Reinsurers continue to offer coverage and terms to insurers that show that reinsurance capital is weathering the storm of the prior few years’ catastrophe events, despite total global reinsurance capital falling by 3 percent from year-end 2017 to 2018, according to an Aon report.
The April 2019 edition of ‘Reinsurance Market Outlook: Supply Weathering the Storm’, published by Aon's Reinsurance Solutions, provides a comprehensive assessment of the key market dynamics of the recent renewals period.
The report estimates that at year-end 2018, global reinsurer capital was $585 billion, a year-on-year reduction of three percent.
However, the market continues to see additional accretive buying opportunities for insurers, and the macro picture still shows that capital has seen an increase of almost 30 percent since 2011 across traditional and non-traditional capital sources and remains adequate for demand in all markets.
It also notes that April 1, which was dominated globally by Japanese renewals, saw continued responsiveness from reinsurers who remained committed to the region despite ceded loss activity in 2018.
Supply continued to cover demand, and terms and conditions remain balanced for buyers against the backdrop of desired continuity with longer-term relationships.
In 2017 and 2018, catastrophe losses totalled more than $240 billion and the industry experienced two significant catastrophe loss years and has responded positively to the needs of insureds.
The first quarter of 2019 has seen total catastrophe losses 47 percent lower than the recent 15-year average and 26 percent below the median.
These losses are the slowest start to a year the industry has experienced since 2013.
Looking ahead to June and July renewals with heavy concentration in Florida and Australia, Aon expects the industry “will continue to find adequate supply in the aggregate with individual
companies seeing renewals directly in response to exposure change, general loss experience, and a continued focus on loss estimation and creep from the 2017 and 2018 events”.
