AM Best has released its annual report on the global reinsurance market, highlighting key trends and developments across regions and sectors.

Last year, the report noted optimism in the global reinsurance sector due to sharp rate increases and tighter conditions in the property/casualty market. The life reinsurance sector continues to show strong levels of risk-adjusted capital and liquidity, with mortality rates stabilizing in 2023, albeit still above pre-pandemic levels.

In June 2024, AM Best issued its first-ever positive outlook for the global reinsurance sector, driven by a renewed focus on technical profitability over the past few years. IFRS 17, which came into effect in January 2023, has presented challenges for reinsurers in adapting to the new financial reporting standard. As a result, AM Best has revised its rating methodology to account for differences in financial reporting standards.

Get the latest reinsurance news straight to your inbox twice a week. Sign up here

Conventional reinsurance capital fell sharply in 2022, but has since rebounded and is expected to reach $515 billion in 2024. For the first time in four years, reinsurers’ return on equity exceeded their cost of capital, as capital gains and underwriting profits improved.

The non-life insurance sector is expected to witness sustained technical gains, supported by risk mitigation measures, realignment of interests between reinsurers and primary insurers, and improved pricing.

In the life and pension reinsurance sector, higher interest rates and moderate mortality rates since the COVID-19 pandemic have provided a strong boost. The sector remains well capitalized and poised for growth, with reinsurers continuing to evaluate underwriting practices and increase premium rates to mitigate high claims in certain regions.

The ILS market has seen modest capacity growth, in line with demand. ILS managers have structured transactions to reduce exposure to more frequent severe convective storms.

In 2023, approximately 47% of U.S. life insurance/pension statutory reserves were moved offshore, with Bermuda accounting for more than a third of all existing business and 60% of new business.

Demand for health reinsurance has been driven by increased healthcare utilization and medical inflation. In the US, growth in 2023 was driven by the commercial and non-life insurance sectors. In Asia, strong growth was linked to expanding economies and the need for healthcare solutions.

Read more: Europe’s top reinsurers thrive amid tough market conditions

Lloyd’s has improved its underwriting results every year since 2020 and remains a major player in the global reinsurance and specialty insurance markets. Reinsurance accounts for around a third of Lloyd’s premiums.

In Latin America, reinsurers are adapting to the new political landscape, monetary policies, and global economic conditions, with public administration agencies playing an increasingly important role in the value chain.

The Asia-Pacific reinsurance market is set to grow by more than 10% in 2023, driven largely by China Re’s international expansion. In response to challenging market conditions, major reinsurers in the region have adjusted their catastrophe capacity to reduce exposure.

In the Middle East and North Africa region, reinsurers experienced strong premium growth due to pricing momentum, rising inflation and new job opportunities. In Sub-Saharan Africa, reinsurers benefited from a tightening global insurance pricing environment to report strong underwriting profitability despite challenging economic conditions.

What do you think of this story? Feel free to share your comments below.

Get the latest reinsurance news straight to your inbox twice a week. Sign up here