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MONTE CARLO, MonacoBrokers will try to resist any effort by reinsurers to raise rates for European catastrophe business at the upcoming renewals, according to Aon Corp.
At the 50th annual reinsurance Rendez-Vous de Septembre in Monte Carlo, Monaco, representatives of the Chicago-based broker said that at January 1 renewals, barring any significant non-U.S. catastrophic events, they expected capacity for reinsurance for Continental European risks to be "plentiful," retention levels "stable" and rates to remain stable or increase by up to 10% in some cases.
Charles Cantlay, deputy chairman of Aon Re U.K. in London, said that for the past nine months there has been a "two-tiered" reinsurance market, during which rates for catastrophe-exposed property business in the United States have been very hard, but where in other regions there has been competition among reinsurers as they seek to diversify into other areas such as Europe.
The buzzword of the past year has been "diversify, diversify, diversify," he said.
There is new capacity in Europe for European catastrophe business, noted Vincent Redier, chairman and chief executive officer of Aon France, and it is likely there will be increased competition as reinsurers seek to write more European business to move away from heavy concentrations of U.S. property risk.
Retrocessional capacity is plentiful for everything except U.S. property catastrophe business, according to Mr. Cantlay.
And he said that while reinsurers may seek to keep rates high for European catastrophe business, brokers would resist such a move, and clients would be unlikely to accept such attempts by their reinsurers.
At the July 2006 renewals, the only "really constrained" market was for U.S. property catastrophe business, where complex commercial risks saw rate-on-line rises of as much as 60%to 100% in some cases, and increases of between 50% and 100% in retentions, Aon noted in a report on the reinsurance market, "Preparing for the Future, Understanding the Past."