JP Morgan analysts assert that substantial progress has been witnessed in the underlying earnings potential of reinsurers during 2023, indicating a notable improvement.
Substantial evidence supports their belief in the considerable improvement within the industry’s underlying profitability.
“…we believe that there is now relatively clear evidence that the underlying earnings power of the reinsurers has significantly improved in 2023.”
Surpassing market expectations, the reported results of reinsurers for the quarter demonstrated remarkable strength, with net income exceeding consensus estimates by a significant margin ranging from 6% to 93%.
“Q1 showed reinsurance cycle might be better than expected.”
Reinsurers exercise prudence in earnings recognition, despite positive outcomes, according to JP Morgan analysts.
Indications of caution observed amidst stronger market conditions prompt analysts to question the accuracy of 2023 guidance.
Furthermore, the reinsurers expressed positive sentiments regarding the April renewals, where prices witnessed additional hikes and overall volumes displayed stronger trends compared to those observed in January.
With the onset of 2023, there were elevated anticipations surrounding the reinsurance pricing cycle, notably in lines of business prone to catastrophes, where prices reached levels not witnessed in decades.
During the FY22 reporting season, European reinsurers failed to meet market expectations, leading to disappointment.
Guidance provided by some companies remained relatively unchanged or, in certain cases like Hannover Re, was considered disappointing by market participants.