Hard market coming: Aon Benfield

A hard market is nearing, according to an Aon Benfield report.
“In sum, the end of the soft market in insurance has arrived,” Evan Greenberg, chairman of ACE, noted in the report, Bermuda Quarterly 9M 2008 Bittersweet.
A combination of higher underwriting losses and ongoing concerns about the stability of the economy has shifted the outlook on pricing; the previous forecast has been revised, for the most part, to that of price increases, Aon Benfield reports.
For primary insurers, increasingly poor earnings and increasing expenses are a concern, with reinsurance being the answer for some. This has placed an upward pressure on pricing, as reinsurers reassess their risks.
Price increases on the primary side seem likely to prompt price increases in the reinsurance sector, the report notes.
Looking at Aon Benfield’s own financials, the report noted that gross premiums written for the group increased to US$51 billion, but this masked a wide range in performance.
“Once again it was acquisitions that flattered a number of the positive results,” according to the report.
Additionally, the aggregate combined ratio increased from 86% to 95.7%.
Estimates for Hurricanes Gustav and Ike were estimated in the US$20-25 billion range, with the Bermudian group sharing roughly US$3 billion of this. (The Bermudian portion represents roughly 9% of the combined ratio.)