Another thought provoking article from the team at artemis.bm.
When the market is struggling to obtain decent terms in the existing market due to saturation, does turning to the reinsurance market to support new initiatives at a time of relatively low cost capital present an opportunity to pursue new risks and/or regions...?
Analysis performed by JLT Re shows that the cost of reinsurance capital has fallen to a level considerably lower than most other forms. By taking advantage of this ceding companies can support new growth initiatives and pursue more profitable business, which ultimately can help them to better navigate today’s challenging operating environment. The drop in reinsurance demand, as evidenced by the chart above, has come at the same time as the market has hit record levels of dedicated reinsurance capital, with the end result being the softening of the market and steady price declines seen over the last four years or more.