Have property/casualty insurers and reinsurers forgotten what they’re in business to do?

Executive Summary

Capital itself is not the problem. It's like guns. It's what you do with the capital that's the problem." The surprising analogy came from Matthew Mosher, senior vice president of rating services for A.M. Best Company, during an industry forum in January. At a recent reinsurance seminar, Mosher joined analysts Meyer Shields of Keefe, Bruyette & Woods and Alan Zimmermann of Assured Research in a lively debate about whether the reinsurance market is overcapitalized or underrisked. Mosher and Zimmermann argue that there are some things reinsurers should be doing with their capital that they're not.

That was one of the questions that three industry analysts debated during a recent reinsurance seminar, when one of them—a rating agency analyst—surprisingly suggested that companies could be taking on more risk.

During a panel discussion at the Casualty Actuarial Society’s Seminar on Reinsurance, moderator Raju Bohra, an executive vice president at Willis Re, kicked off the discussion when he asked how insurers and reinsurers are managing their excess capital.

Matthew Mosher, senior vice president of rating services for A.M. Best Company, noted the willingness of companies to give capital back to shareholders. “Particularly with pricing pressures in the property-catastrophe area, we’ve seen more and more capital being returned by those companies,” he said, suggesting that there are no rating implications looming as a result of those actions.

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