Global reinsurance sector remains stable

The global reinsurance sector continues to remain stable, according to a Fitch Ratings Report, Reinsurance Review and Outlook: Conditions and Trends Support Stable Ratings.
For non-life reinsurers, premium rates and underwriting terms and conditions are sufficient to produce near-term underwriting profits, according to the report. Capital continues to grow throughout the sector and although some reinsurers are actively repurchasing shares (at least up until hurricane season began) or paying special dividends, these capital management strategies are not weakening capital profiles below those expected at current rating levels.
The non-life reinsurance sector is not as stable as the life reinsurance sector, according to the Ratings Outlook, due to concentration among a small number of players in the life reinsurance sector.
Fitch notes that the biggest challenge facing the non-life sector is to effectively manage the underwriting cycle, which is something that has proved elusive in the past.
Fitch commented that subject to a return to historical catastrophe experience in 2006, the non-life reinsurance sector would experience moderate rate reductions in 2007 and see its cycle management strategies truly tested in 2008, according to the special report. If anything, the relative lack of large catastrophe-related losses since 2005s record losses has accelerated these trends.