The International Association of Insurance Supervisors (IAIS) has published its fourth annual overview of the financial condition of reinsurers in its Global Reinsurance Market Report 2007 (report). The report, issued by the IAIS Reinsurance Transparency group, reviews the financial condition of reinsurers, considers future challenges to the reinsurance market, and concludes that the sector remains robust and that low levels of losses during 2006 have improved the industry’s financial condition.

The report analyses exposure and premium statistics submitted by the world’s largest reinsurers relating to their businesses in 2006. This data shows that 2006 was significantly more benign for reinsurers than 2005, which saw record losses. The report addresses activities that reinsures are using to diversity risk. These include credit risk transfer, the transfer of insurance risk to the capital markets, and portfolio diversification. The report stated that the reinsurance industry must turn to the challenge of managing the downturn in the economic cycle, which is already apparent in many markets. The report also exposed future challenges faced by the life reinsurance industry.