KUALA LUMPUR, Sept 7 — The outlook of the global reinsurance sector has changed to stable from negative as reinsurance prices increased amid a global economic rebound, supporting the sector’s earnings, according to Moody’s Investors Service report.
Moody’s vice-president and senior analyst Helena Kingsley-Tomkins said healthy price increases would drive stronger earnings through 2022 as the post-pandemic economic recovery and recent significant catastrophe losses fuelled fresh demand for reinsurance.
“The sector’s capitalisation remains solid with solvency ratios resilient in a range of stress scenarios,” she said in a statement today.
According to Moody’s, property reinsurance prices continued to climb driven by recent natural catastrophe losses and a re-evaluation of secondary peril risks, including winter storms, flooding and wildfires.
“Casualty pricing also remains strong across most lines because of higher demand, loss cost trends and low investment yields,” it said.
Meanwhile, it said uncertainty over Covid-19 liabilities had diminished although pandemic-related claims continue to affect earnings for some large multiline reinsurers in 2021 driven by higher-than-expected mortality claims.
“The pandemic has caused reinsurers to take a more prudent stance towards systemic risk management, including communicable disease, cyber events and climate change,” it said.
Moody’s said as alternative capital returns to growth in 2021, traditional reinsurers with strong third-party capital management platforms would be well-positioned to take advantage of new opportunities.
“For reinsurers, such platforms generate fee income while allowing them to underwrite risks and increase their market share at a lower capital cost,” it added. — Bernama
