Softer For Longer: Are Global Reinsurers Ready For A Long Soft Cycle And An Evolving Business Landscape?

As negotiations for the 2017 reinsurance contracts begin in Monte Carlo, business conditions for the global reinsurance industry remain weak. S&P Global Ratings expects prices to continue declining in the absence of a very large loss. The soft cycle is proving to be deeper and longer than many market participants anticipated in 2013, with falling premiums increased competition putting pressure on reinsurers' top and bottom lines.

However, S&P's ratings on global reinsurers reflect these firms' extremely strong capital adequacy, enterprise risk management (ERM), and competitive positions, which should allow them to withstand the unfavorable conditions for the next year. The agency's forecasts factor in deteriorating earnings over the next two years, but it expects capital buffers to remain resilient. S&P's therefore doesn't expect to see many rating changes over the next 12 months.

Download here the full Ratings Direct report of September 6, 2016, courtesy to S&P Global Ratings.

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