Willis 1st View Reinsurance Report on Pricing Finds some Stabilization

According to the latest 1st View Renewals Report from Willis Re, the relentless “period of rate reductions” in reinsurance pricing shows signs of softening with “early signs” of price stabilization “beginning to emerge in peak property catastrophe zones.”

The report said that “while competition remains intense for non-peak areas where traditional reinsurers still dominate the market, signs of reinsurance pricing stabilization are starting to emerge in peak property catastrophe zones as supply and demand begins to equalize.”

According to the report, the recent pricing trend across both the June 1 and July 1 2015 renewals is a result of the “significant increase in demand for Floridian catastrophe capacity.”

Willis Re also noted that the “recent swell in capacity from collateralized reinsurance markets – which has played a major role in driving pricing down in the peak zones – appears to have abated, with a number of these markets now showing pricing discipline by cutting the capacity they are prepared to offer as rates continued to soften throughout the first half of 2015.”

The report also indicated, however, that while “property catastrophe pricing competition may be cooling, the reinsurer M&A frenzy continues.” It highlights the fact that “despite the unappealing short-term outlook for nearly all companies across the sector, such activity is helping to maintain current , and despite diminishing underwriting and investment returns being delivered, investor capital continues to be attracted to the sector.”

John Cavanagh, Global CEO of Willis Re said: “The June 1 and July 1 2015 renewal season offers reinsurers some hope. With the North Atlantic Hurricane season now underway, even if the predicted low level of hurricane activity is realized, the outlook for 2016 might not be quite as bleak as may have been inferred from the January and April 2015 renewals.”

Source: Willis Re

Topics Reinsurance Willis Towers Watson