Smith Barney: Soft Pricing? Not Just Yet
NU Online News Service, Dec. 3, 4:13 p.m. EST?Overall, executives are finding that insurance market pricing is staying disciplined even as "absolute price increases" decelerate in some cases, according to remarks reported from an industry conference by the Smith Barney financial firm.[@@]
Analyst Ronald Frank in a research note reported that at the 12th Annual Bermuda Angle Conference, in Boca Raton, Brian Duperreault, chief executive at Bermuda-based ACE Limited, told the meeting that aviation renewals were "surprisingly disciplined" and that this trend is giving him "cause for optimism about overall market discipline."
Additionally, Patrick Thiele, chief executive at PartnerRe, also in Bermuda, said at the conference that in the reinsurance sector, the price declines in short-tailed business lines should be modest, allowing for continued profitability. Mr. Thiele further commented that casualty prices will outpace loss cost trends for another two-to-four years.
Commenting on the nature of the reinsurance cycle, Mr. Thiele observed that the current cycle will be "flatter and longer" since interest rates remain low and that capital is still not in excess. "Casualty loss trends remain uncertain, and a number of lines are still not at adequate pricing," Mr. Thiele said.
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