First downturn when reinsurers still make cost-of-capital
Saturday, 09 24 2016, Category: Insurance and Reinsurance, Country: World
Despite the fact that reinsurance prices have been softening consistently over recent years and are forecast to continue to do so, albeit at declining rates of decline, the big four European reinsurers could still cover their costs-of-capital, according to analysts at J.P. Morgan.
If that’s the case then this would be the first reinsurance cycle downturn when large, global reinsurance firms Munich Re, Swiss Re, Hannover Re and SCOR all make sufficient returns to cover their cost-of-capital, even at the very bottom of the cycle.
Analysts at J.P. Morgan Cazenove estimate that these reinsurance firms need to make a risk adjusted return on their capital of at least 8%.