Successful reinsurance businesses strive for profit stability while promising to reduce the volatility that their cedents experience.
Executive Summary
Reinsurance underwriting is all about finding equilibrium between their reason for being—reducing the volatility of cedents earnings—and producing stable profits in their own businesses. With new laws promising to change a Florida litigation environment that was out of control, reinsurers are selectively leaning in, even though catastrophe exposures, amplified by climate change, remain throughout the coastal state.But now some reinsurers have been cutting their property-catastrophe exposures in high-risk regions. For them, the earnings volatility was just too high.
“Given the volatility of catastrophes, reinsurers are responding through rate increases, catastrophe modeling enhancements, greater stress testing and varying degrees of exposure reduction,” according to Moody’s in a January 2023 report.
