Reinsurance

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The first quarter catastrophes weren’t enough to push property-catastrophe reinsurance rates lower. Even though the first quarter was a busy one for catastrophe losses, particularly for global reinsurers, they weren’t sufficient to change the market. As a result, the four regions renewing at April 1, 2010 — the United States, Japan, Latin America and South Korea — ranged from soft to controlled, according to the latest from Guy Carpenter, the reinsurance arm of Marsh & McLennan (MMC). This comes as no surprise, as indications throughout the run-up to the renewal pointed to an orderly process in which there would be enough capital to support the market’s needs.

Continue reading Reinsurance Rates Fall Around the World

Reinsurance Rates Fall Around the World originally appeared on BloggingStocks on Thu, 01 Apr 2010 12:30:00 EST. Please see our terms for use of feeds.

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This year, you can expect experienced catastrophe bond issuers in the insurance and reinsurance sectors to dominate the market, as they did in 2009. Instead of replacing maturing bonds, however, many will be turning to new transactions. Fresh moves are likely, therefore, in a sector that could double last year’s issuance total and at least approach the 2007 record of $7 billion in risk capital.

Eighteen tranches of eight cat bonds are set to mature in the second quarter, according to the Thomson Reuters Insurance Linked Securities Community. On the eve of hurricane season in the Gulf of Mexico, $2.77 billion in risk capital will mature, including State Farm’s $1.2 billion Merna Re transaction, the largest transaction in the history of this form of risk transfer. Only part of Merna Re will be replaced by Merna II, with industry trade publication Trading Risk, which is put out by the Insurance Insider, reporting that the $250 million successor to Merna Re has been upsized to $700 million.

Continue reading Catastrophe Bonds: Same but Different in 2010

Catastrophe Bonds: Same but Different in 2010 originally appeared on BloggingStocks on Mon, 29 Mar 2010 12:00:00 EST. Please see our terms for use of feeds.

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Look for big numbers from the property/casualty sector of the insurance industry for full-year 2009. Light catastrophe losses were a big help, leaving more cash in the coffers to benefit from the recovering financial markets following the September 2008 crisis. Reinsurance companies, in particular, will benefit from the light catastrophe activity of 2009.

Among 52 publicly traded insurance companies, rating agency Fitch reports, the incurred loss ratio fell to 65.8%, a decline of 1.8 percentage points, and the expense ratio increased to 28.5% (up 0.6 percentage points). This caused underwriting profits for the entire group to improve, as indicate by the overall combined ratio of 94.3% for 2009, down from 95.5% in 2008 (a lower combined ratio s a positive development).

Continue reading Strong 2009 Results for Insurance Sector

Strong 2009 Results for Insurance Sector originally appeared on BloggingStocks on Mon, 29 Mar 2010 10:30:00 EST. Please see our terms for use of feeds.

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With borrowing costs at their lowest levels since 2004, reinsurers are loading up on corporate debt in part to fund stock buybacks. The latest tally, according to Bloomberg News, is $1.34 billion in additional borrowing, with Endurance Specialty Holdings (ENH), a Bermuda-based company, recently selling $85 million in bonds. Other recent transactions include Axis Capital Holdings (AXS) and PartnerRe (PRE) each issuing $500 million in bonds and RenaissanceRe (RNR) adding $250 million to the count.

Paul Newsome, an analyst at Sandler O’Neill & Partners, told Bloomberg News, “If you’re a company who can raise debt at 5, 6 percent, and your stock is trading below book value, there’s an arbitrage there.” He added, “The market is essentially saying, ‘We want you to put on debt, and we want you to get rid of your equity.’”

Continue reading Reinsurers Returning Capital Despite Catastrophes

Reinsurers Returning Capital Despite Catastrophes originally appeared on BloggingStocks on Sun, 28 Mar 2010 11:40:00 EST. Please see our terms for use of feeds.

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