The global reinsurance sector could finally be facing a turnaround, with pricing improvements persisting for most lines while property catastrophe lines are experiencing a full-on hard market environment, according to a new report by S&P Global Ratings.
In the report titled "Is The Global Reinsurance Sector About To Turn A Corner?", the global credit rating agency asks the question that is on everyone's mind: will these pricing improvements be enough to combat the endless barrage of headwinds against the reinsurance sector that have muted returns for years?
The combined impact of higher frequency and more severe natural catastrophes, untamed inflation across the world, mark-to-market investment losses eroding capitalization, and the Russia-Ukraine conflict all threaten the reinsurance sector.
As a result, S&P Global Ratings' view on the global reinsurance sector remains negative, reflecting its expectations of credit trends over the next 12 months, including the distribution of rating outlooks, existing sector-wide risks, and emerging risks.
As of 31 August 2022, 19% of ratings on the top 21 global reinsurers were on CreditWatch with negative implications or had negative outlooks, 76% were assigned stable outlooks, and 5% were on CreditWatch positive.