U.S. property-casualty reinsurance rates in the recent Jan. 1 renewal season held firm and closed in on the peak figures achieved last July, according to a recent report from Swiss Re.
In a presentation published on its Web site, the company said that a capacity crunch for U.S. catastrophe reinsurance in June and July of last year resulted in reinsurance premium increases of roughly 40 percent to several hundred percent in some cases.
Bank of America Securities property casualty analyst Tamara Kravec said that she views this as a positive announcement for the companies that write a significant amount of property business.
Swiss Re also said the Jan. 1 turned out to be a late renewal season and that reinsurance terms and conditions were generally stable but there was pressure exerted on original terms.
"January renewals are late but bound business to date is at attractive price levels," the company said.
Swiss Re plans on presenting a detailed accounting of the renewal season early next month, but this preview was provided Chief Financial Officer Ann Godbehere at the Helvea-Swiss Equities Conference earlier this month.
Ms. Godbehere also reported that the European windstorm rates for large global programs remained firm but that "other perils were down from between 5 percent and 10 percent."
More specifically she said that there was "pressure on casualty rates."
Higher client retentions along with a shift to excess of loss structures also marked the transactions, she added.
Swiss Re also expects a 6 percent increase in both demand and capacity for reinsurance coverage this year.
Swiss Re's analysis matches one put out by Willis Group Holdings earlier this month that reported reinsurance rates for both property and casualty risks have remained flat during the Jan. 1 renewal season. The report also said the major exception was U.S. property business where an insurer has significant East Coast or Gulf Coast wind exposed business.
The report attributed several factors to this premium growth:
oReinsurers have sought to bring January renewals of nationwide and critical catastrophe accounts in line with mid-2006 pricing levels with cedants experiencing rate increases of around 40 percent;
oReinsurance pricing is reflecting the perception of increased volatility that is embedded in the latest catastrophe models;
oReinsurers and their investors have a new appreciation for those insured values and the resulting catastrophe exposures in the Northeast.
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