Global reinsurance market struggling to maintain top line: A.M. Best

Capital in the global reinsurance market increased 24% in 2009 from 2008, but market conditions for most lines of business are compressing underwriting margins, reports A.M. Best.
In its report, Reinsurers Battled Headwinds of Softening Market in 2009, A.M. Best says the global reinsurance segment has struggled to maintain its top line over the past year.
“Despite adherence to underwriting discipline, underwriting margins are being compressed by deteriorating rates and increasing loss costs for most classes of business and territories, which are eroding the underlying accident-year performance,” the report says. “Reinsurers have rightfully taken a defensive position against all of the headwinds they face.
“[O]n the underwriting side, 2009 brought a meaningful shift in reinsurers’ underwriting portfolios toward shorter-tailed property and casualty classes.”
As of the Jan. 1 renewals, only loss-exposed lines such as credit/surety and financial institutions directors and officers’ risks were stable or saw rate increases, the report says.
With these exceptions, aggregate rates were flat to down between 5% and 10%.
“The recent major earthquakes across the globe are not market-changing by themselves,” the report says. “However, they may be material enough to stabilize cat pricing, at a minimum for the particular zones affected, as the realization of potential quake-related losses weighs on the minds of risk bearers.”