The Global Reinsurance Highlights 2022 report published by S&P Global Ratings is pointed: The firm has a negative view of the global reinsurance sector, thanks to slowing economies, rising inflation, investment volatility, elevated natural catastrophes and climate change.
Notably, they say the industry is divided on climate change and natural catastrophe risk with half of reinsurers increasing their exposure to the sector while the other half reduced their exposure in 2022. The report also looks at the growing demand for cyber insurance and the challenges reinsurers are having when convincing the market of insurance-linked securities (ILS) investors to assume some of the risk.
In addition, the report examines underwriting performance and growth potential and how International Financial Reporting Standards 17 (IFRS 17) will impact the firm’s credit rating analysis of companies. It also ranks the top 40 global reinsurers by net reinsurance premiums written, based on data from 152 reinsurance organizations in more than 32 countries.
“Our view of the global reinsurance sector remains negative, although we expect underwriting profitability will improve in 2022-2023 in both property casualty (P&C) and life insurance,” says S&P. “Reinsurers will continue to struggle to sustainably earn in excess of their cost of capital due to potential heighted natural catastrophe losses, capital market volatility, increasing cost of capital and high inflation in 2022 and 2023.”
Insurance Portal will publish three more articles this week on S&P’s reinsurance report.