Global reinsurance industry suffers “worst ever” natural catastrophe losses in 2010 Q1

The global reinsurance industry suffered $16 billion in natural catastrophe losses in 2010 Q1, likely making it “the worst-ever first quarter for natural perils losses,” according to a Willis report.
The poor start to 2010 has put the comparatively benign year of cat losses in 2009 into perspective, Willis says in its report on renewals, Calm and Calamity.
“The 2009 results of some of the best performing companies have been so strong that many CEOs have been trying to actively manage their investors’ expectations for 2010,” Willis says.
Still, despite the increased frequency and severity of loss activity in 2010 Q1, “the reinsurance market has yet to react in terms of pricing, conditions and capacity,” Willis observes.
The reinsurance broker notes Apr. 1, 2010 reinsurance renewals have followed the same pattern as the Jan. 1, 2010 renewals. This means “modest risk-adjusted reductions” and a hardening of markets only in specific territories and classes that have consistently shown poor results.
“While one poor quarter, which is an earnings issue for reinsurers, will not be sufficient to trigger a general market turn on its own, it is likely to stiffen reinsurers’ resolve on renewals later in the year, as the size of the recent catastrophe losses develop and back-year reserve releases reduce,” Willis says.
“This is balanced by the remaining reinsurance capacity oversupply and the continuing difficulties companies face in achieving real top line growth to offset claims and expense increases.
“Against this background, absent any other major losses, buyers who will be renewing loss-free programs later in the year can continue to budget for stability or modest reductions in their reinsurance costs.”