The global casualty market remains orderly and has calmed down somewhat from the initial impacts of third-quarter hurricanes, however, the trend of improved terms and conditions (T&C) for reinsurance buyers is now slowing, and even reversing in some instances, according to Willis Re.
In its recent 1st View report, reinsurance broker Willis Re has said that the trend of improvements in terms and conditions for reinsurance buyers, which has defined the casualty business over the last few years, is now slowing down and even reversing in a number of key classes and regions.
The reinsurance broker adds that while it’s hesitant to describe last year as the lowest point of reinsurance pricing in all long tail classes, at this stage, “it appears to be a reasonable description.”
“Further exposure adjusted reductions have become harder and harder for buyers to secure, requiring high hurdle rates about underlying profitability to be overcome,” explains Willis Re.
The challenges for buyers are being driven by deteriorating accident-year results, diminished reserves, and a number of issues specific to certain territories, such as the Ogden rate change in the UK and wildfire losses in the U.S.
In addition, profitable natural catastrophe business which has subsidised the performance of reinsurers for several years has been withdrawn in 2017.
Despite reinsurers continuing to push for improvements in terms and conditions, overall, the global casualty market has acted orderly, says Willis Re.
“With a few exceptions, most reinsurers have been discerning, negotiating sensibly around the issues and, most importantly, in a way that is compatible with their long-term trading relationships,” says Willis Re.