A.M. Best predicts European resilience
At its recent London briefing, A.M. Best indicated that the European non-life industry continues to “display strong resilience” in the face of difficult conditions. The ratings agency said that challenges included “flat demand, excessive competition” on specific lines and “declining reserve margins”.
Nevertheless, the resurgence of the investment markets had helped to recapitalise the industry, said Miles Trotter, general manager, analytics at A.M. Best Europe, although uncertainties within the markets remain a concern. Trotter indicated that the weakness of the capital markets was unlikely to spur any major M&A activity in the London Market moving forward, while rates continued to face downward pressure on cat-exposed international business.
Concerning reinsurance, John Andre, group vice president, property and casualty ratings, indicated that the first half-year’s major cat events had largely been “earnings events” for the industry. He indicated that they had however “hit the catastrophe cushion for the industry”, and went on to suggest that further catastrophes might well be “balance sheet events”.
Andre said that the first six months of 2010 had remained profitable for reinsurers, with the industry showing good management discipline and strong segment capitalisation. Looking forward, A.M. Best’s outlook for the reinsurance sector remains stable, with Andre indicating that for upcoming ratings actions, affirmations would predominate.
Touching upon the prospects for development into emerging markets, Vasilis Katsipis, general manager, analytics, said that such markets “continue to provide the best opportunities to insurers”, with the Middle East singled out as a market of particular interest.
