Financial news in brief

Moody’s flags price falls

Property catastrophe reinsurance prices could drop by 5%-10% in 2011, rating agency Moody’s has said. According to its Weekly Credit Outlook, most reinsurance management teams had told Moody’s that, despite some price erosion, property catastrophe insurance still looked attractive going into 2011, particularly in the USA. But it said that given the oversupply of capacity and most firms’ desire to shift to shorter-tail lines, competition for adequately priced property catastrophe reinsurance was likely to increase, resulting in price cuts.

Bermuda’s mixed fortunes

Despite a good performance in 2010 to date, Bermuda-based (re)insurers face more challenges than opportunities, according to rating agency AM Best. Bermudian firms’ shareholders’ equity was almost $90bn (£57.3bn) at 30 September, combined ratio were in the low 90s and return on equity in low double digits. Equally, the island’s (re)insurers were not hard hit by 2010’s natural catastrophes. But AM Best said the group faced persistent pricing pressure, low-yielding investments and dwindling reserve releases.

Chaucer rise at Lloyd’s

Lloyd’s insurer Chaucer’s underwriting interests at Lloyd’s will amount to £707.2m for the 2011 underwriting year – an increase of £50.3m or 7.6% on its interests of £656.9m for 2010. The company announced the increase following the completion of the Lloyd’s ‘coming-into-line’ process on 29 November. The process allows Lloyd’s and its members to agree how much capital the members need to put up for the amount of business they plan to write the following year.