Skies are basically bright in the relatively stable world of reinsurance as major players gather to strike deals in Monte Carlo during the industry's annual rendezvous. But carriers are still cautiously waiting out the hurricane season, and a few threatening clouds are gathering–generated by the law of supply and demand–rating organizations, brokers and carriers have observed.
“There are a couple of concerns over the horizon,” said Peter Dickey, managing senior financial analyst with A.M. Best. “Although 2006 was an excellent year, with the advent of new startups and the continued flattening of rates in both property and casualty lines, capital management is one of our concerns–what companies are doing with the additional capitalization they have managed to accrue through 2006.”
Another concern, he added, is new capacity entering the market “through hedge funds and the capital markets and the effect they will have on pricing and capacity.”
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