Speed of convergence capital entering market has slowed

The speed of convergence capital entering the market seems to have slowed, according to a new AM Best briefing.

Despite $75 billion of such capital estimated to have entered the market in 2016, up 10 percent from the $68 billion recorded in 2015, this is lower than previous years – something that would be healthy for the market, the rating agency said.

“Third party capital continues to seek a larger piece of the pie but the speed of capital market capacity entering the market seems to have slowed compared with prior years and some collateralised markets have held capacity flat unable to find suitable opportunities,” the report said. “In AM Best’s opinion, this is a healthy response to current market conditions.”

Overall dedicated reinsurance capacity also will likely see a slight increase, the report said, to $420 billion from $400 billion in 2014 and 2015.

The Best's Briefing, titled, "Restraint in a Challenging Market Environment," states that conditions in the global reinsurance market remain competitive, even as cession rates have begun to tick up, driven by the relatively stable terms and conditions available in the market.