Reinsurers are not yet seeing their premiums rise to the levels that might be expected after a year that totalled more than $US100 billion ($98.9 billion) in insured catastrophe losses.

A Standard & Poor’s (S&P) report issued last week is optimistic about the reinsurance market, due to what it says is “a generally stronger capitalisation, overall modest price increases and potential growth in emerging markets”.

S&P says reinsurers are generally strongly capitalised because of additional capital that has entered the market during the past 18 months through insurance-linked securities such as catastrophe bonds.

Capacity has also remained high because many of the larger reinsurance companies were less affected by the 2011 catastrophes than others. S&P says some pricing improvements are being experienced, but it is “far from a hard market”.

It says the last hard market for reinsurers was in 2005, when hurricanes Katrina, Rita and Wilma hit the US.

The report says most reinsurers would consider entering new markets, especially emerging markets, where business is forecast to grow significantly in the coming years.

However, S&P warns that growth in emerging markets should not be confused with growth in profitability, and urges caution over the potential for costly mistakes in reallocating capital.

“If a reinsurer enters a new market unsuccessfully and then decides to leave it, the capital there may not be as easy to withdraw as it was to put in place,” says the report.