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Survey Report

Prudence during unforeseen times

Willis Re 1st View July 2020

Reinsurance|Insurance Linked Securities
COVID 19 Coronavirus|Insurer Solutions

July 1, 2020

Insurers were able to secure sufficient reinsurance capacity at the July 1 and June 1 renewals supported by adequate reinsurance capital.

Issued three times a year, this publication delivers the very first view on current market conditions within the reinsurance industry, covering the changes in pricing levels and conditions experienced by Willis Re brokers and product experts.

Key findings

  • Insurers were able to secure sufficient reinsurance capacity at the July 1 and June 1 renewals supported by adequate reinsurance capital.
  • The recovery in investment markets allied with investors’ appetite to support additional capital and debt offerings and reinsurers own prudent risk and cost management has seen capital levels return to being only 5% lower than the end of December 2019. This compares to a 30% reduction at the end of March 2020.
  • Collectively, reinsurers are recognizing that COVID-19 losses, which currently are reported at about $7 billion, may take several years to settle spreading out reserving over many quarters.
  • The pandemic has also driven a second realization: the impacts of a pandemic loss on the asset and liability sides of the market’s balance sheet are highly correlated. As a result, investors have remained cautious and selective as they continue to withdraw capital from some ILS funds, while favoring better performing funds and rated reinsurers.
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