Reinsurance renewals news

Improved reinsurance market pricing is attracting significant sums of capital, with the latest estimate from broker Willis Re being that $19 billion has already been raised since the COVID-19 pandemic broke out and another $3 billion of capital raises are underway.

Global reinsurance giant Munich Re laid out ambitious plans for continued growth in property and casualty reinsurance, saying that it expects rate hardening will continue for at least a couple of years, “despite alternative capital” which the company clearly sees as a threat to market fundamentals.

While the outlook for the global reinsurance industry remains stable, rating agency A.M. Best warns that market hardening needs to continue for at least a couple of years in order to have a meaningful impact on the segments ability to sustainably make its cost-of-capital.

The upcoming January 2021 reinsurance renewals are expected to be lengthier and more complex, as a range of factors play into negotiations, according to reinsurance broker Guy Carpenter.

Fitch Ratings has adjusted its outlook for the global reinsurance sector to stable, from negative, citing the hardening reinsurance market as the reason for its now more positive view on the market.

Some of the earlier and larger retrocessional reinsurance programs in the market have received their firm orders or are completed, with indications that suggest rates are increasing even for some of the largest and most respected reinsurers in the market, suggesting much better returns are available for writing this business.

Some insurance-linked securities (ILS) funds that invest in collateralised reinsurance contracts have been setting reserves for potential exposure to business interruption losses due to the COVID-19 pandemic in a handful of the major European catastrophe reinsurance programs, we understand.

Insurance-linked securities (ILS) market return potential is on the rise and in some cases the portfolios constructed, or added to, at the January 1st 2021 reinsurance renewals, are going to offer significantly higher return potential to investors.

Reinsurance capital could find itself on the hook for the largest share of COVID-19 losses from second waves of the virus sweeping Europe, with primary insurers largely happy with their loss-picks so far, analysts at Barclays have said.

SCOR Investment Partners, the asset management company of the global reinsurance group SCOR, has continued to add new capital to one of its core insurance-linked securities (ILS) fund strategies, the Atropos, which has now exceeded the $1 billion mark in terms of assets under management.