Analysis suggests that the reinsurance sector is no longer covering its cost of equity

Analysis of the reinsurance sector over 2016 has found that the sector has seen prices drop to a point that it is no longer covering its cost of equity. January renewals saw prices drop more than expected in some business areas with analysts suggesting that the market may not be soft enough for a response. The findings said that over the past few years the market conditions have seen return on equity in the market fall and it’s now at a point that reinsurers are no longer earning sufficient underwriting returns to cover reinsurers cost-of-capital.