Global Reinsurer Capital Reaches $480 Billion: Aon Benfield Study

September 5, 2012

The latest edition of the Aon Benfield Aggregate (ABA) report, which analyzes the financial position of the world’s leading reinsurers for the first half of 2012, concludes that “global reinsurer capital totaled a record $480 billion at June 30, 2012, an increase of 5 percent ($25 billion) relative to December 31, 2011.”

The report described the calculation as “a broad measure of capital available for insurers to trade risk with and includes both traditional and non-traditional forms of reinsurance capital.”

It also determined that “capital reported by the ABA group of 31 publicly reporting reinsurers rose by 6 percent or $15 billion to $286 billion, driven primarily by $14.5 billion of net income and $8.6 billion of unrealized capital gains. Dividends and share buybacks totaled $9.1 billion.”

Aon Benfield listed further “key findings” of the ABA study as follows:
— Gross property and casualty insurance and reinsurance premiums written by the ABA rose by 6 percent to $92.0 billion, principally driven by higher pricing in loss affected lines, with a number of companies deploying new sidecar capacity for catastrophe business. Net premiums written rose by 5 percent to $76.3 billion.
— The ABA combined ratio stood at 90.1 percent, down from 117.8 percent in the first half of 2011, producing an underwriting profit of $6.6 billion, with all but one constituent reporting positive results.
— The contribution to the combined ratio from natural catastrophe losses totaled 2.5 percentage points ($1.6 billion), down from 31.8 percentage points ($19.6 billion) in the first half of 2011.
— The benefit to the combined ratio from prior year reserve releases was 3.2 percentage points ($2.1 billion), down from 4.7 percentage points ($2.9 billion) in the first half of 2011.
— The total investment return reported by the ABA companies through their income statements fell by 4.9 percent to $18.1 billion, representing an annualized investment yield of 3.8 percent.
— Pre-tax profits reported by the ABA companies totaled $17.8 billion, up from only $1.4 billion in the first half of 2011, with all 31 constituents reporting positive results.

Mike Van Slooten, Head of Aon Benfield’s International Market Analysis team, commented: “In stark contrast to the prior year, the relatively low level of insured catastrophe losses in the first half of 2012 allowed most ABA companies to report good earnings and consequent capital growth.”

Source: Aon Benfield

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