S&P Global Ratings described the current global reinsurance pricing environment as a "hardening market," which is a promising sign for the rest of 2019 for global reinsurers.
The rating agency noted that reinsurers saw property catastrophe rate increases in the range of 15% to 25% on loss-affected accounts during April and June renewals following "disappointing" reinsurance pricing increases in 2018 and early 2019.
S&P Global Ratings said loss creep from disasters in 2017 and 2018 affected reinsurance pricing assumptions.
The growth of alternative capital such as insurance-linked securities and collateralized reinsurance funds has also slowed due to dismal returns and spread widening in high-yield corporate bonds that prompted investors to make redemption requests. Still, the rating agency expects alternative capital to stay and regain growth momentum after the recent "bumps are smoothed over."
Ratings has a stable outlook on the global reinsurance sector and on most covered reinsurers, citing their capital adequacy, unrealized losses on fixed-income securities due to higher interest rates in the U.S. and stock market volatility during the fourth quarter of 2018.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.