Market conditions at the January 1, 2012 renewal will be influenced by loss experience in the remainder of the year, and the 2011 hurricane season, in particular. A quiet hurricane season with no damaging landfalls could enable reinsurance capital to resume growth, while a busy season with at least one significant landfall will put an additional strain on the sector’s capital position.
Any adverse development in the macroeconomic factors identified in other GC Capital Ideas posts could also have an effect on the market. How companies integrate the various new cat model releases into their business will also have an impact. As the industry absorbs several major model updates in the remaining months of the year, we expect to see increased demand for reinsurance cover and further pockets of price firming during the 2012 renewals.