The January 2021 reinsurance renewal season is likely to see rates rising broadly by at least 10%, with firming or hardening momentum being held right through the rest of this year, according to executives from PartnerRe.

PartnerRe logoThe Wells Fargo Securities equity analyst team, led by senior analyst Elyse Greenspan, held a call with PartnerRe executives including Nick Hughes, Head of Global Catastrophe, Joe Hooks, Head of North American Catastrophe, and Ryan Lipschutz, Group Treasurer, this week, to discuss the state of the renewal market and the firm’s expectations for the months ahead.

Bermuda headquartered, EXOR owned reinsurance company PartnerRe found the June reinsurance renewals came with 20%+ rate increases, which is aligned with other recent reports.

The company has recently revealed that it is targeting growth in catastrophe exposed underwriting opportunities, so the rate increases will have been welcomed and taken advantage of, as PartnerRe grows that side of its book, we assume.

PartnerRe’s executives told the analysts that reinsurance rate increases were healthy in Florida, that all market participants were seen to be behaving rationally, that the momentum in rates is expected to persist, and that the Covid-19 pandemic means the hard reinsurance market should last longer than would otherwise have been expected.

The executives likened the renewal market to 2004/2005, saying that most programs still got completed even though prices were up and capacity sometimes shorter.

Looking further ahead, the PartnerRe executives said that they expect rate increases of +10% to be the baseline for the January 2021 reinsurance renewals.

That was the level of rate increase seen on non-loss affected renewals in June, the executives said, so they expect that level of increase to hold.

Which suggests that more broadly and for loss impacted programs, the January 2021 reinsurance renewal rate increases could be much higher.

In addition, PartnerRe’s execs said that they are finally seeing rate increases beginning in some of the more stubborn portfolios and areas of the market, where there has been greater resistance to rate increases in recent years.

That could bode well for January, as the European programs that renew are among some of the most stubborn and it would be good to see some rate improvements there.

All of this commentary is very positive, especially for this far out from January 2021’s renewal season.

Of course, with that long to go a lot can happen, but the trajectory appears set and reinsurance rates are likely to firm further, the only question being how much.

Start-ups and capital raises will have a lot of bearing on that, of course.

With numerous start-ups in various stages of preparation, both traditional reinsurance and also ILS fund manager ventures, there is the prospect of fresh capital adding to the available capacity for January renewals.

While that could dampen how much rates rise, it seems likely that inflows would need to be really significant to cause even a flat January renewal this time around, with the market dead-set on achieving more rate at the renewals in 2021.

Also read: 2021 to be hardest P&C market for some time, start-ups likely: Analysts.

January 2021 reinsurance renewals to see rates up 10% at least: PartnerRe was published by:
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