European reinsurers can expect to see only muted pricing increases at the July 2019 renewals, which will likely offer a similar experience to renewals earlier in the year, according to analysts at Deutsche Bank.
Nevertheless, the firm continues to see some positive signs in the market, such as pricing momentum from the 2018 wildfire losses, trapped alternative capital, and Hurricane Michael loss creep in the Florida market.
Deutsche Bank is anticipating rate increases of between 1.5% to 2% for Florida cat business, which should have a somewhat bigger pricing effect within the renewals due to the large proportion of U.S cat risk in the European portfolios.
On the other hand, each of the European reinsurers is underweight in Florida cat business, preferring to write more country-wide business, meaning the positive effects will be significantly diluted.
Analysts also expect growth rates to come down significantly on the volume side but remain on satisfying levels, with Swiss Re viewed as the most willing to take the opportunity to regrow its Florida book.
Additionally, Deutsche Bank will be keeping an eye on whether the European reinsurers react to the recent drop in U.S interest rates, which it noted have not yet been reflected in pricing.