Reinsurers could face a fall in premium revenue of up to 25% over the next 12 months after the number of natural catastrophes dropped by half in 2013, brokers Willis Re have revealed in a new study today.
According to the reinsurance brokers 1st View renewals report, 2013's underwriting performance also suffered from a lack natural and man-made catastrophes.
The study found the US property catastrophe market would take the biggest fall in premium revenues of between 10% and 25% because of a 'benign catastrophe year'. Europe could see a drop of between 10% and 15%, the firm said.
Chief executive John Cavanagh highlighted that better regulation of insurers had also hit the reinsurance market, as had the trend for major insurance groups to retain more reinsurance premium volume and risk on their own growing balance sheets.
Faced with these market headwinds, reinsurers are adopting a variety of strategies, the firm's chair Peter Hearn added.
'Larger reinsurers are using their balance sheet strength and technical ability to offer more capacity and more complex, multi-class, multi-year deals. Others are expanding into specialty lines and many have developed multi-channel capacity offerings seeking to use their underwriting expertise to deploy capacity on behalf of capital markets.
'Additionally, we have seen the rise of pooling arrangements that give smaller reinsurers the opportunity to access business they might not otherwise see in their local markets.'