Publicly traded reinsurance companies saw their stock prices end 2014 below the overall market, according to a new report from A.M. Best.
According to the agency, the fall was driven by the increased volatility in the stock market during the summer and autumn, and was augmented by continued concerns over the decline in pricing for reinsurance risk.
Of the 19 publicly traded worldwide reinsurers featured in the report (including the four large Europeans—Munich Re, Swiss Re, Hannover Re and SCOR), only four outperformed the overall market in 2014 and four others actually experienced negative returns in 2014.
Regardless of the low level of losses and continued favourable reserve releases from prior years, the pricing pressures for catastrophe business were well evident for all of 2014, according to A.M Best.
During 2014 reinsurance companies have seen catastrophe price declines of 20 percent in some cases (more pronounced in the US).
January 2015 renewals once again reported a decline in reinsurance price between 5 percent and 15 percent, depending on risk and loss experience.
The dramatic price declines in 2014 and for January continued to be attributed to the lack of market-changing losses as well as increased retentions carried by ceding companies and the abundance of capital in the market.
