MONTE CARLO–Rating agencies here said the reinsurance industry outlook is generally stable despite downward pressure on pricing.
Peter Grant, director, with Standard & Poor's in London, said that with a combined ratio of 90 percent and persistent discussion of downward pressure on pricing, often in the range of 5 to 10 percent, "you add 3 to 6 percentage points for claims inflation and you can see how easy it is for the industry to go from a banner year to a disappointing performance."
Miles Trotter, assistant general manager, analytics, with A.M. Best Europe, reported that while rates for U.S. catastrophe business remain firm, they are going up elsewhere. He said combined ratios for 2007 will be better without a major event, "In that scenario, however, competition would heat up of excess capacity and downward pressure on all rates would be steeper," resulting in weaker combined ratios in 2008.
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