Guy Carpenter & Company has released its “2008 Reinsurance Market Review: Near Misses Call for Caution.” The report presents a comprehensive review of global market conditions as of the January 1, 2008 renewal period and provides additional detail to the briefing issued by Guy Carpenter on January 2, 2008 (See IJ web site – https://www.insurancejournal.com/news/international/2008/01/03/86036.htm). Much of the information, especially on catastrophes and renewals is contained in that report.
Guy Carpenter said the “expanded report covers renewals trends across various lines, including property, casualty, life, accident and health, retrocession and marine, as well as by geographical areas including the United States, Europe, Asia and the Pacific Rim and Latin America/the Caribbean.”
t also includes details of the influence of rating agencies and regulators, such as the impact of new requirements on the emergence of reinsurance “hubs” in Zurich and Dublin.
Among the other major findings of the report, it also includes an analysis of:
— The subprime crisis – While analysts expect the total damage resulting from the subprime mortgage meltdown to reach $400 billion, Guy Carpenter estimates that the D&O impact will be a more modest $3 billion.
— Bermuda capitalization– Capitalization of the Bermuda Reinsurance Composite increased by 20.4 percent in 2007, reaching $129 billion at the end of the third quarter of 2007, due to strong retained earnings. Reinsurers returned $9.4 billion to shareholders in 2007, a 200 percent increase over 2006. In addition, more than $2 billion in share repurchases were executed.
Sean Mooney, Guy Carpenter’ s Chief Economist, added: “Low and decreasing interest rates have reduced the incentive to engage in cash flow underwriting, while the focus on managing capital is reducing reinsurers’ interest in assuming more inadequately priced business. External capital may also help flatten the peaks and valleys of the insurance cycle.”
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