LONDON — Global property reinsurance prices have risen less than expected in the key Jan. 1 renewal season, with strong competition limiting increases to single-digit percentages following a record year of losses, brokers said on Tuesday.
Catastrophe bond managers are launching new funds and hedge funds have bought reinsurance stocks to benefit from expected double-digit price rises, following hurricanes in the United States and Caribbean, wildfires in California and earthquakes in Mexico last year.
Global prices rose by up to 7.5 per cent, Willis Re said in a report, while JLT Re said its property-catastrophe reinsurance index gained 4.8 per cent.
"The concerted effort by many reinsurers to seek meaningful ... rate increases across the board has been unsuccessful," said James Kent, Global CEO of Willis Re, pointing to "continued supply of capital" in the sector.
The reinsurance sector has turned the corner after five years of falling prices, however, after a record year of US$140 billion in insurance losses, JLT Re said.
Property reinsurance prices rose 20 to 40 per cent in catastrophe-hit areas in the Caribbean and five to 10 per cent in loss areas in the United States and Latin America, Willis Re, a unit of Willis Towers Watson (WLTW.O), said.
Global rates for retrocession, the reinsurance of reinsurance, also came in below expectations, with rises of 10 to 20 per cent, JLT Re said.