LIFE oFFERS
A MIXED BAG
With mid-year renewals on the horizon,
Dean Kidd and David Rains look at what’s in
store for the life, accident and health market.
There is no single answer to the question of a lack of available capital in the global life, accident,
and health (LA&H) market. Reinsurers are responding to the returns possible for specific risks,
which is driving their capital allocation decisions. Meanwhile, cedants are uniformly focused on
managing the cost of transferring risk. As these factors converge on reinsurance rates—along with
concerns about investment asset performance, geography and the underwriting profitability of
other lines of business—the result is a price stalemate caused by competing pressures of comparable
strength. Without an unexpected market development, the norm is likely to persist.
The availability of capacity and the cost of reinsurance heading into the July 1, 2009 renewal
season may be varied by line of business in the LA&H sector, but the underlying conditions
are remarkably similar. Reinsurers are eager to compensate for 2008 investment losses and
underwriting profit declines by pursuing higher-gain opportunities this year. This has led some
to consider allocating more capital to property and casualty (P&C) lines of business. Meanwhile,
LA&H cedants are steadfast in their almost collective refusal to accept substantial price increases,
and they have generally been successful.
Bermuda Re/insurance . June 2009 39
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