Best’s Market Segment Report: AM Best maintains global reinsurance outlook at stable despite COVID-19 volatility

Tuesday, 07 April 2020

ICMIF Supporting Member AM Best is maintaining its market segment outlook for the global reinsurance industry at stable despite the volatility and uncertainty created by the COVID-19 virus outbreak.

According to the new Best’s Market Segment Report, titled Market Segment Outlook: Global Reinsurance, global reinsurers remain well-capitalized and the industry remains resilient, with a long history of innovative and prudent risk management. AM Best says it expects any covered losses to be manageable and that relevant policy exclusions will hold up.

The report states that the stable outlook primarily reflects the pricing environment in the non-life segment, which has stabilized and for the moment is providing positive momentum across a broadening spectrum of business classes. A stable market environment in the global life reinsurance segment also is supporting the current outlook. Although the operating and competitive landscapes of the two major reinsurance business segments are distinct, the report says, the resulting diversification benefits the global reinsurance segment from an overall earnings perspective.

The report outlines other factors considered in the stable market segment outlook, including:

  • Robust risk-adjusted capitalization with significant excess capital in recent years, which has positioned reinsurers to absorb COVID-19-related underwriting losses and investment volatility;
  • The possibility that more-attractive opportunities emerge as the economy stabilizes once the COVID-19 crisis abates and constrains a new flow of third-party capital;
  • Greater discipline to generate underwriting profit commensurate with total return expectations, owing to pressure on interest rates, increased stock market volatility and global economic disruption;
  • The potential for an increase in demand from insurers that may have a constrained financial position as a result of the capital market volatility caused by COVID-19; and
  • Strongly capitalized life reinsurers with advanced modelling capabilities to handle a 1-in-200 year mortality event.

To access the full copy of the global reinsurance outlook market segment report, please click here.  

Separate market segment reports from AM Best on the non-life and life reinsurance segments can be viewed at:

ICMIF members are invited to access AM Best's most up-to-date COVID-19 analytical commentary and video coverage about the unfolding pandemic situation on their website here.

ICMIF members in the USA may also wish to register for AM Best's forthcoming webinar, "Covid-19 Implications for US Insurance and Reinsurance Markets" on 9 April at 10 am EST. AM Best analysts will review the changing impact of COVID-19 on its US insurance & global reinsurance outlooks. Register for the webinar here.