Fitch has reiterated its negative outlook for the global reinsurance sector amid falling premium prices, increased non-catastrophe property losses and a higher underlying run-rate loss ratio.

However, the ratings agency says underwriting results are still profitable thanks to manageable catastrophe-related losses and favourable loss reserve development.

The group of 22 reinsurers Fitch tracks generated a reinsurance combined operating ratio of 87.4% in the first half of this year, compared with 85.9% in the corresponding period last year.

Fifteen of the group reported a deterioration in their reinsurance combined operating ratios.

“The weaker results partially reflect an increase in non-catastrophe property losses that have hit several reinsurers,” Fitch says. “They also reflect a shift in business mix by traditional reinsurers away from the property catastrophe business, which historically has the highest margins, because competitive market pressures have pushed property catastrophe premium rates to inadequate levels.”

Fitch says the sector faced “manageable” natural catastrophe insured losses of $US17 billion ($18.16 billion) in the first half, down from $US21 billion ($22.44 billion) in the corresponding period last year.

Fitch says market conditions are unlikely to improve in the near term given continued competition in the market, where fundamentals have deteriorated with falling rates and weakening of terms and conditions across a range of lines.

On the positive side, shareholder equity grew 5.2% in the half, with last year’s adverse changes in the unrealised investment gain/loss position on fixed maturities largely reversing for non-life reinsurers.

The reinsurers achieved reinsurance net written premium growth of 4.5% in the first half amid flat or falling prices in property and casualty reinsurance lines and increased competition from the alternative reinsurance market.