Fitch maintains negative outlook for London market despite improved pricing
The sector outlook for London Market insurance remains negative for 2018, reflecting the expectation that underwriting results are likely to stay pressured despite anticipated improvements in pricing conditions, according to a Fitch Ratings report.
Underwriting results are expected to suffer from high expense ratios and lower contributions from reserve releases.
If cat losses in 2018 are to be at the long-term average, Fitch anticipates the market combined ratio to be close to 100 percent.
Against a backdrop of several years of declining rates, the ratings agency is starting to see significant price rises in loss-affected and cat-exposed lines of business, such as large US property and catastrophe reinsurance.
The market was hit by hurricanes Harvey, Irma and Maria - along with two Mexican earthquakes - in the space of a month, with total insured losses estimated at as much as $100 billion.
Fitch expects these cat losses to be a capital event for some companies and insurers would want to rebuild their capital buffers through increasing premium rates.
However, strong levels of available capital in the market and intense competition could mean that sustainable rate rises on non-loss-affected lines are harder to achieve and rate increases could be short lived.
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