Increased capital for insurers and reinsurers: Aon Benfield

Insurer and reinsurer capital increased dramatically from the lows experienced in March 2009, according to Aon Benfield’s annual Reinsurance Market Outlook report.
The Jan. 1, 2010 catastrophe reinsurance renewals were focused on rate decreases in the market’s peak zones of U.S. hurricane and U.S. earthquake, says the report, Remarkable Recovery.
“Capacity for the global catastrophe reinsurance market has been restored to near its all-time peak of December 2007, and is meaningfully higher than the levels witnessed throughout the January 2009 renewal season,” Aon Benfield reports.
Global reinsurer capital increased by 16.6% through September 2009 and, by the end of 2009, is likely to have fully recovered from the 16.9% capital decrease experienced in 2008.
In its outlook for the April, June and July 2010 renewal seasons, Aon Benfield says it expects the pace of reinsurer capital growth will decrease due to share repurchases and more stable investment prices.
Given that the reduced pace of reinsurer capital growth is still likely to outpace the growth in insurer demand for reinsurance, Aon Benfield forecasts continued softening over the upcoming renewal periods, assuming no significant reinsured catastrophes occur prior to final negotiations.
 “At January 2010 renewals, reinsurers showed markedly less anxiety than last year and were more focused on gaining the largest possible signings on their reinsurance program authorizations,” Bryon Ehrhart, CEO of Aon Benfield Analytics, says in a release. “The market is again competitive as capacity growth outpaced demand growth, and the global catastrophe reinsurance market softened; however, the market is not soft.”