Hopes that the soft reinsurance market would come to an end during June and July renewals are proving to be premature, according to analysts at Keefe, Bruyette & Woods.

KBW remains cautious on the Bermuda market, seeing a declining property-catastrophe “subsidy” even if losses from the 2017 hurricane season are low, “and we think normalised losses would impede book value growth and share repurchases without meaningfully boosting rates”.

In its report, KBW stated: “Although several executives had been cautiously optimistic about reinsurance pricing finding a floor, we don’t think we’re there yet.

“We doubt the modest recent interest rate uptick justifies rate decreases — the soft market probably hasn’t yet fully played itself out.”

Reinsurers have seen profits under pressure in recent years, with alternative capital in the form of insurance-linked securities pouring into the market, amid benign catastrophe loss activity keeping the downward pressure on reinsurance rates.

On the other side of the balance sheet, reinsurers are squeezing low returns out of their investment portfolios, as unusually low interest rates persist.

KBW cited Willis Re’s report last week on midyear renewals, which showed rates were still falling in many lines of business and geographies.