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Press Release

Reinsurance markets diverge at 1.1 renewal: Willis Re 1st View

Reinsurance|Insurance Linked Securities
Insurer Solutions

January 2, 2020

GLOBAL, 2 January 2020 - Reinsurers have been judicious during the 1.1 renewal period, leading to significant pricing and capacity variance depending on geography, product line, loss record, and individual client relationships. As a result, the renewal season has concluded later than in previous years, according to the latest 1st View renewals report from Willis Re, the reinsurance division of Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company.

In general, U.S. placements were more challenging than international renewals, with U.K. motor and some international liability accounts being the exceptions to the rule, while property catastrophe (cat) proved less demanding than non-cat business. Renewal negotiations were particularly demanding on liability accounts showing prior-year loss development and on risk programs with increased loss frequency and/or severity. Pro-rata liability renewals were less volatile than excess of loss renewals, mainly as a result of primary pricing trends in a growing number of classes and territories moving upwards, with the increase in pricing accelerating in the second half of 2019.

Other than retro aggregate, some treaty aggregate covers, and liability placements viewed as inadequately priced, most buyers have been able to secure the capacity they require...”

James Kent
Global CEO, Willis Re

Capacity for retrocessional covers has been in shorter supply after Insurance-Linked Securities (ILS) capacity growth stalled in the last 12 months and in some cases it reduced, leading to significant rate increases and programme restructuring. The impact has been felt most acutely on aggregate collateralised retrocession contracts, collateralised quota share/sidecars and lower level pillared products. However, a small number of ILS funds showed organic capital growth and could therefore gain access to new retrocessional and specialty business at improved prices, along with some traditional reinsurer capacity. Occurrence retrocessional renewals were generally more straightforward, particularly for clients who have consistent long-term counterparty relationships.

James Kent, Global CEO of Willis Re, said: "Other than retro aggregate, some treaty aggregate covers, and liability placements viewed as inadequately priced, most buyers have been able to secure the capacity they require, albeit at considerably increased prices in some of the stressed classes of business. Reinsurers' client-centric underwriting meant preferred clients achieved their renewal requirements for pricing and conditions more straightforwardly than others. An understandable outcome of this has been a wide variance in the quoting process, which increased the challenge in establishing market clearing prices."

Download the full report
Title File Type File Size
Willis Re 1st View: Markets Diverge PDF 1.6 MB

The Willis Re 1st View report is a thrice-yearly publication including specific commentary on key trends throughout the world's major reinsurance classes and regions.

About Willis Re

One of the world's leading reinsurance brokers, Willis Re is known for its world-class analytics capabilities, which it combines with its reinsurance expertise in a seamless, integrated offering that can help clients increase the value of their businesses. Willis Re serves the risk management and risk transfer needs of a diverse, global client base that includes all of the world's top insurance and reinsurance carriers as well as national catastrophe schemes in many countries around the world. The broker's global team of experts offers services and advice that can help clients make better reinsurance decisions and negotiate optimum terms. For more information, visit our Reinsurance Solution page.

About Willis Towers Watson Securities

Willis Towers Watson Securities, with offices in New York, London, Hong Kong and Sydney, provides advice to companies involved in the insurance and reinsurance industry on capital markets products, including acting as underwriter or agent for primary issuances, operating a secondary insurance-linked securities trading desk and engaging in general capital markets and strategic advisory work. Willis Towers Watson Securities is a trade name used by Willis Securities, Inc., a licensed broker dealer authorized and regulated by FINRA and a member of SIPC ("WSI"), Willis Towers Watson Securities Europe Limited (Registered number 2908053 and ARBN number 604 264 557), an investment business authorized and regulated by the UK Financial Conduct Authority ("WTW Securities Europe") and Willis Towers Watson Securities (Hong Kong) Limited, a corporation licensed and regulated by the Hong Kong Securities and Futures Commission ("WTW Securities (HK)").

About Willis Towers Watson

Willis Towers Watson (NASDAQ:WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas – the dynamic formula that drives business performance. Together, we unlock potential.

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