The major renewals of the past few months have unsurprisingly continued the current market trend with the premium volume reducing by 5% for the year thus far.
At the same time both hull and liability exposure levels have continued to increase by single digit percentages. Capacity levels remain buoyant and the loss experience continues to be excellent. Overall market conditions therefore remain stable with the balance of power continuing to favour the buyers.
There have been a number of significant renewals across all regions and sectors in recent months. During May easyJet had a significant downturn in projected fleet and passenger exposures while in contrast and perhaps in a reflection of the global economic shift, Asian low cost carrier Air Asia projected double digit growth in both average fleet value and passenger volumes. The Virgin Group of airlines, the parallel arrangement that encompasses Virgin Atlantic, Virgin Australia and Virgin America, highlighted a downturn in projected exposures for Virgin Atlantic while the other two airlines demonstrated continued robust growth. The differing experience was reflected in the rating changes achieved by each of the airlines.
June offered little in the way of major renewals and with no change in the major market drivers there was a continuation of the downward rating trend. Despite 22 renewals the month generated less than 3% of the annual premium volume. Eva Airways was by far the largest programme in terms of exposures with Aegean Airlines and Olympic the two other large renewals.
July is the most significant month outside of the final quarter contributing nearly 10% of the annual premium volume. The July renewals include a number of North American renewals of market significance the largest of which is American Airlines followed by Fedex, Republic Airways and Pinnacle Airlines. Talk continues regarding further consolidation in the industry in the USA and any future changes would have a knock on effect to the insurance arrangements. Elsewhere the economic challenges being faced by Kingfisher Airlines are clearly reflected in their projected exposures with an 80% reduction in fleet value and 50% reduction in passenger numbers.
The single digit growth in exposures, combined with single digit premium reductions has been a consistent story for some time now and there will need to be a significant shift in one of the market drivers for any change in market conditions.
Renewal Distribution % Share & Premium Distribution % Share
2012 Net % Premium & Exposure Movements
(Hull & Liability)