Reinsurance brokerage Guy Carpenter reported that its Global Property Catastrophe Reinsurance Rate-on-Line Index fell by 11 percent for the Jan. 1, 2014 renewal and that rate cuts spilled over to non-property lines.
In a report published on Monday, the firm said that although the impact was less dramatic outside of property catastrophe lines, price movements across non-catastrophe business showed a general trend of decline as reinsurers deployed more capacity into these lines.
Casualty pricing was generally flat to down, despite low investment yields due to historically low interest rates and adverse development for some U.S. workers compensation writers.
As for property, much of the 11 percent drop for catastrophe reinsurance was fueled by a 15 percent decline in the United States, with 10 percent declines coming in Continental Europe, and U.K. cedants seeing 15 percent declines. Risk-adjusted reductions of up to 20 percent were achievable in these regions in some cases, Guy Carpenter said.
Breaking from the general trend that saw pricing for all major territories moving in one direction—down—Guy Carpenter said the isolated areas of Germany, some parts of the Nordic region, and Canada saw some increases on the heels of major catastrophe losses in 2013.
Elsewhere, strong capital levels coupled with the continued influx of convergence capital are spurring competition in the traditional market, according to Guy Carpenter.
“The continued expansion of accessible capital, strong balance sheets and relatively low catastrophe losses were all drivers of the January 1 renewal outcome,” the broker said.
Source: Guy Carpenter