A potential bright spot for reinsurers has been highlighted by global reinsurance company SCOR, which is expecting to see an increased and new demand for capacity from some of its larger, global clients, as the implementation of Solvency II approaches in early 2016.
SCOR sees its larger clients increasingly focused on services, rather than just capacity and price, after its meetings with important cedants in Monte Carlo this year, according to analysts at RBC Capital Markets.
With strong client relationships, SCOR also gets to discuss the future needs of large cedants and according to the analysts the French reinsurer is expecting to find opportunities to deploy additional capacity in the coming months.
The prospects of increased reinsurance demand due to Solvency II has been discussed for some years, but as the implementation of the regulatory regime now nears large insurers are beginning to put plans in place to shore up risk capital or plan for additional risk transfer and buying additional reinsurance is one way to assist.
Speaking with SCOR Global P&C CEO Victor Peignet, the RBS analysts said that the reinsurer expects some of its large global clients will seek to buy reinsurance for subsidiaries that were not previously reinsured, as Solvency II approaches.
With the January renewals fast-approaching, plans for reinsurance are being made now by large primary insurers. Any sign of additional demand will be well-received by the largest reinsurers in the world, particularly if that demand is new, as SCOR suggests this may be.
Incremental demand for reinsurance capacity is likely to be strongly fought over by reinsurers though, however the large global players like SCOR will look to leverage client relationships to be preferred capacity providers when cedants want to improve their Solvency II capital outlook.
Any new demand could also help to alleviate a little of the pressure on the rest of the reinsurance market. New demand is unlikely to be particularly significant, but any opportunities to secure incremental business will be welcomed and may reduce a little of the competitive nature in the market, perhaps taking a little more pressure off pricing at 1/1.