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Pressure on the reinsurance business has been significant in 2016 due to a low interest rate environment and a soft market, but 2017 is likely to be even tougher and could lead to negative ratings actions, according to major rating agencies.
AM Best, Fitch and Moody’s all hold a negative outlook for the global reinsurance sector.
The reinsurance industry faced pricing pressure in 2016 while a low interest rate environment squeezed investment yields. The sector was, however, able to offset these pressures through reserve releases due to the absence of large catastrophe losses.
AM Best sees continued market challenges hindering the potential for positive rating actions over time, and adds that this trend may eventually translate into negative rating pressures.
Reinsurance, Ratings, Fitch, Moody's, AM Best, 2017 Outlook, Robert DeRose, Europe, North America, Asia Pacific