GUY CARPENTER: JULY 1 RENEWALS INDICATE DOWNWARD PRESSURE ON REINSURANCE RATES LIKELY TO CONTINUE THROUGH 2013
Source: Guy Carpenter Press Release, 9 July 2013 IN spite of catastrophe losses reaching approximately USD20 billion during the first six months of 2013 (above the ten-year average for the period), Guy Carpenter & Company reported that reinsurance market rates on line (ROLs) continued to be driven by an influx of capital from third-party investors at the July 1 renewals. Guy Carpenter commented that robust catastrophe bond, sidecar and collateralised reinsurance activity throughout the year has for the first time pushed pricing in the capital markets to “decouple” or breakaway from levels set by the traditional market. This has in turn prompted downward pressure on overall traditional market pricing. According to the report, convergence capital now accounts for an estimated USD45 billion of the global property catastrophe limit, or approximately 14 percent of the market. The amount of excess capital in the market helped mitigate the impact of catastrophe losses resulting from severe tornado activity in the United States and floods in parts of Europe, India and Canada during the second quarter of 2013. David Flandro, Global Head of Business Intelligence at Guy Carpenter pointed out that without further significant catastrophe losses in the remainder of 2013; it expected that the downward pricing trend will likely continue through the remainder of the year and into 1 January 2014 renewals.