Global reinsurance capital for the first quarter decreased by about 6% from the same period last year to $ 590 billion and there was a "modest but progressive" tightening of capacity in mid-year renewals, according to a report Tuesday from Aon PLC.  Total reinsurance capital amounted to $ 625 million at the end of 2019, data from the report show.
The change included a 6% reduction in traditional reinsurance capital during the first quarter to $ 499 billion and a 4% reduction in alternative capital by $ 4 billion to $ 91 billion, Aon said.
The broker said that deployed capacity continued a gradual tightening trend.
"In this environment, the 'modest but progressive' tightening of reinsurance capacity that we predicted at the beginning of the year has been accelerated," Aon said.
Exclusive political language changes, for example for infectious disease, gained traction in half-yearly renewals, Aon said.
"The most common discussion for all major innovations was the introduction of communal cable disease language on real estate disaster contracts. A variety of languages ended up being adopted, with some insurance companies choosing to write their own language," said Aon.
Wildfire exposures see also a certain pressure. "California-exposed industries continue to experience significant pricing and coverage pressures, and exposures to wildfires elsewhere also see capacity reductions," Aon said, adding "tailor-made" wildfire solutions available in the reinsurance market.
Loss of property disasters through the first half of 2020 maintained near median activity levels with approximately $ 26 billion in losses accumulated, said Aon
The first half of 2020 saw eight individual catastrophic events that caused more than $ 1
The total cost of the $ 6 billion insured events in the United States was estimated at nearly $ 12. billion.
The fallout from the COVID-19 outbreak has "undermined" revenues for 2020, Aon said.
The total loss before tax for the 18 companies in Aon's reinsurance aggregates reported was $ 3.8 billion and the average total ratio was 103.2%. This included $ 3 billion of COVID-19-related losses recognized, with pandemic-related claims expected to "increase" in the second quarter.