Reinsurance Emerges as Lower Cost Alternative to Risk Financing as Credit Markets Become More Expensive: Aon Re Global Analysis

As the property catastrophe reinsurance market moves further away from the 2005 Atlantic Hurricane Season -- the most significant recent catastrophic event to impact the industry -- trends indicate that renewal pricing peaked in July 2006, and that the reinsurance margin per unit of risk reinsured is in decline. That decline comes as the cost of equity and debt capital will be increasing for insurance; as such, the reinsurance pricing and terms cycle can be uncorrelated with the cost of equity and debt capital for insurers and reinsurers.

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