Reinsurance prices will continue to fall this year as competition for customers from hedge funds and other sources of alternative capital send premiums to their lowest in four years, according to Swiss Re AG.

“Price reductions have slowed down but there’s still pressure,” Edouard Schmid, the head of the property & specialty unit at the world’s biggest reinsurer, said in an interview in Zurich. “Having many years without large losses and an oversupply of traditional and alternative capital it’s more difficult for us to charge the prices we used to see for this protection.”

Swiss Re’s Property & Casualty unit posted a 22.2 percent return on equity for 2015, according to its earnings statement. That compares with a 4.7 percent ROE from the Stoxx 600 banking index in the same period, according to data compiled by Bloomberg.

Hedge funds, sovereign wealth funds and other providers of alternative capital set aside $72 billion for reinsurance last year, a 12 percent increase from 2014, even as allocations from traditional capital fell 4 percent to $493 billion, according to research by Aon Plc. That led to price cuts when policies were renewed on April 1, according to reinsurance broker Willis Re Inc.

Lower than normal claims are also drawing competitors. Global insured losses from natural catastrophes and man-made disasters in 2015 fell to $37 billion, compared with an average of $62 billion over the previous 10 years, Swiss Re said in a report last month. Losses were smaller last year because no major hurricane made U.S. landfall for the 10th year in succession. Hurricane Sandy was not a major hurricane when it hit in 2012, despite being the third-most expensive storm event ever, the report said.

Uninsured Pool

Reinsurers should chase customers who don’t have coverage rather than compete for firms that have traditionally bought policies, Schmid said. Swiss Re’s property and casualty unit premiums fell to $3.7 billion in the fourth quarter from $3.9 billion a year earlier. The reinsurer is approaching governments directly to try to convince them to insure against risks, he said.

Reinsurers including Swiss Re, Munich Re and Hannover Re sell backup coverage to insurance companies, helping to protect them against risks such as natural and man-made disasters. Many in the industry are now at the point where they are no longer prepared to grant any further concessions on price, Willis Re wrote in its report.

“We need to look also at the potential losses” if a catastrophe happens, Schmid said. “It’s just a matter of time until we see the other side of the coin.”