Insight and Intelligence on the London & International Insurance Markets 18 Mar 2018
- 26 September 2017
Sometimes I think the reinsurance market is like an old prize fighter reduced to being an attraction at a travelling fair.
Although he is little out of shape, the warrior's boast is to defy all comers to hit him as hard as they can in the midriff to see if they can make him take a fall.
"Ten bucks says you can't knock the old champ down," goes the ringmaster's challenge.
He may have seen better days, but under the extra layer of fat the old washboard stomach muscles are still steely and taut.
Challengers line up. One by one the blows come raining in, but none make him so much as flinch.
The money piles up.
Then one day a big hit lands unexpectedly. The crowd looks at the fighter. He doesn't budge. Yet despite not wavering he betrays a little too much effort in visibly shrugging the blow off.
That definitely hurt.
The ringmaster notices and makes sure he sees the camp doctor at the end of the day.
The Doc concludes he's a bit bruised but is otherwise okay. The fighter is allowed to go back to work.
The next day a fresh blow takes a lungful of air with it. The fighter and the crowd gasp. One more shot like that and a long and successful run could be over.
That night, as the familiar spots of blood that speckle his urine run a little darker than usual, the fighter wonders to himself whether this is a sensible way to make a living.
With just five more days to go before the quarter's close, it is clear this is going to be the worst Q3 for insured catastrophes of all time.
Whichever way you measure this extraordinary three-month period, it can only be in a peer group of two.
Harvey, Irma and Maria (HIM) and the Mexican quakes are likely to exceed the 2005 body shots of Katrina and Rita.
We've put up a good fight and a proud show of strength, but it's definitely hurting.
For some, the guard is gone and the gum shield is flying through the air.
What's more, there may already be internal bleeding from all of the other cyclical excesses we have been afflicted with of late.
We are wide open and vulnerable.
For some, this is not just an earnings event any more - it is a pummelling that goes right to the internal organs.
If there is no recovery time before the next big blow, some will fall over.
As always, Monte Carlo came too soon and gave little away. Irma damage hadn't been assessed and Maria was just an Atlantic Low.
Leaders could still strut like prize fighters at a weigh-in. I remember they did much the same 12 years ago.
Much of the talk back then was later proven to be wishful thinking. I remember being told at the time that, while cat pricing was definitely going to rise, Katrina was not going to be a significant capital event and certainly not the precursor to a new class of reinsurers.
They were only right about cat pricing.
In the end we got the class of 2005, the birth of the sidecar and a wave of ILS adoption that propelled it to full acceptance as a new asset class.
Back in 2005, K and R were followed by W in Q4. If that happens again, all bets will be off.
Should history repeat itself, it will mess up more than the neat masculine acronym we journalists have so far constructed for ourselves.
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