Morningstar DBRS revises reinsurance outlook down to positive amid geopolitical uncertainty

By Michael Loney

April 3 - (The Insurer) - Rating agency Morningstar DBRS has changed its outlook for the global property casualty reinsurance industry to stable from positive in response to geopolitical uncertainty and other headwinds including U.S. tariffs.

In a commentary, Morningstar DBRS highlighted that global P&C reinsurers reported strong net earnings in 2024 driven by solid investment income, and very good underwriting performance, despite elevated insured global natural catastrophe losses.

The rating agency said that global reinsurers benefited from a relatively high-interest rate environment in 2024 as they reinvested their maturing investment in higher-yielding securities while maintaining a relatively conservative investment portfolio mix typically dominated by fixed income investments.

But Morningstar DBRS revised its outlook for the global P&C reinsurance industry to stable from positive because of increased global geopolitical uncertainty and other headwinds, including further market volatility caused by U.S. tariffs, and uncertainty about how central banks may respond with interest rate actions if inflation starts to rise again.

"Given their strong capital positions and in some cases pricing improvements for loss-impacted reinsurance treaties from the 2025 renewals, we expect the P&C reinsurance sector to be able to navigate the difficult operating environment even if market volatility is sustained,” said Victor Adesanya, vice president, global insurance and pension ratings at Morningstar DBRS.