Reinsurance News

Floridian primary insurers have once again increased their use of catastrophe reinsurance for the 2016 hurricane season, as they took advantage of market forces to increase their 1-in-100 year hurricane coverage, as well as for second and subsequent events.

The persistent inflow of alternative capital in the global reinsurance industry has enabled reinsurers to adjust their risk transfer strategies, as companies look to offset continued, and potentially damaging profitability deterioration, says Standard & Poor’s (S&P).

An increased level of catastrophe losses in the second-quarter of 2016 saw some reinsurers incur losses above their expectations, according to analysis from RBC Capital Markets. And with certain ILS funds feeling the impact of increased losses it’s likely that some experienced more outsized losses than others.

Property Claim Services (PCS) has increased its estimate for the insurance industry loss from the Fort McMurray, Alberta Canada wildfires, slightly from C$4.63 billion to C$4.67 billion, which is approximately US$3.63 billion.

British Columbia (BC), the westernmost province in Canada, has identified a need to develop a fast-response insurance solution to protect vital infrastructure in the event of an earthquake, and has already started working with reinsurers.

Of all the segments within the insurance and reinsurance market, it is the reinsurers that analysts at RBC Capital Markets believe face the strongest headwinds still, as indicated by some companies higher than expected combined ratios at the mid-year point.

Marsh & McLennan President & CEO Dan Glaser said it plainly during the insurance, reinsurance broking and advisory giants Q2 earnings call. In a soft market insurance and reinsurance firms are likely to keep underwriting even when returns are below their cost-of-capital.

To combat the pressure from challenges facing the global reinsurance industry, as competition, the low interest rate environment and headwinds limit growth & erode returns, participants should look to partnerships and innovation as a way to stimulate demand.

Bermudian specialist collateralized reinsurance and insurance-linked securities (ILS) start-up Sequant Re is set to take another injection of cash from its largest backer Premier Diversified Holdings Inc. (PDH), as Premier aims to increase its stake.

The CATCo Reinsurance Opportunities Fund Ltd. reported a 4.86% return in the first-half of 2016, up on the prior-year despite higher catastrophe loss activity, demonstrating the “highly diversified and significantly de-risked 2016 portfolio.”