Reinsurance rates

[T-bone1]

Bloomberg has an article on HannoverRe today saying that reinsurance rates are up ~10% this year. They say this is because many regular insurers are low on capital and need to lay off their risk (as FFH had to years ago). It should be fun to be on the other side of this. I figure this could subtract 6-7% off of ORH's combined ratio, all else being equal.

[oldye]

I saw the 10% number used in a industry publication as well.  Demand is also way up for Reinsurance which is a good sign that prices will finally start to trickle up in 09.  Prices have been dropping for 6 years (insurance cycle normally lasts about 6 years), unless governments start flooding the industry with capital you'll see prices inch their way up.

Aig is being investigated for using government funds to drive down the market price for insurance.  Once these bastards are gone we'll see some swift improvement.

  Once our guys start writing insurance at full capacity, CR should drop by more than 6-7 points. 

[Mikenhe]

Its not just the CR – its what these guys do with the money that’s coming in that as , if not more, important. Last few years track record isn’t looking too bad.. but we can’t use that to predict the future… can we???  8)

[Tommm50]

I wouldn't put too much stock in that kind of statement from an individual reinsurer. Hannover is a "broker market" reinsurer rather than a "direct reinsurer". A direct deals directly with the insurance company a broker market reinsurer goes through an intermediary like Guy Carpenter, Aon Re, or Willis Re. Carpenter is reporting (and their perspective includes all the broker market reinsurers on the placements) January 1 renewals were a mixed bag. Some improvement on Property Cat placements, less on Property Per Risk, and none to speak of on Casualty placements. It's too early to see any significant improvement for reinsurers and certainly not yet for insurers.

[oldye]

Rates are down 9% January YoY, it would be interesting to see what the numbers would look like if AIG was not in the market.