Analysts at Goldman Sachs have forecast that a combination of higher underlying general inflation and the impact of climate change will drive a further hardening of the reinsurance market through 2022 to 2024, with ROEs improving to or above their targeted range.
The firms notes that the reinsurance cycle has lagged behind the primary insurance cycle in recent years, but is now starting to catch up and is likely already in the hardest part of the cycle, as the market recoups the losses from the recent catastrophes and COVID.
Looking at the biggest European reinsurers, Goldman Sachs therefore expects ROEs generated over the next three years will be toward peak cycle ROEs, assuming normal weather losses.
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