Insights
AM Best’s recent paper on reinsurance returns in 2023
Posted 05/11/2024 – Insights
In a recent research paper, AM Best reported that the average Return On Equity (ROE) for reinsurers in 2023 was 22%, marking a five-year high. AM Best analysed a sample of reinsurance companies which collectively represented almost 90% of all global reinsurance premium underwritten in 2022. The report also highlighted that losses from Hurricanes Milton and Helene should be manageable for reinsurers and according to Guilherme Monteiro Simoes, the principal author of the report, these hurricanes ‘will probably stall any softening of the market cycle’.
Alpha comment
As we have highlighted a number of times, 2023 was generally a good year for (re)insurers, with strong market conditions, good investment returns and a lack of US hurricane losses. This was evidenced by Lloyd’s and other carriers’ 2023 annual results. The extensive analysis conducted by AM Best further validates this conclusion. It is also promising that the reinsurance market is well insulated against the losses and Hurricanes Helene and Milton are likely to help sustain the strong market conditions.
