2015 reinsurance to remain challenging: A.M. Best

For publicly traded reinsurance companies (including the four large Europeans – Munich Re, Swiss Re, Hannover Re, SCOR) stock prices ended 2014 below the overall market, driven by the increase volatility in the stock market during the summer and fall, augmented by continued concerns over the decline in pricing for reinsurance risk.

In fact, the average share price increase of all publicly followed company return’s in 2014 increased 6.5 percent, as compared with the market’s total return of 11.4 percent for the same time period.

Regardless of the low level of losses and continued favorable reserve releases from prior years, the pricing pressures for CAT business were well evident for all of 2014. During 2014 reinsurance companies have seen CAT price declines of 20 percent in some cases (more pronounced in the US). January 1, 2015 renewals once again reported a decline in reinsurance price between 5-15 percent depending on risk and loss experience. The dramatic price declines in 2014 and for January 1 continued to be attributed to the lack of market-changing losses as well as increased retentions carried by ceding companies and the abundance of capital in the market.