Earnings volatility could be on rise: S&P

global reinsurance industry, earnings and capital volatility could be on the rise for some.

After a prolonged soft market cycle underpinned by falling rates and intense competition, many reinsurers have been taking advantage of subsequent rate increases and growing their exposure in loss-affected regions and lines.

While this has been the case for the majority of the large reinsurance players, some decided not to grow in the current market and have let their exposure in these areas retract as they did in 2018.

Analysts have warned that while “we expect risk discipline to prevail, global reinsurers’ greater exposure to catastrophe risk could heighten their earnings and capital volatility.”

“Although global reinsurers have maintained their underwriting discipline, we expect earnings volatility could be higher than historically observed, where exposure has increased. The sector remains resilient to extreme events, but we expect a larger industry loss would hit more reinsurers,” states S&P.