Global: Reinsurers hit by Nat CAT in 3Q look to higher rates in 2022
Source: Middle East Insurance Review | Dec 2021
After witnessing significant catastrophe and earning losses in the third quarter, the reinsurance industry is finding silver linings in the de-risking of their portfolios and the prospects for future rate hikes, said S&P Market Intelligence in a statement.
A few global reinsurers surpassed analyst expectations on revenues, but three of the biggest companies logged EPS misses, said the report. Alleghany Corp and Reinsurance Group of America recorded losses after being expected to record positive EPS; while Everest Re Group exceeded analysts’ median estimate, it still posted a loss for the quarter.
Everest Re CEO Juan Andrade said the primary market has benefited from multiple quarters of strong rate improvement, a reduction in limits and the strengthening of terms and conditions. He expects ‘strong portfolio economics’ to emerge as the reinsurer continues focusing growth on core trading partners. He also said the share of the company’s book exposed to catastrophe losses has declined.
Berenberg analyst Kathryn Fear said the reinsurance market is currently very attractive, with rates continuing on an upward trajectory amid increased risk aversion among primary insurers due to the COVID-19 pandemic and ongoing economic uncertainty.
S&P Global Ratings acknowledged that the sector’s capitalisation position remains robust and concurred that prices will rise in 2022. However, the ratings agency has a negative outlook on the global reinsurance space, saying that the industry likely will not earn its cost of capital this year and could struggle to do so in 2022. M