Reinsurers must increase asset risks to boost returns
Wednesday, 08 24 2016, Category: Insurance and Reinsurance, Country: World
It is expected that global reinsurers’ strong enterprise risk management and increasing risk-return considerations will mean the increasingly efficient deployment of capital resources through investment frameworks, according to an S&P Global Ratings report.
The report, titled “Global reinsurers are reluctant to increase asset risks to bolster investment returns”, states that conservative investment profiles have shielded reinsurers' balance sheets since the 2008 global financial crisis and through the European sovereign debt crisis. Geographic diversification and exposure to highly rated countries have contributed to their ratings stability even as some primary insurers have seen their ratings deteriorate over the same period.
The prolonged period of low interest rates is, however, denting reinsurers' investment returns.
Source: Intelligent Insurer