Benfield describes 2007 reinsurance renewal season as “hard market softening”

Global reinsurance broker Benfield Ltd. has characterized the January 2008 renewal season as one of a “hard market softening,” in which reinsurance premiums declined, but they did so from lofty heights to begin with.
“Premiums fell broadly due to client retentions and rate decreases, but companies were quick to point out that the rates had fallen from a historically high base,” Benfield notes in its report, ‘2008 Renewal RoundupLeaving it on the Table.’
Looking at the European treaty portfolios, renewed premiums fell 5% in 2008, compared to a 3% increase reported Jan. 1, 2007.
Most of the decreases could be attributed to 4% and 12% declines in Munich Re and Swiss Re’s premiums, respectively, Benfield observed.
Swiss Re and Munich Re combined took in about 70% of the EUR18.9 billion [about Cdn$30.4 billion] in premiums collected by the six European reinsurers Benfield surveyed (including Hannover Re, Munich Re, Paris Re, Partner Re, SCOR and Swiss Re).
Still, both Swiss Re and Munich Re compared their premium decreases favourably to the broader reinsurance market as a whole, where all companies experienced premium decreases, and individual decreases of up to 20% were reported.
Swiss Re said it had declined large amounts of business, allowing the reinsurer to keep its average rate reduction at around 3%, compared to 10% rate decreases reported elsewhere in the U.K. market.
“Underwriting discipline continued to be a watchword of the season, but in contrast to earlier years when this was the case, large players left significant and visible business on the table,” Benfield’s report notes.
According to Benfield, Hannover Re reported it had seen “almost no easing” of terms and conditions during the treaty renewal season in 2008, leading the reinsurer to believe “that the soft market had not yet arrived, but rather, ‘hard market softening.'”