The current outlook implies that A.M. Best Co. Inc., whose headquarters are in New Jersey, is anticipating that most of this year's rating actions will be affirmations with stable outlooks, the report stated. According to a company spokesperson, this opinion on the health of the reinsurance sector differs from A.M. Best's negative outlook of two years ago.
However, should "price deterioration and competition persist at a faster pace than expected, the outlook could be revised back to negative in 2008," the report noted.
The report asserted the company’s “expectation that the sector is poised for a profitable 2007, given the potential for favorable underwriting margins in many lines of business and reinsurers' reporting strong operating cash flow that will likely fuel investment income generation."