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Reinsurance outlook remains stable despite new capital influx: Best


The outlook for the global reinsurance sector remains stable despite increasing competition, according to a reported issued by A.M. Best Co. Inc.

In “Global Re Outlook Remains Stable; Abundant Capital Weighing on Market,” released Monday, Best said reinsurers continue to be disciplined on both the underwriting and investment sides.

Best said its stable outlook was “predicated on strong risk-adjusted capital, discerning enterprise risk management and a slow improvement in the global economic environment underpinned by the United States.”

Best noted that overcapacity in the reinsurance sector had put downward pressure on rates and terms and conditions.

In addition, Best said, reinsurance buyers continue to increase their retentions, and capital from nontraditional sources, such as pension and hedge funds, continues to flow into the reinsurance sector.

“This external threat (with vast amounts of money) is of concern and could be the game-changer going forward,” the report noted.

“Reinsurers that have global reach and diversified business platforms, including primary insurance distribution capabilities and the ability to manage third-party capital, are better positioned to withstand these competitive pressures over the near term,” it said.

The report is available here.