Partner Re warns of “no-growth environment” in 2010

Partner Re is warning of a “no-growth environment” for the reinsurance market in the coming year.
In its 2009 annual report, securing the future, Partner Re observed that during Jan. 1, 2010 renewals, “the company observed a competitive business environment with reinsurance pricing generally flat or experiencing reductions and a continuing trend towards increasing retentions by cedants.”
In its 2010 outlook for the global (non-U.S.) property and casualty segment, the company said it “expects a continuation of the observed trends in pricing and terms and conditions during the remainder of 2010.”
Partner Re said if these “muted” loss trends continued, they would offset the negative effect of historically low interest rates. In turn, this would “keep price-adjusted profitability at ‘acceptable’ levels for the average reinsurer and at ‘attractive’ levels for the better ones,” Partner Re says in its report.
As a result, Partner Re says it expects reinsurance markets “are likely to be quite stable in 2010.”
And yet, the company predicted, “without a catalytic event, there is likely to be a gradual decrease in pricing, flat to declining return on premium and flat exposure growth as a result of the recession.”
This “no-growth environment will undoubtedly be the biggest challenge facing reinsurers until the next phase of the cycle emerges,” Partner Re adds.