U.S. reinsurance market showing signs of transition: Guy Carpenter

The U.S. reinsurance market is showing signs of transition, with preliminary analysis of Apr. 1 renewals showing pricing roughly flat or up slightly, Guy Carpenter reported.This marks a contrast to the Jan. 1, 2011 rate decreases of 6% to 10%.Guy Carpenter attributes the about-face to heavy global catastrophe activity in 2011 Q1, and the release of RMS’s v11 US Hurricane Model. The new version of the model was released on Feb. 28, and indicated some potentially large changes in results – including probable maximum loss (PML) increases of between 30% and 100% in some areas.”Timing of these events in the marketplace has created an uncertain renewal environment at the April 1 renewals, with reinsurers generally renewing at terms flat to up slightly and capacity commitments highly sensitive to price,” the report says.”In the current environment, decreases in renewal pricing were largely unsupported, and a substantial number of U.S. catastrophe renewals issued revised firm order terms.”