Industry Analysis & Industry Trends
The Global Reinsurance Carriers industry, which provides support to direct insurance markets all over the world, has suffered over the past five years. This will cap off a slow growth period characterized by low-interest rates, a prolonged soft insurance market and severe currency headwinds for many global reinsurers. Nevertheless, the industry is projected to return to more robust growth over the next five years, particularly in emerging markets.In addition, global demand for reinsurance is growing, as more direct insurers look to shore up their capital positions before taking on more business. Furthermore, renewed commitment to higher interest rates in the United States are set to benefit the investment income garnered by reinsurers.
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Reinsurance can be a fickle business, and the past five years exemplify this point. Industry revenue is estimated to decrease at an annualized rate of 4.7% over the five years to 2016, as investment income suffered from low-interest rates, volatile equity and commodity markets and as premium growth was hindered by softening prices. Meanwhile, the industry's profit margin endured some volatility, ultimately reaching 12.2% of revenue in 2016, due to an unusually low amount of catastrophic losses since 2012 and a rise in alternative investment capabilities. Most reinsurers began the period with battered balance sheets, but still with a substantial amount of reserves which enabled operators to endure a prolonged soft market, low investment yields and recent currency headwinds... read more