The global reinsurance industry demonstrated resiliency following the record level of catastrophe losses in 2017, as very strong capitalization and effective risk management enabled the sector to absorb the multiple hits from Mother Nature and broadly maintain financial strength. Favorable investment performance allowed reinsurers in aggregate to still expand shareholders’ equity for the year despite elevated underwriting losses.

Executive Summary

Last year's hurricane losses did not lead to a reinsurance market turn as many had hoped. As a result of strong capitalization and risk management, reinsurers demonstrated resiliency, but competitive pressures continue to make it difficult for companies to make an adequate return on capital, says Brian Schneider at Fitch.

Nevertheless, reinsurers continue to face competitive market conditions that are serving to dampen price increases in 2018, as well as challenges in spurring demand from cedents that have gained risk management sophistication over time. As such, acquisitions of marginalized reinsurance market participants are expected to persist.

The devastating North Atlantic hurricane season, combined with California wildfires, pushed global insurance and reinsurance industry catastrophe losses to $144 billion in 2017—the highest on record, according to Swiss Re’s latest sigma study.

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