1 January 2019 placements have highlighted the gap between pricing for accounts with peak peril exposures and/or poor loss records, and those with good loss records and/or non-peak exposures, according to Mr James Kent, global CEO of Willis Re in the company's latest 1st View renewals report.

The quality of the client counterparty is a significant factor in risk selection by many reinsurers. Notably, European property catastrophe renewals that benefit both from good loss records and a disciplined early renewal process have been able to achieve some risk-adjusted rate reductions,

and similarly in the US, reinsurers’ support for the “preferred” clients is evident in relatively muted renewal pricing on non-loss-impacted business. Buyers who delayed their approach to market in the hope of achieving better prices have found that, for the first time in a number of years, this tactic has not been successful.

As 2019 pricing unfolds, the mid-year renewals may help to answer the longstanding question over how much impact the retro market has on first-tier reinsurance property catastrophe pricing levels.

Within this changing market there have been instances of substantial increases in the premium volumes being ceded by large primary carriers who are reversing recent strategies to increase retentions, most notably with some new large pro rata cessions particularly for long-tail lines.

For reinsurers, the terms of some of these treaties are proving more favourable with lower ceding commissions, mainly driven by technical pricing corrections following deteriorating loss experience, enhanced by a dynamic of original rates moving upward. For buyers, the continuing

attraction of the reinsurance market is clear: The financial strength and client-centric flexibility of major reinsurers is key to risk management strategies as buyers consolidate long-term partnerships to achieve the goal of dampening earnings volatility.

Adjustments to many carriers’ portfolios, which started to be initiated 12 months ago, have taken on an increased urgency with a number pulling out of unprofitable lines completely or seeking to implement more aggressive rate improvements on underperforming lines. The well-publicised actions of Lloyd’s targeting the bottom decile performers have gained widespread publicity but, in reality, this response is in line with less public actions by others.