JLT Re: What challenges do reinsurers face in 2018?

The continued supply vs demand imbalance is probably the biggest challenge facing the reinsurance sector in 2018, Guy HUDSON, Partner, JLT Re, and Liz LOTZ, Global Head of Sales Strategy - Analytics, JLT Re, explained for XPRIMM Publications.

Thus, according to JLT Re's representatives, "although a pricing floor has seemingly been reached with rates either flat or up for the vast majority of geographies and business lines at 1.1 and 1.4, overcapacity is capping any increases".

Another challenge for reinsurers is represented by "strong competition (within the traditional and alternative markets), which is likely to continue to be a key feature during the mid-year renewals and into 2019", JLT Re's representatives pointed out. "It is therefore increasingly challenging for reinsurers to meet their own return hurdles. This is driving increased M&A activity, with a number of big ticket deals announced recently", they added.

2017 - the most expensive catastrophe loss year on record

2017 was a devastating year with natural disasters such as catastrophic floods, wildfires and earthquakes affecting millions across the globe. These catastrophes turned 2017 into "the most expensive catastrophe loss year on record", Guy HUDSON and Liz LOTZ pointed out. "The losses in 2017 demonstrated the resilience of the reinsurance market and its ability to trade through major losses", they explained.

However, despite this severity, "events in 2017 mostly fell within modelled expectations. This helped prevent a repeat of the market reaction that followed the 9/11 attacks in 2001 and Hurricane Katrina in 2005 (when rates spiked)", the representatives of JLT Re added.

"Reinsurers have now paid out billions of dollars of claims from 2017 events without incurring significant capital impairments or any rating agency downgrades. In fact, capacity has continued to be plentiful across most classes of business during renewals so far in 2018", JLT Re's officials pointed out.

More details about the global reinsurance market, the impact of the 2017 events as well as the expectations for 2018 will be also analysed at FIAR - The International Insurance-Reinsurance Forum 2018, taking place between 13 May and 16 May in Bucharest. JLT Re supports the event as Strategic Partner.

More details about the event are available here.

Follow XPRIMM Publications on LinkedIn, for more data on the insurance and financial industry.

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