US cat prices moderated at June renewals: Guy Carp
Broker Guy Carpenter reported that after two years of price decreases on US property catastrophe placements, risk-adjusted pricing moderated at the June renewals.
Price declines moderated to decreases averaging in the high single digits, compared with an average decrease of 15 percent over the past two years.
Guy Carpenter said the range around the average was dependent on companies’ individual renewal characteristics. This was due to a combination of factors, including pricing pressure created by past seasons of price declines and a significant amount of new limit placed.
Lara Mowery, global head of property specialty at Guy Carpenter, said: “Many reinsurers held the line against more extreme declines even though capacity was still plentiful and low loss experience continued. We have seen some firming in the Industry Loss Warranties (ILW) market with demand increasing. Also, while mid-year has not been a core date for retrocession renewals, there has been a significant amount of activity in this marketplace as buyers sought to offset their catastrophe exposures.”
On insurance-linked securities the broker reported there was $1.49 billion of 144A P&C catastrophe bond limit successfully placed with investors, the most first quarter volume in history.
In addition, the highest quarterly volume of 144A P&C cat bonds matured in the first quarter, returning $3.5 billion of principal to investors. Through to June 1, 2015 issuance stood at $3.6 billion.
“Investors’ pricing discipline that emerged in the fourth quarter of 2014 persisted into the first quarter of 2015 as recent deal pricing and investor feedback suggested that further catastrophe bond pricing reductions in the near-term would be unlikely. Data suggests the market has currently reached a stabilisation point,” said Guy Carpenter.
