Reinsurance industry continues to attract capital: A.M. Best

Capital continues to be drawn to the reinsurance industry despite the fact that fundamentals are trending in the wrong direction, A.M. Best Co. Inc. said in a special report issued Monday.

The report, “How Relevant Is the Underwriting Cycle?,” also found that investors continue to flock to the catastrophe bond market as a way to improve investment performance. That's despite the fact that they're risking the entire principal over a relatively short period, according to Best.

Most traditional reinsurers maintained their market share as measured by the Oldwick, New Jersey-based rating agency's annual top 50 ranking of global reinsurance groups in 2013.

Munich Reinsurance Co., Swiss Re Ltd. and Hannover Rueckversicherung A.G. were the top three in the ranking. The only change in the top 10 was Scor S.E., advancing ahead of Berkshire Hathaway Inc. for the No. 5 slot.

Lloyd's of London, which is No. 4 on the Best ranking, continues to be a significant writer of catastrophe and reinsurance business, with reinsurance representing 36% of gross premiums last year.

“However, after several years of reinsurance premiums increasing, particularly after the catastrophe-affected years of 2010 and 2011, gross premiums fell 3% in 2013 from 2012, reflecting softening market conditions,” Best said in a statement accompanying the report.

Best revised the outlook for the reinsurance industry to “negative” from “stable” in August, citing strains on reinsurers' profitability.