Katrina type loss would deplete reinsurance earnings
Wednesday, 04 19 2017, Category: Insurance and Reinsurance, Country: World
Analysts at RBC Capital Markets (RBC) believe that under the current return on equity of the European reinsurance industry a loss event similar to 2005’s Hurricane Katrina would “wipe out” 11 months of industry earnings and, it could be that a smaller loss than previously thought is needed to turn pricing in the sector.
With the low interest rate environment dampening investment returns for reinsurers and consistent, albeit recently reduced rate reductions – a hallmark of the softening landscape – hindering companies’ underwriting results, returns on equity are depressed across the sector.
As a result of reduced return on equity for European reinsurers, analysts at RBC feel that the impact from a large loss event today is greater than it was a decade ago.
Source: Reinsurance News