Reinsurer ROEs to diminish regardless of loss activity
Friday, 06 09 2017, Category: Insurance and Reinsurance, Country: World
Any “subsidy” to the return on equities (ROEs) of reinsurers is likely to diminish in response to persistent and worse-than-anticipated rate declines at recent renewals, regardless of fewer catastrophe events in the coming months, according to Keefe, Bruyette, & Woods (KBW).
For the most part, the utilisation of reserves and the relatively benign loss environment has enabled reinsurers to report profitability despite persistent rate declines at renewals, including steeper-than-expected declines at the recent June 1st, 2017, renewal season.
In a recent note, analysts at KBW, utilising 1/6 2017 renewal data from international reinsurance brokerage JLT Re, states that overall excess capital combined with a growing desire amongst providers of alternative reinsurance capital to boost participation with “better-performing clients,” contributed to further rate declines during the June renewal period.