LONDON (Reuters) - Reinsurance rates are likely to see at most a modest uptick next year due to strong competition in the market, ratings agencies S&P Global, Fitch and Moody’s said on Tuesday.
Reinsurers such as Swiss Re (SRENH.S), Munich Re (MUVGn.DE) and the Lloyd’s of London [SOLYD.UL] market help insurers share the risks of disasters such as hurricanes in return for part of the premium.
But these rates will rise less than 5 percent in 2019, S&P Global Director David Masters told a news briefing.
“There is still too much capacity as far as pricing conditions are concerned, we think the (pricing) momentum is fading out,” he said.
Moody’s analysts said they expected rates to remain “largely flat”, with possible changes within a range of minus 2.5 percent to plus 2.5 percent.
After a record year of $135 billion in insurance losses from natural catastrophes in 2017, some market participants had predicted a sharp rise in reinsurance premiums in 2018 that failed to materialise.
Rises have been lower than expected this year due to strong competition in the sector from hedge funds and other alternative providers that have entered the sector, putting pressure on profits.
Reporting by Carolyn Cohn, Maiya Keidan and Simon Jessop; Editing by Sinead Cruise and Edmund Blair