Global reinsurer capital totaled $565 billion at June 30, 2015, a reduction of two percent relative to the end of 2014 that was driven by strengthening of the U.S. dollar, according to the latest edition of the Aon Benfield Aggregate (ABA) report.
The report, which analyzed the financial results of 28 major reinsurers (including 26 publicly listed) in the first half of 2015, also noted that on an underlying basis, the “capital available to support reinsurance underwriting was flat,” with retained earnings offsetting unrealized losses on bond portfolios.
According to the report, alternative capital continues to grow, but at a slower pace than before; the total rose by six percent to $68 billion.
The report concludes that underwriting performance remains strong, aided by low global catastrophe losses and favorable prior year reserve development. The combined ratio stood at 91.1 percent.
Aon Benfield’s study also found that shareholders’ funds reported by the ABA companies fell by four percent to $332 billion at June 30, 2015, but the total was up slightly at constant exchange rates, driven by solid earnings.
Other findings relating to the 26 publicly-listed holding companies in the ABA include:
- Premium growth is being achieved. In original reporting currencies, two-thirds of the ABA constituents achieved growth in property and casualty premiums in the first half of 2015.
- Investment returns are still under downward pressure, with little prospect of relief in the near term.
- The ordinary yield has declined to 2.8 percent.
- Headline return on equity has eroded modestly, but remains resilient at 10.7 percent (annualized).
- Sector consolidation continues, as companies look to achieve the advantages of scale and diversification.
“The landscape of the reinsurance industry is changing, driven by market dynamics in the developed world and the rising influence of Asian capital,” said Mike Van Slooten, head of Aon Benfield’s International Market Analysis team. “Discerning reinsurance buyers will continue to benefit in this environment, but the level of complexity is increasing and understanding broader industry trends has never been more important.”
Source: Aon Benfield
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