A.M. Best has released a new equity report focusing on the stock performance of global reinsurance companies. The report covers fourth quarter and full-year 2014 and “shows mixed results.”
Best said: “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 increased volatility in the stock market during the summer and fall, augmented by continued concerns over the decline in pricing for reinsurance risk.
“Of the 19 publicly traded worldwide reinsurers featured in the report (including the four top European players), only four outperformed the overall market in 2014 and four actually experienced negative returns in 2014.”
Best explained that even though losses in 2014 were at a “low level,” and the reinsurance industry continued to take advantage of “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),” Best explained. The renewals as of the first of January “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,” Best concluded.
Source: A.M. Best
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