Global reinsurers will earn less profit this year as the weak business environment continues to affect results, according to Fitch Ratings.

The agency has rated the sector’s outlook as negative since 2014.

“Profit levels will decrease [this year] across the global reinsurance sector; however, capitalisation is expected to remain strong as reinsurers actively manage capital for current market conditions,” Fitch Senior Director Brian Schneider said.

The accident-year combined operating ratio excluding catastrophes is expected to deteriorate, a reflection of pressure on underwriting margins.

Some reinsurers may look to improve earnings through consolidation, but such moves are not without risks.

“Industry consolidation is likely to continue [this year] as reinsurers look for scale to improve profitability,” Mr Schneider said.

“However, Fitch would negatively view any individual deal that is driven solely to achieve greater scale and diversity without a clear strategic rationale.”