Rates
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The firm received a long-term ICR of a- and the outlook for both ratings is stable.
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European rates on line increased by 7.60%, while in the US prices were up 5.25%.
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The broker’s report also hailed the best risk-adjusted margins for ILS investors in a decade.
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The broker’s 1st View report predicted that cat bond issuance should remain elevated until at least Q2 2024.
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Reinsurers are making some adjustments to secure target signings but appetite to grow is finely balanced.
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Projected 2024 ILS returns remain historically high, but signs of increased appetite for top-layer cat risk and top-end retro raise questions over how long this will last.
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Anticipations of a tug-of-war around a ‘flat to slightly up’ pricing renewal have indeed come to fruition.
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Profits are expected to widen thanks to improved rates and higher average attachment points.
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TWIA has raised its net operating expenses to $40.2mn.
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E+S Rück said that natural disasters and persistently high inflation have again "taken a toll" on the German insurance industry.
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Fermat’s John Seo said the industry can “see the wall of money coming in, but it’s coming in slowly”.
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Prabis does not envisage market softening at this stage, for reasons including wider macroeconomic impacts.
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The downgrades reflect the negative impact of challenging macro-economic trends on underwriting results and risk-adjusted capitalization.
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Board members voted five to four in favor of rate increases but fell short of the two-thirds majority required.
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The ratings agency is currently in discussions with Clear Blue’s management regarding the company’s ability to replace certain programs or letters of credit.
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The CEO said Chubb has ‘never seen better pricing’ on primary property.
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Loss-free accounts were generally up 20%-50% at renewal, the reinsurance broker said.
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The firm’s 1st View report on the July renewals also flagged that an oversupply of ILW capacity may bring down attachment points relative to early 2023.
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The carrier is increasing underlying rates to counter increased reinsurance costs and inflation.
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Considering recent reforms, Citizens’ rates, on average, are still 58.6% below actuarially sound levels, but the inadequacy would have been 88.3% without them.
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Some cedants paid more than 40% increases depending on Florida concentration and Hurricane Ian losses.
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Even clean accounts in the admitted space are seeing rate increases of 15% year on year, while loss-hit accounts in Florida were slapped with a 100% rate increase for June 1.
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Early private deals have provided far more stability in this year’s renewal than last.
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Softening cat bond rates are among the bearish signals for cat rates, but latent new demand and still-cautious supply should prolong reinsurer gains.
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The pace of rate hikes will ease back from the 1 January reset as buyers seek to lock up capacity early after last year’s dislocated renewal.
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Capital has begun to flow again after a challenging time for ILS fundraising in 2022 – but there is a clear shift underway.
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The recommendations await approval from the Florida Office of Insurance Regulation.
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Reinsurers are also increasing their attention on per-risk contracts protecting Japanese interests abroad.
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A trend for slightly riskier bonds has brought with it a rise in the absolute margin on offer.
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Hamilton Re said early signs point to 25%-30% rate rises on Japanese wind.
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This was the highest single-year increase for the US index since 2006.
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This price hike contributed to a premium increase of $695mn in the month, bringing the year-to-date impact of 2022 rate increases to $3.6bn.
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High-yielding alternatives are taking away attention from this sector, with its complex narrative around recent losses, and diversification only goes so far in selling its story.
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Expansion is set to be a trend across Lloyd’s as syndicates look to capitalise on a hardening market.
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Early reporters emphasised an ongoing demand for structural change.
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Winter storms in the first half of 2022 are expected to result in claims totalling EUR1.4bn.
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Reinsurers and brokers alike have warned of a rocky 1 January renewal process ahead as the industry grapples with multiple issues including inflation, climate change and geopolitical uncertainty.
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The reinsurer is working to find the right inflation indicators for individual client portfolios.
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The ratings agency predicts a combined ratio of 95.2% for the companies on its watch this year.
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The broker said some reinsurers were planning for significant growth in property catastrophe as demand is expected to pick up pace.
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A report warns that recent rate increases may not be enough to protect against headwinds.
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A Moody’s survey of reinsurance cedants found most are expecting cat rate increases to remain in a high-single-to-low-double-digit bandwidth.
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Demotech wrote to more than 15 carriers to warn of a possible downgrade last month.
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The Florida senator described the agency’s market influence as “deeply troubling”.
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The start-up’s top team predicted further rate hardening at 1 January.
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Joe Petrelli said Demotech would continue to follow its independent methodology, despite outside pressure.
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The forecast for real-term premium growth was depressed by anticipated claims inflation.
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The state-backed carrier has seen massive growth in the distressed Florida market.
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Rates have climbed 20%-35% since 1 January, and 40%-50% year on year, sources estimated.
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Overall, the CIAB Q1 survey recorded rates were up 6.6% in Q1.
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The Floridian carrier must improve its financial strength rating ahead of its 1 July reinsurance renewal.
