January 2020 reinsurance renewals showed decline in alternative capital

The January 2020 renewals showed ample capacity as traditional capital growth offset a decline in alternative capital. This is according to a report from Kroll Bond Rating Agency Europe Limited (KBRA) titled January 2020 Reinsurance Renewals: Cyclicality and Catastrophes.

It said that large reinsurers are likely to maintain significant excess capital positions, even after continuing share buybacks and/or special dividends.

KBRA believes that the January 2020 renewals were slightly credit positive for the leading global reinsurance groups, based on their flexibility to reallocate capacity to hardening lines of business.

“In KBRA’s view, market sentiment is slightly positive albeit below expectations of most reinsurers,” said KRBA. “The market remains very fragmented with no clear direction and traditional cycles are a thing of the past. Loss-prone programs in property and specialty lines reported substantial rate increases, while moving sideways for other programs.

“The European casualty business showed some hardening but there is still some pressure on the US motor and US professional liability lines.”