A.M. BestTV: European Cedants Pursue Strategic Reinsurance Cessions, Says A.M. Best Senior Director

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- In this ^A.M.BestTV episode, Carlos Wong-Fupuy, senior director, A.M. Best, discusses a series of briefings, which examine how larger insurers in Europe are ceding business to reinsurers. Click on http://www.ambest.com/v.asp?v=cedants517 to view the entire program.

One driver of cessions is insurers' desire to diversify their product offerings.

“One of the reasons why insurers are buying more reinsurance is to try to make their balance sheets more efficient,” said Wong-Fupuy. “They have to strike the right balance between simply deploying capital and getting into new lines, businesses or using reinsurance, which in many cases is still being offered under very favorable conditions. At the same time, with this attempt to optimize their balance sheets, insurers are getting into lines like cyber that pretty clearly require not just financial support, but also technical support that typically comes from the largest reinsurers.”

In the year ahead, Wong-Fupuy believes that there will be growth, but on a gradual basis.

“There are still signs of continued trends, but on a much more limited pace than in the past. This is because the largest reinsurers are experiencing significant pressures on the cost of their capital, and the returns on capital are not what they used to be. However, as long as companies start trying to diversify, get into lines of business that require reinsurance support, there is going to be demand. There are opportunities for some better profit margins, but let’s recognize that any growth in new lines of business is going to be gradual,” he said.

To read the three Best’s Briefings, titled, “European Cedants Continue to Increase Reinsurance Buying but Demand for Cover Slows,” “France’s Largest Cedants Demonstrate Stable Reinsurance Purchasing,” and “Natural Catastrophe Exposures Underpin Stable German Reinsurance Buying Trends,”go to http://www3.ambest.com/bestweek/purchase.asp?record_code=259820, http://www3.ambest.com/bestweek/purchase.asp?record_code=259907 and http://www3.ambest.com/bestweek/purchase.asp?record_code=259955, respectively.

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^A.M.BestTV covers exclusive A.M. Best information and reports, targeted topics and key developments in the (re)insurance industry every Monday, Wednesday and Friday. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View ^A.M.BestTV episodes at http://www.ambest.tv.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.