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Downgrades are expected to be announced next week for some Florida carriers that are “already winding down”.
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There is a tension between securing payback and negotiating higher retentions.
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Wind excess-of-loss treaties renew with gains between 2% and 5% in “underwhelming” renewal.
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The carrier expanded premium by 8.3% at the January renewal.
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There is a lack of capacity for aggregate deals, and moves towards more named peril coverage.
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Inflationary pressure and climate change meant the market effectively gave ground to cedants despite nominal price rises.
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The firm has been in run-off since late 2020, and another former Credit Suisse affiliate was recently sold to legacy writer Marco.
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European loss experience drove the firm’s index back in line with 2014 levels.
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Noting concerns about rapid growth, the Citizens board approves rate hikes up to the legal limit.
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The projections are slightly worse than they were three months ago, as heightened cat losses and Covid-related pressures impact rates.
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S&P suggested that an “abrupt rethinking” was a more likely outcome than gradual pricing increases – but a third way is possible if ratings agencies set a glidepath to change.
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The Hannover Re subsidiary said the event would incur insured losses in Germany alone of “well in excess” of EUR8bn.
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The state body supporting earthquake cover has seen risk transfer requirements swell over the past decade.
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Strategic Review Committee chairman Bruce Simberg sets out the challenge ahead for FedNat as natural catastrophes continue to hit southern policyholders.
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Moody’s expects RMS, which had about $320mn in revenue around $55mn in operating income last year, to become accretive to earnings by 2025.
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Environmental, social and governance (ESG) factors were the primary driver in 13% of ratings actions in the year to the end of March, according to AM Best.
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The new adjustments will increase rates 7.6% on average after February 1, 2022.
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Rates are still more than 40% ahead of the pre-Hurricane Irma trough in late 2016.
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Willis Re international chairman James Vickers said that the ILS market played a strong role in the Florida renewals, but it was becoming more difficult to judge the overall impact of the sector as more capacity stays behind rated balance sheets.
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The broker said a buoyant ILS market contributed to the reinsurance market nearing a new equilibrium at the end of mid-year renewals.
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The intermediary also warned that inflation headwinds could affect the future cost of claims.
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There is little sign of retro demand returning after buyers cut back in January.
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The first-time ILS sponsor expects to pay a coupon at the lower end of its initial forecast.
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Pockets of the distressed Florida market are still expected to face a challenging renewal, but much of the remediation was carried out last year.
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Spreads have fallen 14% on a weighted average basis on new deals marketed in the quarter to date.
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Cat bond market exuberance seems to be mismatched against overall ILS sentiment.
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The French carrier grew its top line by 14.3% at the April renewals.
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The market has reached the stage of price hardening at which clients will challenge brokers and carriers on continuing increases, according to Aon president Eric Andersen.
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Christopher Swift says more rate is needed in some areas including the London market and certain excess lines.
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Assets under management at the sidecar rose 12.5% year-on-year to $900mn by the start of 2021
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The carrier predicts Covid’s reinsurance impact will drive market hardening.
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The carrier maintains its 2021 profit forecast amid 8.5% 1 January premium growth.
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The intermediary cited Convex and Vantage among new entrants adding capacity to the market at the renewal.
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Property insurance rates are rising by high single digits to 15% on clean accounts.
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The carrier is legally obligated to sell cover at “actuarially sound rates”.
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US contracts are still pricing at a 10%-15% premium to January 2020 levels, but excess retro capacity may impact the smaller market.
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Quarterly report reveals that bond prices went “sideways” in Q4, but market remains hard.
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Second- and third-event retentions rise from the year-ago arrangement.
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Defence costs are expected to remain elevated, as weather losses have also weighed on results.
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The carrier aims to regain its role as insurer of last resort after “unsustainable” customer growth.
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The Singapore-based cat bond deal offers a 400 bps spread 16% below the carrier's initial target.
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Occurrence retro rates are among the segments where rate pressure is abating, although the outlook remains somewhat opaque in a late renewal.
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The Credit Suisse-managed firms will stop underwriting new business as of 1 January.
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Cat events in 2017 and 2018 were a significant test of alternative capital.
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Cedants and reinsurers perform a "slow dance" around pandemic losses, with claims negotiations deferred beyond renewal.
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Scor sought higher-priced agg cover, but Munich Re achieved below-average uplift on its occurrence treaty.
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The ratings agency cites the “significant support” provided by parent Axa as well as divisional restructuring moves.
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The German carrier says P&C gross written premiums expanded 3% to $27.3bn in the period.
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Q4 issuance will likely be robust owing to new investors and increased allocations, the CEO said.
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The carrier says higher retro renewal costs will act as a counterweight to rising rates.
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The reinsurers point to falling interest rates and loss experience as the basis for further hardening.
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Lower capacity will have an effect, but the company hopes to avoid severe retro rate rises.
