Monte Carlo Reinsurance Rendez-vous 2014

monte_carlo_reinsurance_rendezvousIt’s that time of year when the reinsurance and insurance-linked securities (ILS) world travels to the south of France for the Monte Carlo Reinsurance Rendez-vous. Since 1957 reinsurers and their clients have met in the sun at this event and as you’d expect the industry publishes a lot of content at this time.

This page details all of our Monte Carlo Reinsurance Rendez-vous 2014 articles covering pre-Monte reports from rating agencies, brokers and reinsurers as well as coverage of any insightful reports published during the event.

As always our coverage contains our own insight, analysis and opinion on the thinking of industry experts, we never simply publish content without applying a critical eye and explaining why we agree or disagree with it.

All of our coverage is listed in chronological order of the date we published it, with the most recent reporting on the reinsurance market, insurance-linked securities (ILS) and alternative reinsurance capital at the top. We hope you find this useful. Sign up to our weekly email newsletter and ensure you never miss any of our coverage, Monte Carlo Rendezvous week or not.

 

Despite capital on sideline, reinsurers expect payback. Should they?
September, 19th 2014 – Traditional reinsurance players still believe that they will be able to claw back losses suffered during a given treaty year by raising prices in subsequent years, despite the widely expected readiness of more new and alternative capital sitting on the markets sidelines.

Munich Re’s resilience to soft reinsurance market is faltering: RBC
September, 17th 2014 – The world’s largest reinsurance firm Munich Re is not weathering the soft market environment as well as analysts at RBC Capital Markets had expected, with the reinsurer now not expected to hit its stated profit target of €3 billion for the year.

Complexity contains competition from third-party capital, for now
September, 17th 2014 – One of the issues that prevent third-party capital, from sources such as pension funds and other institutional investors, from entering and disrupting the reinsurance and insurance market on a more wholesale basis, is the complexity in some lines of business.

First time sponsors discuss catastrophe bond pros and cons
September, 16th 2014 – At German reinsurance firm Munich Re’s annual Monte Carlo insurance-linked securities (ILS) roundtable event yesterday, first time sponsors of catastrophe bonds and other ILS market experts discussed some of the pro’s and con’s cedents encounter.

New capital continues to reshape the reinsurance market: Guy Carpenter
September, 16th 2014 – The reinsurance market of the future will be reshaped as growing pools of third-party capital are increasingly leveraged, alongside ILS structures, to bring efficiency into the reinsurance industry, according to broker Guy Carpenter.

Where next for ILS? Willis Re surveys ILS investors on the future
September, 15th – Across the peak catastrophe zones, insurance-linked securities (ILS) funds and their managers have had a real impact on pricing and this looks set to continue as ILS capitalises on its lower cost of capital, a survey undertaken by Willis Re found.

Brokers face disruption too in challenging reinsurance market: PwC
September, 15th 2014 – It’s not just the traditional reinsurers who face disruption and disintermediation in the currently challenging and structurally changing insurance and reinsurance market. Brokers too face challenges and need to be prepared to adapt and innovate, suggests PwC.

Competing over the same cake could have disastrous results: Munich Re
September 14th, 2014 – How many times can reinsurance be likened to some of our favourite foods? At the Monte Carlo Rendez-vous it would seem the answer is more than one, as both reinsurers and brokers compare the current market to a pie or cake that everyone is competing over.

Low-cost of catastrophe reinsurance capital an opportunity: Aon Benfield
September 14th, 2014 – The record low-cost of reinsurance capital for catastrophe risks, made cheaper partly by the entry of efficient ILS capital, is an opportunity for growth that insurers should take advantage of, according to reinsurance broker Aon Benfield.

A smarter, more client-responsive reinsurance market: Willis Re
September 14th, 2014 – At a press briefing held this morning in Monte Carlo by global reinsurance brokerage Willis Re, John Cavanagh, the firms CEO, said that, to the benefit of clients, what we have today is a “Smarter, more client-responsive reinsurance market.”

