With no major natural catastrophes occurring in Austria since July 2009, reinsurance rates for catastrophe excess of loss programs were generally flat to down 5 percent, with one case being down significantly more, at the January 1, 2012, renewal. In the primary market, rates were generally higher - even by as much as 20 percent for storm business. We expect original rates to flatten overall in 2012 and further decline in the motor business specifically due to continuing competition in that sector.
Retentions and limit were unchanged in most catastrophe excess of loss programs in Austria with no notable structural changes to reinsurance cover. In terms of capacity, mid-sized European reinsurers increased some of their lines in Austria, while London markets contracted capacity.
The release of catastrophe model RMS v11 had little impact on determining final pricing and structuring. This was largely because of the high payback factor already included in Austrian natural catastrophe programs as a result of the major losses that occurred between 2000 and 2009. Furthermore, the impact of AIR’s new earthquake model was negligible both from a pricing and structural point of view.