(Bloomberg) -- Prices charged by reinsurers for annual contracts renewed this month declined for a second straight year amid an absence of costly disasters, Guy Carpenter said.
“Reinsurance pricing fell in many segments, affecting almost all lines of business and geographies, continuing recent renewal trends,” the reinsurance brokerage unit of Marsh & McLennan Cos. said in a statement today. “A major factor driving market conditions at the renewals was the lack of costly catastrophes.”
Reinsurers such as Munich Re, Swiss Re AG and Hannover Re, which help primary insurers cover the costs of damage claims, are seeking to shore up earnings as lower losses from natural disasters and a greater availability of capital weigh on prices. Global insured losses declined 25 percent in 2014 to about $30 billion, the lowest in four years, the broker said.
The Guy Carpenter Global Property Catastrophe Reinsurance Rate-on-Line Index, a measure of pricing in the industry, fell 11 percent in recent renewals.
“Excess capacity marked by the influx of traditional and alternative sources of capital along with low investment returns and less costly catastrophic events in recent years will continue to make the reinsurance marketplace a challenging landscape,” Guy Carpenter said.
Munich Re, the world’s biggest reinsurer, said in a separate statement today that insurance industry losses from natural catastrophes declined 21 percent to $31 billion last year.
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