Cat Re 2002: A Different Hard Market?

One of the few statements that can be made with certainty about the world catastrophe reinsurance market is that it is a hard marketdefinitively so. The firming of 2001, which was driven largely by industry concerns over profitability levels and shareholder perceptions, has been replaced by a severely hardened market, fueled by dire balance sheet worries.

The effects of the Sept. 11, 2001, terrorism losses, coupled with the reemergence of asbestos, corporate scandals in the United States, and ailing global equities markets, have left reinsurers wringing their hands over capital adequacy, policyholder surplus, and rating agency assessments. A continuing lack of retrocessional capacity has compounded these concerns.

In 2002, rates for catastrophe property reinsurance cover increased in all regions of the world, and for practically all cedents. This is the third consecutive year of rising rates, after six years of soft pricing.

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