Firm Pricing the Norm at April 1 International Reinsurance Renewals

April 1 international reinsurance renewals were consistent with earlier trends as pricing remained firm in virtually all classes and territories, according to Willis Re.

The intermediary said reinsurance capacity was adequate across the board, and there were no substantive changes in negotiations over exclusionary language.

Despite 2020's above-average insured natural catastrophe losses, most property catastrophe excess of loss programs renewing April 1 delivered largely loss-free years, Willis Re said. Some property per-risk programs were affected by the worsening frequency and severity of noncatastrophe losses, which led to price increases and program restructuring.

Aggregate coverages, in particular, saw more focus on structure than price, as reinsurers worked to distance those accounts from attritional losses, according to Willis Re. Long-tail lines, in particular casualty excess of loss, faced increased pricing pressure from reinsurers coping with low investment returns.

Pandemic and silent cyber exclusionary language continued the pattern set at January 1 reinsurance renewals, through a combination of standard clauses and, from some reinsurers, customized language written to align with original policy wordings, Willis Re said.

"The market landscape has not seen much change since January 1 and consequently the important April 1 renewals saw more of the same between reinsurers and their customers," James Kent, global CEO of Willis Re, said in a statement. "Market results for 2020 illustrate the challenges faced by the global reinsurance sector of reduced investment income, declining prior-year reserve releases, rising COVID-19 loss reserving, and increased volatility in the frequency and severity both of natural catastrophes and man-made losses.

"However, reinsurers' 2020 results, when adjusted for COVID-19 claims reserves, have shown encouraging improvements in underlying combined ratios and buyers' immediate concerns over capacity availability and pricing have been allayed leading to an orderly renewal," Mr. Kent said.