Reinsurance sector net income jumps 75% in H1
Aggregate net income of the reinsurance sector increased nearly 75 percent year on year to $14.5 billion in the first half of 2018, according to Willis Towers Watson.
The profit boost was largely driven by a reduction in natural catastrophe losses during the period, the broker explained in its “Reinsurance Market Report September 2018: Results for Half-Year 2018”.
Profitability was also helped by continued support from substantial prior year reserve releases and significant realised investment gains of $2.9 billion in the first half, a reduction from the $3.4 billion in the same period a year ago.
The broker tracks 34 reinsurance companies in its Willis Reinsurance Index.
The return on equity (RoE) of the reinsurance sector improved to 7.7 percent in the first half of 2018 from 4.6 percent in the same period of 2017.
The reported combined ratio for the companies included in the index improved to 94.3 percent from 95.0 percent during the period.
At the same time, shareholders’ equity in the 34 reinsurance companies declined by 1.6 percent to $364.9 billion in the first half of 2018 as reinsurers continued to return capital to investors through dividends and share buy-backs, which totalled $11.1 billion in the first half of 2018.
Shareholders’ equity was also reduced by unrealised investment depreciation of $8.3 billion which was due in part to rising interest rates. Alternative capital increased to $88 billion in the first half of 2018 from $75 billion, the report noted.
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