Guy Carpenter Regional Property Catastrophe Rate-On-Line Index
Guy Carpenter Regional Property Rate on Line Index – this is the proprietary index of regional property catastrophe reinsurance Rate-on-Line movements, on brokered excess of loss placements, that has been maintained by Guy Carpenter since 1990. The index breaks down our the key catastrophe reinsurance markets of U.S., Europe, UK and Asia-Pacific. It is updated following January 1st renewals each year by calculating the change in ROL year on year across the same renewal base.
Latest commentary from Guy Carpenter
January 1 Reinsurance Renewals Commentary
The Guy Carpenter Global Property Catastrophe Reinsurance Rate-on-Line Index fell by 9 percent at the January 1st 2016 renewals. At the year end, total capital dedicated to reinsurance stabilized at approximately US$400bn, unchanged from year end 2014.
The continued scarcity of costly catastrophe losses and abundant capacity led to reinsurance pricing reductions for most lines of business and geographies but the rate of decline moderated, particularly in US property catastrophe. This trend was largely influenced by two prior years of steep declines and a larger increase in demand in property and certain other lines of business during 2015. As the pricing environment shows some signs of stabilization across both the ILS and traditional markets, accessing multi-year capacity is a focus for many cedents. Multi-year contracts provide buyers the opportunity to lock in coverage that has had multiple years of price declines for a longer timeframe and also to set up a renewal structure with additional budget stability.
“As reinsurance providers continue to evaluate how to compete in a market flush with capacity, an environment of innovation, responsiveness and customization has become the norm,” said Lara Mowery, Global Head of Property Specialty at Guy Carpenter. “Solution-oriented dialogue has elevated significantly and insurers are increasingly able to focus on improvements in the structure and efficiency of their programs to incorporate more refined capital management goals.”
While there was some slight variation between major regions tracked in the Guy Carpenter Regional Property Catastrophe ROL index, all experienced decreases of between 7 percent and 10 percent, with international regions experiencing the greatest reductions. Individual renewals experienced a wide range of outcomes dependent on loss activity, type of structure, geographic concentrations, past renewal experience and other company specific features.
Risk adjusted pricing for US property catastrophe decreased by 5 percent to 8 percent, on average, moderating from the average decreases a year ago of down 7 percent to down 14 percent.
“The reinsurance market has been challenged by a persistent low interest rate environment, the continued inflow of new sources of capital, benefited from an extraordinarily long period of few major natural catastrophes, and record levels of merger and acquisition activity in 2015,” said David Priebe, Vice Chairman of Guy Carpenter. “As a result, (re)insurance companies are evolving their operating strategies to embrace this complex environment. We believe that alternative capital will be a consistent source of risk capital for (re)insurance and corporates and we expect to see sustained high growth to continue in this sector.”
Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/NFA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade, Canary Wharf, London E14 5HS. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product.