4 September 2017News

Reinsurance sector profitability to decline in 2017

The profitability of the reinsurance industry is set to fall in 2017 due to low prices and Hurricane Harvey, Moody’s said in a Sept. 4 report.

Reinsurers’ earnings rose a modest 1.4 percent in the second quarter of 2017 from the same period a year earlier, and their median combined ratio improved to 92.6 percent from 95.7 percent over the period, helped by lower catastrophe losses, according to Moody’s.

Nevertheless, Moody’s expects full-year 2017 earnings to fall compared to the previous year given the cohort's weaker performance in the first quarter and expected losses related to Hurricane Harvey. While Harvey is likely to drive an uptick in pricing in the affected regions, Moody’s does not believe property reinsurance pricing trends will be materially affected. 

Reinsurance prices are falling for a fifth consecutive year due to excess capital, prompting reinsurers to trim their exposure and cut costs.

As competition intensifies, reinsurers seek new opportunities, Moody’s noted. Intense price competition was reflected in the second quarter in declining property/casualty (P&C) reinsurance premiums, with around half of the cohort reporting lower volumes in this segment. However, revenues rose as reinsurers selectively grew their primary specialty books, entered new lines such as mortgage (re)insurance, or grew modestly in life and health reinsurance. Many also continue to cut costs and adopt new technologies in response to structural changes in the market, Moody’s noted.

Get the latest re/insurance news sent to your inbox every day -  Sign up to our free email newsletters

Today’s stories

Liberty hires AIG underwriter for new European role

NFIP received more than 67,000 claims for Harvey

Hurricane Irma may hit the US

Starr appoints chief underwriting officer for liabilities group

Don't miss our insurtech email newsletter - sign up today

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk

More on this story

4 September 2017   The National Flood Insurance Program (NFIP) has received more than 67,000 claims related to Hurricane Harvey as of Sept. 3, 2017.
1 September 2017   Insurers are expected to weather losses stemming from Hurricane Harvey relatively well in part thanks to the better reinsurance deals many have secured during the soft market, according to AM Best.