Guy Carpenter Publishes Briefing on June 1 Florida Renewals

Guy Carpenter and Company, LLC published a briefing on Wednesday, May 28, 2008, entitled “Prices Drop: Outlook for Florida Renewals on June 1, 2008.”

The briefing, which can be viewed by clicking here, gives information on property catastrophe rates in the Florida property catastrophe market at the June 1, 2008 renewals period.

A press release from Guy Carpenter is below.

 

Should you have any questions or comments, please do not hesitate to contact this office.

 

Guy Carpenter Publishes Briefing on June 1, 2008 Florida Renewals

Property-Catastrophe Prices Decline 15 Percent

New York, May 28, 2008

Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist, today published Prices Drop: Outlook for Florida Renewals on June 1, 2008, a briefing on property catastrophe rates in the Florida market at the June 1, 2008 renewals period. According to the briefing, Florida property catastrophe pricing, on a risk adjusted basis, are expected to decline by about 15 percent based on a industry weighted average of June 1 renewals.

“The main factors driving the decline in rates at June 1, 2008 renewals period are a competitive reinsurance market and the absence of any major insured losses,” said Kevin Stokes, Global Head of Guy Carpenter’s Property Specialty Practice. “While there is no shortage of disasters, none of them has had a major impact on the market, and the relative lack of other global mega-catastrophes with high insured losses has further encouraged rate decreases.”

According to the briefing, the state-run Florida Hurricane Catastrophe Fund (FHCF) continues to play an important part in most companies overall reinsurance program and price decreases have been more dramatic for higher layers attaching above the FHCF due largely to reinsurers’ preference for more remote exposures. Firm order terms (FOTs) for lower layers sitting below the FHCF declined 7 percent to 10 percent relative to June 1, 2007 renewals. Middle layers usually placed alongside the FHCF saw decreases of 12 percent to 15 percent, while FOTs for higher layers dropped 18 percent to 25 percent relative to last year.

The portfolios of a number of Florida-only writers increased significantly, though national writers continue to reduce their Florida portfolios, freeing up capacity for smaller players. Though Citizens entered the reinsurance market in 2008, adding a limit of $446 million to overall demand, the proposed purchase is not large enough to substantially alter the market.

Likewise, measures being taken to increase the liquidity of the FHCF are not expected to impact current renewals.

A full copy of the briefing is available for download at www.guycarp.com.

 

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