said that ratesfell at the April 1 renewals for the fourth consecutive year despite signs ofan increase in demand for reinsurance.
Pricesat April 1 fell by "marginally less" than they did 12 months ago,suggesting a slowdown in the rate of price decline. However, in the April 1report Willis Re warned that this "by no means" signals that theindustry has reached a pricing floor. A lack of major losses and large prior-yearreserve releases have pushed up the reinsurance industry's profits over recentyears, attracting more investors into the market and driving down prices.
WillisRe CEO John Cavanagh said the underlying reasons for the reversal inreinsurance buying strategies are distinctive to each client, but said twoclear drivers were increased regulation and shareholder pressure to improveROEs by reducing the equity element of the calculation.
"Ultimately,buyers are still reaping the rewards of competitive conditions and reinsurerswill need another below-average loss year to produce acceptable results in theface of a tough 2016. But the apparent uptick in demand is certainly a positivesign," he said.
WillisRe is a unit of Willis TowersWatson Plc.