Assessing the impact of the continuing influx of capital into the reinsurance sector,  David Priebe, Vice Chairman, Guy Carpenter, commented on ILS pricing levels. He said: “We believe current price levels for ILS could be a ‘golden compromise’ in which protection buyers perceive good value for fixed-price multi-year cover and investors continue to broaden and diversify their portfolio of holdings. With costs of issue falling and time-to-market shortening, this equilibrium could provide a substantial boost to the market that the record issuance of early 2015 portends.”

Looking ahead to the renewals, Mr. Priebe summarized the potential US rate environment by stating: “We anticipate ample capacity for the US casualty reinsurance market, with pricing not expected to firm at January 1, 2016 renewals. We also expect US property reinsurance prices to remain relatively weak as supply for the most part exceeds demand. It also remains to be seen whether the tactical exploitation of soft markets by some buyers, and reinsurers’ resistance to aggressive demands for decreases will be repeated at January 1.”

David Priebe: Guy Carpenter Monte Carlo Press Briefing, 2015 from Guy Carpenter on Vimeo.

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