Fitch Rating: reinsurers’ results poised to deteriorate in 2016

The major reinsurers have posted declining results for the first quarter of 2016. This is the case of Hannover Re with -3.1%, Scor -2.9%, Swiss Re -14.65%, Munich Re whose quarterly profits was cut by 45.5% at 430 million EUR (486 million USD).

According to Fitch Rating, reinsurance profitability will decrease in 2016. Downward tariffs, overcapacity, low interest rates are compounding the misery of reinsurers. Return on equity would,therefore diminish from 9.9% in 2015 to 8.1% in 2016. However, net premiums are expected to slightly increase to 95.7 billion USD (compared to 94.8 billion USD in 2015).

This difficult environment is favourable to mergers and acquisitions.

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