The changes insurers are seeing in the reinsurance industry are the result of a fundamental structural change, rather than cyclical factors.
This is according to the deputy chairman of Aon's UK Reinsurance group, Charlie Cantlay.
Speaking at the Monte Carlo Rendez-Vous today Cantlay stressed that the reinsurance industry has proved itself to be strong and resilient, despite suffering the worst ever catastrophic loss on September 11.
Reinsurers will pay for approximately two-thirds of the WTC losses, but instead of this undermining them, they have emerged resilient, said Aon.
The report says that many reinsurers have reassessed the risks they are willing to bear and this ties in with the ongoing round of mergers and acquisitions.
It cites as examples, Zurich Financial Services spinning Zurich Re as Converium, St Paul International intending to spin off its reinsurance operations as Platinum and Generali pulling out of non-life commercial treaty reinsurance, among others.
The report says: "There is a strong belief that this retreat from risk is more structural than cyclical, aimed at generating returns against capital employed rather than in response to the immediate financial impact of WTC losses.
"The pattern is likely to continue as corporations with reinsurance interest come under increasing shareholder pressure over volatility in earnings."
Cantlay was launching the new Aon report 'Reinsurance; A retreating or resurgent market?' The report is available at www.aon.co.uk.
