Reinsurance pricing decline slows at July 1 renewals
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Pricing declines slowed at July 1 renewals, but abundant capacity continues to hit reinsurance markets, reinsurance intermediary Guy Carpenter & Co. L.L.C. said Thursday.
While overall July 1 reinsurance renewal pricing decreased across most geographies and lines of business, the placing of additional limits over the past few months contributed to the stabilization of price declines, particularly for U.S. property risks, Guy Carpenter said in a statement.
“The combination of a significant increase in limits purchased and margins that have continued to thin created a dampening on the market's response to additional rate pressure, particularly with regard to U.S. wind,” Lara Mowery, managing director and head of global property specialty for Guy Carpenter, said in the statement.
In the U.S. market, “catastrophe loss activity continued to be light overall, with 2015 losses to date generally coming from Northeast winter weather,” the statement said.
Alternative capital continued to hit reinsurance markets, especially catastrophe bonds, but investor discipline capped pricing declines.
“Investors' pricing discipline persisted into the first half of 2015 and recent feedback suggests that further catastrophe bond pricing reductions will be unlikely in the near-term,” Cory Anger, global head of ILS structuring for GC Securities, said in the statement.
Softening in the casualty markets slowed and capacity increased for quota share programs in the U.S. workers compensation market, while the renewal of the Terrorism Risk Insurance Program Reauthorization Act brought more stability, the statement said.
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