Reinsurance rates have fallen for the fourth consecutive year at the April 1 renewals, but increased demand and a slowing of price reductions provide a glimmer of hope, according to Willis Re’s latest 1st View report.

CEO John Cavanagh says the slowdown in price cuts is encouraging.

“A number of factors, such as increased limits purchased, as well as some modest losses, including the deterioration of earlier losses, have had an impact,” he said.

Mr Cavanagh says another encouraging sign is that many reinsurers are refusing further concessions to clients “irrespective of relationship considerations”, and demand for reinsurance is picking up.

Larger insurers that in recent years were retaining more risk on their balance sheets are “looking to selectively reverse their thinking”.

“This is now leading to an increase in cessions to selected third-party reinsurers, both on traditional risk-sharing reinsurance structures as well as loss portfolio transfers and adverse development covers,” Mr Cavanagh said.

However, he believes it is too early to conclude the market is bottoming out.

“The underlying imbalance of capital supply and muted demand allied to reinsurers’ largely satisfactory 2015 results continues to hang over the market,” he said.

Despite difficult conditions, most reinsurers posted “acceptable” results last year.

Prior-year reserve releases and a lack of major losses linked to active capital management strategies saved the day.

“Ultimately, buyers continue to reap the rewards of competitive conditions and reinsurers will be hoping for yet another below-average large-loss year to produce acceptable results in the face of a tough 2016,” Mr Cavanagh said.

“But the apparent uptick in demand is certainly a positive sign.”