Aon Benfield has launched the latest edition of its Aon Benfield Aggregate (ABA) report, which analyses the financial results of the world’s leading reinsurers in 2013.
Aon Benfield Analytics estimates that global reinsurer capital totaled USD540 billion at December 31, 2013, an increase of 7% (USD35 billion) over the year. This calculation is a broad measure of capital available for insurers to trade risk with and includes both traditional and alternative forms of reinsurance capital.
The firm's latest study found that capital reported by the ABA group of 31 leading reinsurers increased by 6% (USD20 billion) to USD337 billion, driven primarily by USD34 billion of net income. Repatriation of equity capital in the form of dividends and share buybacks rose by 15% to USD20 billion, partly reflecting the increasing engagement of third party capital.
Further key findings of the ABA study include:
- Gross property and casualty (P&C) insurance and reinsurance premiums written by the ABA rose by 5% to USD199 billion, driven by acquisition effects and exposure growth in emerging markets.
- The ABA combined ratio improved by 2.8 percentage points to 89.6%, with all constituent companies reporting underwriting profits.
- Disclosed catastrophe losses fell by 38% to USD7.9 billion, contributing 4.7 percentage points to the combined ratio.
- Favorable prior year reserve development rose by 23% to USD8.7 billion, benefiting the combined ratio by 5.2 percentage points.
- Net investment income was stable in dollar terms, but the yield fell by 30 basis points to 3.1% and is now down by a third since 2006.
- ABA companies continue to extend their engagement with third party capital, principally via sidecar sponsorship and the formation of in-house fund management operations.
Mike Van Slooten, Head of Aon Benfield’s International Market Analysis team, said: "Reinsurers have reported resilient results in an increasingly competitive marketplace. Most are now adapting their business models to accommodate the increasing availability of lower cost capital, thereby enhancing both their risk transfer capabilities and their offering to clients. We expect capital management activity to accelerate, as the advantages become more apparent.”
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