Despite deteriorating market conditions Aspen Insurance, Hiscox, Beazley and Novae Group, have been listed by rating agency AM Best as companies that have performed strongly in the first half of 2016.
According to a new report from AM Best, titled ‘London market insurers adapting to an evolving operating environment’, insurers performed well, but this concealed fundamental challenges to the market’s competitive position and prospective profitability.
Regardless of catastrophe losses the Bermudian companies have faced from wildfires in Fort McMurray, Canada, as well as a Japanese earthquake in April, European floods and US storms, their investments have performed better than the first half of 2015.
These were helped by “capital gains on fixed income securities, as yields fell in June following the announcement of the result of the UK referendum on its membership of the European Union,” the report said.
Pressure on underwriting results is increasing due to the combined effects of changing buying habits, plentiful capacity and global economic uncertainty. Meanwhile, investments are providing scant earnings support, with interest rates at historically low levels and equity markets volatile, the report said.
The report said: “Insurers also benefited from further improvements in terms and conditions, such as expansion of hours clauses, with programmes placed early generally able to achieve the most favourable terms.
“But the pace of rate deterioration is slowing, especially for the higher layers of programmes. At the half year, AM Best noted that there was only a modest increase in the supply of alternative capital and there is evidence that the market’s very quantitative approach to underwriting peak catastrophe business is supporting pricing discipline.”
It was also mentioned in the report that combined ratios have declined for the first half of 2016 compared with the same period of last year, but remained below 95 percent.
AM Best, London, UK, Aspen Insurance, Hiscox, Bermuda, Insurance, Reinsurance, Catastrophe, Property, Casualty, Special report, London market