Differentiate or consolidation ahead for reinsurance industry: PwC
September 14th, 2014 – PwC’s latest report on the reinsurance industry, titled ‘Reinsurance 2020: Taking control of your destiny’, suggests that reinsurers which fail to differentiate could find themselves at risk. The sector as a whole is ripe for a wave of cost-cutting and consolidation, warns PwC, meaning that standing out through a differentiated strategy has become even more important.

There will always be a soft(er) reinsurance market
September 13th, 2014 – Executives at Guy Carpenter’s press briefing today in Monte Carlo all agreed on one point, the soft reinsurance market we see right now is likely here to stay and reinsurers had better learn to adapt, innovate and find ways to maintain their return on capital, or risk disintermediation and perhaps even failure.

Reinsurers profitable in H1 but underwriting results deteriorate: Fitch
September 11th, 2014 – The outlook for reinsurance firms is worsening, according to Fitch Ratings, with combined ratios on the rise, non-catastrophe property losses up, margins shrinking and overall an environment that is seeing reinsurers underwriting results deteriorating.

Collateralized retrocession reduces reinsurers systemic risk: S&P
Septermber 11th, 2014 – Based on an analysis of extreme loss scenarios, Standard & Poor’s says that it does not consider reinsurers’ catastrophe risk exposure to be a source of systemic risk and that collateralized retrocession helps to reduce interconnectedness in the sector.

Alternative capital, ILS take 20% of catastrophe reinsurance market: Aon Benfield
September 10th, 2014
– Alternative reinsurance capital, made up of insurance-linked securities (ILS), catastrophe bonds, collateralized reinsurance, sidecars and ILW’s etc, has captured 20% of the property catastrophe reinsurance market, according to Aon Benfield.

Moody’s highlights ILS return pressure, negative reinsurance outlook
September 9th, 2014 – Rating agency Moody’s Investor Service highlighted that pressure is not just hurting reinsurers, in the current soft reinsurance market environment, but that some insurance-linked securities (ILS) fund managers returns also feel the pain.

Innovate & adapt to navigate a reconfigured reinsurance industry: S&P
September 9th, 2014 – Innovation and adaptation are two key traits of global reinsurance firms that will succeed in remaining relevant as they navigate what will eventually result in a reconfiguration of the reinsurance industry, according to Standard & Poor’s.

Convergence capital triggers behavioural change among reinsurers
September 8th, 2014 – Rating agency A.M. Best questions the relevance of the reinsurance underwriting cycle in its latest special report on the sector, asking whether the cycle has grown distorted thanks partly to the growth of ILS and alternative reinsurance capital.

Alternative reinsurance capital up 18% to $59B in first-half 2014: Aon Benfield
September 8th, 2014 – The amount of alternative capital in the reinsurance marketplace increased by 18% to reach $59 billion in the first-half of 2014, according to Aon Benfield, accounting for just over 10% of total global reinsurance capital.

Capital market alternatives a permanent fixture in reinsurance: Fitch
September 8th, 2014 – The capital markets, alternative risk transfer and alternative reinsurance capital is a permanent fixture of the global reinsurance market, having gained acceptance from both cedents and reinsurers, according to Fitch Ratings.

Growth of alternative capital a credit negative for reinsurers: Fitch
September 4th, 2014 – Because of its expected permanence, the growth of alternative, or third-party, reinsurance capital is being considered a credit negative for traditional reinsurers by rating agency Fitch Ratings.

Structural change, lower margins, a deeper reinsurance convergence
September 3rd, 2014 – The global reinsurance industry is looking at a period of structural change and reduced margins, as the industry comes to terms with the new environment of excess capacity, both traditional and alternative, higher competition and lower rates.

Reinsurers (and ILS) may underestimate climate change exposure: S&P
September 3rd, 2014 – Ratings agency Standard & Poor’s performed some analysis on the global reinsurance sectors exposure to climate change and found that, under a scenario it tested for, reinsurers may be underestimating their exposure to catastrophe losses by around 50%.

A.M. Best explains its negative rating outlook for reinsurance sector
September 2nd, 2014 – Rating agency A.M. Best changed its outlook on the reinsurance sector to negative recently, becoming the fourth of the major rating agencies to do so. In a video published this week senior A.M. Best rating executives explained the rational behind the shift.

