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Reinsurers faced accident-year underwriting loss in 2016: A.M. Best | Canadian Insurance
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Reinsurers faced accident-year underwriting loss in 2016: A.M. Best

Global reinsurers had a return on equity of 8.2% in 2016

The global reinsurance market faced its first accident-year underwriting loss in five years in 2016, according to a new report from A.M. Best.

Related: P&C stable in 2017 but faces significant market pressures: A.M. Best

The report, titled “Down But Not Out: Reinsurers Look to Reposition Amid Market Disruption,” notes that global reinsurers had an average accident-year combined ratio of 101.0 and a return on equity of 8.2% in 2016.

With the exception of 2011, which had several global catastrophes, the underwriting loss was the first the sector had seen in more than 10 years.

Related: 2016 ends with record-breaking CAT loss and dramatic decline in income

A.M. Best has had a negative rating outlook on the sector since August 2014, and points to “declining rates, broader terms and conditions, unsustainable reserve takedowns, low investment yields and continued pressure from convergence capital” to explain its current challenges.

The report indicates that there are areas for potential growth in cyber insurance and mortgage reinsurance, and notes that reinsurers have adapted to market conditions by lowering their net probable maximum loss in peak zones, among other measures.

There was also a shift in A.M. Best’s Top 50 Global Reinsurance Groups in 2016, with Swiss Re Ltd. overtaking Munich Reinsurance Company as the world’s largest reinsurer, based on reinsurance gross premiums written.