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Member, Beacon International Group, Ltd.
MONTE CARLO, Monaco — While the outlook for the reinsurance industry as a whole remains stable and profitability remains adequate, there are several challenges facing the global reinsurance market, according to Fitch Ratings Ltd.
At a briefing during the Rendez-Vous de Septembre reinsurance meeting in Monte Carlo, Monaco, on Sunday, Martyn Street, a director at Fitch in London, said that among other things, rate softening on many lines of business would prove a challenge to reinsurers' profitability.
He added that expected continued low investment returns also would be a challenge.
Mr. Street said that at all the major renewals to have taken place so far in 2013, there has been an overall reduction in rates and, barring any major loss, that trend is expected to continue at the Jan. 1, 2014, renewal.
At this year's June and July renewals, loss-free U.S. property business saw rate reductions of between 10% and 20%, said Mr. Street, while loss-hit programs saw price movements of between a 5% reduction and a 5% increase.
Loss-free business in Florida saw rate reductions of between 15% and 25%, he said.
If there are no major catastrophic losses before the end of the year, rates likely will fall further in many lines, though they will largely remain at “adequate” levels, Mr. Street said.
Rates for casualty business have been flat to falling over the past several years, he noted.
Business Insurance's digital coverage of the 2013 Rendez-Vous de Septembre is sponsored by Partner Re. To view all the Digital Daily news and related content in its ideal form, use a non-mobile browser to visit www.businessinsurance.com/RVS2013.