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Mid-season renewals in Bermuda’s catastrophe and property reinsurance markets see rate increases of between 8% and 12%


June 24, 2011   by Canadian Underwriter


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Rates in Bermuda’s catastrophe and property reinsurance markets increased between 8% and 12% during mid-year renewals, according to a briefing note from investment bank Keefe Bruyette & Woods Inc. (KBW).
KBW met with 12 insurers/reinsurers and brokers in Bermuda and reported their findings in a detailed briefing note, KBW Bermuda Field Trip: Slow Firming.
“Overall, the tone is positive: rates in the property and catastrophe markets during the mid-year reinsurance renewals were up in the 8-12% range and the outlook is for ongoing improvement,” the briefing note says. “Nonetheless, there was a degree of disappointment that there is little sign of a broader turn and even within the areas of improvement, the more bullish scenarios were not met.”
The note goes on to say 2011 Q2 results “will likely be ugly.” It notes results will be marred by tornado losses in the United States, adverse development due to earthquakes in Christchurch, New Zealand and Honshu, Japan, in addition to damage caused by Cyclone Yasi and flooding in Queensland, Australia.
“Outside of the U.S., the New Zealand/Aussie/Japan markets will likely see 50%+ rate hikes,” the note says. “European property, still largely a January 1 renewal period, will likely see some rate improvement as well.”
Several re/insurers cited in the note observed that Florida property catastrophe rates increased by about 10%-15%.
Many of these increases were influenced by RMS model changes, the briefing note says.
“In the broader market, particularly in the casualty lines, management teams were generally pessimistic,” KBW observed. “The more optimistic views were that rates were likely “bumping along the bottom” with reserve releases offsetting poor current accident years.”


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