The top three rating agencies released predictions for the reinsurance sector yesterday. S&P Global Ratings predicted an improvement in the top reinsurers' underwriting profit, but said this will not result in a commensurate uplift in return on equity. The agency's 2020 reinsurance sector outlook foresees a combined ratio of between 95% and 98% for the top 20 global reinsurers in 2019 and 2020, an improvement on its previous forecast of between 96% and 99%.
Bermuda reinsurers' record of releasing reserves for 15 consecutive years may be under threat in 2019, according to Fitch Ratings. Graham Coutts, senior director of insurance ratings, said reserve releases at Bermudian reinsurers had been on a downward trend and redundancies in reserves in 2018 were lower in more recent accident years.
And Moody's said the outlook is stable for the reinsurance sector, with profitability improving, capitalization strong and prices set to rise in some sectors, though it warned that climate change risks are mounting.
One major reinsurer, France-based Scor SE, is targeting growth of between 4% and 7% per year in a new strategic plan through 2021, the same as in its previous plan. Under its "Quantum Leap" plan, the company is eyeing a return on equity above 800 basis points over a five-year risk-free rate and a solvency ratio in the 185% to 220% range.
Also, total capital dedicated to the global reinsurance industry measured $559 billion at the half-year point of 2019, according to a new Willis Re report. This is an 8% increase from a restated $518 billion at year-end 2018, with strong investment markets being the main driver of the industry's capital growth.
Hurricane Dorian was about 90 miles east of Daytona Beach, Fla., and has maximum sustained winds of near 105 mph, the National Hurricane Center said in a 5 a.m. ET bulletin. Dorian is moving toward the north-northwest at near 8 mph, and a northwest or north-northwest motion is expected through this morning. A hurricane warning is in effect for the Volusia/Brevard County line to Ponte Vedra Beach and north of the Savannah River to Surf City, N.C.
National General Holdings Corp. agreed to sell its Euro Accident Health and Care Insurance Sweden operation to an investor group arranged by Impilo AB for about $138 million.
Just Group PLC said it may have to hold more capital because of new Prudential Regulation Authority rules that require more capital behind lifetime mortgages, which is one of its key products. Just Group's first-half underlying operating profit fell 27% to £114.2 million from £155.9 million a year earlier, reflecting lower new business profits.
Aviva PLC named Erica Arnold COO, subject to regulatory approval. Arnold will join the company and its leadership team in early 2020.
MS Amlin PLC appointed the CEO of MS Amlin AG, Chris Beazley, as head of its reinsurance business, effective Sept. 3. Beazley will succeed James Few, who is stepping down to become CEO of TigerRisk Partners LLC.
Middle-market investor Bowmark Capital LLP has reinvested in Aston Lark Ltd., a U.K.-based independent insurance broker.
The Australian Competition and Consumer Commission started proceedings in the federal court against Medibank Pvt. Ltd. over allegations that the insurer violated the country's consumer law through making false representations about benefits covered by its health insurance policies.
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Berkshire to fetch $737.1M for workers' comp group divestiture: Applied Underwriters' management said they are much more optimistic about the outlook for their business once it is free from the "internal conflicts" that have "grown recently" under current majority owner Berkshire Hathaway.
State reinsurance programs may lead insurers to rejoin individual health markets: Twelve states using waivers authorized in ACA to reduce premiums for consumers in individual market by moving high-cost claims out of rate formula.
American Family hikes, State Farm cuts homeowners rates in July: California regulators approved seven rate-increase requests during July, which could potentially boost homeowners written premiums in the Golden State by $31.8 million. That was the largest calculated increase in any state for the month.
In other parts of the world
Asia-Pacific: Deutsche Bank, BNP Paribas get Chinese underwriting license; Suncorp eyes sale
Europe: UK lawmakers poised to stop no-deal Brexit; RBS' PPI woes; KBC to cut 1,400 jobs
Middle East & Africa: France plots $15B credit line for Iran; South Africa averts recession in Q2
The day ahead
Early morning futures indicators pointed to a higher opening for the U.S. market.
In Asia, the Hang Seng surged 3.90% to 26,523.23, and the Nikkei 225 ticked 0.12% higher to 20,649.14.
In Europe, around midday, the FTSE 100 gained 0.30% to 7,290.21, and the Euronext 100 was up 0.86% to 1,071.42.
Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.
On the macro front
The international trade report, the Redbook and the Beige Book are due out today.
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