Posted on 01 Jun 2010
Aon Benfield, a premier world reinsurance intermediary and capital advisor, today releases its June 1 Renewals Update report, which reveals that significant catastrophe losses in the first quarter of 2010 failed to halt declining reinsurance rates.
Despite loss events including the Chilean earthquake and Windstorm Xynthia in Europe, reinsurer capital rose by 8.0 percent in Q1 to USD434bn, surpassing the record levels set in 2007 before the global financial crisis took hold.
For Florida programs, which represent the majority of activity at June 1 renewals, reinsurers have experienced positive underwriting results for the past four years due to minimal reinsured catastrophe events.
Mike Bungert, Co-CEO of Aon Benfield, said: “I am pleased that despite the difficult primary insurance market for residential insurance, reinsurers were able to provide relief on rates and better differentiate individual insurers within the Florida market.”
Record levels of reinsurer capital saw Florida rates decline by 10-15 percent on average at June 1 with greater variance based on reinsurers’ views of the cedent credit quality. Meanwhile, the continued downturn in rates is in line with Aon Benfield’s forecasts issued at the 2010 January and April renewals periods.
Steve Mildenhall, Aon Benfield Analytics Chief Executive Officer, said: “Our June 1 Renewals Update report highlights that cedents should not be concerned at the impact of first quarter losses on reinsurers’ balance sheets or on rates. Reinsurers are extremely well positioned, the industry remains strong and stable, and capital continues to grow at a faster rate than demand, all of which led to downward pressure on reinsurance rates in-line with our January 1 projections.”
Aon Benfield forecasts that global peak zones including the United States and Europe will remain unaffected by Q1 reinsurance losses, and that the forthcoming July renewals will see continued rate declines in all regions.