(Reuters) – S&P Global has raised its view of the global reinsurance sector to stable from negative, it said on Tuesday, due to higher reinsurance rates and increasing investment income.

The ratings agency pointed in a note to rising rates and tighter terms and conditions when policies in reinsurance – insurance for insurers – were renewed during 2023. S&P Global said this “resulted in the hardest market in decades” in some lines of business.

Pandemic, war, inflation and climate change-fueled natural catastrophes have put upward pressure on reinsurance rates in recent years.

U.S. property catastrophe reinsurance rates rose by as much as 50% at July renewals, broker Gallagher Re said in a recent report, with states such as California and Florida increasingly hit by wildfires and hurricanes.

“Challenges such as elevated natural disasters, increasing cost of capital, financial market volatility, and inflation risk persist,” S&P Global added.