Capital continues to be drawn to the reinsurance industry despite the fact that fundamentals are trending in the wrong direction, according to A.M. Best’s annual segment review.
The report also explores whether the traditional underwriting cycle has grown distorted and notes that the flurry of convergence capital has triggered behavioural changes by the market’s traditional players with more company names appearing for the first time on reinsurance programmes in unusual locations.
A.M. Best recently revised its ratings outlook on the global reinsurance industry to negative from stable.
Investors continue to turn toward catastrophe bonds to improve investment performance, despite risking the entire principal over a relatively short-term period.
The report notes a pattern in the catastrophe bond market: the increasing value of certain bond issues and declining coupon payments.
Of catastrophe bonds issued in 2013, 51.2 percent had a coupon payment of 500 basis points or better. That number has dropped to about 42.2 percent so far in 2014.
Most traditional reinsurers maintained their market share, according to A.M. Best’s annual top 50 ranking of global reinsurance groups in 2013. The majority of movement occurred among the ranking’s bottom two-thirds.
The top three companies in the ranking are Munich Reinsurance Co, Swiss Re and Hannover Rueckversicherung AG.
