Robust global reinsurance market positioned to meet industry challenges

12 December 2007: The International Association of Insurance Supervisors (IAIS) has published its fourth annual overview of the financial condition of reinsurers, Global Reinsurance Market Report 2007. The report, issued by the IAIS Reinsurance Transparency Group, also considers future challenges to the market, concluding that the sector remains robust and that low levels of losses during 2006 have improved the industry’s financial condition.

Jeremy Cox, Chair of the Reinsurance Transparency Group, noted that “2006 proved to be an extraordinary year with exceptionally low levels of loss and strong profitability, following two years of higher-than-expected natural catastrophe losses. The industry must however remain committed to mitigating risk and preparing for short and long term adverse events,” he added.

The report analyses exposure and premium statistics submitted by the world’s largest reinsurers relating to their business in 2006. The data shows that 2006 was significantly more benign for reinsurers than 2005, which saw record losses. The industry must now turn to the challenge of managing the downturn in the economic cycle, already apparent in many markets.

As risk mitigation practices evolve, reinsurers are exploring new methods to diversify risk. Global Reinsurance Market Report 2007 addresses such activities, including credit risk transfer, the transfer of insurance risk to the capital markets (eg through catastrophe bonds and sidecars), and portfolio diversification. The losses incurred in 2005 likely accelerated growth in the use of these instruments.

Life reinsurance challenges include both one-off catastrophe-type risks, such as a pandemic which gives rise to a marked short-term increase in levels of mortality, and issues arising from longer-term trends, such as longevity and levels of obesity in western societies.

(This is the press release of IAIS)

For more insurance related news ...Click here

CLICK FOR MORE FEATURES & STORIES