Capital growth was noted by Guy Carpenter in year-end estimates
The reinsurance market showed resilience against 2017 losses, which were punctuated by the heavy Atlantic hurricane activity in Q3, and has seen capital growth.
According to Guy Carpenter’s estimate of dedicated reinsurance capital, completed in conjunction with AM Best, year-end 2017 reinsurance capital levels saw a slight up-tick against year-end 2016, with the biggest increase in convergence capital.
In a recent report, the global risk and reinsurance specialist outlined: “Dedicated reinsurance capital, is approximately $427bn, up 2% from year-end 2016. While traditional capital is flat, convergence capital grew 9% to $82bn, including replacement of lost or trapped capital.”
Guy Carpenter noted that there had been no significant capital withdrawal, despite estimating $113.5bn in insured losses, excluding the NFIP, for the concentrated period of cat events that included the hurricanes Harvey, Irma and Maria (HIM).
Guy Carpenter vice chairman David Priebe said: “Despite substantial catastrophe losses in 2017, the market demonstrated significant resilience with no notable capital withdrawal and moderate price increases. Evolving market dynamics and innovative reinsurance solutions serve to mitigate significant loss events and protect industry capital and profitability.”
He added: “The reinsurance and capital markets responded favorability to those companies who were able to present quality data and well developed and executed loss mitigation strategies. These measures support companies’ ability to attain customized risk transfer solutions and maximum protection for their risk profiles.”
Many believed in 2017 that HIM had the potential to move the dial and cause some hardening, but Guy Carpenter outlined that price increases were localized to lines with loss-impacted policies or thin margins.