08 April 2010
Published in: Insurance risk, Cat risk - ILS
Pressure remains on reinsurance rates
Reinsurance pricing continues to be under pressure, says Bernstein Research. "First signs of the 1 April renewals are that rates are down 5%, despite the first quarter having a larger than average catastrophe burden." The firm sees two major reasons for this:
"With around $4-5bn reinsured losses, the Chilean earthquake is not nearly enough to wipe out the $30bn of excess capital in the sector. The overall high first-quarter cat burden is part of cat normalization following an especially benign 2009 and therefore mostly budgeted for."
Bernstein cites the second reason as insurers turning more positive on the likely outcome of the Solvency II capital requirements, which means "they could become less cautious on rates from now on." Overall, the firm remains negative about the earnings outlook for reinsurance in 2010 and 2011 for Munich Re and Swiss Re.