Wednesday, August 3, 2016

Swiss Re Pulls Back On U.S. Hurricane Exposure

From Artemis, July 29:

Swiss Re hit by losses, still expansive, but pulls back on U.S. hurricane risks
Global reinsurance giant Swiss Re reported a set of results this morning that were hit by major catastrophe losses, taking its combined ratio to the highest its been since 2013. The reinsurer remains expansive in its strategy of deploying more capacity, but has finally pulled back on U.S. hurricane risks.

Over recent years, when reinsurance prices have been on the decline globally, Swiss Re has actually been quite expansive, choosing to deploy capital into underwriting, particularly in large, complex, tailored transactions, but also into areas like property catastrophe risks where the price declines have been at their highest.

But in its latest results, (for more traditional reinsurance market news please sign up for our sister service here), the reinsurer reveals that it is finally pulling back on underwriting of U.S. hurricane risks, which is perhaps the best sign that the market is reaching (perhaps even reached) its pricing floor and that there is now so little margin even the large, globally diversified players are having to reduce their appetites.

That’s a positive for the reinsurance market and for the insurance-linked securities (ILS) sector, as Swiss Re has been taking large chunks of Florida programs in recent years, sometimes at pricing levels that have been tough to compete with....MORE