Reinsurers See Good Things in Jan. 1 Renewals, But Financial Markets May Break Up the Party

"Jan. 1 renewals are showing positive trends in pricing, but reinsurers will have plenty to be nervous about as 2009 gets under way, and much of that will have little to do with underwriting.

Property and catastrophe pricing is firming up following a near-record year for catastrophe losses in 2008. While the year didn't produce record-breaking events like Hurricane Katrina, there was enough variety, frequency and geographic spread of cat events to tally up what Swiss Re said is the second-worst year on record for insured losses.

Swiss Re put 2008 cat losses at $50 billion, while Munich Re estimated losses at $45 billion. Either way, there was enough pain to prime the price engines Jan. 1.

Still, reinsurance brokers saw a spotty performance in pricing to kick off the new year. Guy Carpenter & Co. said its worldwide rate-on-line index rose 8% for January renewals, with U.S. rates increasing an average of 11% and those in Europe going up from single digits to 10%. Some U.K. rates went down."