Willis says reinsurers maintaining discipline on casualty business

In its annual review of the global reinsurance market, broker Willis says discipline is being maintained on casualty business, although price softening is becoming evident in the aerospace and marine markets.Despite the heavy catastrophe toll in 2004 on the back of U.S. hurricanes and Japanese typhoons, reinsurers’ capital and reserves were not severely impacted, the report notes. This is because the impact of the events was mainly in terms of frequency, meaning much of the loss will be borne by primary insurers rather than the reinsurance market. These events are also more likely to affect pricing in the affected regions that on a global scale. Thus property catastrophe pricing continues to see pricing declines, as had begun in 2004. But there is a growing emphasis being placed on exposure data and technical knowledge that Willis predicts will test the credibility of catastrophe models moving forward.Other trends for 2005 include the increasing interest in hedge funds moving into the traditional market, offering collateralized capacity. At the same time, buyers are taking a more stringent view of reinsurer financial security.