Guy Carpenter Reports Moderating Reinsurance Pricing Decline at January 1, 2017 Renewals
January 05 2017 - 10:09AM
Business Wire
Innovation in Client Solutions Showed
Increasing Importance
Guy Carpenter & Company, LLC, a leading global risk and
reinsurance specialist and wholly owned subsidiary of Marsh &
McLennan Companies (NYSE:MMC), reports the decline in reinsurance
pricing moderated at the January 1, 2017 renewal across most
classes of business and geographies, as compared to the past three
renewal seasons. Several sectors experienced increased loss
activity, which had only a localized impact on pricing while
capacity remained plentiful. After remaining fairly stable in 2015,
dedicated reinsurance capital increased by 5 percent from January
1, 2016 to January 1, 2017 as calculated by Guy Carpenter and A.M.
Best. The convergence capital segment increased by 10 percent.
The Guy Carpenter Global Property Catastrophe Rate-on-Line index
tracking property catastrophe pricing fell 3.7% at January 1, as
compared to close to 9.0% a year ago. The ILS space, in contrast
saw dramatic movement in pricing during the fourth quarter with
decreases as high as 30 percent.
While catastrophe bond issuance in the first quarter of 2016
made it the most active first quarter in the market’s history,
second quarter catastrophe bond issuance fell to its lowest
quarterly level since 2011. In response to this diminished
pipeline, catastrophe bond providers responded with greater
flexibility in coverage and significant decreases in price. While
it is too early to judge the broader impact of these changes, the
last round of market-wide reinsurance price decreases were
triggered in part by catastrophe bond competition.
As the reinsurance sector continues to be flush with capital and
price points are very attractive, product innovation and coverage
customization remain a key focus. Continued exploration in the
reinsurance space paved the way for many new advances, including
expansion of solutions for historically difficult and under
(re)insured risks such as flood. As risk from increasingly complex
sources including climate change, cyberspace and nascent
technologies continue to expand, this focus on broadening solutions
will translate into ongoing positive market evolution.
“Although current renewals indicate that the decline in
reinsurance pricing is slowing, this moderation was not surprising
and the more interesting development may be the continued evolution
of coverage and solutions to meet changing client needs,” said
Peter Hearn, CEO of Guy Carpenter. “An abundance of available
capital and improving analytics tools are essential components to
create support for notable advances. An innovative mindset is the
key to success in today’s marketplace as the increasing complexity
of risk brings new levels of uncertainty.”
Significant global insured loss activity reached a four-year
high in 2016, with insured loss increasing over 50 percent from
2015. Losses were spread throughout several regions and perils with
no single mega-event driving the increase. Renewal pricing impacts
were localized.
2017 Outlook
“The 2017 (re)insurance market will be challenged to offer
solutions that utilize increasing amounts of capital effectively in
a complex landscape, requiring insurers to be increasingly diligent
and responsive to prepare for the uncertainty ahead,” said David
Priebe, Vice Chairman of Guy Carpenter and Head of GC Securities.*
“We’re continually adapting to evolving markets to ensure our
clients are provided with the product offerings that best meet
their needs and the needs of their constituents to adequately
insure a vast range of problems. With the current abundance of
capacity and low interest rate environment, the complexity of the
industry’s issues will make for a challenging yet impactful year
ahead.”
While there are many areas of focus for product expansion and
evolution in the coming year, with political volatility increasing
globally, terrorism coverage needs will require a high level of
vigilance. In keeping up with insurer needs, reinsurance is
adapting to the evolving nature of terrorism and striving to close
gaps in existing coverage. In addition, new technologies, big data
and predictive analytics, coupled with the “sharing” economy will
continue to present both challenges and opportunities for insurers
in the year ahead.
About Guy Carpenter
Guy Carpenter & Company, LLC is a leading global risk and
reinsurance specialist. Since 1922, the company has delivered
integrated reinsurance and capital market solutions to clients
across the globe. As a most trusted and valuable reinsurance broker
and strategic advisor, Guy Carpenter leverages its intellectual
capital to anticipate and solve for a range of business challenges
and opportunities on behalf of its clients. With over 2,300
professionals in more than 60 offices around the world, Guy
Carpenter delivers a powerful combination of broking expertise,
strategic advisory services and industry-leading analytics to help
clients achieve profitable growth. For more information on Guy
Carpenter’s complete line-of-business expertise and range of
business units, including GC Specialties, GC Analytics®, GC Fac®,
Global Strategic Advisory, GC Securities*, Client Services and GC
Micro Risk Solutions®, please visit www.guycarp.com and follow Guy
Carpenter on LinkedIn and Twitter @GuyCarpenter.
Guy Carpenter is a wholly owned subsidiary of Marsh &
McLennan Companies (NYSE: MMC), a global professional services firm
offering clients advice and solutions in the areas of risk,
strategy, and people. With annual revenue of $13 billion and 60,000
colleagues worldwide, Marsh & McLennan Companies provides
analysis, advice, and transactional capabilities to clients in more
than 130 countries through: Marsh, a leader in insurance broking
and risk management; Mercer, a leader in talent, health,
retirement, and investment consulting; and Oliver Wyman, a leader
in management consulting. Marsh & McLennan is committed to
being a responsible corporate citizen and making a positive impact
in the communities in which it operates. Visit www.mmc.com for more
information and follow us on LinkedIn and Twitter @MMC_Global.
*Securities or investments, as applicable, are offered in the
United States through GC Securities, a division of MMC Securities
LLC, a US registered broker-dealer and member FINRA/NFA/SIPC. Main
Office: 1166 Avenue of the Americas, New York, NY 10036. Phone:
(212) 345-5000. Securities or investments, as applicable, are
offered in the European Union by GC Securities, a division of MMC
Securities (Europe) Ltd. (MMCSEL), which is authorized and
regulated by the Financial Conduct Authority, main office 25 The
North Colonnade, Canary Wharf, London E14 5HS. Reinsurance products
are placed through qualified affiliates of Guy Carpenter &
Company, LLC. MMC Securities LLC, MMC Securities (Europe) Ltd. and
Guy Carpenter & Company, LLC are affiliates owned by Marsh
& McLennan Companies. This communication is not intended as an
offer to sell or a solicitation of any offer to buy any security,
financial instrument, reinsurance or insurance product. **GC
Analytics is a registered mark with the U.S. Patent and Trademark
Office.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170105005951/en/
Guy CarpenterPaul Caricone,
1.917.937.3317Paul.caricone@guycarp.comorGuy CarpenterJennifer
Ainslie, 44.207.357.2058Jennifer.ainslie@guycarp.com
Marsh and McLennan Compa... (NYSE:MMC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Marsh and McLennan Compa... (NYSE:MMC)
Historical Stock Chart
From Apr 2023 to Apr 2024