The latest ABA (Aon Benfield Aggregate) report has been launched, featuring detailed financial analysis of the world’s leading reinsurers in the first half of 2014. Aon Benfield Analytics estimates that global reinsurer capital reached a record level of $570 billion at June 30, 2014, an increase of 6% ($30 billion) relative to December 31, 2013. This calculation is a broad measure of capital available for insurers to trade risk with and includes both traditional and non-traditional forms of reinsurance capital.
The firm's latest study found that capital reported by the ABA group of 31 leading reinsurers increased by 4% ($14 billion) to $351 billion (62% of global reinsurer capital), driven primarily by $18.6 billion of net income and USD9.4 billion of unrealized capital gains. The main offset was USD14.3 billion of dividends and share buybacks.
Further key findings relating to the 29 publicly-listed holding companies in the ABA* include:
- Gross property and casualty (P&C) premiums rose by 4% to USD109 billion, with growth split evenly between insurance and reinsurance business.
- The combined ratio rose by 0.4 percentage points to 90.3%, with P&C underwriting profit unchanged at USD7.9 billion.
- Catastrophe losses declined relative to the prior year and were well below the long-term average.
- Support from the favorable development of prior year reserves declined by 5% to USD2.8 billion.
- Return on equity stood at 12.2% in the first half of 2014, the highest level since 2009.
- Net catastrophe exposures are reducing as risk transfer to the capital markets increases via sidecars, insurance-linked securities and more cost effective retrocession cover.
Mike Van Slooten, Head of Aon Benfield’s International Market Analysis team, said: “The influx of alternative capital is lowering risk transfer costs for both insurers and reinsurers, creating a win-win situation that should drive market expansion in the medium-term. Aon Benfield has made major advances in its analysis of reinsurers’ financial performance in recent years, in response to growing insurer demand for strategic insight into longer-term industry trends. We are closely monitoring developments in what is a very dynamic environment. As such, peer studies such as the ABA report, which assess comparative performance on a timely basis, are becoming increasingly relevant.”
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