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Record Q1 losses expected to drive facultative reinsurance rates during 2011, according to Aon Benfield report

Apr 21, 2011

 

London, 21/04/2011 – Aon Benfield, the global reinsurance intermediary and capital advisor of Aon Corporation (NYSE:AON), today releases the latest edition of its Fac Quarterly report, which provides an analysis of trends witnessed in the facultative reinsurance market during the first quarter of 2011.

The report, compiled by Aon Benfield Fac, the firm’s facultative reinsurance division, reveals that Q1 2011 was the worst quarter ever for the facultative reinsurance market in terms of loss experience.

 

Notable Q1 events included natural hazards such as the Australian floods, Cyclone Yasi, and the New Zealand and Japanese earthquakes, and man-made losses such as the Gryphon vessel and Glory satellite.

 

The report highlights that ten large market losses exceeded USD50 million during the quarter, compared with 13 during the 2010 period. However, despite this lower frequency, individual events were markedly more costly to reinsurers.

 

This high level of loss activity has reversed the trend towards facultative rate reductions seen during 2010, leading to the potential of increased pricing in the most impacted territories during 2011.

 

Total re/insured losses are expected to breach USD52.6bn for Q1 2011, compared with a total loss experience of USD40.6bn for the whole of 2010.

 

Elliot Richardson, Chief Executive Officer of Aon Benfield Fac, said: “The first quarter of the year saw a series of unprecedented global losses to the insurance and reinsurance markets, and our teams have been doing their utmost to ensure that the claims process is operating efficiently so that relief efforts in these territories can continue apace. We expect that rate rises will now be seen in affected territories as well as other catastrophe exposed areas. However, it is still too early to correctly state the amount. Early signs are that US property cat rates are hardening, which is an indicator that it will not be contained to affected areas only. The same is also being seen in the onshore energy and power sectors.”

 

Stuart Beatty, Executive Managing Director of Aon Benfield Fac APAC, added: “There are many factors that will conspire to drive facultative rates during 2011, not least the heavy loss experience in the first quarter. Rates will be further impacted by the latest model release from catastrophe modeller RMS, the increased combined ratios that reinsurers have reported for 2010, and the effect of continued low investment returns on industry financial results. Despite this potentially more challenging environment, Aon Benfield Fac has the global resources to ensure that our clients can overcome all their business challenges.”

 

The Fac Quarterly report, which contains a full analysis of the Q1 facultative reinsurance market across key business lines and territories, can be found at the following link:

 

http://www.aon.com/attachments/reinsurance/150411_ab_abf_q1_2011_review.pdf

 

                                                       --ENDS--

 

About Aon Benfield

As a recognized leader in treaty, facultative and capital markets, Aon Benfield is redefining the role of the reinsurance intermediary and capital advisor. Through our notable expertise and industry-leading proprietary tools and products, we help our clients to redefine success. Aon Benfield offers unbiased capital advice and customized access to reinsurance and capital markets. As a trusted advocate, we provide local reach to the world’s markets, an investment in innovative analytics, including catastrophe management, actuarial, and rating agency advisory, and the right professionals to advise clients in making the optimal capital choice for their business. With an international network of more than 80 offices in 50 countries, our worldwide client base is able to access a broad portfolio of integrated capital solutions and services. Learn more at aonbenfield.com. 

David Bogg                                                                                                               

Aon Benfield                                                                                                             

t: +44 (0)20 7522 4016                                                                                                

e:david.bogg@aonbenfield.com             

 

Andrew Wragg

Aon Benfield

t: +44 (0)20 7522 8183

e:andrew.wragg@aonbenfield.com  

 

Alexandra Lewis

Aon Benfield

t: +44 (0)20 7882 0541

e:alexandra.lewis@aonbenfield.com



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