Aon Re Global: Reinsurers Strong Amid Credit Crisis
07 Settembre 2008 - 4:00PM
PR Newswire (US)
Jan. 1 renewals likely to reflect slowing rate of decrease in
reinsurance pricing provided no significant catastrophe losses
MONTE CARLO, Monaco, Sept. 7 /PRNewswire-FirstCall/ -- Despite the
impact of the ongoing credit and liquidity crisis to most financial
services sectors, reinsurance companies are well-positioned to
sustain reasonably significant property catastrophe losses or other
large sequences of non-cat losses while continuing to meet the
needs of reinsurance buyers, according to an analysis by Aon Re
Global, the world's largest reinsurance intermediary. (Logo:
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO ) With the
cost of reinsurance capital in continued decline, Aon Re Global
believes insurers will find that reinsurance is now a substantially
more accretive form of underwriting capital than it was a year ago.
"Equity risk premiums and credit risk spreads have become
significantly more expensive for insurers, and the incremental
benefit of reinsurance as an alternative source of underwriting
capital has become even more pronounced," said Bryon Ehrhart,
president and chief executive officer of Aon Re Global Services.
Most insurers and reinsurers have had very manageable impacts to
earnings or capital as a result of the credit and liquidity crisis.
This reflects an enterprise risk management success for the
industry and provides a strong foundation as the industry heads
into what appears to be a softening global insurance and
reinsurance market. Ehrhart further commented: "Indeed, even
reasonably high levels of property or liability catastrophes could
be sustained by insurers without material disruption of the global
business." Jan. 1, 2009 Renewals Aon Re Global anticipates the
credit and liquidity crisis will lead to a slower decrease in
reinsurance pricing for Jan. 1, 2009 renewals than otherwise would
have been available had the crisis not reached its current or
projected level. The January renewals will reflect the first time
the decline in reinsurance pricing has slowed since the credit
crisis began. (Figures 1 and 2.) Should significant insured
catastrophes occur before Jan. 1, 2009, the fast pace of rebuilding
capacity will be unprecedented since the reinsurance and insurance
markets are now aligned with sufficient existing and contingent
(e.g. sidecar) capital providers. The Capital Markets While the
pace of bond form transactions in 2008 may not reach the record
levels attained though the end of 2007, the market continues to
develop at a significant pace. Paul Schultz, president of Aon
Capital Markets said, "We expect this complementary capacity to
continue to provide 10-30 percent of the capacity required by
insurers that purchase more than $500 million of capacity."
Facultative Reinsurance The facultative market is balancing between
the desire of cedents to spend less on reinsurance to sustain net
premium growth in a softening market -- an influence that's also
driving higher casualty net retentions -- and the increased use of
facultative certificates by underwriters that fear higher net
treaty retentions. Aon Re Global anticipates rate, terms and
conditions changes in the property and casualty facultative markets
that are in line with the movements insurers offer to insureds.
Catastrophe model miss continues to be a driver of facultative
purchases. Property Per Risk Heavy industries such as mining,
metals, pulp and paper and energy have contributed more than half
of the insured losses in 2008. Aon Re Global anticipates neither
capacity reductions on Jan. 1, 2009 renewals nor price increases on
unaffected programs. Such programs are likely to see further rate
relief. Casualty Reduced demand from cedents in 2008 continues to
impact reinsurers. Casualty capacity layers may increase or reflect
lower levels of decreases than would otherwise have been achieved
had the leverage from the underlying layers not been lost by
reinsurers. To read Aon Re Global's Jan. 1, 2009 pricing and
capacity report, visit:
http://aon.mediaroom.com/index.php?s=53&item=264. About Aon Re
Global Aon Re Global provides clients with integrated capital
solutions and services through a world-class network of experts in
more than 35 countries. Clients are better able to differentiate
and meet their business objectives with Aon Re Global's
best-in-class treaty and facultative reinsurance placement
services, capital markets expertise, and relevant analytics and
technical expertise, including catastrophe management, actuarial
and rating agency counsel. Aon Re Global was named best reinsurance
broker in 2008, 2007 and 2006 by readers of Business Insurance.
About Aon Aon Corporation (NYSE:AOC) is the leading global provider
of risk management services, insurance and reinsurance brokerage,
human capital and management consulting. Through its 36,000
colleagues worldwide, Aon readily delivers distinctive client value
via innovative and effective risk management and workforce
productivity solutions. Our industry-leading global resources,
technical expertise and industry knowledge are delivered locally
through more than 500 offices in more than 120 countries. Aon was
named the world's best broker by Euromoney magazine's 2008
Insurance Survey. In 2008, Aon ranked highest on the Business
Insurance ranking of the world's largest insurance brokers based on
commercial retail, wholesale, reinsurance and personal lines
brokerage revenues. Aon also was ranked by A.M. Best as the number
one insurance broker based on brokerage revenues in 2007 and 2008,
and was voted best insurance intermediary, best reinsurance
intermediary, and best employee benefits consulting firm in 2007
and 2008 by the readers of Business Insurance. Media Contacts
Chicago: Rahsaan Johnson, 1.312.381.2684, Mobile: 1.312.391.7506,
London: Reuben Aitchison, +44 (0) 207 086 7201, Mobile: +44 (0)
7944 189 804, Paris: Christelle Mesle-Genin, +33 (0) 1 58 75 60 70,
Figure 1 - United States: January 1, 2009 Expectations: ROL
Capacity Retention Changes Changes Changes United States: Personal
lines national: Light year -5 to -15% +15% +5 to +10% Moderate year
+5 to -5% +5% +10 to +15% Heavy year +25 to +35% Flat to -10% 20+%
Personal lines regional: Light year -10% to -20% +20% +5 to +10%
Moderate year Flat to -5% +10% +5 to +10% Heavy year +15 to +20%
Flat to -5% +5 to +15% Standard commercial lines Light year -10 to
-20% +10% Flat to +25% Moderate year +10 to -5% +5% +10 to +25%
Heavy year +25 to +50% Flat to -20% 25+% Complex commercial lines
Light year Flat to -20% +10% +5 to 20% Moderate year +15 to -5%
Flat +10 to +25% Heavy year +25 to +50% Flat to -30% +15 to +33%
Assumes no changes in insured catastrophe exposures and no
significant catastrophe model changes Rate of change measured from
January 1, 2008 terms Figure 2 - Global: January 1, 2009
Expectations: ROL Capacity Retention Changes Changes Changes Europe
Northern (wind dominating) Flat to -10% +10% Stable to +10%
Southern (quake dominating) -5 to -15% +10 to +15% Stable to +10%
United Kingdom -5 to -10% Stable Stable Asia Pacific (x Japan) Flat
to -10% +20% Stable Japan Flat to -5% Flat to -5% Stable to +10%
Australia +5 to -10% +10% Stable Canada -5 to -10% +10% Stable to
+10% South America -5 to -10% +10% Stable Mexico -5 to -10% +10%
Stable Caribbean -5 to -10% +10% Stable Assumes no changes in
insured catastrophe exposures and no significant catastrophe model
changes Assumes no significant catastrophe losses occur before 1
January 2009 negotiations are completed Rate of change measured
from January 1, 2008 terms
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO
http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT:
Chicago: Rahsaan Johnson, +1-312-381-2684, Mobile: +1-312-391-7506,
, or London: Reuben Aitchison, +44-207-086-7201, Mobile:
+44-7944-189-804, , or Paris: Christelle Mesle-Genin,
+33-1-58-75-60-70, , all for Aon Corporation Web site:
http://www.aon.com/
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