Reinsurance prices near cost-of-capital
Friday, 01 08 2016, Category: Insurance and Reinsurance, Country: World
Further “material” price declines, or evidence of “disorderly” market competition in reinsurance, could result in the need for negative rating actions as prices are already close to some reinsurers’ cost of capital, Fitch Ratings has warned.
In an update, the ratings agency said that the recent January renewal season demonstrated that the reinsurance market has yet to find its pricing floor and that pricing is now nearing some reinsurers’ cost of capital.
At those low levels Fitch warns that if the market does not moderate its appetite there could be negative rating actions ahead.
“Further material price drops, or disorderly competition in the market, could lead to negative rating actions on P&C reinsurers,” the rating agency explained.