Reinsurer RoE’s drop again
Thursday, 09 07 2017, Category: Insurance and Reinsurance, Country: World
It continues to surprise that at a time when reinsurance company returns are shrinking that they continue to spend more. Willis Re reports this morning that the efficiency of the industry is declining in real-terms, based on reinsurers underlying returns-on-equity (RoE’s) dropping to just 3.7%, while expense ratios continue to rise.
The impact of this is that, to a reinsurer, its capital and capacity is not becoming more efficient, which is what’s needed in a reinsurance market characterised by excess capital, competition from the capital markets and ILS funds, and new business models stimulated by InsurTech innovation.