This summit, more ceremonial than studious, is the first contact between insurers and reinsurers, just like two boxers sizing each other up before releasing their shots. The more serious matters will be negotiated later in Baden-Baden or during bilateral meetings.
One finding has emerged from this round of observation: the 2014 rates will remain stable with a slight downward trend.
Reinsurers that have achieved excellent results in 2012 with a combined ratio of 88.1% and a return on equity of 14.4% cannot justify a rate increase. With little room on the financial side as well, the persistence of low interest rates will be detrimental for such reinsurers. In these conditions, it would be difficult to remunerate a shareholders’ equity reaching 510 billion USD and provide shareholders in 2013 and 2014 with a return identical to that of 2012.
Tensions over prices result as well from existing overcapacity. In such a context, the underwriting policy advocated by market leaders will be undermined. The rigidity of certain reinsurers could benefit others whose short-term goal is the volume of turnover and not return on equity.
Finally, in light of the economic difficulties of the so-called mature markets, reinsurers are expecting increased competition on the emerging markets of Asia and Latin America, the only ones able to provide high levels of growth.