News Analysis - Discipline challenge for 2004.

(From Reinsurance)

Byline: Mary Burnett.

From the outset of the negotiations season for 2004 renewals, the impression was of a market that was going to keep itself in check. But with deals being finalised even later than usual, there was still some question as to whether rates would stick or the much speculated softening market would materialise.

As reinsurers announce their renewal outcomes the relief of relatively little change in rates is tangible. Swiss Re and Munich Re have both made buoyant statements about their renewal rates. Swiss Re is reporting a "modest" decline in property and casualty (P&C) premium rates but Stefan Lippe, head of business group, says they have remained at "technically sound levels". It found the non-cat property rates held despite an increase in capacity with slight declines in the US being offset by increases in Europe. The liability rates improved worldwide and it reports "discipline" throughout the industry.

RATE CONSOLIDATION

Munich Re considers that rates "consolidated at a technically adequate level in the property market" but it does see the start of a decline for natural catastrophe covers. In casualty it experienced an overall price improvement, particularly in large industrial risk and special lines - directors' and officers' and errors and omissions. For marine cover it again considers the rate to be risk adequate with further rate improvements in most classes.

In Bermuda, Anthony Taylor, president and chief executive of Montpelier Re, is also pleased with the outcome. "Rate levels for 2004 continue to offer the prospect of very good returns," he says. Jim Bryce, president and chief executive of IPC, says: "Renewals were conducted against a market backdrop of continued underwriting discipline, in which healthy conditions generally prevailed."