Analysis by AM Best suggests that globally, reinsurers are re-deploying their capital away from property classes and into lines such as casualty and specialty primary lines, in order to seek better returns.
The rating agency notes a consensus that positive price movements are being led by primary markets, and in particular specialty lines.
And despite the immediate benefit that reinsurers writing proportional business enjoy, analysts argue that the general feeling is that they are lagging.
Even the retro markets seem to have seen more pronounced price increases, in line with reduced availability.
Casualty lines in most reinsurance portfolios have been seeing attractive price increases, and this is for a segment with more stable, predictable patterns than property catastrophe risks.
AM Best acknowledges that social and economic inflation remain issues for casualty lines, but asserts that current margins in pricing reward reinsurers adequately for the risks taken.
This is in part because social inflation tends to affect more severely particular types of risk originators, such as large corporates or commercial auto, it says.
Analysts also argue that by being more granular when selecting risks, re/insurers could mitigate the impact of social inflation to a large extent.
In addition, the long-term nature of casualty lines provides the opportunity to generate investment returns and dramatically reduces any liquidity risk.
A number of companies have renewed their efforts to expand their casualty and primary specialty business, particularly in the lucrative US market.
At the same time, AM Best notes that several of the start-ups that have recently emerged, which had stated their intention to deploy capital in the property catastrophe reinsurance market, have ended up more focused on the primary market, based on the attractive margins and lower volatility, despite higher barriers to entry.