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Analysis

  • Annualised sidecar returns dropped to the low teens towards the end of 2016, as the softening market and catastrophe losses took a toll on performance.
  • Alternative market reinsurance capital intakes slowed in 2016, but the sector's rate of growth still outpaced the traditional market, brokers estimated in their reports on the 1 January renewals.
  • Retrocession and US property catastrophe rates moved closer to flattening out at the 1 January renewals.
  • Sensitivity-case hurricane risk modelling has become the ILS market's standard currency, but would shifting to the base-case scenarios provide greater stability for investors and underwriters?
  • A new regulatory landscape and M&A activity created opportunities for the life sector in 2016, as more companies looked to the ILS sector to transfer risk.
  • It has been a sponsors' market in 2016, with undersupply meaning reinsurers have been able to exceed target sizes and secure favourable pricing.
  • 2016 has been a year of diverging strategies for ILS fund managers, with some chasing expansion in specialty reinsurance and others focusing on branching out into new spheres of catastrophe exposure.
  • Despite initial fears that Hurricane Matthew could take a significant toll on the Florida (re)insurance market, a shift in the storm's track as it approached the US coastline in early October has limited forecast industry loss levels to the low single-digit billions.
  • Third quarter returns from a group of ILS funds tracked by Trading Risk were stable year-on-year.
  • Indicative reinsurer sidecar returns for 2016 have dropped into the single-digit range, highlighting the impact of catastrophe losses recorded earlier this year
  • Equity analysts suggested that reinsurers were being optimistic in talking up the prospect of the market finding a pricing floor in 2017, as they warned carriers might have to wait another year for flat renewals
  • Reinsurers sought to declare that the market was nearing a pricing floor as the Monte Carlo Rendez-Vous kicked off the traditional lead-up to the January renewal season
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