Analysts at JMP Securities have said there are increasing signs that a “true hard market may be near” in the property catastrophe reinsurance space, following the mid-year renewal period.
The firm notes that the June and July renewals showed “some characteristics of a true hard market.”
These included capacity shortfalls where underwriters would not write the risk regardless of price, as well as some larger market participants reducing capacity or even exiting the property catastrophe market entirely.
AXIS, for instance, was among the big names to announce that it planned to fully withdraw from the property catastrophe reinsurance market.
“By all measures, property exposures, in particular property cat reinsurance, have had a rough go in recent years,” analysts at JMP Securities stated.
“While pricing had improved, the frequency and severity of events has kept accelerating as well, leaving significant questions around the adequacy of pricing,” they continued.
“Time will tell and January 1 renewals will be a key test, but we believe there are increasing signs a true hard market may be near, and at the very least there is little sign that pricing increases will abate anytime soon.”
Analysts at Morgan Stanley recently concurred with the comments made by JMP Securities, reporting that that widespread plans to pull back from the property catastrophe market should “bode well” for reinsurance pricing into 2023.
And broker Gallagher Re reported that a seller’s market persisted at the recent July renewals, even though almost all buyers of protection were able to secure their reinsurance coverage, as the renewals were shaped by economic factors which helped to sustain market hardening.