As the days counted down to the Rendez-Vous de Septembre, Fitch Ratings announced a string of favorable rating actions on several global reinsurers in late August.

Executive Summary

Why is Fitch Ratings upgrading and affirming reinsurer ratings when other rating agencies have negative outlooks on the segment? And why did Fitch have a negative "sector" outlook and a stable "rating" outlook on reinsurers in the days leading up to the Monte Carlo Rendez-Vous de Septembre? James Auden, head of North American P/C Ratings for Fitch explains the distinction.

Fitch’s Aug. 20 statement about its upgrade of Hannover Re’s financial strength rating to “AA-” and its change in outlook for SCOR’s “A+” rating to positive may have seemed out of place as market participants braced for warnings about the reinsurance sector from the rating agencies leading up the Monte Carlo event.

Indeed, just a day earlier, another rating agency, A.M. Best, officially announced it was revising its overall outlook for the global reinsurance sector to negative from stable—a move the Oldwick, N.J.-based firm first signaled in April. That’s the same day that Fitch affirmed the “A” rating of Validus Re, following similar action on the “A+” rating of RenaissanceRe a week before, even though Fitch noted that both Validus and RenRe write the most challenged line in the reinsurance world—property-catastrophe—as their core offerings.

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