Risk-adjusted property-catastrophe reinsurance rates-on-line accelerated by 5-10 percent on average at June 1 as rate momentum remained, but not at the pace witnessed in 2020, according to NOVA, the insurance sector’s financial and underwriting data platform.
Pricing is now back above levels last seen at 1 June 2013 in the wake of Superstorm Sandy. Renewals varied widely, with risk-adjusted outcomes heavily influenced by loss experience, programme structure, and ILS capacity, increasingly available for higher layers. Casualty reinsurance pricing trends established at 1 January remained in place, with higher rates on underlying business enabling reinsurers to seek increases whilst mitigating pressure on ceding commissions.
The renewal took place against a backdrop of improving earnings and plentiful capital with stronger first quarter investment returns the main contributor to higher net income year-on-year. Combined ratios rose slightly compared to the first quarter of 2020 as losses from Winter Storm Uri more than replaced COVID losses reported a year ago. Carriers are preparing for an active catastrophe year in an uncertain macroeconomic environment. Inflation and interest rate fluctuations have the potential to affect balance sheets as the global economy navigates its way out of the pandemic.
David Flandro, head of HX Analytics said: “Using NOVA placement data and wider market financials, we have identified the most prominent headwinds and key offsets driving the market at 1 June. The renewal was ordered if highly varied against a backdrop of significant uncertainty and elevated first quarter catastrophes.”
Michelle To, head of Business Intelligence, HX Analytics added: “With NOVA, you can see well beyond today’s renewal snapshot; you can compare it to underlying primary pricing, to historical trends, to buyer behaviour patterns, and to macro-fundamental factors to name a few. This insight enables Howden clients to watch the market unfold in real time in a fully digital environment every day of the year.”
NOVA, Property & Casualty, Insurance, Reinsurance, Superstorm Sandy, Renewals, David Flandro, HX Analytics, Michelle To, North America, Australia