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Global reinsurance market improves to 'Stable', per S&P Global Ratings

S&P Global Ratings has revised its view of the global reinsurance sector to 'Stable' from 'Negative'.

In a report titled "Global Reinsurance Stabilizes As Green Shoots Emerge In Underwriting," published yesterday, S&P Global Ratings credit analyst Mr. Taoufik Gharib said, "During the 2023 renewals, much-needed structural changes in reinsurance underwriting, including tighter terms and conditions and repricing of risk, resulted in the hardest market in decades in short-tail lines, shifting pricing power back to reinsurers."

He also said, “We have changed our view of the global reinsurance sector to ‘Stable’ from ‘Negative’ because we expect it will earn its cost of capital in 2023-2024, based on favourable property/casualty reinsurance pricing conditions, pre-pandemic earnings levels in life reinsurance, and increasing net investment income.

“We expect these green shoots will take root and help address industry challenges. Reinsurers have had to quickly adapt to evolving conditions amid more frequent and severe natural disasters and an abundance of unprecedented economic and geopolitical events. High inflation, COVID-19, and the Russia-Ukraine conflict have had untimely negative effects on an already overburdened sector.”

Meanwhile, mark-to-market losses eroded aggregate capital buffers for the reinsurance sector to a position just redundant at the 'AA' confidence level at year-end 2022, but some of those losses are beginning to unwind, and improving operating results should sustain the industry's capital adequacy.



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