As I used to work in reinsurance and only ended a contract position last year with one reinsurer and have many contacts in the business I can tell you that for catastrophe reinsurance 2009 was an excellent year indeed, for a start there was not a single major hurricane to impact the USA. One of my friends who writes European Catastrophe business has had a third excellent year, though prices are reducing due to this fact. Reinsurance is a major expense and with the current climate it is being squeezed, which is why Munich Re is talking up the threat as they are seeing the reinsureds pushing for price reductions on the recent good results, which are marred only by the prices falling in line with those good results.
Munich Re, the largest reinsurance company, purchased American Re a number of years back and found all manner of long tail nasties in there, furthermore Munich Re's financial strength was based on German Motor Quota Shares many years back, where they hold long term reserves for the losses which are paid yearly, so they have a vast pool of assets which they can use elsewhere. However German Motor rates are very low, in fact they have not been profitable for years and overall Munich Re is finding its position weakening.
Now we have a really nasty recession, this has resulted in reduced turnover and asset values, this will feed back into rates, also a recession causes massive losses in certain lines of business like credit and bonds and Munich Re is involved there.
Your right Dr North to pick up on this as being a load of tosh, in the late 90's we saw all this climate change rubbish and with the storms that hit France on Boxing day 1999 it did seem like a change was occuring, by the way they were deemed to be 1 in 100 year events, before that they were deemed 1 in 250 year events if I remember correctly. There are companies who gather data on the regions across say France, they look at the number of buildings and their construction levels, this is residential and commercial/industrial, they then model back past events to see what the loss will be today. A key factor to this is the expected return period of large catastrophe events, with Global Warming they would argue that the French storms in 1999 are now say 1 in 50 year events. However pricing of Catastrophe contracts also have the impact of a bank, so that the programme for a reinsured will have paid a certain amount of premium without claiming back for a loss. The only way that Munich Re can fight against that is to make a case for faster return periods and this is what they are using these ADW scammers for.
The major competition for Munich Re and Swiss Re is the Bermudan based reinsurance market, London has effectively been reduced due to over taxation, and those people tend to be more opportunistic then Munich Re, there are some rather smart people there who will be assessing the real climate data, though in my experience they do not publish data, for years Munich Re and Swiss Re were deemed as being excellent at carrying out market research, but certainly over the last 10 years most of the people I knew were opennly contemptuous at the quality of those companies recent work.