Price declines have continued to moderate, predominantly on programmes covering US wind, in Guy Carpenter’s recent renewal briefing.
Overall pricing was down again at the July renewal across virtually all geographies and lines of business.
Increased demand for reinsurance and expansion of tailored coverage persisted through the July renewal period from previous seasons.
Demand for worldwide property catastrophe coverage has continued to grow and since spring 2014 is up around 8 percent based Guy Carpenter’s current analysis.
According to the firm, this is primarily due to new entities purchasing coverage and companies using a portion of their savings to enhance coverage, fill in gaps or to provide additional coverage as they expand their business.
“It was hard to imagine based on the two previous years that we would hear a reinsurer reference lack of capacity as a reason for cutting back on a programme, but this did occur at times this June and July,” said Lara Mowery, managing director and head of global property specialty for Guy Carpenter.
“There is certainly no capacity shortage overall and reinsurance capital has grown once again.”
Elsewhere, the abundance of alternative capital continued to impact the reinsurance market in H1 2015, particularly in the form of catastrophe bonds.
“Investors’ pricing discipline persisted into the first half of 2015 and recent feedback suggests that further catastrophe bond pricing reductions will be unlikely in the near-term,” said Cory Anger, global head of insurance-linked securities structuring GC Securities.
The highest quarterly volume of 144A P&C cat bonds matured in Q1, returning $3.54 billion of principal to investors.
This trend continued into Q2 as an additional $1.60 billion of catastrophe bonds matured, resulting in $5.15 billion of outflows on a gross basis in H1 of 2015.
As of 1 July 2015, $21.56 billion of P&C 144A catastrophe bond risk capital was outstanding.
