Standard & Poor's has changed its outlook for the global reinsurance industry from negative to stable.
Simon Marshall, S&P credit analyst, said: "The industry has managed the massive losses of the 2005 hurricane season and is enjoying the profits and healthy balance sheets that have resulted from a continued hard market.”
S&P indicates that the reinsurance sector has an improved operating environment. Regulation, risk management and transparency have all improved.
The industry still faces challenges, such as a squeeze on retrocession capacity and the aftermath of the hurricane season, but £7.4bn of new capital entered the market in late 2005.
Laline Carvalho, S&P credit analyst, said: "Improvements in modeling, underwriting, and pricing are bound to follow the catastrophe losses of 2005, but whether these will be sufficient to drive down volatility remains to be seen."
