AM Best has published its most recent report on the global reinsurance industry, entitled, Best’s Market Segment Report: AM Best Maintains Stable Outlook on Global Reinsurance Industry. In the report, the ratings agency says profit margins for reinsurers have widened, thanks to substantial rate improvement and higher coverage attachment points.
“Factors have prompted some reinsurers to retract significant amounts of capital from the property reinsurance market. Those remaining reinsurers have benefitted from the reduced supply via drastically higher attachment points and higher risk-adjusted rates on line,” says AM Best senior director, Carlos Wong-Fupuy.
Factors contributing to the stable outlook include increased demand for catastrophic coverage and rising investment income with new money yields on fixed income investments more than doubling. Offsetting factors include growing uncertainty about underlying risks, cautious new capital and concerns about economic and social inflation. Higher post-COVID-19 mortality is also a concern in some markets.
“Although global life reinsurers have reported an improvement in mortality since the height of the pandemic, non-COVID mortality experience generally remains higher than expected – life reinsurers have noted an uptick in deaths related to liver disease, drug use and diabetes – and whether mortality will revert to pre-COVID levels remains to be seen.”