The global reinsurance market faces a challenging task next year as it seeks to maintain underwriting volumes while reducing exposure in some lines, according to a new Standard & Poor’s (S&P) report.

Some reinsurers have already indicated they will reduce their exposure in areas that have peaked, such as global property/catastrophe, aviation hull and big-ticket US property risks.

“The reductions in exposure, combined with underlying price reductions, are likely to result in a decline in premium volumes in the next few years,” S&P credit analyst Stephen Searby said in New York.

“But this will not be unwelcome if it stems from a sensible risk management policy and should not generally be a concern for investors.”

The exposure cuts may also result in increases in risk-adjusted capital and the potential return of excess capital to shareholders.

S&P says this will not generally have a negative effect on ratings if conducted in the context of sensible risk management.