Reinsurers’ attitudes to catastrophe risk in the softening market are diverging, according to Standard and Poor’s (S&P).

Some are taking on increased catastrophe risk, while others are looking to expand other business lines.

“We expect this divide could widen as rates soften further,” the ratings agency says.

S&P warns greater focus on catastrophe risk weakens reinsurers’ risk positions and increases earnings volatility.

“Those that misjudge their exposure could be left isolated after the next large event.

“This reinforces our view that discipline is necessary as reinsurers face difficult strategic decisions when adjusting their exposure to falling catastrophe rates.”

S&P says London-based groups appear to be the most exposed.