January 2014 renewals, reinsurance market turning soft

The January 1, 2014 renewals have shown a particularly soft reinsurance market, a trend mostly accounted for by the abundance of capacity.

Photo credit: Atlas Magazine The good 2013 results of traditional insurers have strengthened already strong balance sheets, with capital from non-traditional reinsurance adding color. Broker Guy Carpenter believes the level of capacity available amounts to 322 billion USD.
Equally worth noting are retention increase and a better understanding of risks by ceding companies, which slowed down demand for reinsurance. The margins of non-proportional treaties have been reduced due to lower premium rates. Apart from increases reported in Germany and Northern Europe both affected by the 2013 floods, the Rate on Line of natural catastrophe programs fell from 15% to 25 % in the United States and from 10% to 15 % in the rest of the world.

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