JLT report suggests January renewals saw some stabilisation

The challenging operating environment confronting reinsurers saw a degree of price stabilisation at the 1 January 2017 renewals. Insurers are facing the reality of deteriorating results and margin compression, according to JLT Re in a newly published report. The report highlighted that twelve months ago, single-digit pricing declines were common in America, while the rest of the world witnessed double-digit price declines. The report said that, “There was a broader trend towards moderating price declines. As a result, programs across a number of different territories and lines of business generally renewed closer to expiring levels, although some continued to experience more significant downward pricing pressures. Near-record levels of capital currently remain the dominant force in determining the direction of reinsurance pricing, as excess supply chases relatively muted demand.” David Flandro, global head of analytics at JLT Re said, “Nevertheless, moderating capital inflows, increasing cessions at the margin, the prospect of higher insured catastrophe losses, reserving volatility, inflationary and interest rate concerns and declining forward reinsurer returns are coalescing to push back against downward pricing pressures.”