As Monte Carlo returns to some degree of normality after last week's reinsurance industry invasion one of the familiar themes to again reflect upon is the relationship between renewal rates, capital flows and consolidation in the market.

While last year's Monte Carlo Rendez-Vous was dominated by the unprecedented severity and number of natural catastrophes of 2011, leading to record insurance claims, 2012 has to date seen a relatively benign period for major global property catastrophe loss. On the eve of Monte Carlo, latest industry estimates for Hurricane Isaac suggested something in the region of $1-$2 billion of loss on an industry-wide basis. Although a significant hurricane to make US landfall this will not move the market.

In fact, at this year's Rendez-Vous the general mood pointed towards flat rates at the next major renewal season on 1 January 2013 with an industry well capitalised despite the events of last year and an increasing investor appetite for reinsurance products distributed via the capital markets. ILS and other forms of alternative risk transfer were a hot topic this year.

What is the message from an M & A perspective? In common with most industries, convincing arguments can be made in favour of increased M & A from varied and sometimes contradictory factors. For instance, some commentators point towards excess capital being a driver of M & A while others can easily point to periods of increased M & A in the past which followed significant capital outflow from the industry. The reality is more likely to be that there is no one dominant factor that points to the health or otherwise of M & A activity in the sector. Rather, it is always a combination of many factors. There are certainly regulatory and macro-economic headwinds to contend with and, like any other industry, transactional activity requires a degree of certainty, stability and confidence in order to flourish – conditions not much in evidence of late.

Against the backdrop of the latest predictions flowing out of Monte Carlo one thing to bear in mind is that the North Atlantic hurricane season still has some way to go – the shape of next year's renewal season could be very different because that's the nature of the global reinsurance industry.