Renewals
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The expected spend is around 33% higher than Twia had budgeted.
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The suggested update to the PML is $2bn higher than last year.
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The carrier also set out detail on its alternative solutions offering.
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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 $7bn initial attachment point has remained unchanged from last year.
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Of $17bn that entered the market in the 15 months to 31 December, 40% was channelled into ILS vehicles.
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CFO William McDonnell said reinsurance market stabilisation in 2023 allowed the firm to buy more protection than expected.
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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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Competition for remote risk deals intensified as more capital has targeted the swathe of business that has historically been the heartland of ILS.
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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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The TWIA board has fired the starting gun on the process to place its reinsurance programme incepting June 2024.
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The P&C Re CEO discussed Swiss Re’s P&C appetite and nat cat exposure in the investor presentation.
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The ILS sector grew in the context of 0% interest rates historically.
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Demand is expected to boost the ILS market growth.
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ILS capacity in the form of retained earnings and new inflows is shaping up to meet growing demand for reinsurance and retro coverage.
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The supply-demand dynamics are all pointing in ILS markets’ favour, so long as hurricane season goes quietly.
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Total reinsurance capital will climb to $560bn, ahead of last year but behind the 2021 peak of $570bn.
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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 broker estimated global reinsurance capital rose by $30bn over the first quarter, with a 7% uplift in alternative capital and a 5% recovery to traditional equity.
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The organisation bought $1.4bn of reinsurance at 1 April.
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This year’s program – sealed with a panel of 78 reinsurers – includes $875mn of multi-year ILS capacity providing diversifying collateralized reinsurance capital.
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Shifts in reinsurance appetite across the risk spectrum has squeezed out ILS providers in some cases.
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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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Aon expects depleted shareholder equity to be restored over time via higher retained earnings and the ‘pull-to-par’ effect of bonds approaching maturity.
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Cat bond pricing has fallen by about 12% since year-end but margins are still strong enough that the market could be set for meaningful growth, the broker forecast.
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The real test for cat capacity will come at the mid-year point, according to Gallagher Re.
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The cat bond market is thought likely to receive an outsized portion of any capital inflows.
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CEO Locke Burt said Florida reforms would be “transformational” and that investors had become more receptive to cat risk owing to higher rates.
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The US mutual cut back its 1.1 reinsurance program, according to sources.
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The ILS manager’s analysis highlighted that Lloyd’s nat cat exposure had lowered over the six years to 2021.
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The carrier has upped its global all-perils cat coverage to $1.2bn since January last year.
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The capital management platform remains active but January renewals were fronted by the balance sheet.
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The reinsurer noted “buoyant” conditions in the cat bond and private reinsurance segments.
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The carrier has increased its retro capacity by 56% to EUR1.34bn.
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The carrier said it achieved average risk-adjusted price increases of 30% on cat business.
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The headline market drop in AuM belies a more lively growth story for funds operating outside of the ILS major league.
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The organisation is preparing its reinsurance placement based on the increased exposure numbers.
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Rate increases achieved at 1 January will help carriers keep pace with inflation, the agency said.
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The carrier has renewed two of its quota shares with continental reinsurers with final negotiations underway.
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Key themes of the renewal that resonated across the ILS investor base include the elevation of attachment points, though lack of take-up of named perils coverage may disappoint some.
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The broker said the renewal had been “gruelling” for cedants.
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The European cat market is hardening faster than expected but the process is being delayed by ongoing negotiations over retro protection and varying lists of reinsurer demands to improve terms.
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The syndicate’s growth headroom is somewhat constrained compared to the Lloyd’s market average.
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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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The ILS broking leader was speaking at the first in-person Munich Re ILS roundtable at the Monte Carlo Rendez-Vous since the pandemic.