Morningstar DBRS has published a recent commentary about its outlook for global reinsurers following a strong first quarter in 2024.

They say global property and casualty (P&C) reinsurers reported strong underwriting and investment profitability during the period, thanks to ongoing hard market pricing, lower natural catastrophe cost and strong fixed income yields.

They add that almost all of the companies the firm follows reported an increase in net profits, compared to the same quarter in 2023.

Despite this, they say underwriting profitability could be affected by future natural catastrophes, the intensity of which could result in above-average losses. “Nonetheless, we do not anticipate any credit rating impact from the potentially more active hurricane season,” they write in the note, Strong Q1 2024 Earnings for Global P&C Reinsurers, But Hurricane Season and Global Economic Uncertainty May Present Challenges

They add that reinsurers could also face additional volatility from spread and equity market risks, with geopolitical tensions and global economic slowdown threatening to undermine investment returns. The note also warns of growing exposures related to population growth in coastal areas. Hurricane Beryl, they warn, could be an early indicator of what to expect for the rest of the year. “While the potential future natural catastrophe losses could be significant, we believe that the industry is well-capitalized, which mitigates some of our concerns,” they conclude.