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Retail Rates - WTW CLIPS (Commercial Lines Pricing Survey - USA - Q2 2018 )

Commercial property prices increased in low to mid-single digits for 3rd consecutive qtr.

Aggregate commercial price change of +3% in Q2’18, compared to Q2’17, a 4 year high

WTW notes mid-market and large accounts prices experienced the largest increases and CLIPS history suggests larger accounts have been leading indicators of market adjustments

Reinsurance Rating Factors - Willis Re Reinsurance Index

Average ex-CAT accident-year combined ratio for global reinsurers was 95.1% for H1’18, an improvement of 20 basis points (bps) year-on-year

Average combined ratio for H1’18 also improved year-on-year by 70 bps to 93.3%

Above figures are drawn (available data) from an Index subset of 21/ 36 global reinsurers

Reported combined ratio for all 36 Index members improved by 70 bps to 94.3%

WTW Hurricane Florence storm update of modeled insured loss estimates (Sept. 17, 2018)

Given the changes in the storm’s structure and as a result of diminishing wind speeds,

WTW reports modeled insured loss estimates landing between $2.5 Billion to $5 Billion (bn)

Lower wind speeds will likely make Florence more of a flood event, for which insurance

penetration rates are generally low, rather than one featuring wind damage, which tends

to be more traditionally insured, reports Gary Marchitello, Head of Property Broking, N.A.

- The well capitalized global property/casualty insurance market should easily absorb

losses in this new range, and barring successive storms this season, WTW would not expect

any prolonged hardening of the market, although some short-term disruption in the market is still expected, Marchitello said

WTW Securities expect only a minor impact on the catastrophe bond market

Carrier CommentsReinsurance Rates (Hannover Re, Swiss Re, CATCo Reinsurance Opportunities Fund)

Hannover Re expects stability in prices and conditions overall for 1/1 treaty renewals; crucial to determining property reinsurance prices will be further development of loss amounts from last year’s hurricanes and continued minimal large losses incurring this year

Swiss Re report says soft underwriting conditions continue to hammer the P/C sector; the report notes return on equity for the sector fell for 18 consecutive quarters from 2013

Markel CATCo expect further rate decreases in the January 2019 reinsurance renewals

Other Commentators(Ivans, Insider, S&P Global, Moody’s, AIR)

Ivans Index reports U.S. commercial property August rate rise of 3.54%, up from 3.03%

Insurance Insider reports from a range of reinsurers and brokers that catastrophe reinsurance rates are likely to move back into negative territory at 1/1 as market fundamentals bring about a reversal of the limited pricing gains made in 2018

S&P say there is too much capacity as far as pricing conditions are concerned and that reinsurance pricing momentum is fading out for 2019

Moody’s expect 2019 reinsurance rates to remain largely flat, ranging from -2.5% to +2.5%

AIR Worldwide expect insured losses from H. Florence’s winds and storm surge will range from $1.7 bn to $4.6 bn, not including the impact of the ongoing flooding (Sept. 18, 2018)