Ratings firm Standard & Poor's has placed 16 catastrophe bonds under review for possible downgrade owing to the recent launch of a new hurricane model by catastrophe modeller Risk Management Solutions. RiskLink V11 doubled the estimate for insured losses for a one-in-100-year event in Texas and increased the loss estimate for Atlantic coast storms by 75%. S&P said that some of the cat bonds could be downgraded by up to three notches in May. The bonds in question include the 2010 Lodestone Re bonds issued for AIG's Chartis division, the 2009 Longpoint Re II bonds issued for Travelers, the 2010 Foundation Re III bond issued for Hartford Financial Services, the 2009 Calabash Re III bonds issued for Swiss Re, the 2009 and 2010 Ibis Re bonds issued for Assurant, and the 2009 and 2010 Montana Re bonds issued for Flagstone Re. "Recent conversations with and information from RMS indicate that if the company re-modeled existing transactions...the results would be materially different from what the existing models had yielded", S&P said.  It noted that the rating action on the revised RiskLink model was restricted to US hurricane risk. S&P has requested further information on modelled losses from RiskLink V11 so that it can review each cat bond issue in fuller detail. This process should be completed by the end of May.

RenaissanceRe has belied its reputation as the last of the cat specialists by reporting Japanese losses of only $220mn.   The Bermudian reinsurer's anticipated loss equates to 5.6 percent of its year-end shareholder equity of $3.94bn.  Its Japanese losses are equal to its combined claims from the second New Zealand earthquake and the first-quarter flooding in Australia, which cost the company $190mn and $30mn respectively.  In total RenRe's Q1 cat bill comes to $440mn or 11.2 percent of equity.  Stifel Nicolaus analyst Michael Paisan said: "Q1 earnings will undoubtedly be wiped out for RenRe and could ultimately prove to wipe out the entire year's earnings."  Currently the analyst is forecasting a loss of $297mn in Q1 and a loss of $13mn for the full year.  He continued: "This is certainly not a loss that could risk solvency or even force the company to have to raise capital. However, the total Q1 2011 losses, when all is said and done, relative to capital could eat away at excess capital positions, not only for the company but for the industry as well."  RenRe's Japanese loss represented as a proportion of shareholder equity places it in the mid-range of losses among international reinsurers, behind a number of its peers including Flagstone (9.2 percent), Montpelier Re (7.8 percent), PartnerRe (6.9 percent) and Amlin (6.6 percent).  The property cat leader is among a host of stocks that have traded up strongly on the back of the earthquake after taking an initial hit.  Before the quake, the shares were trading at close to $65. After dropping off, they then rose to a peak of more than $72 in early April, although they have since slipped back to $69 as investors start to question the hard-market logic that had been dictating the revaluation.  In addition to RenRe, both Axis and Argo reported Japanese loss numbers on 18 April. Axis put its own expected claims at $285mn and Argo forecast losses of $60mn.  With RenRe, Axis and Argo all having broken their silence, the international reinsurance community is fairly close to knowing what preliminary loss estimates will be across the board.  The latest loss announcements carry The Insurance Insider's loss tracker to $9.65bn.  Berkshire Hathaway, which is unlikely to make an announcement before its Q1 results, is the highest profile among the holdouts, with Barclays Capital analyst Jay Gelb suggesting that its losses are likely to be between $1bn and $3bn.  Other holdouts include Catlin, Beazley, White Mountains and Fairfax Financial.

Rating agency Moody's has maintained its negative outlook on the Dutch insurance industry. The agency anticipates a continuous decline in life assurers' revenues due to the reduced attractiveness of their products, and ongoing pressures on margins, mainly because of low interest rates. Moody's also noted that the Dutch insurance market remained one of the most competitive in Europe, to the extent that the Dutch banking and insurance regulator DNB was recently forced to warn assurers about the risk of promoting non-profitable products in the market. "The race for economies of scale is also a feature of many Dutch insurers aiming to mitigate declining profitability, although this actually fosters increased competition and feeds a vicious circle, as it ultimately contributes to additional pressure on margins".

The marine insurance mutual Protection & Indemnity (P&I) clubs went into the February 2011 renewal season in a good financial position, according to an AM Best report. This led to an "uneventful" renewal, with announced general increases of 0% to 5% in all but one case. AM Best observed that the dream of break-even underwriting remains elusive. The technical deficit actually increased in 2009-10, despite fewer voyages and less competition for experienced crews. However, strong investment returns and unbudgeted supplementary calls helped the clubs restore their free reserves to pre-2008 levels. AM Best warned that, as the global economy recovered the clubs could expect to see claims rise even higher, and that, in this context, "the modest general increases announced at the February 2011 renewal are unlikely to support profitable or even near break-even underwriting across the International Group".