Australian reinsurance rates continued to soften at the mid-year renewals amid “plentiful” capacity, reflecting a global trend, according to Willis Re.

In the property space, some reinsurers are starting to reduce capacity where rates are perceived to be inadequate, but most are willing to accept price drops to preserve client relationships.

“Other reinsurers [are] looking to increase capacity and the overall effect is that capacity remains plentiful,” Willis Re’s 1st View renewals report says.

Continued softening was seen across most lines of casualty business.

Some loss-affected treaties were renewed with “no real sign of genuine rate increases”, while breadth of cover remains an important consideration for casualty buyers, along with relaxation of administrative burdens.

Appetite for cyber liability is “increasing cautiously” across all segments and distribution channels.

Globally, mid-year renewals have continued the downward pricing trend seen at the January and April renewals, despite a first-quarter deterioration in many reinsurers’ results.

“Yet again, we’re in a position where the weakening in the global reinsurance industry’s performance has not reached an unacceptable level,” Global CEO John Cavanagh says. “Reinsurers across the board do not yet feel compelled to take a stronger stance over conceding further modest rate reductions and walking away from clients.”

The Florida renewals were affected by an influx of capacity, particularly from insurance-linked securities, which led to price drops accelerating. In other international markets, rate reductions across most lines followed an ameliorating trend seen in January and April.

“For the most part, excess capacity chasing modest demand has allowed buyers to achieve further reinsurance cost savings, albeit at a reduced level to last year, and enhanced coverage,” Mr Cavanagh says.

Future pricing will depend on loss activity in the traditionally more active third and fourth quarters, and on any instability in investment returns, the report says.