1 January 2014 Renewals A Buyer’s Market : The Non-Life 2014 Renewal 23rd January 2014
Matthew Day – GC Business Intelligence Ben Grimwade – GC Benelux & Property Solutions Group
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Pension fund capital and allocations into reinsurance
And…
Hedge Funds, Sovereign Wealth Funds,
Family Offices, Etc.
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Significant insured losses – 2011 to YE 2013 Multiple Dynamics
3 28 January 2014
Tohoku Earthquake approx. $35bn
Hurricane Sandy approx. $25bn
Eastern European Flood approx. $4bn
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Significant insured losses – 2011 to YE 2013 Multiple Dynamics
4 28 January 2014
2011 2012 2013
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Insurance Penetration by Region Opportunities exist to use the industry capital
6 28 January 2014
Lack of (Re)Insurance Supply leads to Government intervention: Terror, Flood, Nat Cat Pools
Lack of Primary Insurance Demand: Motor, Household, Medical
Global Average
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Guy Carpenter Global Prop-Cat Reinsurance Rate-on-Line Index
7 28 January 2014
Winter storm Daria + Typhoon Mirielle ($15 bn)
Hurricane Andrew ($26 bn)
Northridge ($22 bn)
9/11 ($24 bn)
Liability crisis (at least $46 bn – reinsurance sector only)
Katrina, Rita, Wilma ($99 bn)
Credit crunch (at least $15 bn)
Ike ($22 bn)
Chile, Xynthia, Deepwater, etc
($30 bn)
Tohoku, Christchurch,
Thailand, etc (at least $120 bn)
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Regional Prop-Cat Reinsurance RoL Index – 1990 to 2014
8 28 January 2014
De-linkage occurring
US Driving Rates
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European property catastrophe – typical rate-on-line changes
9 28 January 2014
2013 Pricing Consensus
2014 “Loss-Free” Pricing
2014 “Loss-affected” Pricing
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Property Cat Dutch Market - Main Themes
• Benign loss activity
• Capacity more than adequate
• Limited impact of Capital and ‘alternative markets’
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Benign loss activity Netherlands Rate on Line / Loss on Line Evolution
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00%
Rate
on
Lin
e
Loss on Line
2012
2013
2014
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Benign loss activity Rate on Line compared to Loss on Line
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00%
Rate
on
Lin
e
Loss on Line
UK
NORDICS
FRANCE
BELUX
GERMANY
NETHERLANDS
Source: Guy Carpenter 2014
GUY CARPENTER 13 28 January 2014
Capacity more than adequate Firm Order Compared to Average Quote
-7.1% -6.0% -6.2%
-10.4%
-6.8%
-8.8%
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
UK NORDICS FRANCE BELUX GERMANY NETHERLANDS
Least Competitive
Average
Most Competitive
Source: Guy Carpenter 2014
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Capacity more than adequate Excess capacity by region
• Limited impact of Capital and ‘alternative markets’
NL Cat still attractive to reinsurers
– Stable client relationships
– Lack of losses
– Single peril
27%
14% 19%
25% 30%
44%
0%
10%
20%
30%
40%
50%
60%
UK NORDICS FRANCE BELUX GERMANY NETHERLANDSSource: Guy Carpenter 2014
GUY CARPENTER 15 28 January 2014
Property Risk & TPL
• Property Risk
– 2013 a relatively poor year for NL fire losses impacting reinsurers.
– Continued overcapacity in the market, Zurich market still challenging
‘traditional’ reinsurers for new business
– Softening pricing and more so on loss free programmes
• Liability
– Trend in 2014 renewal stable to slight reductions, general consistent
panel but plenty of new entrants looking to grow
– MTPL - Continuing trend of no major increases in large losses following
5th directive
– GTPL - Cancellation of Fire non-recourse agreement
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Marine & Energy European renewal
• Despite the MOL Comfort claim being well publicised, the loss was well
spread in Europe and had little impact on reinsurance programme pricing
for 2014
• Against the backdrop of a low level of 2013 marine claims affecting the
European marine market, renewals saw general reductions ranging
between 2.5% - 10%
• Capacity remains very buoyant for small to medium sized programmes.
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