Profitability a challenge despite reinsurance rate stabilization
Saturday, 02 27 2016, Category: Insurance and Reinsurance, Country: World
Despite signs of rate stabilisation in the global reinsurance market at the key January renewals, analysts at Morgan Stanley have warned that continued pricing below loss cost trend will contribute to further margin deterioration, while reserves are likely to diminish further.
Property catastrophe reinsurance rates have witnessed a -30% cumulative decline during the last two years, according to Morgan Stanley analysts, continuing to decline at January renewals by -5% in the U.S., and by -10% in Europe, with both insurers and reinsurers facing persistent market headwinds.
“We could be in the early stages of pricing stabilization as traditional reinsurers earn single to low-double-digit returns and alternative capital growth has slowed in property re,” says Morgan Stanley.