Pricing trends continue to improve in almost all lines of business in both primary insurance and reinsurance, according to analysis from RBC Capital Markets.
Analysts expect to see prices continue to increase with specialty and commercial lines increasing faster than reinsurance prices.
Furthermore, there’s an expectation that margins are beginning to improve at the 1H21 results but the picture on large non-cat losses in Q2 could cloud this somewhat.
In both primary lines and in reinsurance, RBC Capital Markets have seen price increases continue again in the second quarter.
On the primary side, analysts expect that the data will show that Q2 has again been strong for pricing following on from several quarters of high price increases.
On the reinsurance side, RBC has also seen price momentum continue at the mid-year renewals. Prices increased again at the June renewals with rates up 7%, according to Hyperion.
Despite price improvements continuing, analysts say they have seen a relatively muted reaction to price increases particularly at Lloyd’s.
Year to date, the stocks have lagged the SXIP with the three companies seeing their share prices fall.
The first half of 2021 has been impacted by high Nat Cat losses in Q1 and some residual COVID- 19 losses.
As a result, analysts do not expect that 1H21 combined ratios will be that impressive on a standalone basis.
But looking to H2, there’s an expectation to see significant improvements in underwriting margins, which could help to bring the sector back into favour as the year goes on.
