Reinsurance pricing has continued to soften following a strong 2015 for catastrophe losses, according to a report published by Standard & Poor’s (S&P) Ratings Services.
The report revealed that a strong year reported by the global reinsurance industry in 2015 was largely due to the low level of catastrophe losses and high level of reserve releases.
According to S&P ratings, if you take away these two factors, the report shows that the adjusted results support the claim that business conditions for the sector remain weak.
In a survey carried out by S&P in Q1 2016 reinsurers indicated that reinsurance pricing across lines and regions has continued its downward trend into 2016, although the decline was less severe than expected.
According to reinsurers, ongoing rate deterioration affects both top and bottom line results, but other factors also reinforce the weak credit conditions for global reinsurance in 2016.
The ratings service suggested that the industry continues to benefit from strong capital adequacy and explained: “We are maintaining our stable ratings outlook on the global reinsurance sector, based on the industry's strong enterprise risk management and near-record levels of capital entering 2016.”
