Aon Benfield has released its July first “Renewals Update” report, which indicates that “rates continue to decline in all major regions without significant catastrophe loss activity in the last 12 months.”
Aon noted that the effects of the Chilean Earthquake and storms in Australia resulted in “localized increases in pricing. Chilean reinsurance renewals increased 45 to 65 percent with other Latin American countries seeing minimal rate change for the 2010 renewals. Although reinsurance rates in layers with loss activity rose more than 30 percent in Australia, overall program results varied significantly from client to client.
“Catastrophe capacity remains unimpaired by the events of the second quarter. US property catastrophe reinsurance rates have continued to decline throughout 2010 with rate decreases of between 10 to 20 percent.”
The report also pointed out that the impact of the Deepwater Horizon loss “requires further understanding in the industry. Nevertheless terms, conditions and pricing within the offshore energy market are likely to see significant revision as the year progresses.”
Stephen Mildenhall, Aon Benfield Analytics Chief Executive Officer, noted: “Record-high reinsurer capacity continues to grow more quickly than cedent demand producing further downward pressure on rates in almost all market segments. In Chile, new capacity has been drawn into the market helping contain the pricing impact of February’s earthquake to property catastrophe.”
Bryon Ehrhart, Chief Strategy Officer for Aon Benfield, said: “Despite reinsurance becoming an even more accretive form of underwriting capital, demand is not growing at a pace equal to the growth of supply. Reinsurer share repurchases and consolidation will accelerate if major insured catastrophe losses do not occur.”
The full report may be obtained at: http://www.aon.com/attachments/reinsurance/201007_ab_analytics_reinsurance_market_outlook_july.pdf
Source: Aon Benfield
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