Consensus: a rare beast

This month, 56% of you believed reinsurance pricing is staying the same (although many noted that this is not the case for certain distressed lines), a sentiment that was reflected by the attendees of this year's Baden Baden conference. A further 34% think that pricing is rising, leaving only 9% seeing reductions.

One reader said: "It's quite unstable. Some markets are giving important risings and others enormous discounts, all depending on how the past went for them. As an average, it's stable."

Another reader suggested that the level of rates depends on where in the world the cedent is: "Some markets - in my case Central and East European markets - still show reducing insurance rates, which makes it harder to find proportional reinsurance support on a facultative basis. As a result of the economic situation, insurance is decided upon by price only; clients are prepared to go without insurance if needs be."

Casualty lines

When it came to casualty rates, a market threatened by potential claims inflation and recession-related claims increases, the responses showed a similar picture: 32% of respondents said that rates will rise, with another 35% believing that they will remain stable. One reader commented that, at the moment, it is hard to tell what casualty rates will do over the next few months: "Much depends on AIG's strategy. If the current situation persists then I would expect rates to fall. I don't believe low interest rates are a driver of premium rates." (For more on the casualty markets, please see p.29-32.)

Mergers and acquisitions is a hot topic among market gossips at present, so we decided to ask our readers what they believed will happen over the next few months. A surprising 10% of respondents said that they are in the process of negotiating a merger or acquisition at the moment with a further 40% believing that we are at the point in the cycle when we should start to see more activity in this area.

Meanwhile, 43% expect to see more M&A in some territories and lines, though not uniform activity, while 7% believed that the rumours were the result of investment bankers trying to drum up business. One reader explained why they believe we will see a considerable increase in M&A activity over the next few months: "As a result of the economic situation, companies are struggling to make ends meet.

"This is an opportune moment to sell and, for the buying companies, an opportune moment to grow their books."

One region that is drawing increasing global attention is South America. We asked readers if they would consider starting operations in any of the local reinsurance markets: 33% said that they were already there with a further 29% noting that they would consider it. Only 7% thought that South American markets are too tumultuous for their tastes.

We also asked readers about reinsurance technology and what they believe is driving developments: 49% said that the need for better data quality is behind most investments and 21% blamed reactions to technology developments in the general insurance markets. Meanwhile, 13% believed that demand for transparency is to blame with one reader saying "it is all a game of 'cover your arse' so your boss won't criticise you when you have a loss." A cynical 16% said that there are no real technological innovations in our industry.

Room for run-off

Finally, we asked readers for their opinions on the run-off markets. Only 5% of respondents believe that run-off markets have reached saturation in comparison to 29% who said that there are still plenty of opportunities (not that our readers could ever be biased there.). A diplomatic 66% said that, while there does not seem much room, companies offering a slightly different option could gain traction. One reader noted that the proliferation of run-off could be closely linked to economic developments: "I expect new opportunities to emerge if claims linked to the economic downturn start to escalate, causing failures and portfolios to be put into run-off. Valuations close to book value for recent acquisitions of run-off portfolios suggest that, at the moment, the buyers outweigh sellers. I would expect the pendulum to swing the other way if the above scenario emerges, though."

If run-off interests you then sign up to attend our claims and run-off seminar taking place in London on the 9 December. Attendance is free, so register for your place by sending an e-mail to lene.pedersen@incisivemedia.com.

Thank you to the readers who completed the survey. Your views, as always, are much appreciated. Congratulations to Declan Flanagan of XL Re, who won a bottle of champagne in our Rethink draw.

Make sure that you are on the list of those polled for our next survey and you will be in with a chance of bagging that coveted bottle of bubbly. Subscribe to our e-mail alerts at www.reinsurancemagazine.com