The Insurance Institute

of London

CII CPD accredited - demonstrates the quality of an event and that it meets
CII/PFS member CPD scheme requirements.

This webinar will count as 1 hour of CPD and can be included as part of your CPD
requirement should you consider it relevant to your professional development
needs. It is recommended that you keep any evidence of the CPD activity you
have completed and upload copies to the recording tool as the CII may ask to see
this if your record is selected for review.
AM Best's Reinsurance
Outlook and Insights

Steve Chirico – Director, AM Best

Catherine Thomas – Senior Director, AM Best

Market Segment Outlook – Global Reinsurance
Headwinds Tailwinds
Modeling uncertainty, including COVID-19 Positive pricing momentum,
related exposures despite new capital

Declining reserve releases,

Segment remains well capitalized
social inflation trends

Low yield investment conditions and

Third-party capital – flight to quality
capital markets volatility

Emerging opportunities – increased

Impact from new capital
risk awareness

Political and economic uncertainty Economic stimulus measures

AM Best has maintained the Stable outlook on the Global Reinsurance segment
 Global Market Trends
120% 50%
110.3%
105.5%
101.9%
100.1% 99.6%
100% 95.3% 40%
90.4% 33.8%
32.4%
33.8% 33.1% 34.0%
80% 30%
34.9%
34.3%

60% 20%

40% 10%
76.5% 68.2% 65.6%
67.0% 73.2%
56.1% 60.4%
20% 0%

0% -10%
2015 2016 2017 2018 2019 2020 Q2 5yr Avg

Loss Ratio Expense Ratio Loss Reserve Development

 Global Market Trends
10%
9.4%
9.2%
8.4%

8%

6%

4%

2%
1.1%

0.1%
0%

-1.1%
-2%
2015 2016 2017 2018 2019 2020 Q2

ROE 5yr Avg

 European 'Big Four' Market Trends
120% 50%

108.9%
105.2%
100.7% 101.4% 99.8%
100% 96.3% 40%
91.8% 32.2%
30.8%
32.6% 31.8% 32.3%
80% 32.8% 30%
31.9%

60% 20%

40% 10%
76.7%
59.9% 63.4% 68.1% 67.5%
69.6%
74.4%

20% 0%

0% -10%
2015 2016 2017 2018 2019 2020 Q2 5yr Avg

Loss Ratio Expense Ratio Loss Reserve Development

 European 'Big Four' Market Trends
14%

12% 11.5%

10% 9.7%

8%
7.2%

5.8%
6%

4%

2.7%

2%

0.3%
0%
2015 2016 2017 2018 2019 2020 Q2

ROE 5yr Avg

 U.S. & Bermuda Market Trends
120% 50%

109.7%

101.9% 102.5%
100% 97.1% 97.9% 40%
92.2%
88.6% 31.8%

31.9% 30.7%
80% 31.3% 32.4% 30%
33.9%
33.2%

60% 20%

40% 77.8% 10%

70.0%
65.8% 65.5%
55.4% 58.3% 71.8%

20% 0%

0% -10%
2015 2016 2017 2018 2019 2020 Q2 5yr Avg

Loss Ratio Expense Ratio Loss Reserve Development

 U.S. & Bermuda Market Trends
14%

12% 11.6%

10%

8% 7.3%
6.7%

6%

4%

2%
0.7%

0%

-2% -1.3%
-2.2%

-4%
2015 2016 2017 2018 2019 2020 Q2

ROE 5yr Avg

 Lloyd's Market Trends
120% 50%
114.0% 112.4%

104.6% 45%
102.1% 101.7%
100% 97.9%
40%
90.0% 39.5% 39.6%

39.2% 35%
38.7% 39.6%
80%
40.6%
30%
40.1%

60% 25%

20%

40%
15%

57.3%
49.9% 10%
20% 65.4% 62.1%
74.5%
63.4% 5%
72.8%

0% 0%
2015 2016 2017 2018 2019 2020 Q2 5yr Avg

Loss Ratio Expense Ratio Loss Reserve Development

 Lloyd's Market Trends
10%
8.9% 9.0%
8.1%
8%

6%

4%

2%

0%

-2% -1.4%

-4%
-3.7%

-6%

-8% -7.3%

-10%
2015 2016 2017 2018 2019 2020 Q2

ROE 5yr Avg

Market Segment Outlook – Private Mortgage Insurance
Headwinds Tailwinds

Strong underwriting standards and

Uncertainty regarding COVID-19 related losses
risk-adjusted capitalization

Deteriorating US macroeconomic conditions Global government stimulus programs

Forbearance programs offered by Fannie Mae,

Elevated unemployment and underemployment
Freddie Mac, and the Federal Housing Administration

Increased loss and expense reserves Lower than expected and declining delinquencies

A rebounding mortgage insurance-linked securities

Declining earnings support
(MILS) market

AM Best has maintained the Negative outlook on the Private Mortgage Insurance segment
Feedback

Many thanks for attending this webinar.

Please take a moment to complete this Feedback Form. Your

comments will enable us to ensure that future CPD activities
satisfy the needs of our members. CPD certificates will be
available to download from the event page within 24 hours of
the event date.

To access the survey, scan this Quick Response code with

your QR reader app on your mobile phone.