July 2, 2010 by Canadian Underwriter
A large capital cushion continues to suppress global reinsurance rates, according to a briefing paper from reinsurance broker Guy Carpenter.
“Further erosion of rates was evident at the July 1, 2010 reinsurance renewal,” Guy Carpenter says in its news briefing, posted on GCcapital ideas.com. “Property rates were down by as much 15% despite substantial catastrophe loss activity in the first half of 2010.”
The briefing notes “heavy losses from the Chilean earthquake were insufficient to turn prices outside the areas immediately affected by the earthquake, despite the announcement of large increases in estimates from the largest European reinsurers.”
In the energy and casualty sectors, conditions were flat or down, although the Deepwater Horizon rig disaster may exert upwards pressure as more information emerges, Guy Carpenter says.
Meanwhile, the 2010 hurricane season is predicted to bring elevated storm activity.
“If these forecasts are right there is an even greater chance that the marketplace will look very different at the January 1, 2011 renewal,” the briefing says.