Reinsurance returns challenged if capital inflows continue
Thursday, 04 23 2015, Category: Insurance and Reinsurance, Country: World
Returns for major reinsurance companies around the world will be increasingly challenging to achieve if capital continues to enter the market at recent high rates, reserve releases soften and pricing continues to decline through 2015, according to A.M. Best.
The latest global reinsurance market report from rating agency A.M. Best contains little in the way of solace for reinsurers that are feeling under pressure. In fact it suggests that the pressure is set to continue through 2015 and indeed intensify, as long as market conditions remain similar to how we see them today.
Publicly traded reinsurance firms saw their stocks ending 2014 below the market, as concerns about the decline in reinsurance pricing continued to impact investor and shareholder sentiment, A.M. Best notes. The average share price increase for 2014 of the group of global reinsurers that A.M. Best tracks was just 6.5%, well below the normal ROE levels they promise to investors.