With the Jan. 1 reinsurance renewal season proving something of a disappointment, insurance industry eyes are now on April 1, when a significant portion of the Japanese risk renews, said one leading property-casualty analyst.

After meeting with several Lloyd's syndicates and London-based brokers, Bear Stearns analyst David Small said that European price hikes proved disappointing to reinsurers as many carriers renewed at the current rate to maintain market share. In addition, Bermuda appeared to seek non-U.S. exposure for portfolio diversification.

“Marine and energy have seen both rate increases and significant terms and conditions tightening, with some London participants indicating that Bermuda insurers have generally shied away from these risks,” Mr. Small wrote.

As for Japan, Mr. Small said industry players expressed concern that as reinsurers tend to shy away from Gulf Coast risk, rate increases will not materialize there as had once been expected. “Some suggest that Japan is not the best market to gauge rate changes, as cedants there tend to be more loyal than in other markets,” he wrote.

The July 1 Southeast U.S. wind risk renewals could see some price increases, “as it appears underwriters have generally lowered their aggregate risk appetite there and some have already filled most of their aggregate limit at 1/1.”

The fact that some underwriters appear willing to “play ball” in search of premium growth, along with the new Bermuda capacity that was not in play at 1/1, could lead to price softening, according to Mr. Small.

Special Reports /

Reinsurers Eye Japan Renewals

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