Performance really matters for reinsurance ratings
Monday, 11 21 2016, Category: Insurance and Reinsurance, Country: Europe
The capitalisation of reinsurance companies won’t be the main driver of ratings in the current soft and challenging market conditions, rather it will be performance as reinsurers struggle with low investment returns, softening rates and diminishing reserve releases, according to A.M. Best Chief Rating Officer Stefan Holzberger.
Speaking at rating agency A.M. Best’s 2016 Insurance Market Briefing – Europe, Holzberger gave an overview of reinsurance market conditions and stressed that capitalisation is not going to be the issue to cause rating downgrades, given the excessive levels of capital traditional reinsurance companies are holding.
More of an issue is the actual performance of companies and this is more likely to be a deciding factor in any rating downgrades that A.M. Best might make. The rating agency maintains a negative rating outlook on the sector, but has stable outlooks for company ratings currently.