■ LLOYD’S LOSSES
London Market Weathers
International, U.S. Storms
Risk appetite remains strong, but only if the price is right
limit in the marketplace,” Crawley says.
The retrocessional market saw losses,
creating a shortage of capacity. As a result,
there is “quite a lot of activity in the capital
markets,” says Simon Clutterbuck, a Director of BMS Intermediaries Ltd and BMS Re
Ltd. The capital markets have been supply-ing potential capacity for 2012 to the retro
BY CAROLINE MCDONALD
EVEN AFTER absorbing at least its fair share of international catastro- phe losses, the London market has
come out well positioned in terms of risk
appetite, experts contend.
“The Lloyd’s market continues to look
robust,” says Hugo Crawley, chairman of
BMS Group broking board in London.
Overall, “It’s shaping up to be
a good time for London,” agrees
John Eltham, head of North American brokerage business for London-based Miller Insurance Services Ltd.
But the significant cat payouts—
“which have impacted quite a number of the syndicates,” Crawley observes—have led to reinsurers trying
to recoup their losses from a worldwide
reinsurance client base that is also reeling
from the effects of a global slowdown.
“So we’ve got the age-old issue,”
Crawley says, that clients who haven’t
experienced any catastrophe losses “are
still being pushed on rate—that everybody
should pay increases.”
The situation makes for “quite a
challenging time for brokers and getting the
right job done for the clients,” he adds.
Also adding drama to this buyer-seller dynamic are the changes in Risk Management
Solutions’ Version 11 of the U.S. hurricane
model, which means that “a number of clients are buying significantly more
favorable in that the Japanese have paid
increases on their treaties.”
While the increases and premiums are
nowhere near the losses being paid out,
because of the quick repositioning in pric-
ing, “it is not as disastrous as it would have
been had the London markets had to ride
out the entire 12 months,” Eltham adds.
“The losses occurred in February,
and renewals were for the most part
April 1.”
Elsewhere, reinsurance rates
have been increasing from major
events such as the Chilean earth-
quake and catastrophes in Australia
and New Zealand.
So we’ve got the age-old
issue” that clients who haven’t
experienced any catastrophe losses
“are still being pushed on rate—that
everybody should pay increases.”
Hugo Crawley, chairman of BMS Group
broking board in London
market, delivered through sidecar vehicles,
he notes. Some are being done in conjunction with existing reinsurance companies—
many of them Bermuda companies—and
some through direct-controlled vehicles.
JAPAN: COULD HAVE BEEN WORSE
Eltham observes that losses from Japan
could have been much worse, but because
of the structure of the reinsurance market
in the area where the tsunami, quake and
reactor incidents occurred, a good deal of
the losses remained contained within the
Japanese market.
In addition, he says, the timing of Japanese treaty renewals was ultimately “quite
IMPACT OF U.S. CATASTROPHES
While the first six months of 2011 saw
a surge in cat losses in the U.S. market,
Lloyd’s had relatively less exposure on
these claims in comparison to the large
American carriers.
“The tornadoes hit the U.S. retentions
much harder, relative to what was being
reinsured out into the Lloyd’s market,”
Eltham says. “Lloyd’s has weathered that
far better.”
The U.S. has also seen its share of wild-
fires in 2011, “but on a relative scale, the
U.S. has picked them up more than Lon-
don,” he notes. “Domestic carriers have
retained a larger share of those losses.”
“This has been a dispropor-
