Fitch maintains stable outlook for global reinsurance market

Rating agency Fitch Ratings Ltd. maintained a stable outlook for global reinsurance sector, but warned that a single loss event of $60 billion would likely trigger a revision of the sector’s outlook, Reuters reported.

The $60 billion estimate was revised upwards from the previous estimate of $50 billion as the rating agency expects the sector's capitalization to strengthen further and premium growth to continue into 2013.

While Chris Waterman, managing director in Fitch's EMEA insurance rating group, expects reinsurers' profitability to be pressured by low investment yields and anticipated decline in prior-year reserve surpluses, Fitch expects adequate pricing will support profitability across most reinsurance classes.

But Fitch expects price growth to slow as the supply of reinsurance is expected to exceed demand across most classes in 2013.

At present, the sector's stable outlook is likely threatened by a combination of another catastrophic loss and reinsurers' inability to replenish lost capital, Martyn Street, director in Fitch's EMEA rating group, said. However, he said that such a combination is rare.

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