AM Best has maintained its stable outlook on the global non-life reinsurance segment, noting that it remains fundamentally strong even as it moves past the peak of the hard property market.
In its latest market segment report on the global non-life reinsurance industry, the rating agency stated that the segment’s strong performance since 2023 has driven robust organic capital generation, leaving the market with ample capacity either to return capital to shareholders or to deploy it in writing business.
Although the reinsurance pricing cycle is past the peak of a protracted hard property market, reinsurers have largely upheld underwriting discipline, maintaining higher attachment points and tighter terms and conditions. While projected margins have narrowed, property exposures are still being priced at levels that remain above technical adequacy in the aggregate.
AM Best Senior Director Michael Lagomarsino said that the balance sheet strength across the non-life reinsurance segment is favourable from a credit perspective, although the imbalance created by abundant capacity, partially offset by growth in demand for reinsurance, has been a primary driver of pricing erosion in property and property catastrophe lines of business.
Persistent social inflation, elevated frequency and severity of weather-related events and geopolitical and macroeconomic uncertainty continue to weigh on the segment; however, over the next 12 months, record capital, sustained underwriting discipline and supportive investment income should keep returns at or above the cost of capital, positioning the segment to sustain profitability.