The global reinsurance industry remains strongly capitalized on an aggregate basis, according to rating agency A.M. Best, despite the impacts of losses from the recent hurricanes.
A.M. Best has completed an analysis of the global reinsurance industry, using its updated Best’s Credit Rating Methodology (BCRM). The new “building block” approach to analysing reinsurers credit worthiness shows that around two-thirds of rated reinsurers have the strongest category of balance sheet strength, the rating agency said.
In fact, A.M. Best’s analysis shows that no reinsurance companies it rates saw their balance sheet strength fall below the strong category, which is quite a testament both to the strength of the global reinsurance sector, but also to the excess capital in the space.
The strong surplus of the reinsurance industry is reflected in the results of the analysis, with the overall strength of the sector seen as high.
Following the major losses this balance-sheet strength of reinsurers is likely to be a factor influencing rate movements, perhaps dampening the potential for significant or long-lived reinsurance price increases.
Reinsurers market standing and position remains key though, with newer entrants and those with weaker standing seen as more at risk from competition.
Brand loyalty, longevity in the market, scale and relevance all remain key among traditional reinsurance companies, A.M. Best believes and the rating agencies new approach to analysing reinsurers demonstrates that these traits are found in the strongest of reinsurance companies.
