August 8th, 2012

Chart: U.S. Property Catastrophe Capacity Utilization for Reinsurance Renewals

Posted at 1:00 AM ET

Now that reinsurers have had time to assess and implement their response to market conditions, there has been more willingness generally to deploy significant capacity where terms have met reinsurer requirements, particularly as renewals in May, June and July were impacted by pricing adjustments in 2011.

The chart below tracks the amount of capacity utilized to complete programs in relation to the amount of capacity authorized. The impact of the 2011 loss activity, particularly the Tohoku earthquake and the RMS v11 release on reinsurers’ willingness to deploy capacity is significant. Immediately after these events, capacity utilization spiked to almost 100 percent and stayed above 90 percent through April 2012. After this point, the majority of renewals had already been impacted by some level of adjustment in 2011. This, coupled with favorable experience to date in 2012, has seen the level of utilization drop closer to 85 percent.

jul1_market-cap-incr-mid-yr-renewal-2gccap

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