Expanding terms, competing with selves: A.M. Best on London re/insurers
September 1st, 2014 – In a report on London insurance and reinsurance market conditions, A.M. Best warns that expansion of terms and conditions will adversely affect results, while firms managing third-party capital are effectively competing with their own products.

Reinsurers appetite for catastrophe risk remains, despite lower profit: S&P
September 1st, 2014 – Softening prices, resulting in reduced margins and lower profits, as well as a slight uptick in exposure to smaller catastrophes haven’t dented global reinsurers appetites for underwriting catastrophe risk reinsurance, according to Standard & Poor’s.

Alternative reinsurance capital to fuel M&A deal-making: Fitch
August 29th, 2014 – Mergers and acquisitions seem firmly in the reinsurance markets future with excess capital, growing competition and the increasing availability of alternative reinsurance capital seen as a source of fuel for the M&A deal-making fire, according to Fitch Ratings.

Asia-Pacific regional reinsurers better positioned to withstand pressure: S&P
August 28th, 2014 – Regional reinsurance firms in Asia-Pacific are expected to be able to withstand global competitive pressures, such as increasing reinsurance capacity and pricing pressure, better than peers in Central and Eastern Europe, the Middle East, and Africa (CEEMEA).

Hedge fund reinsurers ‘not a new business model’, says A.M. Best
August 28th, 2014 – The hedge fund backed reinsurance mode which seeks to leverage premium inflows as investment capital in hedge fund strategies in an attempt to outperform on the asset-side, is not treated as a new business model by rating agency A.M. Best.

Reinsurance opportunity in sovereign catastrophe risk financing: S&P
August 27th, 2014 – Ratings agency Standard & Poor’s highlights the opportunity for insurance, reinsurance and the insurance-linked securities (ILS) market to work with governments to provide and support sovereign catastrophe and disaster risk financing tools.

Global reinsurance profits down, outlook still negative: Fitch
August 26th, 2014 – The first-half of 2014 saw reduced profitability in the global reinsurance sector, according to Fitch Ratings, but while still profitable the results show deteriorating underwriting returns, as higher non-cat losses and underlying loss ratios began to bite.

A.M. Best turns negative on reinsurance sector, joins other rating agencies
August 19th, 2014 – Rating agency A.M. Best has finally turned negative in its outlook for the global reinsurance sector, citing weakening operating fundamentals and significant ongoing market challenges which will hinder the potential for positive rating outlooks and upgrades.

Asian insurers look to diversify risk capital, cat bonds one option: Fitch
August 19th, 2014 – Asian general and property casualty insurance companies are typically reliant on traditional reinsurance capital for funding in the event of a major natural disaster striking, but increasingly they are looking to alternative capital and catastrophe bonds, says Fitch Ratings.

Competition, earnings pressure, threatens global reinsurer ratings: S&P
August 14th, 2014 – The increased competition in the global reinsurance market, created by excess capital which is driving down rates, could threaten the ratings of global reinsurers and create greater volatility in their earnings, warns Standard & Poor’s today.

S&P questions viability of hedge fund reinsurer business model
August 12th, 2014 – In a newly published report ratings agency Standard & Poor’s questions the viability of the hedge fund backed reinsurance strategy, asking whether combining the hedge fund and reinsurer strategy can create higher risk-adjusted returns.

To remain credible ILS growth shouldn’t be at expense of discipline: S&P
July 29th, 2014 – After a record start to 2014 issuance of catastrophe bonds and insurance-linked securities (ILS) ratings agency Standard & Poor’s expects more growth, at a more moderate rate, to come, but warns that any future growth of ILS must not be at the expense of discipline.

Competition would be fierce even without third-party capital surge: S&P
July 22nd, 2014 – The competitive nature of the current global reinsurance market is often blamed on the recent influx of additional capital from third-party and institutional investors, like pension funds, but it’s worth remembering that other factors are at play.

With few places to hide from soft market, reinsurers need to adapt: S&P
July 17th, 2014 – With rates falling almost universally across the reinsurance market global reinsurers are left with few places to hide. But in this low rate environment the ability to adapt has become increasingly vital, according to a report from Standard & Poor’s.

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