RenaissanceRe CEO Kevin O’Donnell said that reinsurance and retrocession rate increases secured by his firm at the key January renewals were higher than the reports of a largely flat market suggested.
The January renewals were seen as largely flat, with pockets of rate increases for loss impacted accounts and regions, as well as with some small rate increases in other areas of reinsurance and retrocession.
But the RenaissanceRe (RenRe) CEO said that his firm had a better experience than this at the renewals, achieving as much as 30% rate increases across some catastrophe retro reinsurance business and more broadly a better rate environment than broker reports belie.
Of course the reinsurance broker reports, while a good indicator of the broad rate environment across classes of business, do not account for the individual renewal terms that specific underwriters achieve at renewals.
As we explained recently, the renewal was by no means flat (or down) for everyone, and for some underwriters the terms and conditions associated with reinsurance, retrocession and insurance-linked securities (ILS) renewals and the way you access the risk are just as important as pure rates in defining the ultimate return on underwriting capital deployed.
Speaking during his firms latest quarterly earnings conference call, O’Donnell said that RenRe’s experience was much better than the reports and media coverage would have suggested.
He explained that reports of January renewal pricing were not aligned with RenRe’s signings, which saw increases of up to 30% on catastrophe retrocession, around 10% on average for U.S. property reinsurance renewals and even loss free accounts in the U.S. rising up to 5%.
However, RenRe did see European rates declining again, like so many others have reported.
O’Donnell is now positive about renewals to come later in the year, believing that rate increases will be achieved at April and June, as well as other junctures where accounts hit by losses over the last two years get renewed.
He also said that third-party capital may shrink in 2019, given the recent loss experience of certain ILS funds, but also said that firms such as RenRe may benefit from this in picking up new mandates.
Of course RenRe is also bringing an increasing amount of third-party capital to market in 2019, not least with its Vermeer joint venture with pension manager PGGM, but also with additional capital raises into vehicles such as its Upsilon, as we reported yesterday.