Alex Moczarski, President and Chief Executive Officer, Guy Carpenter & Company, and Chairman, Marsh & McLennan Companies International, introduces the Guy Carpenter press briefing at the Monte Carlo Rendez-Vous in this GC Capital Ideas videocast.
In his opening comments, Mr. Moczarski provided a snap-shot of current market dynamics and the developments influencing these. He said: “The reinsurance industry continues to evolve and adapt to changing and challenging market conditions on several fronts. Continuing inflows of new capital and moderate loss experience mean that capacity remains abundant, maintaining pressure on pricing, terms and conditions. The long-predicted consolidation of the market has now started with inevitable consequences for rationalizing reinsurance buying.”
Commenting on pricing activity, Mr. Moczarski said that while the declining rates of recent years continued, these decreases were being mitigated by a number of factors. He added: “Average decreases were mitigated somewhat by more moderate decreases in US catastrophe reinsurance, especially the wind peril. Reinsurers were more successful in resisting demands for large price reductions following two years of steep declines, while demand actually increased in some lines as clients continued to seek access to innovative new products and improved terms and conditions.”
Assessing the impact of the continuing influx of capital into the reinsurance sector, Mr. Priebe 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.”