2016 looks to be a challenging year for the insurance sector, but a lack of major catastrophes over the next 12 months could allow for market stabilization.

Stephen Catlin, CEO of XL Group, said he expects 2016 to be quite a difficult year for a number of reasons.

“We’ve got lucky over the last few years on cat losses, we’ve actually got lucky on attritional loss ratios -- we can’t have primary rates going down for five years without deterioration there and that’s not really come through yet. And unfortunately investment return isn’t going up any time soon. So to achieve a 10% ROE for 2016, for the industry as a whole, is probably well night impossible,” Catlin said in a video interview with AM Best.

Catlin’s view was echoed by Paul Ehlert of Germania Insurance, who said he also expects low investment rate yields, “but with the absence of a large catastrophe loss, I think we’ll see a stable market,” he said.

Indeed, Steve Weisbart of the Insurance Information Institute, said: “Assuming we don’t have any really disruptive catastrophes, we should see modest growth.”

Weisbart did acknowledge however: “We’re unlikely to see any major flow of investment so it’s going to have to be on underwriting side.”