LONDON, 13 July 2005 – One of the overriding characteristics of the 1 July reinsurance renewals this year has been their lack of uniformity, according to Aon Limited, the UK arm of the world’s biggest reinsurance broker.  At a press briefing in London today, Charlie Cantlay, deputy chairman of Aon Limited’s Reinsurance division, said that reinsurance rates had continued their downward curve in this year’s mid-year renewals but that there were some noticeable differences depending on region and product, creating sub-cycles within the main cycle.

Although rates continued to soften, the current downward cycle is proving much more gentle than usual mainly because of underwriters’ determination to maintain discipline.  “One of the issues likely to dominate the 1 January 2006 renewals will be buyers’ expectations and how far reinsurers will be prepared to go to meet those expectations,” said Mr Cantlay. 

“At the moment there is a mid-year shortage of capacity for wind exposed cover, partly because of increased modelling work but also because of a belief that the wind patterns that manifested themselves in the third and fourth quarter of last year could become the norm rather than the exception,” he continued. 

Hurricane Dennis, one of the earliest Category 4 hurricanes on record for this time of year, would seem to add substance to this belief and so, currently, finding Property Catastrophe capacity at reasonable terms is proving more problematic and Bermuda in particular has hardened its line.  “But it remains to be seen, when capacity is reallocated at 1 January, whether this has been just a temporary mid-year situation or if it continues into 2006,” concluded Mr Cantlay.

Notes to editors

About Aon

Aon Corporation ( http://www.aon.com ) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 47,000 employees working in Aon's 500 offices in more than 120 countries. Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.

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