Scor CEO surprised by the industry outlook assigned by some rating agencies

Scor CEO Denis Kessler has expressed surprise about the relatively negative outlooks assigned to the global reinsurance industry by rating agencies.

Out of all the major rating agencies, Fitch maintained its negative outlook on the reinsurance industry while Moody’s cut its outlook to negative from stable in the week preceding Monte Carlo.

Meanwhile, only AM Best and Standard Poor’s announced a stable outlook across global non-life property/casualty reinsurers.

Scor’s Denis Kessler said: “I was quite surprised by the predictions given by the rating agencies. As an industry, we are not in a state of imbalance.

“Sure, I don’t see new capital coming in and there’s not too many new sidecars and I see some capital flowing out of the reinsurance industry because the investors want their money back. But I see some stability. I see demand being greater than supply. That’s why our view is optimistic. I don’t see major problems.”

He added: “The reinsurance industry as a whole is neutral or positive, but let’s not say negative.”

Scor has itself seen its outlook revised to positive from stable by AM Best.

AM Best, gave the most optimistic outlook for the global reinsurance industry, saying reinsurer capital remains sound and underwriting discipline is being emphasised by reinsurers.

John Andre group vice president, property and casualty ratings, at AM Best

said: “What reinsurers have come through in the last 12 months has been a fairly good stress test and they have come through it pretty well.”

He added: “We also don’t expect underwriting discipline to fade.”

Fitch, which had a more pessimistic outlook for reinsurance due to potential inability of reinsurers in the current economic environment to replenish capital if they suffer large catastrophe losses.

Asked to explain the more pessimistic stance, Greg Carter of Fitch said:

“It’s important to note that if you have economic pressures, the insurance industry often lags. We are still seeing unemployment and the impact that has on economic input takes a while to manifest itself.”

He added that there was a danger in becoming optimistic because of stock market rises.

“There’s still a lot of bad news out there. You could call it pessimistic… or realistic.”