Our roundup of readers' opinions reveals that rates are steady, though we may yet see the market turn this year.
Rates remain stable overall according to 40% of readers this month, a further 33% seeing prices rising as compared to 20% last month. The remaining 27% are seeing prices continuing to fall, down 17% from May.
We asked readers if they believe we will see the reinsurance market turn this year: 58% believed it is possible though there would have to be a number of major events to turn the market; a more optimistic 31% believed that the market will definitely turn. The remaining 11% believe that the speculation among brokers that rates would rise is greatly exaggerated.
Since the merger between Max and Harbor Point was announced, the Bermuda market in particular has been abuzz with merger and acquisition rumours; investment bankers' tongues have been in overdrive.
For this month's survey, we asked if you are currently engaged in any conversations about a potential merger or acquisition (M&A). Only 15% of respondents are currently discussing a potential deal, whereas 45% are not considering a move. A further 16% did not want to let us know if they were engaged in discussions (Ed: how coy), with the remaining 24% not in a position to be included in such discussions.
We also asked if claims costs from first- quarter catastrophes could dampen M&A activity in the market: 8% believed it would because there is not enough excess capital; 62% said 'maybe' but that claims costs seen so far are not big enough to make much difference. The final 30% do not believe claims costs will make a difference because 'claims costs for reinsurers have been miniscule in the big scale of things and will mostly only hit Bermuda anyway'.
On the potential effect of proposed US financial reforms on reinsurance, 18% believed that the reforms could have a large negative impact because the industry is likely to be hit by restrictions. Meanwhile, 29% believe the industry could feel some fallout from the reforms but that the market will not be too badly affected, while one-fifth said that the reforms will have a positive effect because of changed capital regulations; 7% said that reform would not affect the reinsurance industry because it is aimed at the banking sector only. The remaining 26% do not have operations in the US.
Even those who believed the industry could be adversely affected by US financial reform still believed it to be a positive development. One reader explained: "I agree with financial reforms because they will afford more customer confidence even if there is a negative impact in the short term."
Following our Bermuda Reinsurance Club event, we asked readers if they thought the Bermuda Insurance Exchange proposal, revealed in panel discussions at the event, would work. Just over one-quarter (26%) thought that it could; a further 41% said it could work but they expressed doubts because there is already an unofficial exchange with everyone on the island being situated so close together. The remaining 33% believed there is no way it could work.
Conversations for the past few months in the UK were fixed on the general election, which resulted in a hung parliament and the eventual formation of a Conservative and Liberal Democrat coalition. Tory leader David Cameron became Prime Minister with Liberal Democrat counterpart Nick Clegg becoming deputy.
Of our UK readers, 36% voted for the Conservatives, another 25% for the Liberal Democrats and 14% for the defeated Labour administration. The remaining 25% voted for minority parties or independent candidates or else abstained; one reader said that they had registered but did not vote "to show my disappointment with them all".
Congratulations to Robert P Hodson, senior vice-president at Guy Carpenter, who was the winner of this month's coveted bottle of bubbly.
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Click here for more survey results.
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