Guy Carpenter today released a report on the Port of Tianjin Explosions. The report provides initial loss estimates and outlines the many variables involved in assessing the losses emanating from the two massive initial explosions that occurred at Tianjin Port on August 12 of this year.

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Guy Carpenter announced the appointment of Simon Smith as Head of EMEA & International P&I Business, effective September 1.  

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Guy Carpenter reports that market pressures at July 1 renewals continued to drive price decreases across virtually all geographies and lines of business, many in the double digit range. As loss activity remained minimal, reinsurers added to surplus capacity and additional capital continued to come into the market via alternative sources. 

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In general terms primary rates on global marine and energy covers were flat. Despite the relatively recent large losses that occurred even energy rate increases tailed off somewhat. There were no specific moves to increase primary rates, which filtered through to marine reinsurance placements, where individual accounts were treated on case by case bases. There did not appear to be any particular areas where reductions were seen. These only occurred if there were specific extenuating circumstances. Marine ILW contracts were one area where pricing and attachment levels increased, primarily driven by the Costa Concordia loss. The original loss reserve recently increased to the USD1 billion level.

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Reinsurance renewals took place against a backdrop of plentiful capacity at July 1, 2012. Capital has continued to strengthen through the second quarter of 2012, moderating pricing pressures, according to a briefing released today by Guy Carpenter & Company.

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Personal Accident

The trend of hardening rates continued in 2012 although at a slightly lower pace. Risk adjusted rate increases were between 3 percent and 11 percent. Companies whose lead terms were agreed prior to the Tohoku earthquake last year had to accept a steeper increase.

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Reinsurance rates rose as the market continues to work through the impact of the events of 2011, according to Guy Carpenter. In a briefing released today, Guy Carpenter reports that this year’s April 1 renewals are continuing the general trends observed at January 1, 2012.

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Global

Generally, marine and energy reinsurance pricing increased modestly for programs not affected by losses, while those hit sustained reinsurance rate increases of around 10 percent, on average.

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At least six people died after a luxury cruise ship carrying 4,229 passengers and crew ran aground off the Italian west coast on January 13 in calm weather conditions. Italian, Spanish, German, French, British and American nationals were reported to be among the 3,200 passengers on board the vessel. The 290-meter-long Costa Concordia was on a trip around the Mediterranean when it hit rocks near Isola del Giglio off the Tuscan coast, ripping a hole in its hull and prompting a major rescue operation. A large gash can be seen in the ship’s hull but officials said its fuel tanks did not appear to have been damaged, lessening the danger of an oil spill.

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London Market Excess Loss (LMX) & Global Retrocession

April 2011 and prior renewals with energy (particularly, energy liability) experienced exposure paid rate increases of approximately 20 percent. This represented the first opportunity to re-rate since Deep Water Horizon (DWH). Pricing for non-energy classes remained flat but with little downward pressure. Following the Gryphon loss in April, the energy market hardened further. While there are relatively few excess of loss placements renewing at this time, the perception in the market was that rates are likely to harden further where energy related coverage is sought. There has been very little demand for any additional Gulf of Mexico wind limits prior to the wind season, as original rates remained static and insurers maintained or reduced their aggregate. Retro renewals outside the January 1 renewals are rare, but those that did happen paid increases similar to those at January 1 - between 20 percent and 25 percent. Marine industry loss warranty covers tend to attach mid-year and renewed generally at expiring rates. They experienced rate increases following DWH and generally were in excess of any potential loss from Gryphon ‘A’.

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