Favorable underwriting conditions and recovery of unrealized losses provided reinsurers with a 22% return on equity (ROE), according to a report by the AM Best rating agency. Forinsurer highlighted the most important thing.
Analysts note that the increase in reinsurance coverage limits will increase payments for hurricane losses in 2024. The total gross written premiums of reinsurers in AM Best’s sample accounted for almost 90% of the total premiums in 2022. The sample includes companies reporting under US GAAP and IFRS 17.
According to AM Best, the reserve leverage of the sample has declined, especially among non-life reinsurers, with the exception of the four largest companies for which life insurance is a significant part of the business.
It is important to note that various organizations estimate that the total insured losses from Hurricanes Milton and Helene could range from $25 to $50 billion, much of which is likely to be covered by international reinsurers. However, AM Best emphasized that the stricter reinsurance conditions that led to the increase in limits should help reduce reinsurers’ losses.