Insurance News

First-quarter 2010 cat losses likely a record

Posted on: April 2, 2010

The first quarter of 2010 likely will be the worst-ever first quarter for natural catastrophe losses, but it’s still not enough to turn the market on its own, a global reinsurance renewals report concluded Wednesday.

The ?unprecedented? $16 billion in insured first-quarter catastrophe losses, including the earthquake in Chile and Windstorm Xynthia in Europe, do not bode well for reinsurers because their largest losses are in smaller markets, where they are less able to generate significant premium volumes, Willis Re said in a report Wednesday. At the same time, the first-quarter losses leave reinsurers exposed to the historically more loss-prone third and fourth quarters, Willis Re said.

Despite the losses, though, reinsurance rates on loss-free programs are not expected to increase any time soon, the reinsurance broker unit of Willis Group Holdings P.L.C. said.

?While one poor quarter, which is an earnings issue for reinsurers, will not be sufficient to trigger a general market turn on its own, it is likely to stiffen reinsurers’ resolve on renewals later in the year as the size of the recent catastrophe losses develop and back-year reserve releases reduce,? Willis Re CEO Peter Hearn said in a statement.

?This is balanced by the remaining reinsurance capacity oversupply and the continuing difficulties companies face in achieving any top-line growth to offset claims and expense increases,? he said. ?Against this backdrop, absent any other major losses, buyers (that) will be renewing loss-free programs later in the year can continue to budget for stability or modest reductions in their reinsurance costs.?

Copyright © 2010 Crain Communications, Inc.

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