Reinsurance price pressure to persist, ROE’s to struggle
Monday, 06 01 2015, Category: Insurance and Reinsurance, Country: World
Pressure on reinsurance and retrocession pricing is likely to persist through the rest of 2015 and beyond, as alternative capital continues to expand within the market and market-moving loss events remain absent, according to A.M. Best.
In its latest report on the global reinsurance sector A.M. Best hasn’t changed its outlook for the space, expecting pressures to continue, prices to remain pressured, terms and conditions to continue expanding and ultimately reinsurer returns on equity (ROE) to suffer.
Reinsurers have been assisted by the low level of losses, positive prior year reserve releases and the high levels of capital they have managed to accumulate as a result. This has enabled them to outperform stock markets in 2014, with share prices increasing higher than most industries, but that performance will be hard to sustain.