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Reinsurance outlook stable despite catastrophes: Aon Benfield

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There is no fundamental shift in the dynamic of the property/casualty reinsurance market, despite the huge catastrophe losses of 2017, and underwriting capacity remains “intact” for all lines of coverage, according a report issued Tuesday by Aon Benfield.

The reinsurance brokerage said the reinsurance sector was well-capitalized ahead of hurricanes Harvey, Irma and Maria in August and September last year, and that global reinsurance capital stood at $600 billion on Sept. 30, 2017, which was 1% higher than the end of 2016.

The hurricane losses were spread among insurers and reinsurers, the report said. “The California wildfires added to the bill in the fourth quarter, but the sense remains that these were earnings events for the industry,” the report said.

Of the $600 billion in capital, $518 billion was from traditional reinsurers and $82 billion was from alternative capital providers such as collateralized reinsurance vehicles, catastrophe bonds, sidecars and industry loss warranties, according to the report.

Aon Benfield estimates that natural catastrophes generated $128 billion in insured losses in 2017, slightly less than the $136 billion estimate of Swiss Re Ltd. and the $135 billion estimated by Munich Reinsurance Co. 

Windstorm losses accounted for $83 billion of the total, Aon Benfield said.

The losses had a limited effect on pricing, the report said: “Reinsurance pricing has moved up in lines and territories most affected by recent losses, but we expect this trend to be relatively short-lived, given the amount of new capital entering the sector.”

Reinsurance brokers reported price increases at Jan. 1 renewals, but the hikes were lower than had been expected.