At the Rendez-Vous de Septembre insurers’ conference in Monaco attendees have said that the reinsurance market has stabilised after a difficult period marked by declining profitability, lower return-on-equity (ROE) and significant natural catastrophes.
“After several years of declining profitability, lower and lower ROEs, coupled with 2017 and 2018 having significant events that hurt the earnings of the sector, today there is real stabilisation in the reinsurance market,” said Stefan Holzberger, chief ratings officer, AM Best. “Rates are improving. The traditional market is utilising alternative capital and capacity to protect its balance sheet and earn fee income through shedding risk off to sidecars, so to allow for a real alignment of interests. AM Best believes that at the January 2020 renewals, there will be a better rate environment that allows for more appropriate ROEs.”
Jerome Haegeli, group chief economist, managing director, Swiss Re, said the outlook for the industry is promising. “Look at insurance market premiums overall. Last year was a record high in terms of insurance premiums earned for the primary industry. On the pricing front, especially on commercial prices, there is also some rate hardening, which I think shows that there are very positive drivers in our industry,” he said.
Meanwhile, reinsurance capacity supported by capital markets has declined over the past year, but many institutional investors remain interested in the market as it slowly expands to cover a wider range of risks, experts say.
An alternative reinsurance placement for U.K. terrorism risk placed earlier this year marked a significant development and more new coverages, possibly including coverage for cyber risks, could be developed, some say, business insurance.com reports.
ILLUSTRATON: World Atlas MAIN SOURCE: BusinessWire