At the start of 2012 renewals, the US casualty lines are showing stable to increasing underlying exposures, albeit in an uncertain economic environment. A recent positive development in the second half of 2011 was a slowdown in the decline of the subject premium bases for many casualty lines. Exposure and subject premiums appear to be stabilizing (and even increasing in some lines) as a result of the stabilizing economy. It appears that pressure on rates, too, has also leveled off as virtually all of the primary casualty lines have exhibited either flat to positive rate increases averaging in the low-to-mid single digits. And certain classes of business, including energy, chemical and life sciences are experiencing even higher rate increases at renewal as a result of the number of 2010 unprecedented losses.
Overall, the devastating earthquakes and weather-related catastrophic property losses of 2011 did not have much impact on hardening the US casualty and workers compensation reinsurance market pricing. The casualty reinsurance markets continue to be concerned about the level (and sustainability) of primary market pricing, with the impact being felt most strongly in select lines of business and proportional treaties. With the exception of energy risks having US exposure, excess casualty, umbrella and clash non-proportional reinsurance has been roughly flat. Workers compensation cat reinsurance also saw some relative stabilization as rate on line saw decreases of flat to down 5 percent. Overall, reinsurer capacity going into 2012 remained stable for all casualty lines.