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Member, Beacon International Group, Ltd.
Reinsurance bargain hunters bought larger limits at mid-year renewals as rates continued to drop, according to a report published Tuesday by Guy Carpenter & Co. L.L.C.
Cedents sought more property coverage and more tailored coverage at the April, June at July renewals, the reinsurance brokerage said in the report said.
The U.S. casualty reinsurance market also continued to soften at midyear renewals, in part driven by reinsurers diversifying into the sector and away from property catastrophe, the report said.
The challenging environment for reinsurers — fueled by excess capacity and falling rates, among other things — have been predicted to spark merger and acquisition activity, the report said.
“We have seen notable transactions in 2015 that clearly illustrate the expected deal flow of a soft market,” Andy Beecroft, securities head of M&A advisory for the Europe, Middle East and Africa region at Guy Carpenter in London, said in a statement. “However, we have also seen a broader spectrum of transactions that have not been driven by consolidation synergies, but instead by the recognition of a target’s inherently attractive business model and ability to generate an acceptable return on capital over the long term.”