According to the newly issued Best’s Market Segment Outlook from ICMIF Supporting Member AM Best, the global rating agency 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.

The findings of the Best’s Market Segment Outlook: Global Reinsurance report show that despite reinsurance rate increases decelerating, underwriting discipline is being maintained and profit margins remain healthy enough to absorb higher loss activity than recently experienced.

“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.”

The report also notes recently improved and stabilised underwriting margins followed a string of disappointing results in the years after heavy weather-related losses in 2017 (notably Hurricanes Harvey, Irma, and Maria). Repricing efforts were compounded by various actions aimed at tightening terms and conditions, with a diminished appetite for aggregate protection, focus on named perils, shift from proportional to excess of loss covers, and a sharp increase in attachment points, according to the report.

Reinsurance books for the largest players continue to expand owing to a combination of higher reinsurance rates, flight to quality and increased demand. While loss ratios during the first quarter of 2024 were impacted by large losses, including the collapse of the Francis Scott Key Bridge in Baltimore, underwriting margins and annualized ROEs remain strong.

“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.

Learn more about the rationale for the outlook change in this video where AM Best Senior Director Carlos Wong-Fupuy highlights the new Best’s Market Segment Report, crediting underwriting discipline and healthy profit margins as among the contributing factors to the global reinsurance segment upgrade.

To access the full copy of Best’s Market Segment Outlook: Global Reinsurance report, please click here.

To view current Best’s Market Segment Outlooks, please click here.

Forthcoming reinsurance events with ICMIF and AM Best

ICMIF members attending the Rendez-Vous de Septembre in Monaco this year are invited to attend the ICMIF Monaco Mutuelle cocktail event, organised in partnership with AM Best, taking place on Tuesday 12 September. This event will allow mutual and cooperative insurers from around the world to network and make new reinsurance connections, thereby strengthening their organisations.

If you would like to know more or register your interest for ICMIF’s Monaco Mutuelle event, please contact ICMIF at [email protected].

AM Best also extends an invitation to all ICMIF members to attend its Reinsurance Market Briefing during the Rendez-Vous de Septembre on Sunday 8 September 2024. Visit AM Best’s event webpage for more details and the opportunity to register. Delegates to the Rendez-Vous are welcome to join AM Best at the Hotel Hermitage to meet with and hear from senior management and analytical personnel from across their global offices as they present the agency’s perspectives on the state of the global reinsurance sector.

Lastly, ICMIF has opened registration for the 2025 Meeting of Reinsurance Officials (MORO) which will take place near Helsinki (Finland) from 3-5 June 2025, hosted by LocalTapiola. The MORO conference is an unrivalled opportunity for reinsurance professionals to share and discuss issues of common interest with peers from all over the globe in a collaborative and supportive environment which meets every two years. For full details and to register, visit the event page on our website.