The reinsurance industry is facing considerable headwinds in the current competitive market environment, with conditions unlikely to improve in the near term.

Executive Summary

Although reinsurers are facing considerable headwinds in the current competitive market environment, they aren't taking disruptions quietly, says Brian Schneider of Fitch Ratings. Here, Schneider describes the various coping strategies, including fee income from sidecars and forays into E&S insurance, also noting that recent profitable results are among the forces producing the current challenges.

Reinsurers, for their part, have not taken these disruptions quietly and are reacting with shifts in underwriting capacity, increased capital management activity and more determined relationship management. Ultimately, reinsurance mergers and acquisitions (M&A) are expected to intensify.

The fundamentals of the global reinsurance sector have deteriorated recently with declining premium pricing and weakening of terms and conditions. The market is shifting across a wide range of reinsurance lines, although property and property-catastrophe reinsurance pricing is softening more abruptly than casualty.

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