Reinsurers are facing increasing competition and need to adapt to a changing market a forthcoming publication by Standard & Poor's (S&P) will say.
S&P's Global Reinsurance Highlights publication will focus on the competitive pressures which look set to restrict returns as capacity in the market outstrips demand. The findings have been previewed in an article published today.
The biggest challenge identified by S&P is for reinsurers to prove their worth to new clients and altering business models to adapt to changes within the market.
Competition has increased and Premium rates have declined at every major renewal date so far in 2014.
The effect has spread so far in the market it is now considered a global phenomenon.
A statement from S&P said, "The strength of reinsurers' balance sheets has enabled most of them to withstand the pricing pressure and competition to date. Absent this, we would likely have already taken rating actions on some of the reinsurers most exposed to these pressures.
"We estimate that over half of the global reinsurers that we rate are more susceptible to the current competitive and earnings pressures. And even those that are well-positioned to navigate softening prices now are likely to find it harder to handle the pressure that will face the industry over the longer term."
It concluded: "Nonetheless, we think reinsurers have a continuing role to play in the global economy; and they need to emphasize this to current and future clients. In providing solutions for long-term issues, reinsurers can also establish a foothold in and help unlock insurance markets, thus solidifying future competitive positions."
