Mid-year renewals were up between eight percent and 12 percent for midyear renewals of global property catastrophe business, stated the analysis released yesterday by KBW.
“The outlook is for ongoing improvement,” the New York investment bank said in a research note headed “KBW Bermuda Field Trip: Slow Firming”.
KBW met with the senior executives at many insurers and reinsurers in Bermuda. Management teams were confident that higher property catastrophe reinsurance rates were likely to continue through January even without additional catastrophes to stimulate increases.
In the areas affected by a string of natural catastrophes this year, particularly Japan, Australia and New Zealand, rate hikes of more than 50 percent were likely, KBW suggested.
Bermuda market re/insurers estimated catastrophe losses in excess of $6 billion during the first three months of the year, according to company data.
The second quarter will add to those losses. April and May brought severe tornado outbreaks, the flooding of the Mississippi River and other severe weather events in the US that have added up to around $15.5 billion in insured losses, according to broker Aon Corp. This scale of US losses is unusual before hurricane season.
But the rate increases in property lines are not being duplicated in most other lines. KBW said the Bermuda executives it interviewed were “generally pessimistic” about overall price increases for the broader market, particularly in casualty lines such as workers’ compensation.
KBW said it remains cautious on the Bermuda property/casualty reinsurance sector. It noted that company financial results during the second quarter will “likely be ugly, marred by tornado losses, potential adverse development” on recent catastrophes and other large events.
It also sees the sector “teetering, potentially at a point of strong inflection, and warrants close watching as the storm season develops”.
While some in the industry see a hurricane that caused $25 billion of insured losses being sufficient to spark a meaningful turn in the market, opinion is divided, as was illustrated by a vote on the subject among delegates at the Insurance Day Summit in Bermuda last week.