Too soon to predict a hard market in non-life sectors; Fitch says

In response to the global financial crisis, Fitch has revised its rating outlook from ‘stable’ to ‘negative’ for 12 (re)insurance sectors globally.
In addition, it has confirmed its previous negative outlook on six insurance sectors.
“The negative outlooks reflect the significant falls in global credit and equity markets, and unprecedented market volatility and uncertainty,” according to a Fitch Ratings release. “Of greatest concern to Fitch are declines in the market value of investment holdings that have led to significant declines in economic capitalization and profitability for many insurers.”
The negative outlook means that over the next 12-24 months, Fitch expects more downgrades than upgrades within each of the sectors. But, it does not imply that all, or even a majority, of ratings within each sector will necessarily be downgraded, the ratings agency said in a release.
For the non-life insurance sectors, declines in investment values and capital have exacerbated other pressures that the sectors were already facing, Fitch says. These other pressures include ongoing intense competition and ‘soft premium’ rates in many lines of business, the expected general deterioration of underwriting results and expected reductions in reserve releases as compared to recent years, Fitch says.
“While capital pressures could ease the softening trend in non-life pricing, Fitch believes it would be premature to predict a shift to a hardening market,” Fitch notes in a press release.
“Unlike life insurance companies, non-life insurers generally have minimal liquidity exposures, as their products are not deposit-based or linked to institutional funding.
“However, Fitch believes that the global reinsurance sector could experience some liquidity pressure in the current environment.”