The influence of reinsurance capacity on primary market underwriting cycles

As with past cycles, the property/casualty insurance industry’s success is contributing to the deterioration of the market. Capital has grown tremendously in recent years despite significant recent growth in capital outflows from dividends and share repurchases. In a recent report by Fitch Ratings, analysts James B. Auden , Gerald B. Glombicki and Jeff A. Mohrenweiser explored the aspects that affect the insurance underwriting cycle in an effort to understand the market’s current position including the impact of excess capital, the state of insurers’ loss reserves and investment market changes on the cycle. The report also examined the view that the current cycle phase will, in the end, be less severe than the prolonged soft market of the 1990s. Here, in an edited extract from the Fitch report, The Property/Casualty Underwriting Cycle: Will This Soft Market Differ from the Past? , the authors consider the impact of reinsurance market influences on primary market underwriting cycles