Best’s News & Research Service - August 19, 2014 12:40 PM (EDT)
Best's Briefing: Weakening Operating Fundamentals Tip Reinsurance Sector Outlook to Negative
Oldwick //BestWire// - A.M. Best has revised its ratings outlook on the global reinsurance sector to negative from stable, citing the significant ongoing market challenges that will hinder the potential for positive rating outlooks or upgrades, and over time, may result in negative rating pressure. This Best's Briefing, titled "Weakening Operating Fundamentals Tip Reinsurance Sector Outlook to Negative," states that it has become even more apparent that as compression continues to bear down on investment yields and underwriting margins, the strain on profitability will ultimately place a drag on financial strength.
A.M. Best first signaled the potential of an outlook revision in an April 2014 Best's Special Report (see report here), but continued to pore over the metrics for an even better understanding of the market dynamics. At this point, A.M. Best's view is longer term than its typical 12-18 months. While A.M. Best does not anticipate a significant number of negative outlooks or downgrades over the very near term, the market headwinds at this point, which include the continuous flow of alternative capacity, present significant longer term challenges for the industry.
To access the full, complimentary copy of this briefing, please visit: http://www3.ambest.com/bestweek/purchase.asp?record_code=227855 .
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