Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • September 2016
09

Reinsurers to face soft cycle for longer, says S&P

Open-access content Wednesday 14th September 2016 — updated 5.50pm, Wednesday 29th April 2020

The soft cycle in reinsurance has continued longer than many reinsurers expected in the past few years, according to a report published by Standard and Poor’s (S&P).

2


The ratings agency's comments come as negotiations for the 2017 reinsurance contracts begin in Monte Carlo in September. 

Premiums will continue to decline in the absence of very large losses, said S&P in the report. "Competition has increased, putting pressure on reinsurers' top and bottom lines."

They predict returns will continue to weaken, with a combined ratio of 97%-102% and return on equity of 7%-9% for 2016, a deterioration from previous years.

S&P believes the industry is slow to respond to changes in the market.

"We also see the possibility that the reinsurance industry's relevance to cedants and other buyers could be under threat from alternative capital or technology companies, or that reinsurers' relaxed attitude to product innovation could undermine the value of reinsurance in buyers' minds," it said in the report.

"We see limited evidence of reinsurers actively looking to address these risks, and if this remains the case, it could lead to negative rating changes over the longer term."

Smaller firms are expected to be worst-hit, as larger companies have "more tactical tools" to survive the soft cycle and are better positioned to help ensure their relevance to clients in the long term.

"Larger, more diversified reinsurers, with lower costs of capital and more comprehensive product offerings, should be able to retain more business that meets their profitability targets than more concentrated, less sophisticated peers."

The organisation predicts overall firms should have enough capital to absorb continued price declines, a significant catastrophe shock, earnings deterioration, or increased asset risk over the next 12 months. Therefore it does not anticipate many rating changes despite the weak business conditions.

"Our ratings on global reinsurers reflect these firms' extremely strong capital adequacy, enterprise risk management, and competitive positions, which should allow them to withstand the unfavourable conditions for the next year."

S&P's report was published to coincide with the 2016 Reinsurance Rendez-Vous, an industry event taking place this week in Monte-Carlo.

This article appeared in our September 2016 issue of The Actuary.
Click here to view this issue
Filed in
09
Topics
Reinsurance

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Deputy Head of Capital Modelling

London (Central)
£110000 - £130000 per annum
Reference
144789

Head of Analytics (Actuarial)

London (Central)
£130000 - £165000 per annum
Reference
144788

Pensions Actuarial Analyst - GMP Equalisation

London (Central)
£ dependent upon experience
Reference
143745
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