Plane Talking -  November 2011

Executive Summary

Unsettled Times

Market capacity appears to be holding firm, with significant attention being given by brokers to the recent "new" markets.

It appears to be becoming more challenging to complete placement at lead terms, with vertical market price differentials between leader and follower narrowing. However with so much renewal activity currently underway it is difficult to ascertain whether these are specific instances, and therefore isolated, or a more general trend.

The answer will become apparent over the next few weeks. The relatively good year for losses has continued and the few recent incidents have again thankfully resulted in few fatalities. Year to date losses are still at a level well below the annual average of the last five years.

Premium rating overall remains under pressure and whilst exposure growth has acted to bolster aggregate premiums to a very similar level to last year, there are some marked differences between individual renewal outcomes. This signals the continued competitiveness across the underwriting community and despite the common desire from underwriters to achieve premium increases, clearly each market appears to have their own agenda, views and plans; much of which must display some fundamental differences.

It is also a busy time for aviation reinsurance buyers, and early indications from this market suggest that there is unlikely to be much, if any, relief available to insurers from this quarter. The backdrop of an increased frequency in credit rating changes and the growing in merger and acquisition (M&A) activity suggests increasingly unsettled times, however it should be noted that these are being fuelled by events outside of the aviation market.

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