Press Release

New normal prompts reinsurer action: Willis Re 1st View

July 2, 2018

LONDON, 2 July 2018 – Momentum for rate increases on loss-free reinsurance accounts dissipated during the June/July property catastrophe renewals, and in some cases, pricing declined. For example, although most loss-free Florida property accounts were flat, some saw rate declines of up to -7.5%, as competition for this business was heightened, and non-traditional players offered layers with reinstatements. Reinsurance lines beyond property catastrophe have seen varied results for the mid-year renewals and where original loss ratios have deteriorated due to sequential years of rate reductions or high loss activity, reinsurance pricing has firmed.

These are the findings from the latest 1st View renewals report from Willis Re, the reinsurance division of Willis Towers Watson, the leading global advisory, broking and solutions company (NASDAQ:WLTW).

Three trends drove the property catastrophe renewals:

  • Excess capital leading to a surplus of capacity both from traditional and insurance-linked securities (ILS) markets.
  • Stabilization of 2017 natural catastrophe loss estimates, which typically remain below initial projections, and often retained net by larger insurers.
  • Benign loss activity so far during 2018.

Together these three factors are driving the emergence of a ‘new normal’ in property cat reinsurance pricing, and carriers have begun to react. Some have cut costs while others are actively reviewing the profitability of every piece of business on their books, and respond accordingly.

This approach will ultimately prove beneficial, as it promotes the discipline that ensures buyers receive long-term, stable support from financially secure counterparties, but it may yet result in challenges for some businesses. For example, with reinsurers’ emphasis shifting from top-line growth to pure underwriting profitability and control, some carriers may reconsider their MGA strategy, endangering some coverholder relationships. The new pricing normal is likely also to impact M&A, as acquirers exercise greater caution and sellers adjust their pricing expectations.

James Kent, Global CEO of Willis Re, said: “Traditional risk carriers face an intense imperative to respond to the new normal with an adjusted business model. Proactive carriers are applying far greater rigor to ensure the profitability of every line of business they accept. The diversity and top-line contribution of marginal lines no longer makes them acceptable if they cannot earn an adequate return.”

Download the full report: 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 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 over 40,000 employees serving more than 140 countries. 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. Learn more at

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