A general recovery in the global investment markets and the absence of major catastrophes ensured 2009 a profitable year for the reinsurance industry, according to a 2010 reinsurance market review by Cooper Gay.
According to Cooper Gay, while the primary market struggled under a number of factors including attritional losses, local competition pressurising rates and limited scope for premium income growth, the reinsurance sector proved to be more robust.
The market review showed that there was plentiful supply of capital led to a general softening of reinsurance rates across most classes in 2009. Other trends saw capital market activity also picking up significantly in 2009 with 19 catastrophe bonds issued with a combined value of $3.5bn. However, the firm said that 2010 could be more challenging with above average hurricane season expected.
Seymour Matthews, chairman of reinsurance at Cooper Gay, said: “We predicted that 2009 would be a lucky year for reinsurers and given the absence of major disasters resulting in the lowest death toll and economic cost for some 20 years, we were proved right. Couple the low loss levels with a better investment performance than expected and 2009 will go down as a very profitable year.
“2010 however has already been shaken by the terrible loss of life in Haiti although the financial impact is unlikely to affect regional pricing. Of more impact to the reinsurance sector is likely to be an expected increase in hurricane activity in 2010 with forecasts of an above average hurricane season.”