Reinsurer & investor demand to squeeze returns on riskier layers
Monday, 05 18 2015, Category: Insurance and Reinsurance, Country: World
With the mid-year reinsurance renewals fast approaching market participants are reporting that demand from traditional reinsurers for higher priced business, and from ILS investors for higher yielding layers of risk, are combining to squeeze returns on riskier program layers.
At a time when overall pricing and rates are expected to decline by as much as 10% across the reinsurance renewals, it’s becoming apparent that the stability being witnessed on some programs, in terms of year-on-year renewal pricing, is likely to be on the lower risk, lower yielding layers.
There is a general opinion in the market, among participants Artemis has spoken with in advance of the renewal, that where stability is being seen the most is on the more remote layers of risk. Here reinsurers see pricing nearing technical levels and it is considered impossible to squeeze risk spreads any further by capital market investors.