Some of the larger reinsurers are taking their business directly to the capital markets, according to AM Best's Vice president for reinsurance, Robert De ROSE.

He also stated that the alternative capacity entering the industry has been changing the landscape and it pushed reinsurers to get paid less for the same level of exposure.

In the market becomes increasingly competitive, mergers and acquisitions among reinsurers will become a necessity.

Competing capacity would also reduce the opportunity for reinsurers to recover from the soft market following major losses. This is one of the reasons AM Best placed a negative outlook for the reinsurance sector this year.