CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 31, 2021 07:39 AM (EDT)
Although the global reinsurance industry has been able to absorb the exceptional shock from the COVID-19 pandemic, perils that are becoming more complex and interrelated highlight the need for innovation to cover unmodeled risks as they emerge, and traditional risks as they evolve, according to a new AM Best special report.
In its latest annual look at the global reinsurance industry, “Global Reinsurance Outlook Remains Stable in a More Uncertain World,” AM Best states that a main challenge for the reinsurance industry is to remain relevant within the broader economy. After several years of struggling to meet their cost of capital, key players have started to turn the corner. However, considerable uncertainty remains over sizable COVID-19-related claims reserves, which will take years to develop. Risk in general has become more difficult to model and price, and therefore, reinsure. A higher share of uninsurable risks, considered either non-measurable, non-manageable or systemic, in a more connected world increasingly dominated by intangible assets, could translate into a smaller role for the reinsurance industry.
The global reinsurance composite produced a five-year (2016-2020) average combined ratio of 102.4% and a return-on-equity ratio of 4.3%. The reinsurance industry also may have experienced their largest-ever first-quarter insured loss in 2021, driven predominantly by winter storms in the southern United States. However, despite the heavy losses, traditional reinsurers remain strongly capitalized. The events of the past year, dominated by the COVID-19 pandemic and the higher frequency of medium-sized catastrophe losses, exacerbated reinsurers’ focus on price. Additionally, despite the high level of uncertainty about COVID-19-related claims reserves, AM Best views reinsurers as having been conservative in their loss estimates. The improved pricing trends, which for most business lines are offsetting growing claims uncertainty and the abundance of capital, underpin AM Best’s stable market segment outlook on the global reinsurance industry.
Other highlights from this year’s report include:
To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=312153 .
A short video interview with AM Best Associate Director Greg Dickerson on the report also can be viewed at http://www.ambest.com/v.asp?v=ambglobalrereport821 .
Additionally, a panel of AM Best analysts and market leaders will discuss the state of the reinsurance market on Sept. 8, 2021, at 9 a.m. (EDT) (2 p.m. BST). To register for register for the complimentary briefing, please go to http://www.ambest.com/webinars/reinsurance21/index.html .
Finally, AM Best also will host its annual reinsurance market briefing, typically held at Rendez-Vous de Septembre, as a virtual event on Monday, Sept. 13, 2021, from 2:00 p.m.–3:30 p.m. (CEST). For more information and to register, please visit http://www.ambest.com/conferences/rmbseptembre2021 .
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.