Decreased reinsurance premium pool in 2007: Partner Re

Renewals in January 2007 have demonstrated some negative trends in the market that are expected to intensify through 2007, according to Partner Res 2006 Annual Report, entitled The Value of Risk.
Partner Re reported that Jan. 1, 2007 was a good renewal for us, with 55% of the reinsurers non-life book up for renewal and a moderate 4% reduction of in-force premiums.
But negative trends in the market loom large in 2007, Partner Re noted in its annual report. On the back of observed low loss trends, our clients are retaining more of their risk by raising attachment points and by dropping lower layers, Partner Re observed. This is taking significant amounts of premium from the reinsurance marketplace; a trend that will further be compounded by the recent acts of the Florida legislature.
Recent Florida legislation has, among other things, increased the amount of hurricane losses covered by the public Florida Hurricane Catastrophe Fund (FHCF).
As a result of the reforms, A.M. Best notes, the FHCF could double its capacity while continuing to charge below-market rates to coastal homeowners. Consequently, the reforms could eliminate billions of dollars of reinsurance premiums from the private reinsurance market.
The trend of decreasing prices is also intensifying, Partner Re noted in its annual report. Lower demand coupled with greater supply of capacity from both established companies and start-up vehicles generally leads to lower prices. This is especially true in the environment of low loss trends.
So while we started out 2007 well, we expect challenges in virtually all non-life markets as we move through the year.