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Fitch projects worst combined ratio since 2011 for reinsurance sector

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Fitch projects worst combined ratio since 2011 for reinsurance sector

Fitch Ratings said Dec. 7 that the fundamental outlook for the reinsurance sector remains negative in light of low prices and continuing low returns on investment.

The agency updated its outlook for the industry for 2018 to take account of various catastrophes, including hurricanes Harvey, Irma and Maria, losses from which amount to a "significant percentage of capital for some reinsurers" and prompted revisions to negative on the outlooks of several companies, including XL Group Ltd and AXIS Capital Holdings Ltd.

The agency expects an aggregate combined ratio for the entire sector of 109.7% in 2017, the worst performance since 2011.

However, Fitch expects that the strong capital levels of most reinsurers means that they will be well-positioned to take advantage of higher prices for reinsurance at the crucial Jan. 1 renewal window, although it noted that further additions to loss estimates or additional loss-triggering events before year-end could add further pressure.