LONDON — Reinsurers are operating within a challenging environment of fierce competition fueled by ample capacity and changes in buying habits, but are finding ways to diversify and manage their risks, according to Standard & Poor's Corp.

And many reinsurers are taking defensive action, such as underwriting more proportional or primary business, in a bid to maintain their positions, said Dennis Sugrue, director and reinsurance sector specialist for the Europe, Middle East and Africa region at S&P in London, at a briefing in London on Tuesday.

Speaking ahead of the Monte Carlo, Monaco, reinsurance Rendez-Vous de Septembre gathering next week where reinsurers, cedents and brokers meet to discuss the upcoming renewals, Mr. Sugrue said that a trend among large cedents to buy less reinsurance from fewer reinsurers now is spreading to midsize buyers of reinsurance.

Reinsurance rates are likely to continue to fall at the upcoming renewals season, S&P said, although probably at a slower rate than in 2014.

The rating agency said that on average, rates likely will fall by up to 5% at Jan. 1, with rate declines for property catastrophe business likely to be more pronounced.

Reinsurers will not be able to rely overly on reserve releases to boost their profits in coming months, as there has been a relatively benign period of catastrophe losses, said Mr. Sugrue, and investment income also is unlikely to boost reinsurers' profits to any great extent as any rises in interest rates in 2016 likely will be small.

“This highlights the importance of technical underwriting profitability,” Mr. Sugrue said.

Many reinsurers are adapting to the competitive challenges by seeking to diversify their books of business, he said, by writing more U.S. catastrophe, crop or mortgage insurance business, for example, and reducing their writing of property catastrophe business.

And several reinsurers have begun to increase their proportional and/or primary business, he said.

There likely will be more merger and acquisition activity before the year is out, said Mr. Sugrue, noting the announcement Tuesday of a proposed acquisition by Mitsui Sumitomo Insurance Co. Ltd. of London-based Amlin P.L.C. in a deal that values Amlin at about £3.47 billion.

The recent spate of M&A activity in the reinsurance sector has largely been defensive, Mr. Sugrue said, driven by a need for scale and diversification.

“In many cases, it is a responsible move,” said Mr. Sugrue, enabling catastrophe-focused businesses to diversify their books, for example, he said.

But these mergers are not necessarily alleviating the competitive pressure on the sector as a whole, he said, as not much capital has left the sector as a result of the deals.

And while more M&A is to be expected, there are few potential takeover targets left, Mr. Sugrue said.