State of the Reinsurance Market

Global reinsurers view U.S. catastrophe risk as an essential component of their diverse assumed risk portfolios. The important role reinsurance plays in our nation’s economy and the resiliency of reinsurers is demonstrated by recent events. Despite historic losses in 2004 and 2005, ensuing catastrophe modeling and rating agency dynamics which impacted the reinsurance market in 2006, and the large natural disaster losses in 2008 and the tumultuous financial markets in 2008 and early 2009, the global reinsurance industry continued to provide needed capital and risk transfer capabilities to the U.S. market.

The 2010 market features plentiful capital, reinsurance supply exceeding reinsurance demand, and competitive pricing. On a risk adjusted basis, brokers report price decreases of 5% to 15%for U.S. hurricane and earthquake exposed treaties renewing at January 1.