Analysts at Keefe, Bruyette & Woods (KBW) are the second group to say that the returns generated from catastrophe reinsurance risk underwriting and capital allocation can remain strong, just so long as the industry remains disciplined on attachments, terms and conditions.
It’s taken a while for it to become clearer that the real driver of the last two years of catastrophe reinsurance profitability has been the elevated attachment points and stricter terms installed, not just the higher pricing achieved.
In fact, the catastrophe bond market is a case in point here, where recent tightening of spreads and yields has not been as negatively received as one would have seen a few years ago.
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