Ratings agency A.M. Best’s continuing stable outlook for the global reinsurance sector is good news for the entire industry. It goes without saying the reinsurance sector plays a critical role by increasing capacity in the global insurance marketplace, and offering protection against catastrophic losses. In fact, despite facing enormous loss potential from natural and man-made catastrophes, the reinsurance market is remarkably robust. In affirming the sector’s outlook, A.M. Best cited generally strong balance sheets, continued improvements in enterprise risk management (ERM) and general earnings momentum through 2007. However, it added that price deterioration, competition and increased cedant retentions are drivers of concern relating to the sustainability of the sector’s long-term operating performance. Other challenges remain in light of the increased capacity of industry participants, new entrants and forms of capital. For example, A.M. Best noted that it is no longer easy to ignore the reality of the capital markets as an alternative. Check out further I.I.I. info on reinsurance.