Consistent with Guy Carpenter’s post-January 1, 2015 renewal report, the U.S. casualty reinsurance market continued to soften on both quota share and excess of loss reinsurance programs. This trend continues to be driven by the reduction in property catastrophe premiums, causing reinsurers to further diversify their overall premium writings into casualty lines and by the improved loss ratios among these underlying lines of business. As a result, reinsurance pricing continued to soften via ceding commissions increases on quota share placements (albeit at a slower pace than in 2014 and earlier in 2015) and rate decreases on excess of loss placements (subject to stable loss experience).
Traditional reinsurers continued to dominate the casualty reinsurance marketplace as the newer alternative capital entrants remain cautious and limited in their ability to participate on some of the longer tail liabilities inherent among many casualty lines. Importantly, traditional markets continue to work with core clients to tailor specific reinsurance coverage to each client’s needs. Examples include: multi-year contracts, private layers, aggregate coverages, hybrid structures, and including additional lines of business into broad-based casualty treaties. Treaty retentions and co-participations continued to vary across the casualty space. Some clients have elected to purchase more cover in light of current market conditions, while others have increased retentions in select areas. Reinsurance capacity remains ample to fill treaty placements. In brief, the trends exhibited at the start of 2015 continued through the July 1st renewal period.