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Some fund managers were negative on the deal, given the continuing uncertainty caused by the Covid-19 pandemic.
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The company has requested state-wide changes to its multi-peril homeowners account.
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The Peter Scales-led vehicle is reunited with the private equity house.
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The CEOs of Aon Reinsurance Solutions, Willis Re and TigerRisk predict limited rate gains, but up to $10bn of incoming capital.
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The debate over how far Covid losses will escalate is not the only key to January renewal dynamics.
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ILS outperformed major financial benchmarks in terms of returns, Aon said.
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Covid-19 losses and other catastrophe events have exhausted the catastrophe budgets of many companies, the ratings agency said.
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Underwriting margins need to improve by as much as 7-12 percentage points to compensate for lower interest rates, the carrier states.
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As new PE inflows arrive in the sector, it remains to be seen how this will be matched on the ILS side.
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Coronavirus is just one factor driving rate increases, (re)insurers said.
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The outgoing CUO emphasises large pro-rata book and interest rate impact.
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The utility spent 13% more to secure its insurance but cut back third-party cover to $870mn.
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The French reinsurer guides away from an equity raise as it predicts further rate hardening.
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A hardening market could encourage diversification away from property catastrophe, the ratings agency says.
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Cat programmes have been completed this year, but a heavy hurricane season could shake up the market, the broker said.
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The start-up carrier had initially sought $150mn of North American storm and earthquake cover from its first-ever cat bond.
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The rating could fall if the company fails to meet deadlines, the agency has warned.
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Twelve Capital's Urs Ramseier says the potential for more distressed opportunities to appear will depend on the extent to which carriers pass on increased reinsurance costs to policyholders
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The European earthquake bond will pay investors a 450 basis point spread.
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Cat bond investors received better risk-adjusted rates on new issuances, but lower risk levels meant average spreads fell year on year.
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The consultancy firm also argued that the World Bank should buy more pandemic cover after receiving a payout under its cat bond programme.
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Rate increases should continue but may be increasingly fragmented by January 2021.
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Reduced exposures take the vertical limit on carrier’s cat programme down to A$6.5bn from A$7.2bn.
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An influx of underwriting capacity will likely limit the extent to which reinsurance rates rise, the agency said.
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RoLs could rise moderately in July with stronger gains in January, market participants said.
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The Florida Senator says tackling legal fees is a priority as demand for reform grows – but it will take time to implement.
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An active hurricane season could further amplify RoL increases, the investment bank warns.
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The insurer has raised its projected policy count by 20 percent.
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Florida Citizens received more than 500 new Irma claims each month up until April, which has slowed 30 percent from 2019.
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Lower deployable capacity and looming Covid risks added pressure, the firm said.
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The early renewal approach has been met with opposition from Lloyd’s reinsurers.
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The US wind deal by the Nephila fronting partner comes amid a flurry of activity in the cat bond market in recent weeks.
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The move bucks the trend of cedants hiking spreads on their cat bonds to attract sufficient investor capacity this renewal.
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To what extent does the business opportunity for new start-ups rely on BI losses that the industry is vigorously rebutting?
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The capital raise boosted Fidelis’ share base by 45 percent of pre-transaction equity.
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Avatar has increased the spreads on its new Casablanca Re bond just a week after hiking them by 16-18 percent.
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Trading was brought forward this year and more cedants could head to bond market.
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RPP covers, previously dominated by ILS writers, were one of the areas in shortest supply.
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Property catastrophe reinsurance rates rose by 26 percent at the 1 June renewals, according to the London broker.
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Multiple carriers had to revise official terms to get programmes home as reinsurers held firm on price demands.
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The CIAB’s latest market survey also found carriers pushing for higher deductibles.
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Small increases on international cat treaties such as the New Zealand EQC are being welcomed by reinsurers, with US nationwide deals also rising by up to 15%.
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Earlier this month, the carrier said it wouldn’t renew its 2017 Torrey Pines Re cat bond.
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After the immediate claims hit, reinsurers face the prospect of harder rates but shrinking premium volumes in some lines.
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Reinsurers have held the line on pricing as cedants seek to close out deals, with the market showing further hardening.
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Capitol Preferred cancelling over 23,000 policies could drive customers to state-backed insurer Citizens.
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The combined ratio for select firms could rise 2.4 points to 103.5 percent this year, the agency predicts.
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Reinsurance rates increased were manageable, a number of carriers said.
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Even as Florida rates improve, the reinsurer said it expects to hold back capacity for net growth and potential new demand.
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Reinsurers push back on aggregate exposure from cascading covers as market gets more differentiated.
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The Floridian insurer said it has secured most of the reinsurance limit it requires ahead of the 2020 hurricane season.
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The midpoint of the updated spread range promises a multiple of 5.8x the expected loss.
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Trapped capital will become an issue in the coming months, CEO of Lancashire Capital Management Darren Redhead said.
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