Fitch: Global reinsurance outlook is still stable
Thursday, 09 05 2019, Category: Insurance and Reinsurance, Country: World
Fitch Ratings has provided a stable outlook for the global reinsurance sector for 2020, largely driven by subdued profitability, historically low risk-adjusted prices and low investment yields persisting amid a weak global economic outlook.
The rating agency adds that the outlook is partly down to the high quality of its ratings universe, skewed towards reinsurers with very strong business profiles and capital.
Following two consecutive years of heavy catastrophe losses, Fitch says reinsurance price rises have picked up momentum in 2019.
Improvements on the reinsurance treaty side are in a large part driven by even bigger pricing hikes in the primary markets.
The Lloyd’s market-wide profitability review and the impact of a number of large global carriers re-positioning their portfolios improved the underlying primary rating environment, in turn benefiting reinsurers.
On the casualty side, Fitch says continued concerns over reserve redundancies and loss severity have resulted in improved terms but it remains to be seen whether rate improvements are enough to match underlying risk.