In spite of rate increases in the global reinsurance market,
for the sixth successive year, global rating agency Standard
& Poor's (S&P) ratings services has expressed
a negative outlook for the North American reinsurers.
negative outlook signifies that the number of insurer
financial strength ratings lowered over the short- to
medium-term is likely to outweigh those that remain the
same or are raised.
to S&P's credit analyst Laline Caryalho, the reinsurers
suffer from diminished quality of capital, reduced financial
flexibility, prior year liabilities, the overhang of reinsurance
recoverables, and the likelihood that many companies'
operating performance will fall short of expectations.
compound the pressure on ratings, reinsurers have had
a difficult time capitalising on the hard market conditions
of recent years. Although participants need to rebuild
and restructure their capital bases and put in place foundations
to reduce future loss volatility, the ease of entry for
new players and increased competition in the market have
dampened the ability of existing players to recover.