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S&P warns of eroding reinsurance profitability margins
02 February 2010
Global reinsurers face the daunting prospect of eroding profitability margins over the next two to three years, S&P has warned in a new report.
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S&P
standard & poor's
Global reinsurers face the daunting prospect of eroding profitability margins over the next two to three years, Standard & Poor’s (S&P) has warned in a new report.According to the rating agency, premium rate adequacy is particularly tenuous in casualty reinsurance, where further weakening in premium rates or terms and conditions could tip the scale towards unprofitable underwriting. “If reinsurance premium rates continue to decline and significantly lower our expectation for operating profitability, we could revise our global outlook on the industry to negative,” S&P said in the report.S&P’s expectation for strong earnings, combined with the reinsurers’ improved capitalisation, strong liquidity position and conservative investment portfolios, are supporting the rating agency’s stable outlook for the industry.Reinsurers' improved capital positions, which S&P described as remarkable, have increased competition and dampened earlier hopes for stable or slightly improved premium rates in 2010.Most global...
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