A.M. Best at Rendez-Vous: Reinsurance outlook remains negative, but opportunities are growing

vendredi, 14 September 2018

In this A.M.BestTV episode from the 2018 Les Rendez-Vous de Septembre (Rendez-Vous) conference in Monte Carlo (Monaco) a panel of A.M. Best analysts said reinsurers still face profitability pressures, but the increasing demand for insurance is providing growth opportunities. Click here to view the entire programme from ICMIF Supporting Member A.M. Best.

Participating on the panel were Stefan Holzberger, Senior Managing Director and Chief Rating Officer; Robert DeRose, Senior Director; and Anthony Diodato, Managing Director.

All three discussed A.M. Best’s market segment outlook on the reinsurance market.

“Reinsurers are very well-capitalized and have the capacity to absorb adversity, over the near term,” said DeRose. “What really is dictating A.M. Best’s negative outlook is the operating and total performance of the sector, which really has been under pressure for a number of years. In order to attain and retain investors, you have to provide a reasonable return. You need to have strong financial flexibility, which comes from the investors. A.M. Best’s concern has been and continues to be on profitability and improving that profitability.”

Holzberger highlighted some positive aspects of the market.

“A slow rise in interest rates will be a positive on investment income, helping that bottom line,” said Holzberger. “Economic growth in some of the mature Western markets also has driven an increase in the underlying demand for insurance, and the reinsurance sector is benefiting from that as well. In addition, the significant catastrophe events from last year have led to an increased demand for reinsurance.”

Underscoring the importance of innovation, Diodato said, “Innovation is not just ‘the new product,’ but how a company becomes more efficient in the way it acquires business and the way it processes business, because that's going to be a deciding factor for many companies. … It is such a key component to an organization distinguishing its self in the future, whether it is a reinsurance or commercial one.”

For full A.M.BestTV video coverage from of the Rendez-Vous conference, including exclusive executive interviews, visit http://www.ambest.tv/rvs18.