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Member, Beacon International Group, Ltd.
The rating outlook for the global reinsurance industry remains stable, A.M. Best Co. Inc. said Monday in a briefing.
Best said global reinsurers are well-capitalized and “capable of absorbing significant losses from a combination of events.” Oldwick, N.J.-based Best also said that the industry follows prudent enterprise risk management practices and is enjoying an improving pricing environment over a broad range of business classes.
The market appears “poised for a turn,” said Best. Recent events including catastrophes, increased volatility of assets and updated catastrophe models have caused primary insurers to change their perspective of risk.
Risk awareness, regulatory pressures
“This increased awareness of risk, combined with growing regulatory pressures on solvency margins, appears to have turned the tide on demand for reinsurance, especially in loss-prone regions of the world,” said Best.
Best expressed concern, though, that the reinsurance industry's positive momentum may be short-lived.
“History has proven that the market has a short memory, and if the sting of recent loss events quickly fades, the soft market may return,” Best said in the briefing. That would cause a slow erosion of the reinsurance industry's capital strength, and Best said it would consider revising its rating outlook to negative.
Best has maintained its stable outlook for the http://www.businessinsurance.com/article/20110110/NEWS/110119993 reinsurance industry for six consecutive years.