AM Best revises outlook for global reinsurance industry to positive

Written by Adam Cadle

10/06/2024

AM Best has revised its market segment outlook for the global reinsurance segment to positive from stable, citing robust profit margins along with higher attachment points and tighter terms and conditions that followed a period of drastic repricing.

Despite reinsurance rate increases decelerating, underwriting discipline is being maintained and profit margins remain healthy enough to absorb higher loss activity than recently experienced, according to the newly issued Best’s Market Segment Outlook.

“Demand for coverage remains strong due to heightened natural catastrophe loss activity and general economic uncertainty,” said Carlos Wong-Fupuy, senior director, AM Best. “We also considered the expectations of a slower reduction in interest rates than originally anticipated, which are likely to support strong returns in the short term.”

Reinsurance books for the largest players continue to expand owing to a combination of higher reinsurance rates, flight to quality and increased demand.

“AM Best believes that the exceptional returns on equity experienced in 2023 are unlikely to be repeated at such a high level, but expects reinsurers to focus on underwriting discipline in the near term,” Wong-Fupuy said.

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