Enough in reserve? Is the reinsurance sector in a new danger phase?

12 September 2016

  • Deficient reserves are arguably the (re)insurance sector’s largest potential exposure.
  • JLT Re hopes its exhaustive reserving study will inform reinsurance managers and C-suite leaders in taking advantage of reserve protection.

JLT Re has today launched a new Viewpoint Report ‘Enough in Reserve?’. The paper examines sector reserve adequacy and concludes that the (re)insurance market is once again likely to find itself in danger of releasing reserves, despite accident year experience suggesting redundancies are running dry.

David Flandro, Global Head of Analytics, JLT Re, said: “By analysing quarterly calendar year reserve developments since 1998 for the top 30 global (re)insurance companies and comparing them to accident year loss trends, pricing and previous cycles, our research shows that net sector deficiencies are now likely closer to adversely affecting the sector’s income statement than any time since the early 2000s.”

Mike Reynolds, Global CEO, JLT Re said, “Reserving levels are always under close scrutiny and this is especially true today as several carriers continue to release reserves to protect or enhance profits. JLT Re’s analysis shows that the reserving cycle has reached an inflection point and pressures are likely to intensify in the current market environment given the historical relationship between falling pricing and reserve deficiencies. Indeed, there have been some notable instances of reserve strengthening in recent quarters.”

David Flandro concluded, “The clear implication is that now is the time to seek protection. It is always more economical to purchase adverse development cover (ADC) before deficiency trends are clearly manifest. Fortuitously, reinsurance pricing is at or near period lows in many medium and long-tail lines and cover is more easily obtained than it has been even in the recent past for those with the foresight to move quickly”.

- ENDS -

ENQUIRIES & For A COPY OF THE REPORT:

JLT Re
Isabella Gaster, Head of Marketing Communications | T: (+44) 7920 586 032 |E:
Isabella.Gaster@JLTRe.com

NOTES TO EDITORS:

Viewpoint Reports

JLT Re Viewpoint is JLT Re’s regular series of reports that comment on or give insight into key topics, occurrences or changes in the (re)insurance and broking market place.

About JLT Re

JLT Re’s trusted team of 700 colleagues worldwide combines market leading expertise and proprietary analytical tools with the freedom to challenge conventions.

Deep specialist knowledge and extensive experience of both the reinsurance market and clients’ own industries and sectors enables JLT Re to ask smarter questions, innovate and deliver better results tailored to meet client needs.

JLT Re is part of the Jardine Lloyd Thompson Group plc.

 

www.JLTRe.com


contact Isabella Gaster
Head of Communications & Marketing, JLT Re