Rates
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From here on out, insurers will likely have to rely on the strength of their individual stories.
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Prices for programs that renewed in both Q1 2023 and Q1 2024 decreased 15%.
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Transatlantic competition, rising valuations and price undercutting set a challenging scene.
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Retentions and coverage could be affected by future adverse claims trends.
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The Corporation is walking a tightrope between encouraging further growth whilst maintaining discipline.
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The executive said that adequate rates were encouraging insurers to grow.
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Attention is fixed on how competition will impact pricing in H2.
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Underwriters are pushing for rate rises, but competition is increasing.
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The broker said softening was emerging in some lines, but cat risks remain challenging.
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Falling rates in finpro and increased competition in property drove the trend.
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The ratings agency also affirmed the reinsurer’s A- FSR rating.
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Property rate increases decelerated to 6% in Q4, compared to slowdowns of 7% in Q3 and 10% in Q2 2023.
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Sources said that the market was not sufficiently profitable to concede ground on pricing.
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The flight of reinsurers to mid- and upper layers of programmes is influenced by recent experience but softening at this level can be seen as a risky move.
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European rates on line increased by 7.60%, while in the US prices were up 5.25%.
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The broker’s report also hailed the best risk-adjusted margins for ILS investors in a decade.
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The broker said over-placement on some deals was a positive sign for brokers, though reinsurance capacity is still very tight in some areas.
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Reinsurers are making some adjustments to secure target signings but appetite to grow is finely balanced.
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Sources said that there was still rating adequacy in the market, but that further pricing falls would be unsustainable.
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Anticipations of a tug-of-war around a ‘flat to slightly up’ pricing renewal have indeed come to fruition.
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Profits are expected to widen thanks to improved rates and higher average attachment points.
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Delegates at our annual London Market Conference (LMC) described the market as “transforming” and “exciting”.
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The revision reflects Swiss Re's "strongly improved financial performance and better capitalisation and leverage”, the ratings agency said.
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Does one party – the carrier or the cedant – have to lose out for the other to succeed?
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London’s insurance market is booming in some ways yet still has multiple challenges to address.
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The ratings agency said the change reflected its expectation that the carrier would post improving underwriting results in the next two years.
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The mood at the association’s annual meeting is vastly more congenial this year, but challenges remain, particularly around long-tail lines.
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With US third-quarter reporting season being well underway, the results so far highlight further runway for the hard property E&S market.
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The revised status follows the recent announcement that R&Q Insurance Holdings has agreed a sale of its Accredited program.
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E+S Rück said that natural disasters and persistently high inflation have again "taken a toll" on the German insurance industry.
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Loss severity and prior-year development in US casualty dominated discussion at The Broadmoor.
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The Corporation used its latest market message to call out what it saw as an “underwhelming” approach from specialty insurers to changing conditions and “moronic” D&O underwriting.
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The paradox of “the best reinsurance market in years” is that there are still question marks over who wants a piece of it.
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The executive also recommitted Aon to its mission around creating net new markets – including growing IP – in the wake of the Vesttoo issues.
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Despite a successful upstreaming of cat risk to primary insurers, reinsurers still have multiple factors to worry about in the run-up to 1 January 2024.
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Key trends the credit agencies will be monitoring include inflation, redistribution of losses and the investment bounce-back.
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The ratings agency also affirmed Swiss Re’s ‘AA-’ rating, with the carrier expected to maintain an ‘AA-’ rating through 2024.
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Ongoing rate rises in property are expected to be offset by decreases in specialty lines and casualty.
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The hammering of hailstorm losses that US homeowners’ carriers reported for H1 will drive positive change in property markets.
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The broker said that rates were largely flat thanks to insurer appetite and competition.
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Loss-free accounts were generally up 20%-50% at renewal, the reinsurance broker said.
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A “little flurry” of new capacity helped the mid-year renewals as reinsurers pushed to deploy at the last chance for 2023.
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Reinsurers began relaxing limits on US property exclusions, but the lack of new start-ups points towards stability amid a more orderly market, the broker forecast.
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Despite reinsurers’ concerns over social inflation and loss trends, capacity remains abundant in both quota share and XoL deals, sources say.
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The broker said increased reinsurance costs had not been passed onto customers.
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The carrier is increasing underlying rates to counter increased reinsurance costs and inflation.
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The class is attracting increasing scrutiny from executives and within Lloyd’s, as a descent in pricing persists.
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The broker said clients could save money, increase limits and buy extra coverage.
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A report by the ratings agency shows cyber insurance pricing has risen by 11% in Q1.
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The deal is the third scale-up buyout for the firm, highlighting the ongoing value of scale in the reinsurance segment.
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Early private deals have provided far more stability in this year’s renewal than last.
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The broker’s UK CEO said the current rating environment is ‘eminently supportable’ for London carriers.
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Most carriers were keen to talk about how they are taking on the ongoing hard market in Q1, but some complexities partly offset their good news.
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Blenheim’s withdrawal from property treaty highlights questions around London’s role as a reinsurance centre of excellence.
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The executive said IGI is seeing similar trends in treaty rate renewals during the second quarter of the year.
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Softening cat bond rates are among the bearish signals for cat rates, but latent new demand and still-cautious supply should prolong reinsurer gains.
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The pace of rate hikes will ease back from the 1 January reset as buyers seek to lock up capacity early after last year’s dislocated renewal.
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Most lines continued to record price increases, with global rates being propelled largely by rising rates in property insurance.
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The broker said pricing reductions might decelerate throughout the year if carriers perceive increased risk.
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Primary insurance rate increases were 10% for property in Q1 compared to 7% in Q4.
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