Top 20 reinsurers maintained or reduced cat exposure at Jan renewals: S&P
“Catastrophe risk appetite continues to vary, with more than half of the top 20 global reinsurers maintaining or reducing their natural catastrophe exposures during the January 2023 renewals, despite the improved pricing terms and conditions and rising demand,” according to a new report from S&P Global Ratings.
S&P’s report noted that global reinsurers saw another record year of natural catastrophe losses last year, with the estimated insured losses of $125 billion well above the long-term average expectation for the insurance industry.
“As a result, catastrophe budget expectations were exceeded for another year for the top 20 global reinsurers,” the rating agency explained.
However, despite the growing cost of natural catastrophes and the apparent divide in strategy observed in recent years, S&P suggested that 2023 and 2024 could be a “turning point” for visible earnings improvements in the space.
S&P added that more reinsurers may aim to grow their catastrophe exposures as pricing continues to improve and demand remains strong.
Still, many reinsurers entered 2023 with a “cautious stance on property catastrophe risk.”
S&P Global Ratings credit analyst Charles-Marie Delpuech, said, “We expect the top 20 global reinsurers to deploy more capital toward catastrophe risk in 2023 and 2024, because of continued strong demand from cedents, while higher retrocession cost could lead reinsurers to ceding less of their risk.”
Meanwhile, improved underwriting margins and rising investment returns, coupled with still-robust capitalization, are providing further buffer against exceptional shock, as per AM Best.
Delpeuch continued, “For 2023, we expect the property catastrophe business to contribute about 2.5 percentage points to return on equity for the top 20 global reinsurers if losses remain within the annual budgets.
“In our view, this would translate into an annual insured natural catastrophe loss of about $85 billion for the entire insurance industry.”
The post Top 20 reinsurers maintained or reduced cat exposure at Jan renewals: S&P appeared first on ReinsuranceNe.ws.