Reinsurer capital totalled $565bn at H1: Aon Benfield
Global reinsurer capital totalled $565 billion at June 30, 2015, despite a continuation of tough market conditions.
That is according to the latest Aon Benfield Aggregate (ABA) report, which said that the headline reduction of 2 percent relative to the end of 2014 was driven by strengthening of the US Dollar over the intervening period.
The report added that on an underlying basis, the capital available to support reinsurance underwriting was flat, with retained earnings offsetting unrealised losses on bond portfolios.
Other highlights from the report, which analyses the financial results of 28 major reinsurers in the first half of 2015, included the growth of alternative capital, which has slowed compared to previously recorded figures, generating a total rise of 6 percent to $68 billion.
The study also found that shareholders’ funds reported by the ABA companies fell by 4 percent to $332 billion at June 30, 2015, but the total was up slightly at constant exchange rates, driven by solid earnings.
Mike Van Slooten, Head of Aon Benfield’s International Market Analysis team, said: “The landscape of the reinsurance industry is changing, driven by market dynamics in the developed world and the rising influence of Asian capital. 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”.
Other key findings included that in original reporting currencies, two-thirds of the ABA constituents achieved growth in property and casualty (P&C) premiums in the first half of 2015, while underwriting performance remains strong, aided by low global catastrophe losses and favourable prior year reserve development. The combined ratio stood at 91.1 percent.
According to Aon Benfield, 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.
Also, headline return on equity has eroded modestly, but remains resilient at 10.7 percent (annualised) and sector consolidation continues, as companies look to achieve the advantages of scale and diversification.
