Despite momentum slowing down, reinsurers and London market players continue to enjoy attractive market conditions with pricing reaching new highs, while the structural changes in the terms and conditions achieved last year remain in place for 2024, suggest analysts at Berenberg.
In a report discussing its recently hosted insurance speed dating programme, which included 24 insurers, 53 investors and 40 institutions, Berenberg noted that “all players” were constructive on the outlook for property reinsurance.
“Despite the momentum slowing down, reinsurers and London market players continue to enjoy attractive market conditions with pricing reaching new highs, while the structural changes in the terms and conditions that were achieved last year remain in place for 2024,” Berenberg’s analysts explained.
However, according to the firm, the focus has shifted slightly from this time last year to not just growth and capital deployment but also to capital returns.
“London Market players sounded particularly constructive on the opportunity for both, as the abnormal growth rates of the last couple of years are moderating, thus the decision to focus on capital returns and growth is not binary,” Berenberg added.
Meanwhile, the firm said that UK life insurers that presented all came across as “upbeat and excited” about the growth outlook, which in part is driven by pipeline in the bulk purchase annuity (BPA) market.
Berenberg noted that all reiterated their strong solvency positions and investment portfolios which are “performing well”, despite investors’ repeated concerns about credit risk which have not materialised in credit defaults.
Berenberg’s analysts concluded that the main focus of the conversations was each company’s determination to pay a progressive dividend, and for some insurers, this means not just flat or up, but a growing dividend year on year.
“We believe this means that the sector will continue to deliver attractive returns, and our preference, as we outlined in our 15 December sector overview Insurance – Still more capital return than M&A, is life, followed by reinsurance/London market, then composites.”
