June 7th, 2012

June 1 Renewal: Improving Capital Position

Posted at 1:00 AM ET

flandro_davidmowery_lara_1411David Flandro, Global Head of Business Intelligence and Lara Mowery, Head of Property Specialty

Despite suffering one of the biggest loss years ever in 2011, the reinsurance sector’s dedicated capital position was slightly up at around USD178 billion by the end of the year. During the January 2012, renewal global property catastrophe rates on line increased 9.5 percent, reflecting in part the heavy catastrophe losses sustained in 2011. Since then, loss activity has been relatively light. Insured losses during the first five months of 2012 were estimated to be around USD6 billion, well below the USD75 billion recorded during the same period of 2011. Benign catastrophe activity has again strengthened reinsurers’ balance sheets and Guy Carpenter now estimates that the global reinsurance sector’s capital position is about USD15 billion in excess of historical trends, given risks assumed. The reinsurance sector continues to function normally and, in the absence of a significant cat loss burden, the improving capital position is likely to contain any attempt at price increases throughout the year.

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