Dear Friend,

Another quick scribble as I’ve got to run back upstairs to the British Insurance Awards for another judging session (we judges work hard, you know!)

The 1st quarter numbers are coming in thick and fast — as is the news from the front after the Japanese renewal season and it looks like the crème brûleé market is developing as predicted.

First the brûlée part — we have a disappearing and dysfunctional retro market, with what little capacity there is left trying to charge silly prices for much reduced coverage. Consequently buyers aren’t buying as much and are choosing to write less and retain more as an alternative.

The few players with remaining capacity are doing the old classic of saving it for later in the year and plenty of buyers are bringing purchases forward. Signs have been reported of there having been a knock-on effect in stressed cat risks all over the world, but perhaps it is too soon to say.

What we do know is that for calculated risk takers right now US Cat is where all the money is to be made for the brave soul who sticks his head above the parapet. And you’ve got all the ingredients for success. Risk aversion from incumbents, increased demand from buyers (at a fair price, of course) and an imminent perceived threat in the shape of a dire summer storm forecast — where is Cuthbert Heath when you need him?

Well, out of all the results announcements, Partner Re seemed to be the only firm that hinted it might be tempted to have a go at taking on more of these exposures rather than less — so why not get your broker to give them a call and find out what they have in mind?

But now back to the soft custardy underbelly of our favourite French dessert — here everything is going mushy fast. The most interesting feature of the 1st quarter results is the major uptick in investment returns from rising global bond yields and excellent equity market performance. And what’s more, apart from a blip from Everest, the Katrina, Rita and Wilma reserves seem to be holding rock solid and underlying loss ratios are still benign.

Anyone can see that this means that the worldwide soft market in non stressed cat business is only going to accelerate from here. Compared to this no wonder the Gulf of Mexico is starting to look tempting. There is obviously still room for more players here — it just remains to be seen if any more capital providers will want to play now that bond yields are heading north.

You pays your money and you takes your chances.