JLT Re sees no let-up in capacity at 1 June renewals
28 April 2015
Miami: During the RMS Exceedance Conference in Miami this week, David Flandro, Executive Vice President, JLT Re, spoke at two sessions examining the reinsurance and ILS markets. With 1 June renewals a month away, Flandro said, "We see no let-up in capacity at the 1 June renewals. At the same time, we are experiencing some increase in demand as companies buy additional cover rather than just pocket the savings. Some of this is driven by new opportunities that have arisen in the private market in Florida, as well as risk transfer likely to be purchased by Citizens and the FHCF."
Ed Hochberg, CEO, JLT Re in North America, added, "It is interesting that the private market is potentially competitive with the FHCF, depending on where the FHCF layer sits in a client’s program. As such, we expect to see some companies reduce their FHCF coverage to 75% or even 45% in favour of private market mechanisms. We feel that RMS v15 is unlikely to have a significant impact on the amount of cover purchased."
Figure 1: JLT Re Florida risk-adjusted property-catastrophe reinsurance rate-on-line index (provisional)
Source: JLT Re
Note: This is a provisional estimate of current and historical reinsurance pricing and is subject to change.
David Flandro concluded, "At present, JLT Re’s Florida risk-adjusted property-catastrophe reinsurance rate-on-line index (Figure 1) is expected to fall by up to 10 percent. Actual reductions are of course client and layer-specific. Reinsurers are expressing some level of resistance to the softening at the pace observed recently but we believe that with a global reinsurance sector gross premiums to surplus ratio now under 80% at year-end 2014 (Figure 2), the amount of capacity out there will act to maintain downward pressure on rates."
Figure 2: Global reinsurance dedicated capital vs premiums, all lines (USD billions)
Source: JLT Re
Note: This is an estimate of dedicated reinsurance capital, distinct from the total capital of all firms which write reinsurance. The estimate excludes capital-qualifying subordinated and convertible debt. ‘Alternative’ capital here is defined as insurance linked securities (including private placements), industry loss warranties, and third-party capital-provided collateralized covers.
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About JLT Re
JLT Re a global reinsurance broker and consultancy that concentrates on geographies and specialty classes where it believes it can make a difference to clients.
JLT Re has close to 700 professionals across 14 countries, with the scale to deliver world class solutions whilst remaining small enough to differentiate clients from their peers. New clients and new employees continue to join, attracted by specialist broking, consultancy and analytical capability and increased market presence.
JLT Re is part of the Jardine Lloyd Thompson Group plc.
About Jardine Lloyd Thompson Group plc
Jardine Lloyd Thompson is one of the world’s leading providers of insurance and employee benefits related advice, brokerage and associated services. JLT’s client proposition is built upon its deep specialist knowledge, client advocacy, tailored advice and service excellence.
JLT is quoted on the London Stock Exchange and owns offices in 39 territories with more than 10,000 employees. Supported by the JLT International Network, it offers risk management and employee benefit solutions in 135 countries.
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