Guy Carpenter’s 2013 Reinsurance Renewal Report Executive Summary was discussed at a press briefing held in London on January 3. It reports that the reinsurance sector enters 2013 equipped with ample dedicated capital and stable pricing. Guy Carpenter found that the January 1, 2013, renewals took place against a stable backdrop, with only loss-affected lines and select regions experiencing price volatility.
Nick Frankland, CEO, EMEA Operations, said, “This renewal has seen a reduction in the amount of catastrophe reinsurance being purchased and a greater capacity concentration ….. among a smaller number of counterparties. An issue this raises is that of counterparty credit and operational risk. Reinsurer panels are being reduced on programs as major cedants look to establish larger, more meaningful partnerships with key reinsurers. As a result the question of scale will become an increasingly important one in our industry and will likely have a knock-on effect on mergers and acquisitions activity as we establish what is too small and what is big enough.”
“In the last 12 months we have seen additional sources of capital entering the market and tending towards existing major players rather than being used to set up independent companies or dedicated structures. Existing players are finding it much easier to access these additional sources of capital. It is our expectation that in future we will see a larger number of reinsurers acting as (quasi) fund managers. This is how capital will enter the market - to proven entities within the industry. We must remember that our industry remains a very attractive market in which to invest money.”
Click on the graphic immediately below to hear an audio recording of the press briefing/presentation by David Flandro