Fitch Ratings said it has revised its global reinsurance industry outlook to stable from negative, citing relative improvements in the capital markets, macroeconomic conditions and reinsurance companies’ strong financial performance.

 The New York rating firm said improvements in capital market conditions have sufficiently eased concerns regarding reinsurers’ ability to access the capital markets on reasonable terms following a significant catastrophic event.

 Macroeconomic conditions, while still weak by many measures, said Fitch, have stabilized enough to support a stable rating outlook.

The company said it views the reinsurance sector’s credit quality as less sensitive to macroeconomic factors than that of many financial services sectors.

According to Fitch, reinsurers are most directly exposed to macroeconomic deterioration through pressures on the asset side of their balance sheet, and the firm noted that asset values have improved markedly over the last six months.

 Global (re)insurers Fitch tracks generated strong results through the first nine months of 2009, “characterized by significant underwriting profits and solid capital growth against a background of favorable capital market trends and ongoing weak economic conditions,” said the firm.

 Going forward, Fitch said it views the reinsurance sector’s profitability and capital formation “as susceptible to downward pressure on premium rates and less favorable reserve development trends but views these pressures as within normal cyclical expectations.”  

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