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20 August 2019Insurance

Below average cat losses boost non-life profits in H1 2019: Fitch

Profitability for non-life reinsurers' underwriting rose in the first half of 2019 caused in part by below average catastrophe losses, which in turn helped to offset mixed results for life reinsurers, according to Fitch Ratings.

The ratings agency found that non-life reinsurance net written premiums increased 11.3 percent in H1 2019, compared with a slight decline for life reinsurers.

However, analysis of 16 reinsurers H1 results showed an aggregate calendar year combined ratio of 94.6 percent, up slightly from 92.7 percent a year ago as reinsurers were hit by adverse developments in Typhoon Jebi losses.

Life and health performance was mixed, with only five out of eight reinsurers posting higher net premiums earned.

The agency predicted that “the firm market will continue through the January 2020 renewals period, and reinsurers will retain more capital in the near term on the back of more favourable pricing.”

Brian Schneider, senior director, reinsurance at Fitch, said: "Even with the costliest successive years on record of catastrophe losses in 2017 and 2018, overall pricing remains inadequate and well below recent risk-adjusted levels.”

The research said that global reinsurance catastrophe losses narrowed to $15 billion in the first six months of 2019 from $23 billion in the first half of 2018. The H1 2019 figure also represented a drop from the 10-year average for H1 of $31 billion. But, the agency added “additional 2019 losses cannot be ruled out”.

A slower rate of cat bond issuance slashed the H1 2019 results for the Insurance Linked Securities market “to one of the lowest levels seen in a decade”.

Fitch added: “While ILS funds continue to attract new capital, the pace is more measured than in 2018.”

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Research reveals non-life profit boost in H1 as cat losses ‘below average’

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