GC assesses pricing environment pressures
Challenging market conditions due to abundant capacity, the ongoing influx of new capital and limited loss experience, continue to put pressure on the reinsurance sector, while recent M&A activity is adding a new dynamic to the mix.
This was the unanimous sentiment of a panel of speakers at the eighth annual press briefing held at the Reinsurance Rendez-Vous 2015 in Monte Carlo, by Guy Carpenter & Company, LLC.
The briefing was led by Alex Moczarski, president and chief executive officer of Guy Carpenter & Company, LLC and chairman of Marsh & McLennan Companies International. He was joined by David Priebe, vice chairman of Guy Carpenter; Nick Frankland, CEO of EMEA operations; and James Nash, CEO of Asia-Pacific operations.
Moczarski provided a snapshot of current market dynamics and the developments influencing these. Commenting on pricing activity, he said that while the declining rates of recent years continued, these decreases were being mitigated by a number of factors. He added: “Average decreases were mitigated somewhat by more moderate decreases in US catastrophe reinsurance, especially the wind peril. Reinsurers were more successful in resisting demands for large price reductions following two years of steep declines, while demand actually increased in some lines as clients continued to seek access to innovative new products and improved terms and conditions.”
Turning to developments in the EMEA region, Frankland described the last 12 months as a “testing period” for the market. Commenting on renewal expectations, he said: “Following another benign loss year, clients will continue to seek improved terms, yet reinsurers are beginning to get near to technical minimums, which will not allow enough scope for firm orders to be easily won.” Another influencing factor, he added, will be the impact of recent M&A activity and the interplay between the new combined groups and the existing markets. “Such a dramatic tension should work to clients’ benefit as they try to find the greatest value available and construct the most responsive panels,” he concluded.
