Reinsurance executives have been gathered in Monte Carlo this past weekend for the sectorÃ¢â‚¬â„¢s 2010 September Rendezvous.
If you werenÃ¢â‚¬â„¢t able to make the trip this year, not to worry, reinsurance girlÃ¢â‚¬â„¢s blog will transport you to the gilded ballroomsÃ‚ with its virtual Monte Carlo reports. Also, check out Twitter #rvmc2010 for the conference gossip.
SeveralÃ‚ newly-published studies on the state of the reinsurance market are also worth reading.Ã‚ Here are a few selections.
Guy CarpenterÃ¢â‚¬â„¢s World Catastrophe Reinsurance Market 2010 report finds that reinsurance rates continue to decline, despite costly disaster losses in the first half of the year.
Global catastrophe reinsurance rates fell by 6 percent on average throughout the 2010 renewal season, according to the Guy Carpenter World Rate on Line (ROL) Index.
Guy Carpenter estimates that the reinsurance market was overcapitalized by as much as $20 billion, or 12 percent, at the beginning of 2010. While this amount came down to approximately 8 percent by the end of June, reinsurersÃ¢â‚¬â„¢ excess capital continued to be the main driver of rate reductions at the 2010 renewals.
If no market-changing event were to occur in the second half of the year, surplus capital is likely to remain the driving force behind continued rate softening at next yearÃ¢â‚¬â„¢s January 1 renewal, according to the study.
Meanwhile, ratings agency A.M. Best says robust earnings reports mask challenges ahead for the global reinsurance industry: a convergence of market pressures, low interest rates and tightening financial and market regulations that could impact the industryÃ¢â‚¬â„¢s capital.
Despite seemingly ripe conditions for consolidation Ã¢â‚¬“ excess capital and a soft market Ã¢â‚¬“ the bleak outlook for profitability has reinsurers across the board trading near or below book value, which constrains the market for mergers and acquisitions.Ã¢â‚¬
A.M. Best says that prudent reinsurers are looking at every aspect of their operations Ã¢â‚¬“ capital management, underwriting discipline, the size of their balance sheets and even their countries of domicile.
It notes that insurers and reinsurers continue to prepare for Solvency II, the European UnionÃ¢â‚¬â„¢s new solvency directive, which A.M. Best believes will drive business to highly rated reinsurers.
Check out I.I.I. information on reinsurance.