Ratings agency Standard & Poor's has accused some reinsurers of "reserving by stealth".
Director of financial services ratings at Standard & Poor's, Stephen Searby said the profits recorded so far in 2003 by reinsurers were "disappointing" given the current hard market. He said that one explanation for the lower than expected profits was that reinsurers were using some of this year's profits to top up reserves.
Searby said that this covert reserving had negative implications because it implied that either reinsurers' reserves were still not at adequate levels, or that they thought the next soft market would be severe and were preparing for "another long winter".
Searby said increased competition from Bermudian reinsurers was another reason for the below forecast profits.
