Fitch Ratings has said in a report today that it has maintained its stable rating outlook on the global reinsurance sector.
Fitch believes that the sector's underwriting, operating and capital trends over the next 12 to 24 months will remain consistent with expectations established in July 2004, when it revised its rating outlook to stable from negative.
Chris Waterman, senior director in Fitch's insurance group based in London, said: "The unknown factor in Fitch's analysis is the effect Hurricane Katrina will have on the reinsurance sector.
"Katrina-related losses approximating the upper end of current estimates could be large enough for Fitch to reconsider its stable outlook," Waterman added.
Mark Rouck, senior director in Fitch's insurance group in Chicago and co-author of the report, said: "Excluding Katrina, the sector's recent trends have generally been favourable from an earnings and capital perspective."
Although premium rates have softened, Fitch viewed this as a natural response given the reinsurance sector's cyclical nature.
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