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Despite a recent string hurricanes, floods, wildfires and other natural disasters, the outlook for the global reinsurance sector is improving, according to rating agencies Moody’s Investors Service and Fitch Ratings.

In a new report, Moody’s said the outlook for the reinsurance industry has shifted from negative to stable amid expectations of higher profits and solid capital over the next couple of years.

“Healthy price increases will drive stronger earnings through 2022 as the post-pandemic economic recovery and recent significant catastrophe losses fuel fresh demand for reinsurance,” said Helena Kingsley-Tomkins, vice-president and senior analyst with Moody’s, in a release.

Moody’s reported that property reinsurance prices are climbing, driven by recent losses due to natural catastrophes.

Fitch noted that higher prices, along with the ongoing economic recovery and lower pandemic-related losses, have also boosted the sector’s outlook.

“These positive factors should outweigh the negative effects of declining investment returns, increasing natural catastrophe claims due to climate change, and a temporary pick-up in inflation,” Fitch noted.

Additionally, Fitch said that rising vaccination rates, particularly in Europe and North America, have “reduced the risk of excess mortality claims in life reinsurance, despite the spread of the Delta variant.”

Looking ahead, tougher reinsurance terms and conditions “have mostly eliminated the risk of new pandemic-related claims” for business-interruption losses, Fitch said.

“The pandemic has caused reinsurers to take a more prudent stance towards systemic risk management, including communicable disease, cyber events and climate change,” Moody’s noted.