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Reinsurance renewal rates remain in doldrums

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Softening continued during the June/July reinsurance renewal season, according to a report issued Friday by Willis Towers Watson P.L.C.'s Willis Re unit.

Willis Re's “First View, July 1, 2016: Bumping along the Bottom” said that a continued lack of catastrophe losses and abundant capacity across virtually all classes and territories has continued to soften the market. But the report added that “it is increasingly apparent that the magnitude of rate reductions is slowing.”

In addition, there is evidence that capacity withdrawals are occuring where some reinsurers consider pricing to be inadequate “although considerable pricing variation by class and territory persists. As yet, any indication of widespread pricing stabilization remains elusive.”

The report said that only one major catastrophe loss — the fires that ravaged Fort McMurray in Alberta, Canada — will result in any “meaningful” catastrophe claims for reinsurers.

Willis Re also said that “relief that market pricing in some areas may be nearing the bottom of the cycle is counterbalanced by concern over how and when reinsurance rates might start to increase, even modestly, on a wider basis. The alternative is a market that faces a number of years bumping along at current levels earning very modest returns. “