International reinsurance renewals completed for April 1 followed trends set earlier in the season, as market pricing remained firm in virtually all classes and territories.
Capacity was adequate across the board, and no substantive changes took place in negotiations over exclusionary language, according to the latest 1st View renewals report from Willis Re.
James Kent, global CEO of Willis Re, said the market “landscape has not seen much change” since January 1 and consequently the important April 1 renewals “saw more of the same between reinsurers and their customers.”
According to the report, despite above-average insured natural catastrophe losses in 2020, most of the renewing property catastrophe excess of loss programs delivered a largely loss-free year. Some property per-risk programs were affected by the worsening frequency and severity of non-catastrophe losses, which led to pricing increases and program restructuring, Willis Re noted.
Aggregate covers particularly saw greater focus on structure than on price, as reinsurers worked to distance these accounts from attritional losses. Long-tail lines, and particularly casualty excess of loss, faced increased pricing pressure from reinsurers coping with low investment returns.
Pandemic and silent cyber exclusionary language followed the approach set at January renewals, through a combination of standard clauses and, from some reinsurers, customised language written to align with original policy wordings.
Demand from insurance-linked securities (ILS) investors proved strong, particularly for capacity made available through publicly traded bonds, which helped to moderate overall price increases.
“Market results for 2020 illustrate the challenges faced by the global reinsurance sector of reduced investment income, declining prior-year reserve releases, rising COVID-19 loss reserving, and increased volatility in the frequency and severity both of natural catastrophes and man-made losses,” commented Kent.
However, he added, reinsurers’ 2020 results when adjusted for COVID-19 claims reserves have shown “encouraging improvements in underlying combined ratios and buyers’ immediate concerns over capacity availability and pricing have been allayed leading to an orderly renewal.”
Source: Willis Re
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