Meetings at the recent Monte Carlo Reinsurance Rendez-Vous suggest downward property catastrophe pricing pressure of flat to -5% at the 2019 January renewals, reports Morgan Stanley.
Furthermore, as signified by Markel’s acquisition of Nephila, traditional and alternative capital are converging and industry consolidation should continue as global reinsurers adapt to the changing competitive landscape.
After record insured losses of more than $140 billion from 2017 catastrophes, the market saw a small rebound in 2018.
Morgan Stanley believes that, absent of large losses, property cat repricing will resume a modest decline. However, should the fast-approaching Hurricane Florence inflict damages equivalent to 1989’s Hugo or 1954’s Hazel, its could support pricing on the margin.
In general, Morgan Stanley says it would take large catastrophes totalling $200 billion or significant unexpected losses to turn pricing meaningfully; a conclusion that supports the findings of our recent industry survey.
There are some positive signs that primary carriers are purchasing more reinsurance, partly
due to attractive pricing and the heightened risks of aggregate losses from multiple events.
Among some insurers under Morgan Stanley’s coverage, the net to gross ratio declined in 2017
and H1 18 after years of increases.
Casualty reinsurance pricing is largely stable, with modest increases in proportional business as primary insurance pricing rises.