Below-average catastrophe losses in 1H19 boosted non-life reinsurers' underwriting profitability, offsetting mixed results for life reinsurers, according to Fitch Ratings.

Within Fitch's universe, non-life reinsurance net written premiums grew 11.3% in 1H19, compared with a slight decline for life reinsurers. Fitch's universe of 16 monitored reinsurers posted in their 1H results an aggregate reinsurance calendar year combined ratio of 94.6%, up slightly from 92.7% a year ago as reinsurers were affected by adverse development on Typhoon Jebi losses.

In its report, titled "Global Reinsurers: Mid-Year 2019 Financial Results -- Low Catastrophes, Rising Rates and Strong Investment Results", Fitch says that the performance of life and health reinsurers was mixed, with only five of eight reinsurers posting higher net premiums earned.

Outlook

Fitch expects the firm market will continue through the January 2020 renewals period, and reinsurers will retain more capital in the near term on the back of more favourable pricing.

"Even with the costliest successive years on record of catastrophe losses in 2017 and 2018, overall pricing remains inadequate and well below recent risk-adjusted levels," said Mr Brian Schneider, Senior Director, Reinsurance at Fitch.

Global reinsurance catastrophe losses narrowed to $15bn in 1H19 from $23bn in 1H18 and the $31bn 10-year average for 1H. Despite this, additional 2019 losses cannot be ruled out.

Similarly, slower cat bond issuance hindered the insurance linked securities market in 1H19 to one of the lowest levels seen in a decade. While ILS funds continue to attract new capital, the pace is more measured than in 2018.