Best’s Market Segment Report: Reinsurance: Will Investor Losses Lead to a Rising Tide for Reinsurance Pricing?

OLDWICK, N.J.–(BUSINESS WIRE)–Pricing in the global reinsurance sector remains disappointing following
the Jan. 1, 2019, renewals, according to a new AM Best report, as
expected rate increases following heavy catastrophe losses in 2017-2018
did not come to fruition.

The Best’s Market Segment Report, titled, “Reinsurance: Will
Investor Losses Lead to a Rising Tide for Pricing?,” states that
expectations were that reinsurers would react swiftly and adjust their
pricing following the heavy catastrophe loss years in an effort to
reverse the segment’s depressed performance. However, renewal rates were
mostly flat, with the most significant increases only experienced by
loss-affected accounts. Companies tried to maintain discipline, with a
few walking away from poorly priced business, while others, particularly
the larger players, focused on market share, and as a result remain
willing to write inadequately priced risks.

However, investors mindful of the recent poor results have started to
demand higher returns and have been more selective in some of the risks
and thus capital inflows have slowed aiding in the increase of renewal
rates for this segment. Rates in the property catastrophe retrocession
segment rose between 10% and 20% at the Jan. 1 renewals, with peaks of
35% on loss-affected accounts.

AM Best believes that investors will continue to invest in third-party
capital and that the alignment between third-party and traditional
capital will endure, guaranteeing an abundance of capacity for the
reinsurance segment.

Although January renewals did not proffer the price increases that were
expected given the nearly $200 billion in losses of the past 18 months,
the upcoming renewal seasons will shed more light on the impact of
recent typhoon, hurricane and wildfire losses on rates for the remainder
of 2019.

To access the full copy of this market segment report, please visit

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Filippo Novella
Financial Analyst
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Mariza Costa
Senior Financial Analyst
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Christopher Sharkey
Manager, Public Relations
908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644

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