Source: Business Insurance

August 28, 2019 U.S.-based ratings agency A.M. Best Co. said that the global reinsurance operating environment remains “less than optimal” for traditional reinsurers, Artemis reports. The rating agency believes that the market remains incredibly competitive and that major reinsurers continue to utilize reserve releases to remain profitable.While the outlook is looking better for reinsurers than a couple of years ago, it is far from certain as pressures of excess capital in the industry, the competition from capital markets players, the shift to more direct business, as well as disruption caused by technology and newer ways of doing reinsurance business, all still present their challenges to the traditional business model. Reinsurance firms largely have robust balance sheet strength and continue to generate positive operating results despite what A.M. Best sees as “persistent underwriting and pricing pressures from extremely competitive market conditions.” Since 2018 the reinsurance market has begun to shift in favour of reinsurance capital providers, A.M. Best explains.