Moody’s released its “Global Reinsurance Industry Outlook” today, which finds that Hurricane Gustav was a “near miss” for reinsurers and not likely to have a meaningful influence on reinsurance pricing.
Ongoing turbulence in the capital markets had put some reinsurers balance sheets under pressure as they reported losses from structured fixed income investments and equity portfolios, although holdings in such assets across the sector were modest.
Moody’s also said that the reinsurance industry’s capital position was on a “solid footing,” following two years of strong profitability and enhanced risk management. However, a large catastrophe event in the midst of turbulent financial markets may stress the financial flexibility of some carriers, particularly smaller startups or firms with outsized losses, the ratings agency said in a statement.
Pano Karambelas, Moody’s senior analyst and author of the report, said “Pricing continues to decline steadily in both property and casualty lines of business, but generally remains near or above technical levels as rates have not cheapened enough to reduce underlying retentions, though we expect that primary carriers have begun to actively evaluate the lower alternative layers for casualty business.”