Swiss Re held its annual review and outlook on insurance markets in London yesterday, Dec.1. Looking to the future, the company predicted that the life and non-life industry’s 2004 return to profitability would continue, but growth will be lower than that achieved in 2004, as rates reach their peak.
The briefing, hosted by John Fitzpatrick, Head of Swiss Re’s Life & Health Business Group, reflected on the unique and valuable role played by the (re)insurance industry in managing risk and capital for the economy as a whole. He emphasized that “given the many challenges faced by the industry in recent years, policymakers need to ensure a stable and predictable legislative and regulatory environment if insurers are to provide their valuable service to clients.”
Swiss Re’s Chief Economist Thomas Hess predicted continued profits for the insurance industry in 2005 and through to 2006. He noted that during 2004, P/C insurers continued to recover, led by favorable underwriting results, while life insurers have survived the difficulties of recent years, but the outlook remains challenging.
Hess saw both sectors affected by the low investment returns available, as capital markets are predicted to remain sluggish through 2005. Commenting on next year’s outlook Hess stated: “Insurers are continuing to rebuild their financial strength. The focus remains on underwriting quality, even as rates look like having peaked, discipline is being maintained. As a consequence, prices will stay at attractive levels, while top line growth is likely to be slower than in recent years.”
Bob Yates, global head of research at Fox-Pitt, Kelton stressed that the as stock markets remain uninspiring, investors were cautious about the prospects for the insurance sector. This approach comes despite evidence that, although cycle pressures exist, management in the sector is better placed than in the past to successfully manage a downturn of the cycle.
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