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Typhoons to boost Japanese reinsurance rates, but not market-wide: Barclays - Reinsurance News

The substantial industry losses stemming from Japanese typhoons in 2019 will provide a boost to affected regional lines, but are unlikely to trigger a sharp recovery in wider property and casualty (P&C) reinsurance prices, according to analysts at Barclays. With insured losses from Typhoons Faxai and Hagibis now pegged at between $5-9 billion each, plus $10-12 billion of loss creep from 2018’s Typhoon Jebi, the re/insurance market looks set to pay out a minimum of $20-30 billion for Japanese cat losses this year. This will almost certainly lead to some price hardening for Japanese wind programs at the April 2020 renewals, Barclays said, but its influence on the broader reinsurance market is less clear. Some capacity constraint may be visible in the insurance-linked securities (ILS) retro space at 1/1, but so far in 2019 reduced capital availability in this area has not led to meaningful price improvements. The muted response following the Japanese events of 2018-19 indicates that the overall pricing impact may be restricted to low single digits, analysts suggested, as loss-affected lines likely represent only a low-single-digit percentage of the global non-life reinsurance market. For larger reinsurers, exposure is even lower, Barclays noted. For example, Swiss Re’s Japanese non-life premiums presented $593 million in 2018, or 2.8% of its P&C reinsurance business, while for Munich Re it was €336 million, or 1.6%.

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