The new Best’s Special Report, “Innovation: The Race to Remain Relevant,” notes that reinsurers have made a number of moves to position their organizations for long-term survival, and increasingly seem to be viewing capital market capacity as an opportunity as opposed to a threat. Capital market capacity has continued to be drawn to the reinsurance sector and underwriters that have the market knowledge and distribution capability to assess risk are benefiting.
“Capital market capacity is clearly pressuring the reinsurance sector to work to charge less,” said
Other highlights from this year’s report include:
- Among the more notable movements in A.M. Best’s highly regarded annual ranking of the Top 50 Global Reinsurance Groups was RenaissanceRe increasing six spots in the rankings to No. 20, driven by the completion of its acquisition of Platinum. Arch moved up five places to No. 22, attributable to the consolidation of Watford Re into its operations. Qatar Re surged 15 places to No. 35, due to a reported 116% increase in gross premiums written. Munich Re, Swiss Re, and Hannover Re have occupied the first, second and third spots, respectively, since 2010.
- Alternative capacity continues to fuel strong price competition.
A.M. Bestcurrently estimates that alternative capital represents approximately USD 71 billionof capacity, roughly 20% of the total dedicated capacity of the reinsurance market.
- Results across A.M. Best’s composite of hedge-fund-sponsored reinsurers were unfavorable, with an overall combined ratio of 111.5%, a loss ratio of 70% and an underwriting expense ratio of 41%.
A.M. Bestbelieves it is premature to discount the “hedge fund re” model, as the level of investment volatility experienced is expected and is contemplated as part of A.M. Best’s stringent start-up requirements. A.M. Bestalso notes that companies in its composite were not able to avail themselves of prior-year reserve takedowns that have been heavily utilized by U.S.and Bermudareinsurers.
- The global reinsurance report also includes A.M. Best’s analysis of the alternative capital market, along with in-depth reviews of the Lloyd’s and life reinsurance markets, as well as geographic regions such as
Brazil, Asia/Pacificand Africa.
To access a copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=253443.
Copyright © 2016 by A.M. Best Rating Services, Inc. ALL RIGHTS RESERVED.
Associate Director, Market Development & Communications
Assistant Vice President
Assistant Vice President, Public Relations
Senior Financial Analyst