Prices continued to fall at the April 1 reinsurance renewals, driven by continued demand for catastrophe bonds and new capital providers’ entry to the US market, according to Willis Re.

“The... renewals have seen a softening of rates across nearly all classes and geographies, which in turn allowed buyers to achieve substantial savings,” CEO John Cavanagh says in the First View renewals report.

US property catastrophe rates fell by up to 20%, with new capital providers and facilities continuing to pressure traditional reinsurers, causing capacity oversupply.

However, many primary insurance company buyers remain cautious in their use of insurance-linked securities (ILS) and collateralised markets, where the retrocession market has been a key area of activity.

Indian property rates fell by up to 20% and Japan earthquake rates dropped as much as 17.5%.

Willis Re Chairman Peter Hearn says the reinsurance market currently favours buyers. “The cost of reinsurance is falling much faster than original rates in many classes and territories.”

Major traditional reinsurers have worked hard to optimise client relationships, capacity and technical underwriting capability, to protect or increase share against the ILS and collateralised markets, the report says.

They have also stepped up efforts to manage capital through increased share buybacks, special dividends and other techniques.

“In spite of the softening rate outlook, stock valuations of quoted companies remain attractively high.”