Global rating agency Fitch forecasts global reinsurance net premiums written to continue to grow in 2024 and 2025, forecasting USD 173.4 billion and USD 183.8 billion, respectively, with the impact of catastrophe losses to worsen.
“Premiums growth is likely going to continue, but at a reduced pace, as rate adequacy has generally been reached, although discipline market behaviour should remain,” Manuel Arrive, Director, EMEA Insurance, said. last week.
This message was echoed by Fitch this morning at the credit rating agency’s briefing at RVS 2024, during which the firm reiterated its message that the current market cycle may heave peaked.
In terms of catastrophe losses, the rating agency expects an impact of 14.3% of net earned premiums in 2024, up from 11.1% in 2023, and rising to 16.4% in 2025.
“As far as catastrophe losses, our estimates are based on the first half 2024, which are near average for the reinsurance market. And we also look at about nine points of annual losses as our expectation, with about 60% occurrence in the second half of the year. So far the Atlantic hurricane season has been quiet, but we are reaching the peak part of that season right now, and we’ll see how the frequency plays out,” said Fitch.
Fitch also expects the calendar-year combined ratio to increase for the sector, from 87.3% in 2023 to 88.2% in 2024, moving up again in 2025 to 90.2%. The same is true for the accident-year combined ratio, which Fitch expects to rise from 89.9% in 2023 to 90.1% and 2024 and reach 91.2% in 2025.
“Looking at shareholder’s equity, we can continue to expect that to grow into 2024 and 2025 from underwriting and investment income, and equity market gains offset by increased return of capital to shareholders,” continued the firm.
In fact, excluding Berkshire Hathaway, Fitch forecasts that shareholders equity will move from $254 billion in 2023 to $266.7 billion in 2024, growing again in 2025 to $280 billion.
In terms of net income for the reinsurance space, the ratings agency expects the sector’s return on equity to remain robust despite a decline from 21.8% in 2023 to 20.7% in 2024, and 18.9% in 2025.
