Blue Capital: pressure causing retro and cat rates to fall


Blue Capital Global Reinsurance Fund, the reinsurance fund managed by Montpelier Re subsidiary Blue Capital Management, says retrocessional and cat bond prices dropped by 20 percent at the start of the year on the back of competition in the market.

The fund says that its focus on regionally-exposed traditional reinsurance business meant it was able to protect its own portfolio with risk-adjusted price changes on its renewals, 12 percent lower than the previous year, but terms and conditions remained consistent with market best practice.

The London Stock Exchange listed fund also reported an increase in its quarterly net asset value of 0.47 percent and published detail on its latest portfolio mix. The fund’s market capitalisation at the end of March was $187 million, while its net asset value was $179.4 million.

The fund reports its three-month NAV as 0.47 percent for the first-quarter of 2014, while its share price performance in the same period was 1.08 percent.

“The January 2014 underwriting period was a competitive one, marked by pressure to reduce prices and offer more generous contractual terms and conditions.” the company says. “From a pricing standpoint, the company benefitted from its continued focus on regionally-exposed traditional reinsurance business.”

“While prices in the retrocessional and cat bond markets decreased in excess of 20 percent, observed risk-adjusted price changes on the company's contract renewals were 12 percent lower compared to the January 2013 renewals. Additionally, contractual terms and conditions on regionally-exposed traditional business remained consistent with market best practice. The January 2014 portfolio also incorporates the addition of a quota-share participation of a traditional property catastrophe book of business, which further increases the company's access to its preferred client base.”

Blue Capital, Montpelier Re, retro, cat rates, pressure

Bermuda Re