Morgan Stanley report predicts alternative capital could account for as much as 30% at renewals

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Property catastrophe reinsurance pricing is set to fall by 10-20% at the mid-year renewals as a result of the influx of capital into the industry, according to a report published by the North America research team of investment banking firm Morgan Stanley.

The report also predicts the mid-year renewals could see the participation of alternative reinsurance capital grow to as much as 30%.

It notes that the growing influence and maturity of non-traditional reinsurance markets is forcing traditional reinsurers to adapt their offering to appeal to new capital market investors.

It cites the growth of Nephila Capital, from $3bn of AUM in 2009 to about $8.5bn today, as an example of how the alternative side of the market has grown and developed, forcing reinsurers to adapt or lose market share.