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Next year could see the 'bottoming out' of the reinsurance market, according to Ulrich Wallin, Chairman and Chief Executive of Hannover Re. This was one of the key messages to emerge from this year's Monte Carlo Reinsurance Rendezvous. Speaking at the Rendezvous Mr Wallin said that rates in some lines were close to technical levels and that reinsurers would resist further reductions. His views were echoed by other reinsurance executives, including those from Munich Re, Swiss Re and SCOR.
Swiss Re's Chief Underwriting Officer, Matthias Weber, predicted that reinsurance prices will stabilise next year, while Victor Peignet, Chief Executive Officer of SCOR Global P&C SE, said he expects a 'soft landing' for the long lasting downward rating trend.
David Flandro, Head of Analytics at JLT Re, said that the market is likely to 'bump along the bottom' for a while. The slowdown in rate reductions, market consolidation and proximity of pricing to technical rates, suggest that an 'inflection point' has been reached, he said.
Torsten Jeworrek, Head of Munich Re's p/c reinsurance business, warned reinsurers not to repeat the mistakes of the last major soft market. "Cycle management is a must. Don't find justification to reduce prices," he said.
Reinsurers have, however, enjoyed high profits with benign catastrophe losses and all round favourable claims development. Positive reserve releases have continued, flattering combined ratios by around six percentage points.
But ratings agencies at Monte Carlo predicted that reinsurers' profits will decline going forward. Combined ratios will likely reach the 100% mark in 2016, with little prospect of higher investment returns on the horizon.
A number of reinsurers are already warning about the risk of complacency in casualty lines, an area that some have expanded into as property prices come under pressure.
Reinsurers in Monte Carlo speculated that alternative capital providers may have hit saturation point in peak markets like Florida. According to SCOR's Mr Peignet, buyers are limiting their exposure to alternative capital providers, placing the majority of their programmes with large reinsurers.