The continuing influx of capital and low number of claims have started the long-awaited consolidation of the reinsurance market, according to speakers at a Guy Carpenter media briefing in Monte Carlo yesterday.

The briefing, held at the annual Reinsurance Rendezvous, heard from a panel of experts that the reinsurance industry continues to evolve and adapt to changing market conditions.

Guy Carpenter Vice-Chairman Nick Frankland says another benign loss year is prompting clients to demand improved terms, “yet reinsurers are beginning to get near to technical minimums, which will not allow enough scope for firm orders to be easily won”.

He says another influencing factor will be the impact of recent merger and acquisition activity and the interplay between the new combined groups and the existing markets.

Guy Carpenter President and CEO Alex Moczarski says continuing inflows of new capital and moderate claims levels mean capacity remains abundant. This is in turn maintaining pressure on pricing, terms and conditions.

While he agrees rates are continuing to trend down, Mr Moczarski says the drops “are being mitigated somewhat by more moderate decreases in US catastrophe reinsurance, especially the wind peril”.

“Reinsurers were more successful in resisting demands for large price reductions following two years of steep declines, while demand actually increased in some lines as clients continued to seek access to innovative new products and improved terms and conditions,” he said.

Asia-Pacific CEO Operations James Nash told the briefing capital from Asia is seeking opportunities overseas.

“[This year] Asia-Pacific has been a net exporter of insurance and reinsurance capital through mergers and acquisitions, with Japan and China leading the charge into Europe, Lloyd’s and the US. In the year to September, outbound deals totalled $US20 billion ($28.2 billion), compared with inbound deals of only $US849.9 million $1.19 billion).”

The Reinsurance Rendezvous, held in Monte Carlo each year, began on Saturday and will end on Thursday.