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A.M. Best: Investors Pressure Reinsurance Sector

Money and an Hourglass
March 04, 2019

According to recent findings from A.M. Best, January reinsurance renewal rates were mostly flat despite the expectation that reinsurers would adjust their pricing amid the segment's depressed performance and following the nearly $200 billion in losses for the prior 18 months. Some notable pricing increases were limited to loss-affected accounts.

While some reinsurers tried to maintain discipline, with a few walking away from poorly priced business, others, particularly the larger players, focused on market share, and as a result continue to write inadequately priced risks.

However, according to A.M. Best, investors mindful of the recent poor results have started to demand higher returns and have been more selective in some of the risks and thus capital inflows have slowed aiding in the increase of renewal rates for this segment. Rates in the property catastrophe retrocession segment rose between 10 percent and 20 percent at the January 1 renewals, with peaks of 35 percent on loss-affected accounts.

A.M. Best believes that investors will continue to invest in third-party capital and that the alignment between third-party and traditional capital will endure, guaranteeing an abundance of capacity for the reinsurance segment.

A.M. Best said the upcoming renewal seasons will shed more light on the impact of recent typhoon, hurricane, and wildfire losses on rates for the remainder of 2019.

Copyright © 2019 A.M. Best Company, Inc. and/or its affiliates ALL RIGHTS RESERVED

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