Global reinsurers will seize the opportunity to deploy more capital over the next two years, within strict limits, says S&P Global Ratings (S&P).
"Rising demand, improved pricing, and more favourable terms and conditions boosted reinsurers' appetite for property catastrophe risk during 2023," S&P credit analyst Sachin Bhojani said in the report, "Reinsurers Show Growing Appetite for Natural Castastrophe Risks".
While global reinsurers' natural catastrophe risk appetite has diverged in previous years, most of the 19 largest global reinsurers rated by S&P increased their exposure to natural catastrophes during the January 2024 reinsurance renewals. S&P observed an average overall increase in risk exposure of 14%, although a smaller group of reinsurers continued to reduce theirs. Favorable reinsurance pricing and improving net investment income in 2023 and 2024 have presented reinsurers with opportunities to deploy capital and expand their property catastrophe business.
Improved underwriting margins and sound investment returns, coupled with robust capitalisation, are expected to add to reinsurers' already strong buffers against exceptional shocks.
Based on the budgeted property catastrophe losses at the top 19 global reinsurers, S&P calculates that return on equity could benefit by 3 percentage points from this line of business in 2024.
Source: asiainsurancereview.com
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