Rates

Despite a softer-than-expected 1 June Florida renewal, hedging activity in the industry loss warranty (ILW) market has been slow, with buyers holding back amid a glut of capacity, sources said.

The main factors in this year's "double-dip" Florida reinsurance renewal were abundant supply, reduced demand from several key buyers and uncertainty over model changes.

A group of major Florida-based insurance carriers reported obtaining more favourable rates on their reinsurance programmes at 1 June, as a number of firms cut back their limit in a renewal marked by subdued demand.

Allstate reduced its traditional limit when it renewed its $4.42bn nationwide catastrophe reinsurance treaty at the mid-year renewals, after having cover up to $4.55bn last year, sister publication The Insurance Insider reported.

Larger residual insurers were among cedants that prospered in the June renewals from competition for US property catastrophe reinsurance business.

Newly issued cat bonds, including the latest Alamo Re and Citrus Re 2017-1, have already traded above par on the secondary market, in a sign of strong ILS demand.

Pricing for the riskier layer of Tokio Millennium Re's $250mn Spectrum Re cat bond has fallen below the initial target range, as the reinsurer looks to close its first major ILS transaction.

Rates at the 1 June Florida reinsurance renewals softened more than underwriters were hoping for last month, with reductions averaging around 5 percent, sources said.