Fitch Ratings, one of the world’s leading investment and economic rating agencies, has projected that despite the whirlwinds in the world’s economic landscape across geopolitical zones, global reinsurers are expected to maintain strong earnings through the rest of 2024 and into 2025.
The rating agency linked its forecast on the reinsurance business to generally adequate pricing and disciplined underwriting by risk-underwriting entities.
In a news report on Wednesday from Reinsurance News, an online industry-focused medium, Fitch noted that in the first half of 2024, the 19 non-life reinsurers tracked by its researchers achieved a combined ratio of 84.2%, an improvement from 85.9% in the same period last year. This improvement is attributed to better underwriting profitability and manageable catastrophe losses.
Based on the research finding, the rating firm predicted: “Underwriting results should remain favourable in 2H24 and 2025 as pricing is generally adequate.”
The report reflected that non-life reinsurance net premiums increased by 6% in 1H24 from 1H23, reflecting strong performance during the reinsurance renewals, as market conditions remained favourable.
While premium growth is expected to persist, Fitch predicts it will slow as competition increases in the market.
In addition, the firm reported that for life and health (L&H) reinsurance, there was a 6% rise in pre-tax income for the first half of 2024 as profitability varied among companies based on their mortality and morbidity experience.
Fitch noted that but overall, increased investment income from higher interest rates benefited the entire group.
Additionally, it reported that shareholders’ equity increased by 6% in 1H24 from the end of 2023, driven by higher underwriting and investment income, as well as gains in equity markets.
On the industry outlook, it predicted: “Companies are expected to maintain strong capitalisation and may increase share repurchases and dividends in the latter half of 2024 and into 2025 as growth opportunities lessen and investors seek returns on capital.”
