8 billion in exceptional losses in 2008 30

As every year at the school, the world of insurance and reinsurance is preparing to launch tariff renewals kicks. As every year, "Rendez-vous de September" Monte-Carlo, which opens Sunday, will be the theatre of informal negotiations, where insurers will plead for a lowering of tariffs, reinsurers to increase, brokers rounding the corners.

In the absence of large areas of tension, each and others anticipate serene "appointments". "The market is balanced." "This will be a priori a very classical renewal", predicts Daniel Fortuit, Director of the reinsurance of AGF and Chairman of the Committee assignments of the FFSA. "There will be no debate on the covers: the discusssions will focus on the consequences of the crisis and prices", said Victor Peignet, CEO of SCOR Global P & C.

In this regard, those who had expected a sharp tariff reversal may be for their expenses. Of course, the last renewals recorded the end of the price declines incurred since 2006. "2009 was the beginning of the tariff inflection, but increases remained less than 5." "Pricing is not yet fully adequate, and could be threatened by a major disaster," warns Lotfi Elbarhdadi, Director in Standard & Poor's.

Things should be, at best, similar this year. The insurers, struggling to impose price increases, shake the bolts, hence a stagnant demand. After early January modest tariff increases, Swiss Re indicated yesterday that he was "stable" renewalGen Re, the reinsurer owned by Warren Buffet, not "significant" increase expected

Surprisingly, the financial crisis has finally done little moving lines. As if the traces left by the demise of Lehman, AIG rescue or the difficulties encountered by Swiss Re had been immediately erased. "The reinsurance market is not very different from a year ago: Monte-Carlo will not be this year's starting point for a new era", confirms Michel Hideux, CEO of Aon Re Global, and Philippe Renault, Deputy Director of Aon Benfield in France. "He was neither destruction nor improving ability of reinsurance from last year: the offer is still there", adds an expert.

Reinsurers have of course suffered from the crisis but rather less than the insurers. Between late 2007 and late 2008, their own funds on average declined by 18.5, according to calculations by Fitch Ratings, mainly due to the decline in value of assets. The reduction of the "spreads" of credit and the resumption of the markets however allowed them to get 35 of the ground lost in the course of the first half.

The surpluses have melted

2008 will therefore had value of test. "The solvency resisted to the collapse of financial markets and major disasters, sign of the improvement of management practices of the risks of reinsurers since 2002," commented Lotfi Elbarhdadi. According to him, the first 9 reinsurers are thus managed to absorb 33.8 billion in exceptional losses in 2008 (30.1 billion of losses on investments) and 3.7 billion of disaster with own funds surplus they had. Capital surpluses which have now melted. Hence a major concern: "The potential inability of reinsurers to replenish capital if they were facing major losses in respect of natural disasters", according to Fitch. In other words, the reinsurers would have difficulty to withstand the crisis over a bis Katrina.

In this context, their only leverage is of clear results to strengthen equity. Without tariff increases or products financial to feed the machine, the exercise could be complex, prefiguring cuts costs or reallocations of significant capabilities. The starting point for a new era