-to high teens, Guy Carpenter said, “and changes in coverage, more diverse product offerings and an increase in multiyear options enabled companies to better tailor their coverage to meet their risk management needs.”
This continues a trend that was evident at June renewals.
U.S. casualty quota share reinsurance program rates also continued to soften, according to Guy Carpenter, as reinsurers sought to diversify their underwriting books in reaction to continued downward pressure on property rates.
Rates for Latin American and Caribbean property catastrophe excess-of-loss cover fell at the July 1 renewal, Guy Carpenter said, although the decreases were less pronounced than in other regions.
In Australia and New Zealand, July 1 renewal saw significant rate decreases, according to Guy Carpenter, because of overcapacity following a benign period for catastrophe losses.
The issuance of catastrophe bonds during the first half of the year reached $5.7 billion, according to the report.
“With an abundance of alternative capital, catastrophe bond pricing continues to decline,” said David Priebe, vice chairman of Guy Carpenter, in a statement.
“In addition, greater flexibility in the market has facilitated first-time achievements in 2014, including a European windstorm bond utilizing an indemnity-based trigger and the first-ever Japanese yen denominated bond,” he added.
“Alternative capital is also extending its market impact through increased interest in noncatastrophe lines of business, including entities specifically focused on writing more stable business but with a more aggressive investment strategy,” Mr. Priebe said.