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.

-- ENDS --

 

Disclaimer

This information by JLT Re (North America) Inc. is intended to provide only general information based on sources we believe are reliable. JLT Re (North America) Inc. makes no representations or warranties, express or implied, as to the accuracy of any of the information herein, which is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such.

Any statements concerning tax, accounting, legal or regulatory matters should be understood to be general observations based solely on our experience as reinsurance brokers and risk consultants. We are not tax, accounting, legal or regulatory professionals and any such information provided is not professional advice. These matters should be reviewed with your own qualified advisors in these areas.

This information may not be copied or reproduced in any form without the express permission of JLT Re (North America) Inc., except that clients of JLT Re (North America) Inc. need not obtain such permission when using this report for internal business purposes.

Notes to Editors

Enquiries:

JLT Re Isabella Young Tel: +44 20 7558 3387/ +44 7920 586 032 Isabella.Young@JLTRe.com

Elizabeth Miller Tel: +1 215 246 1654/ +1 215 380 2079 Elizabeth.Miller@JLTRe.com

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.

This announcement may contain "forward looking statements" regarding the financial position, business strategy or plans for future operations of the Group. By their nature, forward looking statements involve risk and uncertainty, relating to facts that are beyond the company's ability to control, such as future market conditions. Any such statements in this announcement speak only as at the date of this announcement. The company does not assume any obligation to, and does not intend to, revise or update these forward looking statements except as required pursuant to applicable law.

contact Isabella Gaster
Head of Communications & Marketing, JLT Re