Opalesque Industry Update - Declining rates, broader terms and conditions, unsustainable reserve takedowns, low investment yields and continued pressure from convergence capital are all negative factors that continue to adversely impact global reinsurance companies. These weak operating fundamentals in the reinsurance sector also are being exacerbated by continued weakened demand from primary insurers as they retain more business to leverage their own excess capacity. As a result, companies have intensified their efforts to develop new strategies in order to adapt to structural market changes, as detailed in A.M. Best’s annual special report on the global reinsurance industry. The new Best’s Special Report, “Innovation: The Race to Remain Relevant,” notes that reinsurers have made a number of moves to position their organizations for long-term survival, and increasingly seem to be viewing capital market capacity as an opportunity as opposed to a threat. Capital market capacity has continued to be drawn to the reinsurance sector and underwriters that have the market knowledge and distribution capability to assess risk are benefiting. “Capital market capacity is clearly pressuring the reinsurance sector to work to charge less,” said A.M. Best Vice President Robert DeRose. “With more capital in the market, the ultimate winner should be the insured client as this drives down the cost of insurance. But it is the long-term value proposition that really matters for all parties involved and that outcome is still very unclear.” A.M. Best revised its rating outlook to negative on the sector in August 2014 and has maintained it there since, citing the ongoing market conditions that are hindering the potential for positive rating actions over time, and eventually may translate into negative rating pressures. Other highlights from this year’s report include:
A.M. Best will present a webinar, “The State of the Global Reinsurance Market,” on Thursday, Sept. 8, 2016, starting at 10:00 a.m. EDT. A.M. Best analysts will cover recent developments in the Americas, Europe, the Middle East and Asia, as well as A.M. Best’s annual ranking of leading global reinsurers. Joe Taussig talked about criticisms against hedge funds reinsurers in this Opalesque.TV interview: Article source - Opalesque is not responsible for the content of external internet sites |
Industry Updates
A.M. Best Special Report: Race for global reinsurers still open, premature to discount the “hedge fund re” mode
Tuesday, September 06, 2016
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