Reinsurance renewals news

The alternative reinsurance capital and insurance-linked securities (ILS) sector may return to growth in 2021, but it may be slower than some expect, according to analysts at RBC Capital Markets.

The insurance-linked securities (ILS), or alternative reinsurance capital market, is “more likely to grow than shrink” over the coming year, as the shake out of recent years moderates, according to equity analysts from investment bank Credit Suisse.

According to executives from Bermuda-based reinsurance companies and brokers that met virtually with analysts from KBW, the wave of new private equity backed start-ups are so far being seen to maintain the reinsurance industry’s price discipline as the key January renewals approach.

Florida’s Citizens Property Insurance Corporation has increased its policy count by 28% in just the last 18 months and the insurer expects its growth to continue at an unsustainable rate, which now makes it “the insurer of first resort,” according to its Chairman.

After meeting virtually with Bermuda-based reinsurance companies and brokers, analysts at KBW said that they expect the renewal outcome to be generally positive, with satisfactory rate increases expected, but nothing spectacular.

Global reinsurance firm Munich Re has lifted its estimate for insurance industry losses from 2018’s Japanese typhoon Jebi to $13 billion, which we understand could put a handful of still-exposed industry loss trigger contracts such as ILW’s in play.

Reinsurance pricing momentum is forecast to continue through all of the 2021 renewal seasons, with rises of 5% to 6% expected across the key upcoming January renewals, according to analysts at Morgan Stanley.

The California Earthquake Authority’s (CEA) reinsurance program has shrunk slightly in the last few weeks, as $400 million of Ursa Re catastrophe bonds matured. But the Authority is aiming to keep its risk transfer target stable for 2021, suggesting more catastrophe bond issues are possible early in the new year.

It appears we’re heading quickly towards a familiar reinsurance renewals story, where the ambition to capitalise on rate increases and subsequent inflows of capacity are now serving to ramp up competition. As a result, market sources expect pricing at the January 2021 reinsurance renewals will not be as hard as forecast back in September or […]

In light of a marketplace that had slowed its growth trajectory somewhat in recent years, Fitch has underlined the need for a sustained inflow of new sponsors to drive a more dynamic, growing catastrophe bond and insurance-linked securities (ILS) sector.