Analysis

Reinsurance underwriters and brokers anticipate a Japanese renewal largely unaffected by Covid-19 as negotiations continue to focus on payback for 2018 and 2019 typhoon losses.

One primary vehicle delivered a significant loss but many others are likely to have had their best year since 2016.

As Floridian insurers gear up for their mid-year reinsurance renewals, multiple issues are set to make it another challenging year for both sides.

Trading data showed the market delivered on liquidity in the midst of the pandemic panic.

As some in the market believe the winter claims will remain notably below $20bn, there are multiple factors creating challenges in assessing the event.

Some pointed to low average costs to fix burst pipe claims, while others warned that BI could drive up losses.

Aggregate cat bonds and quota shares may be exposed although the loss would typically be expected to skew to the traditional binders and insurance market.

While uncertainty over Covid may limit early commutations, isolated deals may have been struck, as 2017 contracts in some cases remain open.

One estimate suggested around $2bn of new capacity in private deals.

Fenchurch Law partner suggests "aggressive" initial claims adjustments will be unwound and the reinsurance context will need specific consideration.

Returns have disappointed some institutional investors, but prospective rates may attract fresh investment, sources said.

The sector has received a post-Covid boost heading into January, with strong interest in liquid cat bonds, but challenges around structures, pandemic exposures and lifting ESG commitments will remain.