At the start of 2009, capacity was extremely tight, as both insurer and reinsurer capital levels and costs were in question. Cost of capital, reduced investment income, lower lapse assumptions and a lack of reserve credit collateral put tremendous pressure on pricing. As the year progressed, capital and collateral issues began to resolve and the reinsurance market saw increased activity. By the end of the year, the same forces that stalled the market were creating ample opportunity for coinsurance deals, particularly in-force transactions.
Though fundamental forces continued to put pressure on pricing, and many cedents slowed or postponed new product changes, reinsurers seemed eager for business. Evidence includes very competitive terms and conditions and a new willingness to devote resources to smaller deals.