Price competition in P/C to remain fierce, says S&P

Price competition for global property/casualty (P/C) reinsurers has been fierce for the past few years and is likely to stay that way for the foreseeable future, according to a new report by Standard & Poor's (S&P).

The report, titled “Property/casualty reinsurers with strong reserve margins are in a better position to withstand the prolonged soft market”, claimed some global reinsurers have supported their combined ratio by releasing more of their reserves since the market started softening in 2007.

However, it also found that in the future, it expects to see a reduction of reserve releases attributable to natural catastrophe events, as there were fairly few catastrophe claims in 2013 and 2014.

S&P also said in the report that it expects reinsurers who chose to retain prudent reserves for longer to have maintained a cushion on which they could use. In contrast, it said those who have released reserves more quickly may find they can’t support current reported profits from past reserves.