Posts Tagged ‘reinsurance rates’
Guy Carpenter & Company, LLC, a leading global risk and reinsurance specialist and a wholly owned subsidiary of Marsh & McLennan Companies (NYSE:MMC), reports that after two years of price decreases averaging 15 percent on U.S. property catastrophe placements, risk-adjusted pricing moderated at the most recent June renewals.
As we approach the April 2015 reinsurance renewal, we look back at the Jan. 1 renewal.
Mark Murray, Senior Vice President
The major rating agencies covering the reinsurance sector (A.M. Best, S&P, Moody’s, Fitch) have all voiced concerns with the industry’s ability to adjust to the seemingly overwhelming headwinds currently facing the sector. With A.M. Best recently changing its outlook, the view of the reinsurance sector across the rating agencies is now unanimously negative.
Here we highlight recent GC Capital Ideas Chart Room entries highlighting Guy Carpenter’s Rate on Line (ROL) Index at the 2015 renewal.
From one of GC Capital Ideas’ more popular categories, we highlight the top ten Chart Room stories viewed during the year of 2014:
1. Chart: Global Property Catastrophe ROL Index: The Guy Carpenter Global Property Catastrophe Rate on Line index is presented for 1990 through 2014. The index fell by 11 percent at January 1, 2014.
2. Chart: Rate Movements by Business Segment: Reports rate movements at January 1, 2014.
3. Chart: Regional Property Catastrophe ROL Index: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.
4. Chart: Evolution of Dedicated Reinsurance Capital, 2012 - YE 2013: The evolution of dedicated sector capital is presented in the chart. Guy Carpenter estimates this rose marginally in 2013 to USD322 billion at year-end as underwriting profits from low catastrophe claims and convergence capital inflows offset unrealized losses, sustained share buybacks and dividend payments.
5. Chart: Catastrophe Bond Issuance and Capital Outstanding: Issuance reached a record high of USD7.1 billion, surpassing 2007’s total. Risk capital outstanding also reached an all-time high of USD18.6 billion last year.
6. Chart: 2013 Catastrophe Bond Transactions: This table lists the 144A property/casualty catastrophe bond transactions that were completed in 2013.
7. Chart: Top Ten Catastrophe Bond Transactions: The chart ranks deals in 2013, as compiled by GC Securities*, a division of MMC Securities Corporation.
8. Chart: Pension Fund Capital Under Management and Allocations into Reinsurance: As the chart illustrates , pension funds alone are worth around USD30 trillion. Based on Guy Carpenter’s analysis of possible capital allocation percentages to the (re)insurance space in consultation with sector experts, a maximum of USD900 billion of this amount could potentially be available for insurance-linked investments. This figure is, of course, much greater than currently needed, demonstrating the existing convergence-driven supply excess. Given Guy Carpenter estimates global property catastrophe limit is currently in excess of USD300 billion, and the ILS market only accounts for around 15 percent of this amount, pension funds have so far made very small investments in reinsurance relative to their overall size.
9. Chart: U.S. Property Catastrophe Reinsurance Quoting Behavior: In this chart, the January 1, 2014 average quote across all programs is represented by the line at 0 percent, while the red dots indicate reinsurers’ distances from the mean across all the programs that they quoted. The size of the line represents the variability from the average for all quotes provided by the reinsurer. Each reinsurer is represented across the bottom of the chart by its A.M. Best rating. Quotes representing non-concurrent terms were excluded.
10. Chart: European Property Catastrophe - Typical ROL Changes: The chart compares changes at January 2014 with January 2013.
*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/NFA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade, Canary Wharf, London E14 5HS. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product. **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.
The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.
Guy Carpenter reports reinsurance pricing fell at the January 1, 2015 renewals in many segments, affecting almost all lines of business and geographies, continuing recent renewal trends.