AM Best has been rewritten from bank to ear the idea of global reinsurance sectortalks about the prospect of high profit margins for underwriters and says he expects underwriting discipline to be maintained.
This is the first time AM Best has looked at the world’s best insurance markets in several years.
The first level companies showed a negative opinion in the reinsurance sector in August 2014, when all the leaders of the companies adopted this position at the level of market weakness. AM Best then revised its outlook on global insurance to stable in December 2018, citing greater price stability at the time, the fact that other capital markets are maintaining their price discipline, while large funds preparing business insurance due to heavy losses of the last two years.
After a difficult market period recently, which has been seen to be stable until today, AM Best is more confident about the future of reinsurers.
In addition to benefits, AM Best also reflects new market realities, and better terms and conditions for insurance providers.
This is despite the recent figures that are now stretched to ease, as AM Best said, “a warning is kept in writing that the profit margin remains the same better to achieve a higher loss function than seen recently”.
Carlos Wong-Fupuy, CEO of AM Best, explained about the company’s new positive outlook, “the demand for insurance continues to grow stronger due to the increase in natural disasters and the lack of economic stability in general. . “We also confirmed that expectations for interest rate cuts are slower than previously expected, which could support a stronger outlook in the near term.”
Indemnification margins have increased and stabilized, the rating agency said, due to efforts to recover contracts and install stricter terms and conditions, in other types of targeted insurance, reduced demand for collective insurance, a shift from and equality to excess. of death and sharp increase in the combat area.
The rating agency also noted that larger insurers are growing, expanding their insurance portfolios through a combination of higher insurance rates, better-than-expected flights and higher demand from cedat.
Although major events related to losses in the first quarter of 2024, including the collision of a ship with the Francis Scott Key Bridge in Baltimore that led to its collapse, the amount of compensation and the annual return on equity remains strong.
Strengthening the opinion of AM Best in the reinsurance sector, the rating agency says that “no new entrants can disrupt the current market discipline as expected”, adding that in its opinion “Management and flight towards attitude”.
“AM Best believes that the exceptional equity returns seen in 2023 are unlikely to be repeated at a high level, but expects investors to focus on maintaining caution in the near term.” ,” Wong-Fupuy concluded.