The 18 non-life reinsurers monitored by Fitch Ratings posted solid underwriting profits in 1H23 with an aggregate reinsurance combined ratio of 88%. This included moderate losses of 6.7pp from catastrophes.
Underwriting results should remain favorable in 2H23 and 2024 as rate increases stay ahead of loss cost trends. Non-life reinsurance net premiums grew by 7% in 1H23 from 1H22. Premium growth is likely to continue, but at a reduced pace as price increases decline and a potential recession dampens exposure growth. However, higher inflation has boosted premiums through higher insured values.
Life and health reinsurers profitability improved as interest rates rose and pandemic losses diminished. Shareholders’ equity grew 8.6% in 1H23 from end-2022 due to increased underwriting gains and positive investment results.
Reinsurers are benefiting from a rebound in equity markets and higher reinvestment rates from the rise in interest rates, while unrealized investment losses on fixed maturities lessen with most bonds likely to be held until maturity.