Reinsurance prices to stabilise, but at structurally lower levels
Friday, 05 29 2015, Category: Insurance and Reinsurance, Country: World
Analysts from Goldman Sachs believe that reinsurance pricing could stabilise by the end of 2016, but warn that this could be at a structurally lower level from where they may not rise much again, even after future losses.
There is an increasing expectation that a reinsurance pricing floor is being reached, with evidence emerging in the insurance-linked securities (ILS) market as catastrophe bonds price at or above the middle of guidance and even some reinsurance placements have had to be repriced to get accepted by the market in time for the renewals.
Equity analysts from Goldman Sachs have also seen the signs that pricing is beginning to stabilise, but they do not expect it to happen as quickly as some reinsurers might like. The analysts forecast reinsurance price stabilisation to come by the end of 2016, but at structurally lower rate levels as abundant alternative capital helps to prevent significant price rises.