Despite challenging conditions, the global reinsurance market remains strongly capitalized, based on an aggregate basis, A.M. Best has reported.
The ratings agency used its updated Best’s Credit Rating Methodology (BCRM) and its new building block approach as part of its analysis.
It found that approximately two-thirds of the rated population has the strongest category of balance sheet strength and that no companies fell below the strong category.
This is mostly due to the reinsurers’ surplus growth, which stems from generating positive cash flows and loss reserve redundancies, managing high quality investment portfolios, and maintaining appropriate reinsurance structures to protect surplus, the report said.
Steven M. Chirico, a Director in A.M. Best’s property/casualty ratings division, said: “The analysis of the global reinsurance market using the building-block approach accentuates the value of the approach in that is based on the convergence of multiple analytical assessments that result in a published rating.”