Global reinsurance sector on positive course: AM Best exec

CHICAGO – Global reinsurers have over the past two years shown improved combined ratios and capital position, which led A.M Best to revise its outlook for the sector last year from stable to positive, a company executive said Monday.

The improved pricing “wasn’t just about repricing,” it was also about “de-risking,” Antonietta Iachetta, associate director, global reinsurance, at Best, said Monday at the Risk and Insurance Management Society Inc.’s Riskworld 2025 conference.

Reinsurers’ share of natural catastrophe risks has declined from about 20% to around 14% over the past two years, she said.

One tool in this transition was the re-establishment of attachment points – the loss levels at which a given reinsurance coverage kicks in – to higher levels.

Any subsequent adjustments or “relaxations” to these attachment points will be very “selective,” Ms. Iachetta said, as reinsurers maintain discipline on the matter.

While combined ratios improved in 2022 and 2023 and are expected to again be below 100 for 2024 once calculated, increased capital levels, especially alternative capital, are bolstering reinsurers.

Ms. Iachetta noted “the increased use of alternative capital to meet capital needs” among reinsurers and the increased internal generation of traditional capital by established players.

One difference from past reinsurance cycles, Ms. Iachetta said, is that the improving market conditions have yet to draw in any new players.

“We haven’t seen new entrants entering the segment,” she said. In the past under such conditions, “you would see new entrants coming into the market. So, the question is, how come you haven’t seen that in the last couple of years? Why is this cycle different?”