The reports, studies and opinions about the reinsurance market for 2008 have continued to emanate from Monte Carlo over the past two weeks. Aon and Guy Carpenter released reports timed to the Monte Carlo Reinsurance Rendezvous, which indicate that the reinsurance market stabilized in 2007, with capacity increasing to meet the increased demands in 2006 arising after the large catastrophes of 2005 and prior years. Aon’s more general market report and Guy Carpenter’s report, which is focused on the world catastrophe reinsurance market, both recognize a general softening of the market. Ratings agencies apparently agree, with Moody’s reporting an expectation that rates will decrease at the 2008 renewals, barring a relatively catastrophe-free fall. Moody’s also predicts an increase in M&A activity in the reinsurance industry.
Some market leaders, such as Swiss Re, and other commentators, have suggested that stricter underwriting discipline is the appropriate approach to the softening market, although there has been recognition that discipline could eventually wane in the face of falling prices as pressure to grow the business mounts.
