Global: Stable outlook for non-life reinsurers
Source: Middle East Insurance Review | May 2023
The outlook for global non-life reinsurance segment remains stable, according to a report issued by AM Best.
The report, ‘Market segment outlook: global non-life reinsurance’, noted that stability of the reinsurance market is driven primarily as positive pricing momentum and enhanced market discipline continue, including tighter terms and conditions. In addition, various companies have materially shrunk their property catastrophe reinsurance exposure despite improved rates and diversified further into primary and casualty lines of business. This realignment should diminish the inherent volatility of underwriting results.
The third factor is the fact that demand for reinsurance capacity continues to grow, although primary carriers appear to have generally accepted the new norms of reinsurance pricing and structures.
However, counterbalancing factors the report listed include heightened natural catastrophe activity continues to test investors’ risk tolerance levels. This is compounded by geopolitical and economic uncertainty. Secondly, despite improving pricing trends and tighter terms and conditions, new capital is cautious and so far, has not been forthcoming. Similar constraints are seen on the ILS side, particularly for retro capacity. Lastly, inflationary pressures and the risk of recession make profitability targets more challenging over the long term. M