Paybacks can be long in reinsurance
Wednesday, 07 20 2016, Category: Insurance and Reinsurance, Country: World
The topic of underwriting discipline and whether it is being displayed in the reinsurance market has come to the fore once again at 2016’s renewals, as it becomes increasingly apparent some lines of business no longer meet everybody’s cost-of-capital.
The very large reinsurance firms, a few of which admitted to writing some business at negative or near-negative return levels earlier this year, can utilise this as diversification within their portfolios. Writing some business at below cost-of-capital just to maintain diversification, or to keep their foothold in some lower returning lines of reinsurance business, is common in the reinsurance market.